Clyde & Co works closely with MDS & KhanLex LLP in Mongolia and the article below was contributed by Odmaa Tsevegjav from MDS KhanLex LLP. According to the Mongolian Law on Labour (1999) an employer is obliged to conclude an employment agreement with an employee in writing and is prohibited to conclude agreements other than employment agreement for a permanent workplace.

An employer may not demand an employee to perform work which is not specified in the employment agreement, except as otherwise provided in the Labour Law. The relevant Labour Law exceptions are a) temporary transfer to another job due to an unavoidable work need, such as in circumstances of natural disaster, industrial accident, or any other unforeseen circumstances; b) temporary transfer to another job during idle time; and c) transfer to another job for health reasons based on the decision of a medicallabor commission.

Validity of an employment agreement

An employment agreement must be in writing and should, at least, include the following basic terms:

  • job title or name of a position;
  • job duties specified in the position description;
  • amount of basic or position salary;
  • labour conditions.

An employment agreement that does not include any of the above mentioned basic terms shall be invalid. The parties are free to agree upon any terms in addition to the basic terms. An employment agreement shall become effective from the date of signing by the parties.

Any term of an employment agreement which is less favorable than those provided in the legislation or collective agreements or covenants shall be null and void.

Termination of employment agreement by the employee

Unless otherwise provided in the law or an employment agreement, an employee shall have the right to leave his or her workplace upon the expiration of 30 days after submitting his or her request of resignation to the employer, in which case the employment agreement shall be considered as terminated. An employment agreement may be terminated prior to the above mentioned time limit due to a valid reason or by an agreement with respect to the time of resignation with the employer.

Termination of an employment agreement by the employer

Change of ownership or affiliation of a business entity or organization shall not serve as a ground for termination of an employment agreement.

Notice of termination of an employment agreement pursuant to the following terms shall be given to the employee one month prior to such termination:

  • liquidation of the employer’s business entity or organization, branch or unit thereof, abolition of the job or position within it, or reducing the number of employees;
  • where it has been determined that the employee fails to meet the requirements of the job or position due to the lack of professional qualifications or skill, or health reasons;

An employer shall pay to an employee whose agreement is terminated on the grounds mentioned above, a severance pay in an amount equal to at least the employee’s average salary for one month. This severance pay shall also be payable to an employee whose employment agreement is terminated because he or she has been called to active military service or has attained 60 years of age and has become eligible to receive a pension. In the case of a mass redundancy of employees an employer shall agree the amount of the severance pay to be paid through negotiations with the representatives of employees.

Other possible grounds to termination of an employment agreement by an employer are:

  • repeated breach by the employee of the labour disciplinary rules or commission of a serious breach for which the employment agreement specifically provides termination of the labour relations (serious negligence);
  • where it has been determined that an employee who is responsible for assets or money has lost the trust of the employer due to an act or omission (financial negligence);
  • an employee is elected or appointed to another salaried work; or
  • arising on the grounds set forth in the contract.

Conditions in which termination of the employment agreement is prohibited

It shall be prohibited to terminate an employment agreement with an employee whose job or position is retained, unless the business entity or organization is liquidated.

An employee shall retain a job or position in the following circumstances, even though an employee is not performing his or her job duties:

  • the employee performs duties by election in a state body for a period of up to 3 months;
  • the employee is on an annual vacation;
  • the employee is undergoing medical examinations, acts as a donor, or is on leave pursuant to a medical certificate or at employer’s permission or;
  • the employee is on pregnancy, maternity or child care leave;
  • the employee is participating in negotiations to conclude a collective agreement or bargain, or is participating in a lawfully organized strike;
  • with respect to an employee who has received a call-up under the decision of the military call-up commission for active military service;
  • such other cases as provided in the legislation, collective or employment agreements.

Additionally, the labor Law prohibits employers to terminate an employment agreement with an employee who is pregnant or has a child less than three years old unless such employee has conducted financial or serious negligence or the employer is liquidated.