Dismissal Compensation and Maternity Benefit in Azerbaijan: Rights You Lose Without Knowing

Two scenarios in which people most often receive far less than they are entitled to — or nothing at all — simply because they do not know the law.

First: you are dismissed and you do not know what you are owed. Second: you are pregnant and have never thought to ask how much your maternity benefit will be.

In 2026, significant changes to the legal framework occurred on both fronts. For dismissal — a landmark ruling by the Constitutional Court. For maternity benefit — a complete rebuild of the delivery system. In both cases, "I didn't know" is no longer an excuse.

Part One: Dismissal Compensation

Who Is Entitled, Who Is Not

Under Article 78 of the Labour Code, a severance benefit is paid only when the employer initiates the dismissal. Specific grounds include: reduction in headcount or staff positions, liquidation of the enterprise, change in working conditions, permanent incapacity of the employee (6 months or more), conscription into military service, change of enterprise ownership, or death of the employee.

An employee who resigns voluntarily receives no compensation. Where parties separate by mutual agreement, conditions are set by contract — the law does not impose a mandatory minimum, though parties may agree on a higher amount.

Benefit Amount: Scales with Tenure

The calculation is based on tenure with this specific employer, not total insurance experience.

The phrase "at least" matters: the employer may pay above the legal minimum, but not below it.

How Is the Average Monthly Salary Calculated?

Unlike annual leave pay, dismissal compensation uses an average based on the last 2 calendar months — not 12 months.

Under Article 177.2 of the Labour Code:

Step 1: Total Gross income for the last 2 months ÷ working days in those 2 months → average daily earnings.

Step 2: Average daily × average monthly working days per the production calendar → average monthly salary. (In 2026, on a five-day week: ≈ 19.9–20.2 days per month)

Step 3: Average monthly × tenure multiplier (1; 1.4; 1.7; or 2) → compensation amount.

Worked Example: Employee with 12 Years' Tenure

The employee has worked at the company for 12 years. Gross salary in January and February 2026: AZN 2,000 per month each. January — 21 working days, February — 20 working days.

Notice Period: This Is Money Too

In a redundancy, the employer must give the employee advance notice — in addition to paying the benefit.

During the notice period, the employee must receive at least 1 free working day per week to search for new employment — with salary retained.

If the employer fails to give proper notice, the employee is entitled to additional compensation equivalent to the notice period under Article 77 of the Labour Code.

The Landmark 2026 Change: Constitutional Court Ruling of 18 February

This change attracted little public attention — yet in practice it determines whether large numbers of dismissed employees lost money they were owed.

Article 144.3 of the Labour Code previously stated: upon termination of employment, no compensation is paid for additional, educational, creative, or social leave days.

In other words: an employee with 5 years' service had earned the right to 30 days' basic leave + 4 days' seniority leave each year. If those 4 days were unused, upon dismissal they received compensation only for 30 days. The remaining 4 days — nothing.

The Plenum of the Constitutional Court, in its ruling of 18 February 2026, found this provision inconsistent with Article 25 of the Constitution (right to equality) and suspended its application.

Result: from this date, an employee being dismissed must receive compensation for all types of unused leave days — basic leave, seniority leave, hazardous-conditions leave, and social leave.

Concrete example: An accountant started work on 22 February 2025; the contract is terminated on 22 February 2026. Basic leave 30 days + seniority allowance 4 days = 34 days. Under the old rule: compensation for 30 days. Under the new rule: compensation for 34 days. The difference — 4 days' salary.

For an engineer working in hazardous conditions the gap is larger: basic 30 + hazard allowance 6 + seniority 2 = 38 days. All of these must now be compensated.

Is Dismissal Compensation Taxable?

Income tax is deducted from the benefit. However, SSPF contributions are not deducted — this distinguishes it from sick leave benefit (which is fully exempt) and from regular salary.

Compensation for unused leave is also taxed in the same way as regular salary.

Part Two: Maternity Benefit

Legal Basis and Duration

Maternity benefit is governed by Article 125 of the Labour Code, Article 13 of the Law on Social Insurance, and Cabinet of Ministers Resolution No. 189 (updated by Resolution No. 31 in 2026).

Additional norms apply for agricultural workers.

Benefit Amount

Maternity benefit has always been paid at 100% — unlike sick leave, it has never been tied to insurance experience. Resolution No. 31 made no change here; the 100% rule was already in place.

Calculation formula:

Step 1 — Average daily earnings: Total Gross income for the last 12 months ÷ 365

Step 2 — Daily benefit: Average daily earnings × 100%

Step 3 — Total benefit: Daily benefit × number of leave days

Maximum Cap

The monthly benefit amount may not exceed 25 times the minimum labour pension. This cap acts as an effective ceiling for high earners — even if 100% of income exceeds the limit, only the permitted maximum is paid.

Worked Example

An employee's total Gross income for the last 12 months is AZN 24,000. Normal single birth — 126 days.

If the amount does not exceed the maximum cap, it is paid in full.

Minimum Insurance Experience Requirement

A minimum of 6 months of social insurance contributions is required to be eligible for the benefit. An employee with less than 6 months of contributions is not entitled to a benefit.

Self-employed individuals may receive the benefit — provided they have been making voluntary SSPF contributions. If no contributions were made, no benefit is payable.

The 2026 System: Proactive Payment

From January to April 2026, the SSPF paid one-time childbirth benefits proactively to 28,830 people. This figure demonstrates that the new system is operational.

From 1 May 2026, maternity benefit is assigned proactively — automatically. The employee does not apply or gather documents. The SSPF receives medical data, performs the calculation, and makes the payment autonomously.

At the same time: the principle of paying the benefit on the basis of a sick leave certificate remains in force. Without a sick leave certificate, no benefit is paid. The proactive system simplifies the process but does not eliminate the medical document.

Is Maternity Benefit Taxable?

No. Maternity and childbirth benefit is fully exempt from income tax and SSPF contributions. The employee receives the full calculated amount in hand.

This is a significant distinction: while 10–19% is deducted from regular salary, maternity benefit arrives in full.

Childcare Leave: A Separate Phase

After the maternity leave period ends, the employee may take childcare leave — until the child reaches the age of 3. The payment for this phase is governed by a separate regulation and is considerably smaller than the maternity benefit. Childcare benefit for children up to age 3 was also moved to the proactive system under Resolution No. 31.

Shared Logic of Both Systems

Cost Implications for Employers in 2026

On the dismissal side, employer obligations have grown since 2026 — following the Constitutional Court ruling, all additional leave types must now be compensated. For companies carrying out redundancies, this translates into real additional cost.

The shift of maternity benefit to the proactive system has reduced the administrative burden on employers. The obligation to convene a commission, prepare a protocol, and submit payroll statements has been eliminated. The SSPF now handles the calculation.

Conclusion

Dismissal compensation and maternity benefit are among the most frequently misunderstood aspects of the labour law system. In 2026, concrete regulatory changes occurred on both fronts — one expanded employees' right to leave compensation, the other radically simplified the mechanism for receiving a benefit.

Knowing your rights is not enough — you need to calculate the numbers.

Want to calculate your dismissal compensation? Enter your tenure, average salary, and grounds for dismissal. The system shows the severance benefit, notice compensation, and unused leave compensation separately. → Go to Dismissal Calculator

Want to calculate your maternity benefit? Select your average salary and type of delivery — find out the full benefit amount for 126 or 140 days. → Go to Maternity Benefit Calculator

Prepared on the basis of Articles 77, 78, 125, 144, 176, 177 of the Labour Code; Article 13 of the Law on Social Insurance; Cabinet of Ministers Resolution No. 31 of 30 January 2026; ruling of the Plenum of the Constitutional Court of the Republic of Azerbaijan of 18 February 2026. The article is updated if normative acts change.