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Unemployment insurance benefit: calculation, assignment, payment procedures
Unemployment insurance benefit: calculation, assignment, payment procedures
The purpose of unemployment insurance is to ensure the strengthening of social protection of the population in the Republic of Azerbaijan through the creation of relations and new financing mechanisms based on risk transfer in the labor market, the compensation of lost wages of insured persons, and the implementation of preventive measures to avoid the emergence of unemployment.
Who is eligible to receive this insurance payment, and under what conditions? How is the unemployment insurance benefit calculated?
Expert Nusrat Khalilov explains.
Unemployment insurance is a form of guarantee aimed at compensating for the lost wages of insured persons in cases provided for by the Law on Unemployment Insurance.
The control over the calculation and payment of unemployment insurance contributions, collection of arrears, calculation of interest for late payments, and refund of overpaid contributions is carried out in accordance with the procedures established for taxes in the Tax Code of the Republic of Azerbaijan.
According to the law, the insurance contribution rates for unemployment insurance are set as follows:
0.5% of the payroll fund paid by the employer;
0.5% of the employee’s salary paid by the insured person.
The insurance contributions calculated for each month are paid in full by the employer to the insurer at the same time as salary payments, but no later than the 15th day of the following month.
The calculation of the insurance period is carried out as follows:
The Law on Unemployment Insurance came into force on January 1, 2018. Before that, unemployment benefits were regulated by the Law on Employment.
Under the new legislation, the insurance period is calculated as follows:
the period for which mandatory state social insurance contributions were paid for the insured person before the law came into force;
the period for which unemployment insurance contributions were paid after the law came into force.
Types of Insurance Payments
According to Article 12 of the Law on Unemployment Insurance, three types of insurance payments are defined:
Basic insurance payment;
Additional insurance payment;
Minimum insurance payment.
According to Article 13 of the same law, persons whose employment contracts have been terminated on the following grounds and who are registered as unemployed are entitled to receive unemployment insurance payments:
when a state body or legal entity is liquidated (Article 70(a));
when the number of employees or staff positions is reduced (Article 70(b));
when the term of the employment contract expires (Article 68.2(b)).
The assignment of insurance payments is carried out through the centralized electronic information system of the relevant executive authority.
Procedure for Assigning Insurance Payments
In cases where an employment contract is terminated under Articles 70(a) and 70(b) of the Labor Code, individuals capable of work who have more than 12 calendar months of insurance experience during the 24 calendar months preceding the occurrence of the insured event are entitled to an insurance payment amounting to 50% of their lost average monthly salary, regardless of the total length of their insurance period.
Example 1: An employee working as a specialist in a bank since 01.01.2024 was dismissed on 18.02.2025 due to staff reduction under Article 70(b) of the Labor Code.
The employee’s salary was 1,000 manats and had no prior work experience before 01.01.2024.
Since the insurance period before unemployment exceeds 12 calendar months (13.5 months), after registration as unemployed in accordance with the Law on Employment, the employee will receive 50% of the lost wage, i.e., 500 manats.
1,000 × 50% = 500 manats.
In cases where an employment contract is terminated under Articles 70(a) and 70(b) of the Labor Code, and the employee’s insurance period is less than 12 months but at least 1 year within the last 24 months, a minimum monthly wage is paid as an insurance benefit.
Example 2: “A” Bank cannot continue its operations due to devaluation.
The employment contract of an employee working as a specialist since 01.01.2014 was terminated on 01.08.2014 under Article 70(a) (liquidation of the legal entity).
The employee’s salary was 1,590 manats, and they had 6 months of prior experience elsewhere before 2014.
Thus, during the 24 months preceding unemployment, the employee has a total insurance period of 1 year and 2 months.
Therefore, the person will receive the minimum monthly wage as the insurance payment.
Additional Insurance Payment
If an employee with dependents under the age of 18 (or students and pupils enrolled full-time until graduation but under 23 years old) is dismissed under Articles 70(a) or 70(b), they are entitled to an additional payment to the basic insurance benefit.
The amount of this addition is 5% per child, but not exceeding 20% in total.
If both spouses receive unemployment insurance, only one of them is entitled to the additional payment.
Example 3: The employee mentioned in Example 1 has two children under 18.
Their insurance payment will be as follows:
Basic: 1,000 × 50% = 500 manats
Addition: 500 × 10% (5% × 2) = 50 manats
Total payment: 500 + 50 = 550 manats
Example 4: If the same employee has five children under 18, the additional payment will be 20%, not 25%, because the maximum limit established by law is 20%.
Fixed-Term Employment Contracts
If an employment contract is terminated under Article 68.2(b) of the Labor Code (expiration of contract), employees with at least 30 months of insurance experience during the last 36 consecutive months are entitled to an insurance benefit equal to the minimum monthly wage.
According to the Law of the Republic of Azerbaijan dated December 24, 2021, amendments were made to the Law on Unemployment Insurance.
As a result, the required insurance period for employees dismissed due to the expiration of fixed-term contracts was reduced from 36 months to 30 months, and the three-month waiting period after registration as unemployed was abolished.
Example 5: An employee who worked as a specialist in a bank since 01.02.2017 had their contract expire on 30.04.2021, terminated under Article 68.2(b).
Since their insurance period during the last 36 months exceeds 30 months, they are entitled to an insurance payment equal to the minimum monthly wage.
Reapplication and Duration of Payments
A person who was not provided with suitable employment under the Law on Employment within 24 months after the first assignment of an insurance payment has the right to reapply once and receive the minimum insurance payment again.
However, persons specified in Article 13.2.3 of the Law on Unemployment Insurance cannot receive repeated payments.
Except for those dismissed under Article 68.2(b), unemployed individuals who are not provided with suitable employment within 24 months after the initial assignment may also reapply to receive a minimum insurance payment, which is paid for 3 months.
The duration of the insurance payment is:
6 months — for dismissals under Articles 70(a) and 70(b);
3 months — for dismissals under Article 68.2(b);
3 months — for repeated applications.
For a single individual, the total duration of insurance payments within 24 months cannot exceed 9 months.
Conditions for Reassignment
If a person who previously received an insurance payment is dismissed again under Articles 70(a) or 70(b), a new payment may be assigned only if they have at least 12 months of insurance experience since the previous payment.
If dismissal occurred due to expiration of the employment contract (Article 68.2(b)), at least 30 months of insurance experience is required.
Before December 24, 2021, this period was 36 months.
It should be noted that the insurance period refers to:
the period during which mandatory state social insurance contributions were paid before January 1, 2018;
and the period during which unemployment insurance contributions were paid after January 1, 2018.
The purpose of unemployment insurance is to ensure the strengthening of social protection of the population in the Republic of Azerbaijan through the creation of relations and new financing mechanisms based on risk transfer in the labor market, the compensation of lost wages of insured persons, and the implementation of preventive measures to avoid the emergence of unemployment.
Who is eligible to receive this insurance payment, and under what conditions? How is the unemployment insurance benefit calculated?
Expert Nusrat Khalilov explains.
Unemployment insurance is a form of guarantee aimed at compensating for the lost wages of insured persons in cases provided for by the Law on Unemployment Insurance.
The control over the calculation and payment of unemployment insurance contributions, collection of arrears, calculation of interest for late payments, and refund of overpaid contributions is carried out in accordance with the procedures established for taxes in the Tax Code of the Republic of Azerbaijan.
According to the law, the insurance contribution rates for unemployment insurance are set as follows:
0.5% of the payroll fund paid by the employer;
0.5% of the employee’s salary paid by the insured person.
The insurance contributions calculated for each month are paid in full by the employer to the insurer at the same time as salary payments, but no later than the 15th day of the following month.
The calculation of the insurance period is carried out as follows:
The Law on Unemployment Insurance came into force on January 1, 2018. Before that, unemployment benefits were regulated by the Law on Employment.
Under the new legislation, the insurance period is calculated as follows:
the period for which mandatory state social insurance contributions were paid for the insured person before the law came into force;
the period for which unemployment insurance contributions were paid after the law came into force.
Types of Insurance Payments
According to Article 12 of the Law on Unemployment Insurance, three types of insurance payments are defined:
Basic insurance payment;
Additional insurance payment;
Minimum insurance payment.
According to Article 13 of the same law, persons whose employment contracts have been terminated on the following grounds and who are registered as unemployed are entitled to receive unemployment insurance payments:
when a state body or legal entity is liquidated (Article 70(a));
when the number of employees or staff positions is reduced (Article 70(b));
when the term of the employment contract expires (Article 68.2(b)).
The assignment of insurance payments is carried out through the centralized electronic information system of the relevant executive authority.
Procedure for Assigning Insurance Payments
In cases where an employment contract is terminated under Articles 70(a) and 70(b) of the Labor Code, individuals capable of work who have more than 12 calendar months of insurance experience during the 24 calendar months preceding the occurrence of the insured event are entitled to an insurance payment amounting to 50% of their lost average monthly salary, regardless of the total length of their insurance period.
Example 1: An employee working as a specialist in a bank since 01.01.2024 was dismissed on 18.02.2025 due to staff reduction under Article 70(b) of the Labor Code.
The employee’s salary was 1,000 manats and had no prior work experience before 01.01.2024.
Since the insurance period before unemployment exceeds 12 calendar months (13.5 months), after registration as unemployed in accordance with the Law on Employment, the employee will receive 50% of the lost wage, i.e., 500 manats.
1,000 × 50% = 500 manats.
In cases where an employment contract is terminated under Articles 70(a) and 70(b) of the Labor Code, and the employee’s insurance period is less than 12 months but at least 1 year within the last 24 months, a minimum monthly wage is paid as an insurance benefit.
Example 2: “A” Bank cannot continue its operations due to devaluation.
The employment contract of an employee working as a specialist since 01.01.2014 was terminated on 01.08.2014 under Article 70(a) (liquidation of the legal entity).
The employee’s salary was 1,590 manats, and they had 6 months of prior experience elsewhere before 2014.
Thus, during the 24 months preceding unemployment, the employee has a total insurance period of 1 year and 2 months.
Therefore, the person will receive the minimum monthly wage as the insurance payment.
Additional Insurance Payment
If an employee with dependents under the age of 18 (or students and pupils enrolled full-time until graduation but under 23 years old) is dismissed under Articles 70(a) or 70(b), they are entitled to an additional payment to the basic insurance benefit.
The amount of this addition is 5% per child, but not exceeding 20% in total.
If both spouses receive unemployment insurance, only one of them is entitled to the additional payment.
Example 3: The employee mentioned in Example 1 has two children under 18.
Their insurance payment will be as follows:
Basic: 1,000 × 50% = 500 manats
Addition: 500 × 10% (5% × 2) = 50 manats
Total payment: 500 + 50 = 550 manats
Example 4: If the same employee has five children under 18, the additional payment will be 20%, not 25%, because the maximum limit established by law is 20%.
Fixed-Term Employment Contracts
If an employment contract is terminated under Article 68.2(b) of the Labor Code (expiration of contract), employees with at least 30 months of insurance experience during the last 36 consecutive months are entitled to an insurance benefit equal to the minimum monthly wage.
According to the Law of the Republic of Azerbaijan dated December 24, 2021, amendments were made to the Law on Unemployment Insurance.
As a result, the required insurance period for employees dismissed due to the expiration of fixed-term contracts was reduced from 36 months to 30 months, and the three-month waiting period after registration as unemployed was abolished.
Example 5: An employee who worked as a specialist in a bank since 01.02.2017 had their contract expire on 30.04.2021, terminated under Article 68.2(b).
Since their insurance period during the last 36 months exceeds 30 months, they are entitled to an insurance payment equal to the minimum monthly wage.
Reapplication and Duration of Payments
A person who was not provided with suitable employment under the Law on Employment within 24 months after the first assignment of an insurance payment has the right to reapply once and receive the minimum insurance payment again.
However, persons specified in Article 13.2.3 of the Law on Unemployment Insurance cannot receive repeated payments.
Except for those dismissed under Article 68.2(b), unemployed individuals who are not provided with suitable employment within 24 months after the initial assignment may also reapply to receive a minimum insurance payment, which is paid for 3 months.
The duration of the insurance payment is:
6 months — for dismissals under Articles 70(a) and 70(b);
3 months — for dismissals under Article 68.2(b);
3 months — for repeated applications.
For a single individual, the total duration of insurance payments within 24 months cannot exceed 9 months.
Conditions for Reassignment
If a person who previously received an insurance payment is dismissed again under Articles 70(a) or 70(b), a new payment may be assigned only if they have at least 12 months of insurance experience since the previous payment.
If dismissal occurred due to expiration of the employment contract (Article 68.2(b)), at least 30 months of insurance experience is required.
Before December 24, 2021, this period was 36 months.
It should be noted that the insurance period refers to:
the period during which mandatory state social insurance contributions were paid before January 1, 2018;
and the period during which unemployment insurance contributions were paid after January 1, 2018.