Termination compensation calculation
Calculate termination compensation under Azerbaijani Labour Code
Last updated: 28.07.2026
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Termination compensation is calculated based on the employee's average monthly salary over the last 12 months. According to Azerbaijan's Labour Code, an employer must pay a dismissed employee a minimum of 2 average monthly salaries as severance pay. The compensation increases with the employee's length of service. Income tax is deducted from compensation, but DSMF contributions are not applied. Different terms may apply in cases of mutual agreement termination.
- –Labour Code — Article 77 (grounds for dismissal)
- –Labour Code — Article 78 (compensation amount)
- –Labour Code — Article 176 (average salary calculation)
- –Tax Code — Article 102 (tax on compensation)
Last updated: January 2026
Is termination compensation mandatory?
Yes. When dismissed by the employer, payment of at least 2 average monthly salaries is mandatory under the Labour Code.
Is compensation paid when resigning voluntarily?
No. Compensation is not paid when an employee resigns voluntarily. It only applies when dismissed by the employer.
What deductions are made from compensation?
Income tax is deducted from compensation. However, unlike sick leave, DSMF contributions are not applied.
Will I get compensation if dismissed during probation?
No compensation is paid during the probationary period. General rules apply after the probationary period ends.
How is compensation calculated during staff reduction?
During staff reduction, the employee receives a minimum of 2 average monthly salaries. Additionally, compensation for unused leave days is also paid.
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