Digitalization of employment contract in Armenia
Overview of the Amendment
On 12 December 2024, the Law on Amendments and Additions to the Labor Code of the Republic of Armenia (hereafter referred to as "the Amendments") was enacted, marking a significant update to Armenia's employment regulations. The amendments will come into effect on 1 July 2025.
Key Provisions of the Amendment
The amendment introduces a new Chapter 13.1 to the Labor Code, which defines the concept of a digital system for signing employment contracts. The purpose of the amendment is to digitalize the process of signing, terminating, and amending employment contracts, as well as managing the associated information.
Other provisions of the Amendments include
- Employment contracts will be signed using digital signatures.
- The use of the platform will be optional from 1 July 2025 to 1 June 2026.
- Starting from 1 June 2026, the use of the platform will be mandatory, and all contracts previously signed in paper form will need to be digitalized.
- Employment contracts may contain annexes which will not be reflected on the platform. The platform will only note that the employment contract has an annex, which will remain in paper form.
- The State Revenue Committee of the Republic of Armenia, Migration and Citizenship Service of the RA Ministry of Internal Affairs, and Health and Labor Inspection Body of the Republic of Armenia will have access to the information pertaining to their functions.
- Both the employer and employee will have access to the information pertaining to them through their personal pages on the platform.
- All sub-legislative legal acts detailing the platform’s operation (body responsible for the management of the platform, the procedure of signing the contract, etc.) shall be adopted by 1 June 2026.
Background and Impact
The purpose of the Amendment is to address issues such as:
- Tracking the employers not signing an employment contract with the employee or failing to provide a copy of the contract. Although the system itself does not directly address the issue of employers neglecting to sign contracts, it enhances the governmental ability to monitor whether an employee has a signed employment contract (EC). This improved tracking will facilitate the enforcement of penalties particularly.
- Monitoring the existence of signed labor contracts with each employee and ensuring compliance with Labor Code regulations should be carried out by the relevant state body or bodies. Although the authorized state body has not yet been identified, it is anticipated that the relevant body will be designated by the applicable legal act.
- Identifying the employers avoiding obligations imposed by labor legislation by signing service contracts instead of employment contracts. Employers in some cases use service contracts instead of employment contracts to avoid obligations like minimum wage, benefits, and social security contributions required by Armenian labor laws, potentially undermining employee rights. which is why identifying and addressing such behavior is important for ensuring compliance with labor laws.
- Detecting the employers concluding employment contracts retroactively.
Applicable Fines
Any incompliance with the provisions of this Amendment can be considered as a violation under Article 41 of the Code of RA on Administrative Violations. Initially, violators will be issued a warning. If a second violation occurs within one year of the first, a fine of 50,000 AMD will be imposed for each violation. In practice, the RA legislative body may incorporate specific regulations to the RA Code on Administrative Offenses related to specific types of violations governing the above-mentioned relations.
The amendments to the Labor Code aim to enhance the powers of supervisory bodies and improve employee awareness by providing access to their employment contracts. The requirement for a digital employment contract will become mandatory from 1 June 2026. However, employers have the option to transition to digital employment contracts starting from 1 July 2025. When utilizing digital employment contracts, employers should ensure compliance with Armenian labor laws by including all essential terms such as job description, salary, working hours, and employee rights. Employers must also protect employee data in accordance with data protection regulations, ensuring secure storage and access to personal information. Both parties should have easy access to the digital contract, and employers should maintain a secure and organized system for storing these contracts for audits or legal purposes. Additionally, the process for updates or amendments to the contract should be clearly outlined, with both parties agreeing to any changes. By adhering to these guidelines, employers can effectively implement digital employment contracts while ensuring compliance with legal and regulatory requirements in Armenia.
For more information or to discuss how KPMG Armenia can assist your organization, please contact our legal team.
