Mandatory Social Insurance for Employees Against Accidents in the Republic of Kazakhstan in 2024

It is a mistake to think that an accident that occurs to an employee while performing their duties only harms that specialist. In fact, it is a serious blow to the business: any incident is thoroughly investigated, and if the employer is found to be at fault, they face hefty fines and prolonged court proceedings. Mandatory insurance of organization employees against accidents can protect the entrepreneur from such problems.

Why is Insurance Necessary?

Mandatory insurance of employees by the employer has been practiced in the Republic of Kazakhstan (RK) since 2005. According to the law, organizations employing hired specialists must enter into an agreement with an insurance company. This document guarantees that in the event of force majeure, the expenses of the injured employee will be reimbursed. This includes not only injuries resulting from accidents but also occupational diseases developed due to harmful working conditions, poisoning, etc.

The insurance is valid for 12 months and is renewed annually. Early termination of the policy is only possible in two situations:

1. if the enterprise is liquidated;
2. if the insurer has already settled with the injured party for a specific insurance case.

The insurance amount (the payout received by the injured party) depends on the annual payroll fund. It is easy to calculate: the salaries of all employees for the year are summed up. The insurance amount cannot be less than the resulting figure.

For example, if an organization employs 10 specialists, each earning 100,000 tenge per month, the total annual salary payouts amount to 12 million tenge. Therefore, the insurance amount can be 12 million tenge or higher. If salary amounts change, the insurance amount is recalculated.

Which Companies Need Employee Accident Insurance?

In Kazakhstan in 2024, employee insurance is mandatory, meaning it applies to any business with hired personnel. Therefore, insurance is relevant for both large companies and limited liability partnerships (LLP) and individual entrepreneurs (IE). However, the specifics of insuring LLP and IE employees should be considered in more detail:

• An LLP is a legal entity. There are LLPs where only one person works – the director. Since they are an employee of the LLP, insurance is mandatory.
• If an IE does not hire specialists, they do not need to insure anyone. However, if they hire staff, they must enter into an insurance agreement.

Moreover, insurance is required even if the enterprise does not generate income, except when activities are officially suspended.

When Should Employees Be Insured?

According to the law on mandatory employee insurance, the entrepreneur has until the 10th of the month following the month of business registration to arrange insurance. For example, if you registered as an IE on September 15, you must insure your staff by October 10.

What if an employee quits or a new one is hired? The entrepreneur has 10 days to inform the insurer in both cases.

Where and How to Arrange Insurance?

Employee insurance in RK in 2024 starts with submitting an application to enter into an insurance contract. This can be done in two ways:

• Through the Egov.kz portal after online business registration.
• In person at an insurance company. Note that only a licensed insurer can provide employee insurance.

•In person at an insurance company. Note that only a licensed insurer can provide employee insurance.

How to Calculate the Insurance Premium?

First, let's understand what an insurance premium is. This is the payment an entrepreneur makes to the insurer when arranging insurance. To calculate the premium, the annual payroll fund is multiplied by the insurance rate.

The employer can calculate the payroll fund independently, while the rate is set by the insurer. Two criteria are considered: the type of business activity (NACE) and the professional risk class.

Additionally, some insurers also consider the accident statistics at the organization. If there were no force majeure events over a specific period (usually a year), the employer might get a discount. If there were incidents, the rate would increase. Companies engaged in heavy physical labor or those involving health or life hazards (mining, construction, toxic substance production, firefighting, etc.) should expect higher rates.

The minimum premium equals 1 MCI, which is 85,000 tenge in 2024. In other words, the insurance premium cannot be less than 85,000 tenge.

How Much Money Does an Employee Receive in Case of an Insurance Event?

In case of an insurance event, the injured employee receives compensation, but there are nuances:

1. The insurer pays the compensation if the damage degree is between 30% and 100%. If the damage is less than 30%, the employer covers the costs.
2. If the injured party is unable to work for an extended period, they receive monthly payments.

The compensation amount depends on the employee's average monthly salary but cannot exceed 10 MCIs, i.e., 850,000 tenge.

If an accident results in death, the insurer pays the burial organizer 369,200 tenge (equal to 100 MRPs). If burial expenses exceed this amount, the employer covers the difference.

To receive compensation, the employer must submit a written application to the insurer. However, it is important to remember that insurance in Kazakhstan in 2024 allows the insurer to refuse payments in certain cases:

• The damage was intentional.
• The employee was injured while performing duties not assigned to them.
• The accident resulted from external factors such as military actions, strikes, nuclear explosions, etc.

If the insurer refuses to pay, the employer receives a letter stating the reason.

How to Act in Case of an Insurance Event?

Suppose an accident occurs at the workplace, and your specialist is injured. In such a situation, mandatory employee insurance in Kazakhstan provides the following steps:

1. Inform the insurer about the incident within three business days.
2. Conduct an investigation to determine the circumstances of the incident. The investigation is carried out jointly with the insurer and authorized bodies (e.g., the fire department).
3. Provide the insurer with the necessary documents and the contact information of the injured employee.
4. Conclude an annuity contract for the injured party or the person who will receive compensation in case of death. This contract ensures that the insurer makes monthly payments to the employee in case of disability.

What Happens if You Don't Arrange Insurance?

As mentioned, all employers must insure their employees. The penalty for failing to do so is significant:

• Small businesses face a fine of 160 MRPs, which is 590,720 tenge. The same penalty applies to notaries and NGOs.
• Medium-sized businesses face a fine of 400 MRPs, totaling 1,476,800 tenge.
• Large businesses face a fine of 1,000 MRPs, amounting to 3,692,000 tenge.

For entrepreneurs who recognize their mistake, there are concessions. If the fine is paid within seven days, a 50% discount is possible, provided three criteria are met:

1. The entrepreneur acknowledges the violation.
2. They are willing to pay the fine at a 50% rate.
3. They do not contest the evidence of their violation.

Running a business requires substantial investments, so it is not surprising that entrepreneurs try to cut costs, often by skipping insurance. However, the insurance cost is much lower than the hefty fines, making it unwise to skimp on it. Moreover, insurance shows care for employees, which can become a competitive advantage for your business.


This article has been translated from its original language using neural network-based translation technology.