Georgia Payroll and Benefits Guide

What global businesses need to know about payroll in Georgia

If we asked you to pick the easiest country in Eastern Europe to do business in (according to the World Bank), it’s unlikely that you would have picked Georgia. But this former Soviet state of around 3.7 million people ranks second only to Denmark among all European countries, and seventh in the world, in between the United States and the United Kingdom.

Reading this guide will give you a pretty good idea as to why that is: Georgia’s approach to payroll and employment regulations is exceptionally straightforward. It’s simple and fast to get a business set up there and there’s much to enjoy for foreign businesses, whether it’s a highly varied economy, low wages by European standards, or a GDP that’s octupled in size since the turn of the millennium.

Whether you’re looking at services and tourism, or core industries like steel, machinery and energy, this guide can give you a solid foundation from which to plan your expansion into the Georgian marketplace.

Getting Started

Starting a limited-liability company in Georgia does not require the owner to be a Georgian resident, and neither does it come with any minimum share capital requirement. 

Business owners must begin with the National Agency of the Public Registry, where they must submit either a Shareholders’ Agreement or a Charter, complete with Articles of Association and Bylaws. All documents must be translated into Georgian and legalized to be valid. Companies will also need to register with the Revenue Service to receive their official tax information, and you may also need to apply for a business license.

Most companies will need an in-country bank account from which to pay their employees and relevant taxes. Because corporate bank accounts may take several in-person meetings to set up, many companies opt for an international bank that has branches in both Georgia and the company’s country of origin. 

Employment Considerations

Written contracts are required in Georgia and should specify the full terms and conditions of work. Contracts should also outline the employee’s liability in relation to their duties. Collective bargaining is legal in Georgia, though most employees negotiate the specifics of their employment per individual contract.

While Georgia runs a standard working week of 40 hours, spread over five days, normal working days will generally start and finish later than they would in western Europe. Working weeks in certain sectors can be increased to 48 hours. Overtime is limited to two hours per day and four hours per week; it should be paid at 125% of salary, or alternatively through time off in lieu.

Notice periods are 30 days, although employees still on probation aren’t entitled to any notice period. Probationary periods can run for a maximum of six months, and the exact length should be specified in the employment contract.

Compensation, Bonuses & Severance

There is no fixed minimum wage in Georgian law, which means that wages are determined by contractual agreement or collective bargaining. As of late 2023, the average full-time Georgian wage was around GEL 1850 per month (approx. £550, $695, €640).

Discretionary bonuses can be paid in Georgia, while it’s also common for employees and collective bargaining to negotiate Christmas bonuses. However, there is no legal requirement to pay a 13th-month bonus.

Severance pay is normally between one and two months’ salary, and should be paid in full within 30 days of the decision to terminate.

Tax and Social Security

Georgia has one of the simplest approaches to tax that you’ll find anywhere in the world. Income tax is levied at a flat rate of 20%, with no exempt bracket or personal allowance. 

Corporation tax is 15% (20% in the finance sector), while VAT is 18%. The only social security contribution is pension, into which employers and employees pay 2% each.

Holidays and Leave

The standard paid leave entitlement in Georgia is 24 working days each year, which can be increased to 34 for some employees in hazardous roles. Employees who clock up 11 months of continuous service can also take 15 days’ vacation leave, although this is unpaid. If taking paid leave would be considered detrimental to the business, and with the agreement of the employee in question, entitlement can be carried over for as much as two years. Georgia has 17 days of public holidays each year.

Maternity leave runs for 18 weeks and is paid by social security at full salary, up to a maximum of GEL 2000 per month (approx. £595, $750, €695). As of 2023, mothers are also now entitled to a one-off state payment of GEL 1000 (approx. £300, $375, €350) for every newborn they have, from their third child onwards.

Paternity leave is rolled into wider parental leave. This can run for as much as 604 days, and can be shared between the two parents, although only the first 57 days of this is paid by social security.

Sick pay is covered by employers at full salary for a maximum of 60 days in any six-month period, or a maximum of 40 consecutive days. Medical certification should be provided from day one.

In Summary

The great thing about Georgia is that it likes to keep things simple, whether it’s business registration, tax and social security, or the lack of a fixed minimum wage rate that keeps going up year-on-year. However, that doesn’t mean that you shouldn’t be vigilant to any changes in payroll or employment legislation in the future. Working with a global payroll partner can ensure that you avoid any nasty surprises, and make the most of your Georgian expansion with the confidence of full compliance.

This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.

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