The Labor Law of Mongolia (“Labor Law”) is the main law which governs all types of employment relations. The Draft Amendment Law to the Labor Law was submitted to the Parliament of Mongolia on 26 December 2017 and was subsequently enacted on 21 April 2017. The changes introduced by the Amendment Law are as follows:
Article 231 on the Trial Period: It is common practice in Mongolia for employers to employ individuals for a period of time for a ‘trial period’ to determine whether the individual is suitable for the position. However, this practice was not regulated by the Labor Law which often led to disputes, particularly due to the lack of an Employment Agreement between the parties. As such, the Amendment Law introduced provisions to regulate issues relating to the trial period of employment. Now, the amended Labor Law expressly requires an Employment Agreement to be established between the parties that stipulates the length of the trial period which is not to exceed 3 months. If the Employment Agreement does not include the foregoing, the individual will be deemed to have been employed without a trial period.
Article 232 on the Shadowing Period: Under the amended Labor Law, an employee may shadow an experienced employee for a certain period of time to obtain skills and experience. This shadowing period shall be no longer than 3 months. For both the Trial Period and the Shadowing Period, the parties are free to determine the amount of salary to be paid to the employee.
Article 233 on Hourly Wages: Prior to the amendment of the Labor Law, there were no specific provisions with regard to employees that are paid by the hour. The new section on hourly wages provides for payment of the wage calculated by the number of hours worked and for the duties, working hours, working conditions and hourly rates to be reflected in the Employment Agreement. The total wage of the hourly-rate employee shall be equal to the salary of an employee in full time employment in the same work conditions.
Increase of Penalties for Breach of the Labor Law: The amendment law also provided for an increase in the penalties to be imposed for a breach of the Labor Law. The penalty for the failure to establish a written Employment Agreement has increased from MNT 5,000-20,000 to MNT 500,000-1,000,000 for individuals and from MNT 50,000-100,000 to MNT 5,000,000 - MNT 10,000,000 for legal entities.
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