Georgia is one of the most business-friendly nations owing to its varied economy and competitive labor market. The Peach State stood 7th for Ease of Doing Business in 2020, thanks to its regulations and taxes. The country has one million small businesses employing 1.6 million locals and an increasing demand for skilled labor.
However, before expanding your business in Georgia, you must be aware of the country’s labor laws regarding registering a business and hiring employees. Otherwise, the situation might lead to the risk of non-compliance and hefty penalties without HR and legal assistance.
Partnering with a Georgia PEO/EOR service provider, like Multiplier, is a reliable method to onboard your employees in the country without skipping any regulation. We help you utilize Georgia’s talent pool without the need to establish a local entity.
Why Use A Georgia PEO?
Establishing a local entity in Georgia follows a time-consuming and expensive procedure. Furthermore, setting up a global team requires you to consider numerous aspects such as labor laws, employment contracts, mandatory benefits, payment methods and payroll taxes. Keeping track of all the applicable laws, accurately calculating the relevant taxes and releasing payments on time can be overwhelming without expert help.
Partnering with a Georgia PEO is more efficient in streamlining international onboarding and employee management. A Professional Employer Organization (PEO) allows you to expand in Georgia without dealing with HR and legal hassles.
Georgia PEO Costs
Usually, PEOs have a fixed or variable pricing model for their services. The fixed model may cost you between USD 500 to USD 1500 for each employee per year. PEO service providers may also charge you a percentage of your business’ yearly payroll.
Multiplier’s Georgia PEO services follow an employee-based model. The pricing starts from USD 300 per month for each full-time employee in your company. The price includes international payroll, multilingual contracts, benefits management, and other expenses. However, the final bill amount may change according to the employment laws of the employee’s country.
Our Georgia EOR services ensure you can smoothly run payroll and benefits for your international employees without setting up a local entity. Multiplier’s comprehensive services and flexible platform offer a seamless experience in global HR management.
How to hire in Georgia
There are various regulations in the Georgian Labor Code which you must follow while hiring. To hire and onboard the locals in Georgia compliantly, you must be aware of the law regarding the following:
Employment contracts
The labor code of Georgia outlines the following rules for every legal employment contract:
- Every labor contract in a written or verbal format must mention the definite or indefinite duration period and terms of employment.
- Employers must draft the written contract in one or more languages understandable for both parties. If the employment contract in different languages has varied provisions, the employer must indicate which version holds the highest priority.
- The employee’s application and the employer’s document based on the application that confirms their will to hire the applicant qualify as a valid labor contract.
- Upon an employee’s request, the employer must provide a letter specifying key information about the employee’s role, job position, compensation and duration of the contract.
- The employer can choose to mention the internal regulations in the labor contract. However, before signing the contract, they must familiarize the employee with the regulations and any modifications.
- If both parties have signed multiple contracts over a period containing different regulations, all of them are valid and considered as one contract.
- Any older contract is valid as long as its terms are the same in the subsequent contracts.
- If there are multiple contracts with the same terms and agreements, the latest version is given the highest priority.
Taxation in Georgia
The local entities in Georgia are liable to pay Corporate Income Tax (CIT) at 15% per year.
Any foreign company conducting operations in Georgia via its local entity is subject to CIT on its Georgian-based earnings.
Furthermore, businesses must pay Value-added Tax (VAT) applicable to all goods and services in Georgia.
Type of Tax | Applicable to | Rate (annually) |
Corporate Income Tax (CIT) | All businesses | 15% |
Value-added Tax (VAT) | All businesses | 18% |
Import Tax | All goods crossing the Georgian borders (not including the exports). The tax is dependent on the type of product | 0%, 5%, and 12%, dependent on the product type. Imported cars are taxed at GEL 0.05 times the engine volume in addition to a 5% tax for every year of ownership. |
Excise Tax | Alcoholic drinks, condensed natural gas, goods produced from crude oil, oil distillates, tobacco and automobiles | GEL 0.12 to GEL 800, depending on the quantity of goods. |
Property Tax | Fixed assets (except land), investment property and leased out property of Georgian entities or foreign entities owning property in Georgia | 1% |
Land Tax | Agricultural and non-agricultural land | GEL 5 to GEL 100 for 1 hectare of agricultural land. GEL 0.24 per square meter of non-agricultural land. Both rates are dependent on the land quality and administrative unit |
GEL: Georgian Lari
Payroll
The following taxes are deducted from every payroll in Georgia
Tax type | Rate |
Personal Income Tax | 20% |
Pension Contribution | 2% |
The employer must match the employee contribution towards the pension fund. Self-employed individuals must contribute 4% of their earnings to their pension account.
Minimum wage
The national minimum wage in Georgia is 1446.51 GEL per month.
Working hours
According to the Labor Code of Georgia, an employee may work for a maximum of 40 hours a week. In businesses with special working conditions, as decided by the Government of Georgia, a full-time employee may work for a maximum of 48 hours a week.
For minors between 16 to 18 years of age, the maximum working hours are 36 hours per week. However, for minors aged 14 to 16, the labor law mandates a maximum of 24 hours of work per week.
If an employer requires 24 hours of continuous work, they must sign a shift labor agreement with the employee.
Overtime is considered legal in Georgia and the overtime pay must be more than the regular pay per hour. The overtime pay rate should be discussed and agreed upon between the two parties. The employer may choose to compensate for overtime with additional time off.
Public Holidays
The Georgian Labor Code approves the following days as public holidays
Date | Day |
January 1&2 | New year holidays |
January 7 | Orthodox Christmas |
January 19 | Epiphany |
March 3 | Mother’s Day |
March 8 | International Women’s Day |
April 9 | National Unity Day |
Easter Holidays | Good Friday, Good Saturday, Easter Sunday, Easter Monday |
May 9 | Victory Day over Fascism |
May 12 | Commemoration Day of St. Andrew |
May 26 | Independence Day |
August 28 | Mariamoba |
October 14 | Mtskhetoba |
November 23 | St. George’s Day |
Employees who work on any of the above public holidays must be compensated as per their overtime pay.
Sick leaves
Employees in Georgia receive paid leaves for up to 30 days. The employer may ask their sick employees to present a medical certificate from their doctor.
Maternity leaves
Georgian employees are mandated 183 calendar days of paid maternity leave. Furthermore, the employee can take 200 days of unpaid leave if there are pregnancy complications or multiple births.
Why Multiplier
The HR operations for your Georgia entity can be daunting, considering the number of regulations and compliance measures you must follow. Moreover, you must keep up with the ever-changing labor law guidelines and align with them for smooth operations and minimal legal hassles.
Multiplier’s Georgia PEO solution helps you onboard and manage your employees in a smooth and efficient manner. Our digital platform allows you to create and share legal employment contracts within minutes, allot benefits, manage payroll and release payments in legal currency.
Connect with us to set up your global team in Georgia quickly and compliantly.
Our Georgia PEO simplifies your expansion
- Run and handle international payroll
- Provide employees locally competitive benefits and insurance
- Seamlessly manage expenses and reimbursement claims
- No need for a local entity
- 100% statutory compliance
- Maximum precision and transparency
- No transfer fees or hidden charges