What are Employee Benefits?
Employee benefits are additional perks or compensation given to employees in addition to their basic salaries or regular pay. Health insurance, paid time off (PTO), life insurance, retirement benefits, profit sharing, and other benefits may all be included in a holistic benefits package.
Businesses of all sizes may profit from providing employee perks. According to surveys, 83% of employees think the benefits package an employer offers determines whether or not they accept a job offer. Hence, an employer must provide an alluring benefits package to recruit and retain the best people. It demonstrates your firm’s value and helps boost employees’ morale.
Compensation Laws in Uzbekistan
Both resident and offshore company owners must comply with the employee compensation policy in Uzbekistan to ensure the fair distribution of wages to all employees.
- As per the compensation structure in Uzbekistan, employers have to provide UZS920,000 per month as minimum wage.
- As per the employment act in Uzbekistan, minors and employees in demanding and hazardous industries should be allowed fewer work hours.
- Uzbekistan law ensures that all employees, irrespective of nationality, get equal opportunities in the country.
- According to Article 233 of the Uzbekistan Labor Code, all women are eligible for maternity leaves. State social insurance benefits usually pay it.
- Article 16 of the Constitution of Uzbekistan limits the number of work hours for employees allowing them to have appropriate rest during work days.
How to Design an Employee Benefits Program for Employees in Uzbekistan
To create a thorough compensation and benefits policy in Uzbekistan as an employer, you must first grasp the country’s compensation and benefits framework.
You must ensure that your employee benefits package (local or international) satisfies employee rights and specific business requirements. Here is a comprehensive list of tips to help you draft a suitable compensation package in Uzbekistan:-
Determine the organization’s benefits objectives and tally them with the budget plan.
Identifying the program’s goals is the key to designing a compensation package in Uzbekistan. In most cases, this approach helps develop a summary of the organization’s goals instead of a list of particular benefits provided by taking the employer’s and employee’s requirements into account. The business or HR strategy of the firm usually aids in formulating the benefits objectives. While establishing the objectives of the benefits, make sure you take the following variables into account:
- Employer size
- Collective bargaining agreements.
Assess what you require as a business
A needs evaluation ought to be carried out to identify which employee benefits in Uzbekistan suits both the needs of the business and employees. The assessment may include:
- What the employer thinks regarding the need for employee benefits
- Competitors’ benefits strategies
- Tax laws and regulations
Yet, a more recent tendency in establishing a compensation and benefits policy in Uzbekistan is to use market research as a guide. You can conduct employee inquiries in the form of:-
- Personal interviews
- Short questionnaires
- Use complex market research tools
There is a high chance of increasing employee engagement and satisfaction if the benefits package is high. However, this entirely depends on how much the employer is willing to incorporate employee input and feedback into the selection and design of benefits.
Create a program for a benefits plan
After completing the gap analysis and needs assessment, the company must create a new employee compensation policy in Uzbekistan. The employer can formulate benefit packages using the information gathered from all resources. The company must calculate the net cost of the prioritized benefits and compare it with its benefits budget.
Share the benefits plan with the staff
The communication strategy is an essential part of managing and preparing for employee benefits in Uzbekistan. If the feedback was collected and used to establish the compensation structure in Uzbekistan, be sure to inform the workforce of this and describe how it impacted the program’s design. The beneficial effects on staff morale, retention, and recruitment may be lost without good communication strategies. Effective goals for benefits communication should include:-
- Enhancing employee financial security and promoting knowledge and appreciation for new or established employee compensation and benefits in Uzbekistan.
- Offering a thorough knowledge regarding the advantages provided.
- Promoting smart use of benefits.
Create a process for evaluating benefits on an ongoing periodic basis
Another crucial phase in establishing a benefits and compensation structure in Uzbekistan is the routine assessment of the benefits plan program. The organization’s goals and the requirements of the workforce must be taken into account while evaluating the benefits program regularly.
Benefits packages are affected by dynamics brought about by shifts in the corporate environment, the regulatory environment, the economy, and labor demographics. Evaluate the benefits programs, make the necessary adjustments, and consider creating goals and benchmarks. The employer should also incorporate utilizing trends and benchmarks to analyze the efficacy of the benefits plan, as well as periodically conducting employee surveys or thorough needs assessments.
Types of Guaranteed Benefits in Uzbekistan
As per the compensation and benefits policy in Uzbekistan, employees are entitled to receive the following guaranteed benefits:-
- Working hours: The standard working hours in Uzbekistan consist of 40 hours a week. It is usually decreased for minors and employees working in dangerous sectors.
- Overtime: Employees working more than the working hours are entitled to overtime compensation of up to 200% of their regular pay.
- Paid time off: Employees are entitled to 15 days of paid vacation after completing six months of continuous employment.
- Public holidays: There are nine public holidays given to employees.
- Sick leave: Sick leaves are usually paid by the employer in the event of illness or injury of an employee. Sick leave compensation ranges between 60% to 80% of employees’ average income.
- Pension: The first mandate for employee benefits in Uzbekistan is the allocation of pensions to employees. Residents of the Republic of Uzbekistan, including nationals and foreigners, are entitled to pension benefits. In general, a registered Uzbekistan employee ought to receive a minimum wage, social security by age, and a pension in case of illness, disability, or the death of a breadwinner as per the Republic of Uzbekistan Constitution. The country has a multi-level pension system inclusive of:-
- Basic pension system
- Required pension system
- Optional pension system
Maternity benefits in Uzbekistan last for 126 calendar days, out of which 70 calendar days can be used before birth and 56 calendar days after birth. Seventy days are allowed for difficult deliveries or the delivery of two or more children. Pregnant employees are entitled to 100% of their regular pay during maternity leave.
Employees are provided with a periodic insurance settlement to reimburse damages resulting from lost income caused by the loss of operational capacity (30% to 100%). Insurance companies are responsible for handling these payments.
The net calculation for lost monthly income should not exceed ten times the minimum wage. The social payment from the State social insurance fund needs to be subtracted from the net payment in case of a loss of ability to work.
To cover damages caused by lost income, mandatory pension contributions must be provided and transferred from insurance payouts to the unified retirement savings fund.
Employee Benefits for Expatriates
Labor Code of Uzbekistan ensures that each employee gets equal opportunities. This also implies the expatriates working in Uzbekistan.
In Uzbekistan, ex-pats are allowed equal benefits as that national. They are eligible for benefits, including leave benefits in Uzbekistan, maternity benefits, insurance, etc. Some companies also provide additional benefits like travel allowance and dental benefits in Uzbekistan.
How are Employee Benefits Taxed in Uzbekistan?
The income tax on employment in this country is 12%, while the employment income for non-residents is taxed at 20%. In Uzbekistan, employers and employees must make social security payments at rates varying between 4.-12%. The employee payroll contributions have been illustrated in the table below:
Housing Loan Regime
Employee training contribution (INCES)
Restrictions for Uzbekistan Benefits and Compensation
Businesses that want to expand into Uzbekistan must establish a registered subsidiary before administering wages to employees or providing benefits.
Also, companies need to ensure that they know the monetary value of the benefits they provide to the employees to calculate the taxes on them easily. To avoid hefty penalties, businesses should give their employees at least the specified minimum wage.
Uzbekistan Supplemental Benefits
Companies often offer supplemental benefits to reduce employee turnover rates and encourage applicants to apply for a job in the firm. Many large-scale and small-scale companies offer supplemental employee benefits in Uzbekistan.
Health insurance sponsored by employers is becoming more popular. Medical benefits for employees in Uzbekistan are also one of the clauses that attract more and more applicants to apply.
Bigger firms frequently provide a variety of voluntary perks at a reduced cost to their employees. Personal accident insurance, critical illness insurance, and other coverage are among the advantages available.
Some bigger firms provide ‘gym on-site,’ while smaller employers may give gym subsidies or access to a gym with discounted corporate rates. Furthermore, many businesses fund this benefit through wellness accounts, allowing extra flexibility for employees with wellness requirements outside the traditional gym membership alternatives.
Employees can access dietitians, homeopaths, and mental health professionals for free. It is covered by their health insurance coverage, thanks to virtual care. A per-appointment fee may apply to an online medical visit. Delivery of prescriptions and drugs is also virtually available through applications.
Leadership training in mental well-being, mindfulness, anti-stigma campaigns, and stress reduction workshops are also provided by many companies as a part of the supplemental employee benefits in Uzbekistan.
How Multiplier Can Help with Benefits Managements in Uzbekistan
Choosing a reliable PEO (Professional Employment Organization) will give you the time to focus on other pressing matters like business expansion and operation while they handle the administration of the compensation and benefits. With a PEO, you don’t need to go through the hassle of establishing your subsidiary either.
At Multiplier, we have a team of professional experts in the field who will not only help hire your staff but also add them to the compensation and benefits policy in Uzbekistan while ensuring that all the compensation rules have been adhered to. You can skip the need to start a subsidiary in the country and easily attract talent at cheaper costs.