Employee Benefits and Compensation in Afghanistan: A Comprehensive Guide

What are Employee Benefits? 

When employers provide some perks and benefits to their employees through salary or wages, it is known as employee benefits. An employee benefits package includes life insurance, health insurance plans, retirement benefits, profit benefits, and everything that provides financial and social security to an employee. In short, any form of indirect payment from the employer that is voluntary or mandatory can be called employee benefits. 

If you have decided to start a business in Afghanistan, you need the necessary talents to grow your business. You can provide some employee benefits in Afghanistan to ensure employees stick with your business. This not only allows better functioning of the organization but also acts as a motivation to the employees. 

The unprecedented growth of the Afghanistan economy from a GDP of USD 2.2 billion to USD 21.8 billion is enough for investors to choose this place for conducting business. Besides, the availability of skilled talents and government resources for startups make it a suitable location for business. However, knowing about the employee compensation and benefits policy of Afghanistan helps in acquiring talent. So, here is a detailed guide on employee compensation and benefits in Afghanistan.  

Compensation Laws in Afghanistan 

The different compensation laws levied on employee benefits in Afghanistan are listed below: 

• The Afgan Labour Law points out the dos and don’ts of workers. It explains the employees’ rights, privileges, obligations, and social needs. 
• Article 8 of the Labour Law highlights the right to work against wages. Employees are entitled to work against wages based on the quality and quantity of work they provide to an Islamic organization. 
• Article 9 states the rules of non-discrimination on recruitment in Afghanistan. Every employee, irrespective of caste, class, creed, or sex, should get all the benefits of an employee. 

How to Design an Employee Benefits Program for Employees in Afghanistan?

Different countries have different employment benefits programs. However, the basic structure remains the same. To develop a compensation structure in Afghanistan, here are the steps to follow: 

Step 1: Identifying the objectives, benefits, and budget 

• Identifying the business objectives and goals helps select and design the benefits plan. 
• Consider necessary factors like employer location, size, and industry to achieve strategic goals. 
• Create a rough benefits plan that can be altered at an interval of every two years according to changes in the business industry. 
• Discussing a budget after analyzing the cost of the annual benefits helps avoid cost constraints. 

Step 2: Conducting a need assessment 

• Need assessment is vital as it pays attention to the employees’ needs. 
• Analyze the competitor’s benefits plan to develop something better than them. 
• Conduct market research to understand the kind of benefits you need to offer. 
• Look into the workforce demographics to determine the needs of the employees of various categories. 

Step 3: Formulating an employee benefits plan

• After analyzing the gaps, formulate a new employee benefits plan with the help of all the data and resources collected in the need assessment process. 
• Consider the cost of the new employee benefits plan and see if the company is stable enough to finance it. 
• Evaluate the administration cost along with the cost of containment features. 

Step 4: Discussing the benefits plan with the employees 

• Communication is important if you want your employees to be loyal to you. 
• Discuss with your employees all the new additions to the benefits plan and how they would help them. 
• Ask for suggestions from the employees. 

Step 5: Develop an evaluation process 

• Keep reviewing the benefits plan periodically to check if they meet the employees’ needs. 
• Make the necessary changes in the benefits plan as and when required.  

Types of Guaranteed Benefits in Afghanistan

Regardless of the type of business entity, every employee is entitled to compensation and benefits policy in Afghanistan. Here is a list of workers’ compensation in Afghanistan: 

Minimum wage 

• The minimum wage for government workers is 5,000 Afghani per month. 
• There is no minimum wage for people working in the private sector in Afghanistan.

Probation period

• Employers must stay within the probation period of two weeks.  

Annual leave

• The leave benefits in Afghanistan include 20 days. 
• These 20 days are considered recreational leaves. 
• Employees can get ten days of paid essential leaves. 

Holiday entitlement 

• The holiday entitlement discusses the leave benefits in Afghanistan that employees can enjoy. 
• On these days, employers must give their employees leaves – liberation day, Nowruz, the first day of Ramadan, labor day, Eid-ul-fitr, day of Arafat, mujahideen victory day, Ashura, afghan independence day, and the Prophet’s birthday. 

Injury and illness of employees 

• As medical benefits for employees in Afghanistan, every employee gets 20 days of paid sick leave along with the required allowances. 
• Three days of sick leave is granted on written notice.

Maternity and paternity rights 

• Employees of Afghanistan do not receive any paternity leave. 
• For female employees in Afghanistan, the Labor Law provides 90 days of paid maternity benefits in Afghanistan. 
• Female employees get one month’s leave before the delivery and the remaining after the delivery. 

Working hours

• In Afghanistan, the working days start on Sunday and end on Thursday. 
• Generally, the working time ranges from 7.30 am to 4.30 pm.
• According to Labor Laws, every employee can work 40 hours weekly. 

Employee overtime 

• The overtime for work should not be more than four hours. 
• Employees get an hourly payment for overtime. 
• Overtime on weekdays leads to 25% more, while that on weekends means 50% more levied on the hourly charges. 

Social insurance program 

• For employee benefits insurance in Afghanistan, employees get a social insurance program. 
• This insurance program covers contributory pension, health insurance, unemployment insurance, and provident funds.

Employee Benefits for Expatriates 

Afghanistan is a secure country where the government strives to enhance its economy by giving opportunities to investors to establish their businesses here. Skilled and talented professionals can get their visas to relocate and start working in Afghanistan. 

To offer the employees more security, the government here has made it a rule to provide employee compensation and benefits in Afghanistan for the betterment of both employees and employers. Right from leave benefits in Afghanistan to sick leave, holidays, proper working hours, and rightful wages, the Afghan Labor Law includes everything for expatriates. Besides, for the benefit of female workers, maternity benefits in Afghanistan make it easier for them to maintain a work-life balance. 

How are Employee Benefits Taxed in Afghanistan?

Along with the compensation and benefits in Afghanistan, it is vital to focus on how these employee benefits in Afghanistan are taxed. All employees, both residents and non-residents, should pay income tax. For the residents of Afghanistan, this tax will be levied on the overall Afghan earning. On the other hand, for non-residents, the tax will be generated only on Afghan revenue. Employees have to pay an income tax of 20% in Afghan currency. 

Restrictions for Afghanistan Benefits and Compensation 

According to Afghan Labor Law, no employee should be imposed with compulsory work. While recruiting a person or paying salary and allowances, no employer should discriminate regarding race, class, caste, creed, or sex. 

Every employer is responsible for processing the employees’ payments at the right time. In case of any delay, employers should inform employees about it prior. Before preparing the employee benefits plan, every employer should ensure an operation business with zero legal troubles. Above all, the employers of all Islamic organizations in Afghanistan are bound to follow Afghan Labor Laws. 

Supplemental Benefits for Employees in Afghanistan

Along with compensation and benefits in Afghanistan, here are some supplemental benefits that function as an added advantage for employees. These supplemental benefits include: 

13/14th month pay 

Employees in Afghanistan are entitled to receive the 13/14th-month pay. Although there are no statutory rules in Afghanistan about this, some organizations pay the 13th-month salary to their employees. 

Besides, as per the Labor Code, employers pay employees in advance in case of recreational leave. Again, according to Article 44 of the Labor Code, if the employer fails to provide leave on a public holiday to meet professional demands, the employee will have to pay an extra half of the employee’s wage and monthly salary. This would be considered an overtime wage. 

How Multiplier Can Help with Benefits Management in Afghanistan

To set up a business overseas and hire the required talents, it is necessary to comply with local rules and regulations. To determine the employee benefits that stay ahead of competitors, attract skilled talents, and be at par with the market challenges, Multiplier is here to help you. 

The team of professionals at Multiplier takes responsibility for hiring global talents for your firm. Our team members do not have to set up a subsidiary to handle the workforce. Instead, they are efficient and responsive enough to carry out the task independently. Contact Multiplier today for hiring talents all over the globe.