Employer (individual entrepreneur or LLC) hires an employee: contract and mandatory terms: what to do under Georgian law

What to do

1. Form: where the relationship lasts longer than 1 month, the contract must be in writing (Labour Code of Georgia, Art. 12); the language must be understandable to the parties; if there are several languages, state which text prevails (Art. 13). The relationship arises from the actual start of work unless the contract provides otherwise (Art. 15), so sign before the employee starts work.
2. Content: essential terms — parties, start date and duration, working time and rest, place, position and job description, pay and payment procedure, overtime pay, leave, and the termination procedure (Art. 14). Limits: standard working time — no more than 40 hours a week (Art. 24); paid leave — at least 24 working days a year (Art. 31). Discipline: the internal rules may be made part of the contract — in that case the employee must be familiarised with them before signing (Art. 14).
3. Term: a fixed-term contract shorter than 1 year is permitted only on the grounds set by law (a specific volume of work, a season, a temporary increase in workload, a replacement) (Art. 12); a term exceeding 30 months, including through a chain of contracts, makes the contract open-ended (Art. 12); the restrictions on fixed-term contracts do not apply to a start-up whose registration is less than 48 months old (Art. 12). Probation: once only, no more than 6 months, in writing only; work during probation is paid (Art. 17).
4. Taxes and contributions: the employer is a tax agent — it withholds income tax from salary and transfers it on payment (Tax Code of Georgia, Art. 154); the income tax rate is 20% (Tax Code, Art. 81); the declaration of payments is due no later than the 15th of the following month (Tax Code, Art. 154); the employer’s pension contribution from its own funds is 2% of the taxable salary (Law of Georgia on Funded Pensions, Art. 3); a further 2% comes from the employee’s funds and is withheld from salary (Art. 3). There is no registration of the employment contract, but data on employees is entered into the Revenue Service’s register of hired persons (Tax Code, Art. 12).
5. Control: for each violation of the Labour Code, the Labour Inspection issues a warning or a fine (Labour Code, Art. 77).
6. Where to apply: Revenue Service (tax, declarations, register); Pension Fund (საპენსიო ფონდი) (contributions); Labour Inspection Service.
7. Evidence: signed contract (and translation if bilingual); internal rules with a signed acknowledgment; timesheets, payroll statements and payment slips, declarations.
8. Traps: an oral agreement lasting longer than a month, or a contract dated backwards; a short fixed-term contract without grounds, or a chain of contracts exceeding 30 months; a repeated probation period or an unpaid “internship”; a civil-law contract instead of an employment contract — risk of reclassification and additional tax assessment; expecting a mandatory employment record book or contract registration as in the CIS countries.

Be sure to check

• written form, an understandable language, and the list of essential terms
• limits on fixed-term contracts and probation (once only, up to 6 months)
• 20% income tax withheld; declaration by the 15th; pension contributions of 2% + 2%
• no contract registration is required, but the employee appears in the Revenue Service register; control — Labour Inspection