In Uzbekistan, there is growing concern among entrepreneurs about the current procedure for calculating compensation for delayed payment of wages. Representatives of the private sector, especially small and medium-sized businesses, call for a review of the norms laid down in article 333 of the Labor Code, citing their destructive impact on the economic stability of companies.
The problem lies in the formula used to calculate compensation: employers are required to pay employees 10% of the current refinancing rate of the Central Bank for each day of delay. At an annual rate of 14%, this means accrual of 1.4% daily — or more than 42% of the amount owed in just one month.
In practice, such a load becomes unbearable. Thus, Nargiza Ulugova, co-founder of the bakery chain TESTO, noted that even short-term interruptions caused by external circumstances can lead to a financial crisis: “If we delay wages due to power outages or street closures, the law requires payments comparable to half the annual rate.”
Other participants of the open dialogue organized by the Chamber of Commerce and Industry also proposed to adjust the formula for calculating compensation — in particular, based on the annual rate divided by 365 days with the exception of weekends. Their goal is to minimize risks for bona fide employers and reduce the likelihood of bankruptcy amid temporary disruptions.
Particularly acute consequences have already been recorded in the manufacturing sector. Head of the Karbonat Company Farrukh Sadikkhodjayev said that the company producing lime in the Jizzakh region was in crisis after the gas shutdown in December 2023. The delay in wages for only one month led to a class action from 170 employees, and the calculation of compensation under the current norm amounted to 8 billion soums — with a wage fund of 800 million. "This is the equivalent of 511% per annum," he emphasizes.
Similar difficulties were registered at other enterprises in the region, including four textile factories. Attempts to appeal to state bodies, including the Presidential Administration, have not yet yielded tangible results. At the same time, the position of the Ministry of Employment, according to which the daily calculation of interest is applied, is based on a letter from the Deputy Minister sent to the Supreme Court.
Davron Vakhabov, Chairman of the Chamber of Commerce and Industry, expressed support for the initiative to review the legislation, noting the need for an open dialogue between the state and business. According to him, the current norm ignores the real conditions in which entrepreneurs work: "If due to force majeure, the employer cannot provide work, it is necessary to reconsider the approach”"
Chairman of the Trade and Service Association Zafar Hashimov also joined the discussion. He called the current wording “inadequate”, pointing out the imbalance between protecting the interests of employees and the sustainability of the business. Khashimov suggested intensifying cooperation with the deputies ' corps in order to achieve amendments to the Labor Code.
Amid discussions at the Chamber of Commerce and Industry, the creation of an expert council on tax disputes has already been announced. It will include specialists in taxation, economics, law and financial regulation, which should strengthen the professional approach to reforming the business environment in the country.
The situation with compensation for delayed wages is one of the clearest examples of how the ill-considered application of financial sanctions can undermine the sustainability of entire industries. At a time when the Uzbek economy is actively liberalizing and opening up for investment, a review of the mechanisms of responsibility becomes a necessary condition for maintaining a balance between the rights of employees and the opportunities of employers.
