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How to hire and pay employees in Mongolia
Slasify
Jun 21, 2025
| Key Takeaways |
|---|
| 1. Payroll is semi-monthly with a minimum wage of MNT 792,000/month, ensuring predictable cash flow for employees. |
| 2. Personal income tax ranges from 10–20% for residents; non-residents pay a flat 20%. Employer contributions include pension, health, benefit, unemployment, and industrial accident insurance. |
| 3. Standard working hours are 40 per week with maximum overtime of 4 hours/day and 56 hours/week. Breaks and childcare allowances are legally mandated. |
| 4. Annual leave ranges 15–33 days depending on service length, plus 15 public holidays, sick leave, maternity/paternity leave, and other regulated leaves. |
| 5. Termination and severance rules are strict: 30-day notice, 1–4 months' severance based on tenure, and dismissal only for legitimate reasons. |
Discover the global hiring and employment landscape in Mongolia – emerging as a promising market in Asia, Mongolia offers vast natural resources and a growing economy.
Personal Income Tax
Non-residents are taxed at a flat rate of 20% on their gross employment income, whereas tax residents are subject to the following progressive tax rates:
| Taxable Income (MNT) | Progressive Tax Rate (%) |
|---|---|
| Up to 120,000,000 | 10 |
| 120,000,001–180,000,000 | 15 |
| Over 180,000,000 | 20 |
Local Tax
There are no local taxes on employment income in Mongolia.
Statutory Contributions
Mongolian nationals and foreign nationals who are employed in Mongolia are subject to the mandatory social insurance contributions. Effective April 1, 2025, the employee's portion of social insurance contribution are subject to a monthly cap of MNT 910,800.
Employer Contributions
| Contribution Rate | |
|---|---|
| Pension Insurance | 8.5% |
| Benefit Insurance | 1% |
| Health Insurance | 2% |
| Unemployment Insurance | 0.2% |
| Industrial Accident and Occupational Disease Insurance | 0.5%–2.5% |
The actual rate of contribution for Industrial Accident and Occupational Disease Insurance may vary between 0.5%, 1.5% and 2.5% depending on the industry.
Employee Contributions
| Contribution Rate | |
|---|---|
| Pension Insurance | 8.5% |
| Benefit Insurance | 0.8% |
| Health Insurance | 2% |
| Unemployment Insurance | 0.2% |
Payment of Wages
Salary shall be paid at least twice a month on fixed dates, and the payroll dates shall be outlined in the internal labor regulations or employment contract.
Minimum Wage
Effective April 1, 2025, the minimum wage in Mongolia is set at MNT 4,715 per hour or MNT 792,000 per month.
Statutory Bonus
There is no statutory bonus in Mongolia.
Termination
Employment relations can be terminated by mutual agreement or by the initiative of either party, provided that the necessary conditions are met. Employers looking to dismiss an employee shall only do so if they have a proper justification for doing so.
| Legitimate grounds for dismissal | Prohibitions when dismissing an employee |
|---|---|
| Liquidation of the business entity, branch or unit thereof, cut or reduction of the jobs within it | Dismissal of an employee whose job or position is retained shall be prohibited unless there is sufficient grounds for the employer to do so or the business entity, branch or unit thereof is liquidated |
| It has been determined that the employee does not qualify the job or position in terms of the level or skills of profession, specialization, or work performance—the employee must have been warned and provided reasonable timeframe for improvement | |
| The medical-labor examination commission has determined that the employee is unable to work due to the health reason, provided that there is no alternative job and the employee is unable to work despite the measures taken by the employer | |
| The employee repeated a disciplinary breach or made a serious breach for which the employment relations must be terminated immediately as outlined expressly in an employment contract | Unless otherwise stated by Law, a change of jurisdiction, proprietary type, legal person's form and management of a business entity or organization shall not serve as a ground for termination of employee's employment relations. |
| It has been found out that an employee who is entitled to disburse or be responsible for completeness of the employer's money and assets has lost the employer's trust due to a wrongful act or non-act | |
| It has been found out that an employee has provided forged documents regarding their level of education, profession and specialization during recruitment |
Dismissal as a form of disciplinary action can only be imposed within 6 months from the date of disciplinary violation or from the last day if the violation continues, and within 1 month from the employer's discovery thereof
Notice Period
In the event of a termination on the initiative of either party, the terminating party is generally expected to produce a written notice and serve at least a 30-day notice period.
In cases of dismissal, employers who consider that the employee receiving notice does not need to or find it impossible to continue the work, the employer can choose to pay them in lieu of the notice period not served, calculated based on the employee's average salary until their termination.
Employers may be allowed to dismiss their employees without any notice or payment in lieu if the reason for their particular dismissal is severe enough to justify it.
Severance Pay
Where an employee has been dismissed, employers are generally obligated to pay the following severance:
| Length of service | Severance pay |
|---|---|
| 6–24 months | 1 month's salary |
| 2–5 years | 2 months' salary |
| 5–10 years | 3 months' salary |
| 10 years or more | 4 months' salary |
Employers who justly dismiss their employees without notice or payment in lieu are generally not required to pay severance. Furthermore, severance is also not payable to employees who are just temporarily replacing an absent employee whose job is retained upon their termination.
Probationary Period
Employers may conclude a probationary employment contract when hiring an employee to verify whether they meet the job requirements. The term of a probationary employment contract is subject to a maximum of 3 months, which may be extended once for up to 3 months upon mutual agreement.
Work Time Rules
Standard Working Hours
Normal working hours in Mongolia is subject to a maximum of 8 hours per day and 40 hours per week.
Where, depending on the nature of work, service or manufacturing process, it is not possible to follow the ordinary daily or weekly work hours limits determined by law, work hours shall be calculated in aggregation.
Break Period
Employees are generally entitled to at least an hour of break periods for rest and meals. This period shall not be considered part of the employee's hours of work.
An employee who is not able to have a break for meal due to the nature of their job duties shall be provided by an employer with an opportunity to have a meal at the workplace and such time shall be considered as the hours of work.
In addition to the breaks for rest and meals, a woman is entitled to the following additional break for child care and breastfeeding that shall be considered as the employee's working hours for payment of allowance:
| Those with a child under 6 months old or with twins under a year old | 2 hours |
|---|---|
| Those with a child between 6 and 12 months old, or with a child who has reached one year but requires special care | 1 hour |
Note: At an employee's request, the break for child care and breastfeeding may be provided in a form of reducing working hours.
Overtime
An employee may only be required to work overtime under the following circumstances, provided that their total working hours do not exceed 56 hours per week, and that the maximum limit of overtime hours of 4 hours per day is observed:
| Circumstances allowing overtime | Circumstances where overtime is prohibited |
|---|---|
| To perform work that is indispensable for the defense and protection of the country, or human life and health | A pregnant employee and an employee who has a child up to 3 years old shall be prohibited to work overtime unless they agree. |
| To prevent from catastrophe, natural disaster or accident, or take immediate actions to eliminate the consequences thereof | |
| To remedy disruption of water, electricity or heat supplies, road transport or communication facilities | A minor shall be prohibited to work overtime. |
| To perform unforeseen works which are needed urgently to prevent and eliminate a potential disruption of the normal functioning of a business |
If the employee who worked overtime is not given compensatory days off, they shall be paid at 150% their average salary.
Weekly Rest Days
Employees are entitled to 12 continuous hours of rest in between consecutive workdays and are generally entitled to 2 consecutive days of rest per week, which unless otherwise allowed by the nature of work or production, shall fall on a Saturday and Sunday.
Unless the employee agrees, they shall not be required to perform any work on weekly rest days at the employer's initiative, except to perform continuous manufacturing process, in the provision of common public services and those in transport, communications or indispensable works as stated in Paragraph 91.2 of the Labor Law.
The above exception does not apply to employees who are pregnant or have a child up to 3 years old or a disabled child up to 16 years old needing constant nursing.
If the employee who worked on rest days is not given compensatory days off, they shall be paid at 150% their average salary for the time worked.
Holiday and Leave Entitlements
Public Holidays
Unless the employee agrees, they shall generally not be required to perform any work on public holidays at the employer's initiative. There are 15 days of public holidays in Mongolia for 2025.
| Holiday | Date |
|---|---|
| New Year's Day | January 1 |
| Lunar New Year | February 10–12 |
| International Women's Day | March 8 |
| Vesak Day | May 23 |
| Children's Day | June 1 |
| Naadam Holiday | July 11–15 |
| Chinggis Khaan Birthday | November 2 |
| Day of the Proclamation of the People's Republic | November 26 |
| National Freedom and Independence Day | December 29 |
The conditions for employees being required to work public holidays is the same as those for employees being required to work on their weekly rest days. If the employee who worked on public holidays is not given compensatory days off, they shall be paid at 200% their average salary for the time worked.
Annual Leave
Employees who have completed 6 months of service shall be entitled to a basic annual leave period of 15 working days. Moreover, in addition to the basic period, employees shall be entitled to the following additional leave days:
| Length of service | Additional leave for employees working under normal working conditions | Additional leave for employees working under non-standard working conditions |
|---|---|---|
| 6–10 years | 3 working days | 5 working days |
| 11–15 years | 5 working days | 7 working days |
| 16–20 years | 7 working days | 9 working days |
| 21–25 years | 9 working days | 12 working days |
| 26–31 years | 11 working days | 15 working days |
| Over 31 years | 14 working days | 18 working days |
Annual leave may be taken in parts during the year at the employee's request, provided that the length of any continuous part of leave shall be at least 10 working days.
Annual leave shall be paid based on the employee's average salary for the respective year, with those not being able to take their leave due to the urgent work being entitled to be paid 150% of their annual leave pay.
Note: The basic period of an annual leave of an employee who is under the age of 18 and disabled shall be 20 working days.
Sick Leave
An employee shall have their jobs retained when they are under medical verification due to health issues where the employee does not work. Information on sickness benefits provided by the Social Insurance Fund can be accessed here.
Maternity Leave
An employed mother shall be entitled to 120 days of pregnancy and maternity leave, or 140 days in cases of twins.
This leave shall also apply to a woman who has delivered a stillborn child, has had abortion under medical guidance or has had pregnancy interrupted by medical procedure after at least 196th days of pregnancy and to a woman who has delivered a child prematurely (<196 days of pregnancy).
Where a woman has delivered a stillborn child, has had abortion or has had pregnancy interrupted by medical procedure before the 196th day of pregnancy, she shall be entitled to a leave under medical verification.
Information on maternity benefits provided by the Social Insurance Fund can be accessed here.
Paternity Leave
An employed father shall be entitled to at least 10 days of paid paternity leave in an amount equal to their average salary of such period.
Other Leave
| Leave | Paid/Unpaid | Duration | Note |
|---|---|---|---|
| Adoption Leave | Paid | Until the child reaches 60 days old | For when employees who have adopted a newborn child make a request. |
| Childcare Leave | Paid | - | For when an employed mother or father of a child up to 3 years old makes a request. The pay for this leave is regulated by the legislation, collective agreement, collective bargaining, employment contract and internal labor regulations. |
There are also certain instances where the employee does not work, but must have their jobs retained by the employer. These are laid out under Article 60 of the Labor Law.
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