In April 2021, the Supreme Court of Kazakhstan made an important decision that affects employers. It ruled that an employer is not entitled to terminate a labor agreement upon mutual consent with payment of the compensation provided in the labor agreement, after this provision was removed from the Labor Code in May 2020, even if such an agreement was made during the validity period of Article 50.3.

According to the Supreme Court, the current Labor Code does not provide such a basis for termination, and the termination condition under Article 50.3 in current labor agreements worsens the position of employees in comparison with the current legislation.

This position differs from the position of the Ministry of Labour and Social Protection, which previously clarified that the termination of a labor agreement in this way (if this agreement was made during the validity period of Article 50.3) does not contradict the legislation after the exclusion of this provision.

We believe that employers should be aware of the Supreme Court’s position on this issue and take into account the risks when terminating existing labor agreements upon mutual consent with a compensation payment, i.e. under the previously existing basis of Article 50.3 of the Labor Code.