What to Consider When Entering into an Employment Agreement (Part 2)



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This week we continue the topic of issues the employer and employee should consider when concluding an employment agreement. The first post reviewing these issues can be found here.

Part-time employment agreement

Pursuant to Labor Law (Law) part-time employee means an employee who works less hours than a full-time employee. Law specifies that reducing work hours of a full-time employee in accordance with the law is not considered as working part-time. Employer may hire an employee to work part-time work and pay him/her a salary commensurate with the work performed and hours worked.

Employment agreement for employees working from home

Upon agreement employee may choose to work from home or any other place or location of his/her choice that is other than employer’s, using employer’s or own equipment and materials, under the supervision of employer. In this case employer is responsible for inspecting the safety of equipment and other tools used by employee working from home and providing safety instructions.

Chapter 6 of Law does not apply to employees working from home. Meaning that general provisions and regulations regarding work hours, rest hours, leaves and holidays does not apply to employees working from home.

Remote employee employment agreement

Upon agreement employer may allow employee to perform his/her duties remotely online, either permanently or partially.

In addition to specifying main conditions of the agreement provided by Law, remote employee employment agreement must specify place or location where employee shall perform his/her duties, term/deadlines and form of handing over the work performed, and amount of compensation payable by employer in the event of use of employee’s own assets and equipment to perform duties.

Unless otherwise provided by Law, part-time employee, employee working from home or remote employee has the same rights and obligations as a full-time, permanent employee of the employer or other employees performing similar duties, and is subject to provisions and regulations of labor laws, collective agreements, collective bargaining agreements and internal labor regulations.

When concluding any type of mentioned employment agreements main conditions provided by Law must be specified in employment agreement, which are name of the job or position, duties to be performed specified in the job description, place or location of the job, amount of salary and work conditions.

What to Consider when Entering into an Employment Agreement (Part 1)



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Let’s look into what should both employer and employee consider when concluding an employment agreement.

Pursuant to Labor Law, depending on legal status of employer, there are employment agreement with individual-employer and employment agreement employer, which is legal entity. About regulation of employment agreement with individual-employer is briefly discussed in previous article.

Aside from common employment agreement, where employer is a legal entity and where it is concluded for permanent positions, Labor Law (Law) distinguishes seven other types of employment agreement.

Apprenticeship employment agreement

In order to provide an employee with work experience and skills employer may conclude an apprenticeship employment agreement. Term of regular apprenticeship employment agreement is up to three months with possibility of extending once for no more than three months. However, term for professional apprenticeship employment depending on characteristics of the profession and professional experience and skills to be acquired may be up to two years with possibility of extending once for no more than one year. Salary of an apprentice must be determined by agreement based on his/her duties, work experience and skills, and must not be less than 70% of the salary of a full-time permanent employee performing similar work.

Employment agreement for trainees

An employer, student and educational institution may conclude a tripartite traineeship agreement in order to provide vocational education and training to students of vocational educational institutions, combine theoretical knowledge with practical experience, gain work experience and skills. Term of employment agreement for trainees is up to three years, depending on the profession to be acquired. Salary of a trainee must be negotiated but not less than minimum wage, taking into consideration the ratio of study and working time, the quality and volume of work performed, as well as financial aid received from the educational institution.

Pursuant to Law at the end of agreement term employer is not obliged to hire apprentice or trainee on permanent basis, unless otherwise agreed by parties. Other provisions and regulations of Law, including provisions and regulations regarding employee allowances, surcharges and compensations also equally apply to apprentices and trainees.

Probationary employment agreement

When hiring an employee, employer may conclude probationary employment agreement to ensure that the employee meets the requirements of the job or position. Term of probationary employment agreement is up to three months with possibility of extending once for no more than three months. Salary of probationary employee must be not less than salary offered for the job or position. If employee is hired for one-time seasonal work, as replacement of a permanent employee or for temporary job or position to conclude a probationary employment agreement is prohibited.

Types of Employment Under the New Labor Law



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As previously discussed here, the revised Labor Law came into force on January 1st of this year. Many of our clients have already have updated their employment agreements and internal labor regulations. However, some are still in progress in this matter. In some cases client have asked our Mongolian lawyers what types of employment agreements are permitted under the new Labor Law?

The revised Labor Law (Law) provides for a wider variety of employment agreement types. Even though Law provides general rules and requirements for all types of employment agreements, depending on legal status of employer, occupation characteristics, job description and other factors, the type of employment agreement shall vary.

The Law provides for slightly different regulation for employment agreement between employee and an individual as employer than common employment agreement, where the employer is a legal entity. Pursuant to Law such employment agreement should be concluded between the individual employer and and the worker. This uniquely type of labor arrangement is intended to accommodate a more rural employment environment. Due to the characteristics of rural work, the working schedule and resting hours are more flexible than in a typical employment arrangement. With this type of contract, the parties may agree for the employee to live and work directly in the employer’s residence or other facility, and in this case, the employer is required to provide normal living conditions to employee.

With regards to common employment agreement, Law distinguishes following types of employment agreements: apprenticeship employment agreement, employment agreement for trainees, probationary employment agreement, part-time employment agreement, employment agreement for employees working from home, remote employee employment agreement and employment agreement with special conditions (such as an executive employment agreement). Even though some types of employment agreement may sound to be somewhat similar to each other, they do differ in purpose and regulation. Also, Law separately regulates agreement for supply of labor. However, Law specifies that job placement services are not regulated by this Law, but are regulated by Employment promotion law.

Introduction to Mongolia’s Law on Digital Signatures



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A newly revised Law on Electronic Signatures was adopted in December 2021 and will come into force on May 1st, 2022.

The Revised Law distinguishes between electronic signatures and digital signatures. The Law provides that an electronic signature shall be used for electronic information that has been converted from paper form to electronic form by means of an information system, or created, sent, received, stored or accessed in an electronic environment (except for those classified as state secrets).

Generally digital signature is characterized by a unique feature that is in digital form like fingerprint that is embedded in a document. The Law provides that digital signature is a form of an electronic signature, and is an information that is encrypted and converted into digital signature by using private key and can be verified and validated by using a public key. With regards to legal entities, pursuant to the Law legal entities shall use digital seals, which must meet the requirements for digital signatures. The authorized representative of legal entity shall be the holder of the digital seal. The signer shall be required to have a certificate so that he/she can be linked to the document (information). Digital signature shall be as valid as the written signature on paper document.

Along with the certificate the signer shall be required to have a digital signature tool used to create the digital signature and retain private key. The Law specifically provides that for Mongolian citizens their ID cards shall be one of types of digital signature tools, that is information on citizen’s digital signature, certificate and private key shall be placed in the memory chip of ID card. The Law does not set a legal limit on the types of digital signature tools, but a list of eligible tools shall be issued by the Ministry of Electronic Development and Communications.

In accordance with the Law now not only Mongolian citizens and legal entities, but also foreign citizens and stateless persons shall be able to use digital signatures. Also, now a digital signature certificate issued by foreign authority may be used in the same way as Mongolian certificate provided that conditions set forth in the Law are met and in accordance with procedures set forth in the Law. Meaning that digital signatures authorized by foreign certification authorities may be used, whereas the current law does not allow it.

Furthermore, the Law sets forth more detailed requirements for digital signature certificates, certification authorities, their rights and obligations, rights and obligations of government authorities.

Constitutional Change Improves Environmental Impact Transparency



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The Parliament of Mongolia amended the Constitution of Mongolia on November 14, 2019, according to the second part of Article 6.2 of the Constitution of Mongolia “… By using subsoil resources within the right of citizens to live in a healthy and safe environment have the right to know about the impact on the environment”.

In order to exercise this constitutional right, the Law on Environmental Protection and the Law on Environmental Impact Assessment provide for measures to be taken by citizens to monitor the status of subsoil use, environmental impact, rehabilitation and monitoring by the authorities. The legal regulation of the right to know and the legal regulation of the exercise of constitutional rights are in the process of being approved.

This is very important regulation. There are frequent tripartite disputes between citizens and company using subsoils or project implementer and local authorities such as Governor and Citizens’ Representative Meeting.

Citizens complain that companies using subsoil in local area and project implementers are destroying the environment and failing to rehabilitate it, and demand that action be taken to stop the activity.

The reason for this is that citizens are not given the right to know and the information they want has not been provided. In other words, failure to provide information or access to information on the current status of subsoil use, its impact on the environment, and the process and results of rehabilitation, the lack of access to information has led to a number of negative consequences, such as misinformation and misunderstandings.

On the other hand, due to the failure of the local government to provide the above information to the citizens, the citizens have lost trust in the local governors and the Citizens ‘Representatives’ Meeting and therefore there have been many cases that citizens criticized local government that not protecting their rights and interests instead protecting and serving the interests of the company using subsoil and project implementers.

As a company using subsoil and project implementer, they have spent a certain amount of money and have conducted certain activities, such as employing local people, providing financial support for local development, and conducting regular rehabilitation work. Lack of information or access to information has led to many misunderstandings and conflict among citizens due to a lack of information about their work and investments.

Therefore, it is important to ensure that citizens have access to information and right to know, and that local governments and project implementers are required to report their work and the results of their activities in connection with proving information to citizens.

According to the two laws mentioned above, on the one hand, the law allows a citizen may request information from the aimag, capital city, soum and district governors, project implementer on the condition of natural resource use within the territory, its impact on the environment, rehabilitation process and control measures taken by the state authorities and project implementers.

On the other hand, aimag, capital city, soum and district Citizens ‘Representatives’ Khurals and Governors shall openly inform citizens about the conditions of land use, environmental impact, rehabilitation and control measures within the territory, and provide relevant information upon request, and therefore obliged to report it to the Citizens’ Representatives Meeting.

As a project implementer, they are obliged to provide or provide information on the status of subsoil use, environmental impact, rehabilitation process and results related to its activities at the request of the citizen.

Mongolia’s New Law on Virtual Assets Providers



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In recent years number of companies and organizations have come out and sold various “coins” and tokens. Although virtual asset services have the advantage of using technological advances to increase access to finance at low cost, the process of trading coins and tokens is carried out in very short term and at high prices. As a result, special legal regulations became necessary due to high risk of possible increase of cybercrimes, and as consequence individuals and investors to become victims of cybercrimes, or even unknowingly get involved in money laundering and terrorist financing crimes said lawmakers. Thus, the first draft of Law on Virtual asset service providers was submitted by the Government on May 12, 2021 and the parliament adopted it on December 17, 2021. The law came into force on February 25, 2022.

Pursuant to law public offerings and trading of virtual assets now can be done only through companies registered as virtual asset service providers. Companies that want to provide virtual asset services and that meet requirements set in law and ancillary regulations on combating money laundry, terrorist financing and risk mitigation can be registered with Financial Regulatory Commission (FRC) as virtual asset service providers. Once registered virtual asset service providers shall be obliged to identify its customers, determine the legality of their assets, and inform customers in advance about risks of becoming victims of technical and fraudulent crimes in the process of possessing and trading of virtual assets.

Pursuant to law eight ancillary regulations must be adopted, which are currently being developed by FRC. FRC is currently conducting survey on some of the draft regulations. You can read the draft regulations (only Mongolian versions are provided) (the link http://www.frc.mn/a/3910) and send your proposal by March 27, 2022.

FRC shall not register any company as virtual asset service provider within four months from the date the law came into force. This period is given for FRC to develop and adopt aforementioned ancillary regulations. Companies that provided virtual asset services before the law was adopted shall satisfy all requirements set in law and ancillary regulations within three months after expiration of the four-month period and may be registered with FRC as virtual asset service provider.

The law expressly provides that registration of a company as virtual asset service provider is not considered as guarantee for the virtual asset. The government shall not be responsible for any damages resulting from activities related to virtual asset service, and public offerings and trading of virtual assets through a company not registered as virtual asset service provider is prohibited.

An individual or legal entity that violates the law shall be subject to liability specified in Criminal Code or Law on Infringements. Administrative penalty for violation of law for individuals is fine in the amount equal to from 1 million MNT up to 3 million MNT, for legal entities is fine in the amount equal to from 10 million MNT up to 200 million MNT.

So, it looks like in October virtual asset market will start to be more regulated and well-ordered.

Revised Law on Personal Information Protection for Digital Age



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The parliament adopted a revised Law on Protection of personal information on December 17, 2021, and this law will come into force on May 1, 2022. This law is a revised version of current Law on Individual secrecy, which will be repealed on the date when revised law comes into force.

Current Law on Individual secrecy was adopted in 1995. It has passed over 20 years since then and social relations have changed and evolved a lot. The revised law covers a wider range of personal information than the current law, and regulates protection of personal information rather than “personal secrets”. Law on Protection of personal information covers personal information (such as name, date and place of birth, citizenship, educational background, membership, information on property, etc.) and sensitive information (such as nationality, religion, gender, key to digital signature, criminal and medical records, sexual orientation, correspondence, etc.), which also include genetic and biometric information.

The revised law introduces several novelties. One of them is that any personal and sensitive information must be collected, processed and used with a written consent from owner of the information (either written on paper or electronically), with exception of cases specified in laws. Pursuant to current Law on Individual secrecy only owner of personal information has responsibility to protect his/her own “personal secrets”. When the revised Law on Protection of personal information comes into force the responsibility to protect one’s personal information shall be imposed also on government bodies, individuals, legal entities and organizations without the rights of a legal entity that legally collected, processed and used personal information. Also, lawmakers differentiated criminal liabilities for disclosure of personal information via telecommunications and the Internet, and toughened criminal penalties.

The revised law also regulates matters and restrictions related to installation of cameras, voice recording devices and making of recordings in public places, offices and/or at home, processing and use of such recordings.

Are Uncompleted Buildings Real Estate?



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It is common practice for a real estate developer to take an order or advance payment from customer for an apartment building, obtain an uncompleted building certificate from the state registry, and pledge the certificate to a bank or non-bank financial institution and obtain loan in order to finance the project.

According to the State Registration Agency, as of September 30, 2020, 552 uncompleted buildings in Ulaanbaatar were registered as real estate. Of these, 123 uncompleted buildings are pledged as collateral for loans from banks and financial institutions. In addition, there are 333 people who have not been able to obtain a real estate certificate even though the building has been completed and people has purchased the apartment. Moreover, bribery of the General Authority of State Registration in order to obtain a real estate certificate, as well as the creation of a network of bribes through acquaintances, is due to the regulation of registration of uncompleted buildings as real estate.

Therefore, taking into account the above circumstances, Article 10.10 of the Law on State Registration of Property Rights” amended as “An apartment building will not be registered in the state registry of property rights until it is commissioned/ handed over for permanent use” and the amendment was supported by the relevant standing committee and was recently submitted to the plenary session of the Parliament.

It is an important to change the regulations that corrects the practice of registering uncompleted buildings as real estate which violates citizens’ property rights, and creates new regulations related to the rights of public apartment and surrounding land. In addition, the amendments are based on the need to harmonize the Civil Code and the Land Law, including the need to change and improve the regulation of serious violations of citizens’ property rights related to public housing/apartment.

Amendments to Law on Trademarks and Geographical Indications



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As promised, we will continue to discuss about intellectual property law reform in Mongolia. On May 6, 2021 lawmakers passed amendments to Law on Trademarks and Geographical indications. The revised version of this Law was adopted in 2010, and was previously amended only once in 2015. Since this Law was adopted some trademark-related relations have evolved and several new regulations were implemented. For example, IP office started to take trademark applications online. Due to these circumstances, it became necessary to make relevant amendments to the Law.

Let’s look at key points of new regulations implemented in new amendments to Law:

  1. Terms and definitions are redefined in accordance with international treaties, to which Mongolia is a party (such as TRIPS, the Paris convention, Singapore Treaty on the Law of Trademarks),
  2. New ground for refusal to register a trademark is added: if a mark (trademark) matches the name of a legal entity that is registered in state registration.
  3. In connection with above mentioned regulation, IP office (IP inspectors) is now authorized to access the state registration database for purposes of performing trademark examinations. This authority was not granted under previous regulation. Because of this there were occasions where a name of a legal entity is registered as different entity/person’s trademark.
  4. New stages of trademark examination are implemented. Now after formal examination of an application IP office determines the filing date and publishes bibliographic data of a mark in the official journal. This regulation was not provided previously. After such publication an interested party may submit an opposition to IP office. Meaning that now an interested party may submit an opposition before a trademark is registered (while IP office is performing a trademark examinations) and after a trademark is registered. Whereas under previous regulation, an interested party could submit an opposition only after a trademark is registered.
  5. New ground for cancellation of a trademark is added: if a trademark was not used for 5 years without any good reason.
  6. New regulations are introduced with regards to entity/person who was using in good faith a mark that is similar or identical to a registered trademark for the same goods or services prior to the latter’s priority date.
  7. Now trademark owners and holders of geographical indications are obliged to notify the IP office every time of their name change, address change and transfer of ownership, and apply to make relevant amendments to registration.

Overall same as new Law on Patents, the amendments to Law on Trademarks and Geographical indications have implemented more detailed and new regulations of trademark application filing, formal and substantive examinations, registration and publication of trademarks and geographical indications, and eliminated any existing inconsistencies and overlapped regulations.

Intellectual Property Law Reform in Mongolia



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Over the past decade or so due to rapid development of technologies more new types of works and creations are starting to be protected by intellectual property rights. Hence the relations and transactions related to intellectual property rights are becoming more complex and multifaceted. Naturally, reform of intellectual property legislation becomes necessary. So, new Law on Intellectual property was adopted on January 23, 2020 and came into force on December 1, 2020. Law on Intellectual property establishes general regulations related to intellectual property rights, legal status of intellectual property authorities and institutions. In one of our previous blogs, we have covered highlights of this law. And matters related to specific types of intellectual property are regulated by separate relevant laws.

As part of said reform several key laws were renewed and amended on May 6, 2021, particularly, Law on Patents, Law on Copyrights, and Law on Trademarks and Geographical indications.

Revised version of Law on Patents was adopted and it implements several new significant regulations. Here are highlights of these new regulations:

  • new law provides to grant patents for utility models, whereas previously certificates were granted for utility models;
  • patentability criteria of inventions, utility models and industrial designs are redefined, in the sense that they are more clarified;
  • patent application filing procedures have become more detailed, particularly, formal examination of application is split into two stages: composition check of application documents and examination of application documents;
  • due to the fact that terms in the Patent Cooperation Treaty (PCT), to which Mongolia is a party, are long and the need to bring the law into line with PCT, patent application filing terms and prior art search and substantive examination terms have been extended. Also, other relevant regulations have been brought into line with international treaties, to which Mongolia is a party;
  • regulation of electronic filing of patent applications have been updated, while previous regulations were very vague;
  • more clarified regulation is added concerning third-party observations (third-party objections);
  • regulation on international patent application filing procedures, and licensing agreement regulations have become more detailed.

Overall, the new law has implemented more detailed regulations and precise terms of patent application filing, application examination and patent granting procedures, and has eliminated any previously existing inconsistencies and overlaps of regulations.

In our following blogs we shall discuss about new regulations established in Law on Trademarks and Geographical indications and Law on Copyrights.