What Severance Pay Rules Must Employers Follow in Armenia?

Which Employees Qualify for Severance Pay?

• Employees dismissed due to staff redundancy or organizational changes initiated by your company.
• Employees terminated because of the employer’s liquidation or cessation of activities.
• Employees released due to health reasons or inability to perform the job, where reassignment is not possible.
• Employees whose employment ends because they are called up for compulsory military or alternative service.
• Employees who refuse to continue work after significant changes in working conditions initiated by the employer.
• Employees terminated on other grounds where the Labour Code expressly provides for a severance payment.

What Are the Legal Timelines for Paying Severance?

In Armenia, you must usually pay all final amounts, including any severance, on the employee’s last working day or no later than the final settlement date specified in the Labour Code. In practice, employers aim to complete payment on the termination date to avoid disputes and inspections. If calculating average earnings takes extra time, you should still settle within a few days and document the calculation basis clearly. Any delay can trigger employee complaints to the Health and Labour Inspection Body and increase the risk of penalties. Always confirm timing in the signed termination order and provide the employee with a written breakdown of all sums paid.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company fails to pay severance correctly in Armenia, you risk administrative fines, back payments, and potential litigation. The Health and Labour Inspection Body can audit your records, and courts may order you to compensate employees for unpaid amounts and related damages.

• Fines may be imposed for each violation of labour legislation, including non-payment or underpayment of severance.
• You can be ordered to pay the full outstanding severance plus interest or monetary compensation for delay.
• Employees may bring claims to court, increasing legal costs and management time.
• Repeated or serious breaches can trigger more frequent inspections by the Health and Labour Inspection Body.
• Non-compliance can damage your employer brand and make future hiring in Armenia more difficult.

Does Outsourcing Employment via an EOR Change Severance Liability?

Using an Employer of Record (EOR) such as https://www.playroll.com/employer-of-record does not remove the need to follow Armenia’s severance rules. In a compliant EOR setup, the EOR is the legal employer in Armenia and is responsible for calculating and paying severance under the Labour Code. However, your company usually bears the commercial and financial risk under the service agreement with the EOR. If you instruct an unlawful or non-compliant termination, you may still face reputational damage and indirect liability. Clear contracts, approval workflows, and documented termination decisions are essential to keep both you and the EOR aligned with Armenian law.

Be 100 Percent Compliant in Offering Severance with Playroll

Managing severance in Armenia means tracking legal grounds for termination, length of service, and the correct average salary formula for each employee. Your company also needs consistent documentation: employment contracts, internal policies, termination orders, and written notices that match the Labour Code requirements. Without a structured process, it is easy to misclassify a termination or underpay severance, which can quickly escalate into disputes.

With Playroll, your team gets local employment expertise built into every step of the offboarding process. We help you confirm whether severance is due, calculate the right amount, and schedule payments within Armenian timelines. Our platform centralizes contracts, approvals, and payroll data so you can show clear evidence of compliance if authorities or employees ever challenge a termination.