How to Hire and Pay Employees in Mongolia: A Step-by-Step Guide for Global Employers

Mongolia might not be the first place you think of when expanding your team. But it’s a hidden gem—tucked between global powerhouses, full of untapped talent, and poised for growth. Hiring there could be your smartest move yet.

That said, figuring out how to legally hire and pay someone in Mongolia is not exactly plug-and-play. Labor laws, payroll systems, tax codes—it’s a lot to unpack. And getting it wrong isn’t an option.

That’s where this guide comes in. We’ll walk you through what it really takes to hire in Mongolia, without the red tape headaches.

Navigating Mongolia’s hiring landscape as a foreign employer

If you’re a non-local company looking to hire in Mongolia, your first step is understanding what’s legally required. The good news is that you’ve got really great options. The key is figuring out which one fits your goals and your timeline.

Understanding local employment laws and essential requirements

Mongolia’s Labor Law sets the tone for how you hire. Here’s what you need to know right out of the gate:

• Employment contracts in Mongolia can be oral, but we highly recommend that you put them in writing and in Mongolian. They need to include job title, wage, responsibilities, leave, and probation terms (up to three months).
• The minimum wage is currently MNT 420,000 per month (US$145). This can change, so stay updated.
• Working hours are capped at 40 per week. Overtime is allowed but must be paid at 1.5 times the regular hourly wage. Employees are limited to working no more than four hours of overtime per day and 120 hours of overtime annually.

Public holidays are non-negotiable. If your employee works on one, they’re owed extra pay or time off.

Hiring model options: Local entity, Employer of Record (EOR), or contractor engagement

You’ve got three ways to hire someone in Mongolia:

1. Set up a local entity. This is where you set up a legal entity in Mongolia. While it offers you complete control, it comes with setup time, paperwork, ongoing admin, and significant resources.
2. Use an Employer of Record (EOR). This is your shortcut. An EOR legally employs your team in Mongolia and handles everything from payroll to compliance. You manage the work—they manage the rules.
3. Hire contractors. Okay for short-term work, but risky. If the contractor looks like an employee under Mongolian law, you could be on the hook for back taxes and benefits.

Initial onboarding: Documents, registrations, and local must-dos

Once you’ve picked your path, it’s time to onboard. That means:

• Registering employees for tax and social insurance
• Getting work permits for any foreign nationals
• Ensuring everyone’s set up with the General Department of Social Insurance

To get a broader view of practical global hiring practices, check out International Hiring 101: Best Practices for Globally Expanding Companies on Velocity Global’s blog.

Compliance-driven employment contracts and payroll setup

You’ve found the right hire. Now you need to keep it legal, and that starts with your contract and payroll setup.

What goes in a Mongolian employment agreement

Every employment contract in Mongolia needs to include:

• Job description and duties
• Duration (fixed or open-ended)
• Salary terms
• Probation period (up to three months)
• Annual leave (minimum of 15 working days)
• Termination notice (usually 30 days)

Contracts must be written in Mongolian and filed with the local labor office within 10 days.

Payroll: How it works and what to watch

• Employees are paid monthly, typically on the last working day
• Personal income tax is 10% (flat rate)
• Social insurance is 12.5% from the employer, 10.5% from the employee
• Payroll records must be kept for five years

Paying employees in Mongolia: What to expect

Getting people paid correctly and on time is where everything comes together. Here’s how to handle it.

Local pay norms: What’s standard

• Wages must be paid in Mongolian Tugrik (MNT) unless you’ve got government approval.
• Bank transfers are the norm. To do that, you’ll need complete documentation on file: tax ID, social insurance number, and a signed contract.
• Payroll filings must go to the Tax Department and Social Insurance Office each month.

Paying foreign employees: What changes

• You’ll need work permits approved by immigration.
• Cross-border payments (like paying to a foreign bank account) require clearance from the Bank of Mongolia.
• If someone works in Mongolia more than 183 days in a year, they’re considered a tax resident and must pay local income tax.

Tips and resources for a smooth hiring experience

Here’s how to simplify the process:

• Start your paperwork early because it takes time to process tax IDs and insurance.
• Bookmark the Ministry of Labor for law updates.
• Build onboarding checklists to track contracts, ID numbers, and filings.
• Work with experts on local norms, especially if you’re hiring remote or foreign nationals.

Why EORs make hiring in Mongolia easier

If you don’t want to set up a company in Mongolia or wait months to start hiring, your best bet is an employer of record.

An EOR acts as the legal employer on paper, while you manage the work. They:

• Handle employment contracts
• Run compliant local payroll
• File taxes and social contributions
• Get work permits when needed

Partnering with an EOR like Pebl also helps you navigate local labor law compliance.

Pebl’s EOR services are built for speed and compliance. That means you can hire in Mongolia without the setup delay and avoid expensive compliance mistakes. And everything is centralized on one user-friendly platform.

Hiring in Mongolia doesn’t have to be hard

You don’t need to be a legal expert to build a team in Mongolia—you just need a straightforward process.

Get your hiring structure right. Choose the setup that fits your goals. And if you want to move fast without missing a legal step, an EOR can do the heavy lifting for you—faster than you’d ever imagine.

Mongolia’s talent pool is growing. Now’s the time to tap into it.

How Pebl can help

Pebl helps you go global without the guesswork. Our EOR services in Mongolia handle hiring, payroll, and compliance without requiring an entity. And if Mongolia is just one of several countries in your expansion plan, you’re in luck. We offer these same services in 185+ other countries.

You stay focused on growing your business. We’ll handle the legal side, from contracts to tax filings to social insurance. Fast, simple, and always compliant.

Ready to build your Mongolia team? Let’s talk.

This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided “as is,” and no representations are made that the content is error-free.

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