Payroll Services: The most common mistakes in Azerbaijani experience
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Payroll and human resources documentation are one of the most common issue in Azerbaijani practice. At the same time, a number of mistakes are made during the organization of such payroll services.

In essence, personnel documentation is among the functions “Human Resources”. In many companies, this function is assigned to a separate division or specialist. In practice, we have observed that these functions are assigned to the accountant or a lawyer. Human resources functions include employee recruitment, signing employment contracts, compliance with labor and safety rules, organization and termination of employment relationships, employee assessment and other similar functions. And the payroll services are among the functins of this division.

The most common mistakes in the organization of payroll services in Azerbaijan are as follows:

1- To entrust these functions to accountants who are not skilled in employment legislation, or to entrust these accounting firms not experienced in labor experience;

2- To entrust these cases to a human resources specialist who is not aware of labor legislation, or to provide HR services only to a specialist in human resources;

3- To try to document employment issues only when they are in dispute with an employee or if any complaints to the State Labor Inspectorate are submitted;

4- Hiring employees via with the registration of employment notices, and, in fact, no employment contract (conditions are not agreed) are not agreed upon;

5- Conclusion of standard employment contracts with all employees without regard to company specificity, employee functions and other legitimate interests of the employer;

6- Failure to conclude a material liability agreement with those responsible for the equipment or equipment, and generally the necessary personnel;

7- Lack of terms conditions in the employment contract or any other agreement with the employee enshrining the protection of the company's commercial secrets and interests;

8- Failure to comply with the requirements of the Labor Code when dismissing an employee;

9- Defects in documentation regarding changing the employee's position or salary, particularly in the absence of the employee's consent;

10- Failure or late filing of necessary notices and reports to government agencies in accordance with the requirements of legislation;

11- Non-compliance with labor (health) safety regulations, charges and damages against the company.

Due to the reasons not limited with the above mention ones, the payroll issues related to HR services require special knowledge and experience in the area of ​​labor legislation. It is risky for those with no knowledge or experience to organize human resources or to document human resources issues within the company.


It is recommended that companies pay attention to the following while selecting a payroll service provider in Azerbaijan:

- Get professional support while the set up of the HR and Payroll work in the company;

- In small companies, it is possible to assign accountants or lawyers, but it is imperative to involve those individuals in training in the relevant field, as well as regular consultation with specialists in the field of labor legislation;

- Medium-sized companies may hire a human resources specialist for payroll documentation or delegate such services to specialized consulting firms;

- Large companies should be more interested in creating an internal HR unit, due to the large volume of work and the complexity and intensity of documentation, team of payroll professionals would be encourage to oeprate as a separate unit within the company. Naturally, such units should also be involved in training on a regular basis, be aware of changes in labor laws and employee documentation, and consult with a qualified lawyer before any disputes arise.

- When recruiting consulting firms offering HR and payroll services, the number of consultants, their education and work experience should be carefully reviewed and studied. It will also be helpful to get customer lists related to previous work.

- Do not entrust the performance of payroll services, especially in medium and large companies to an accountant. This is particularly because of the accountant's daily work in such companies is quite large, and they would be compelled to pay attention to the most important issue in their opinion and miss serious payroll matters. It is riskier to entrust this work to an accounting department without experience or specialization in labor law.

CLC is a fully-fledged consulting company, with the team of professionals possessing international education and experience, offering a wide range of business law, tax, accounting and payroll/ human resources services in Azerbaijan. The experience of our specialists and the work of the company is highly appreciated by international ranking agencies.

For questions or inquiries please feel free to contact us.