Definitive Guide to Hiring in Ukraine

Hiring in Ukraine

Hiring employees compliantly in Ukraine means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Ukraine so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Ukraine; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Ukraine

Employee Probation Period

• The employer can set a probationary period in the employment contract of up to 3 months.

Annual Leave in Ukraine

• Employees in Ukraine are entitled to a minimum of 24 days off per year.
• Employees over 55, disabled employees and caretakers are entitled to an additional 3 days off.

Holidays in Ukraine

Maternity Leave Ukraine

• Female employees are entitled to 70 days of maternity leave prior to the expected delivery date and 56 (sometimes 70) days after delivery.
• A woman is also entitled to partially paid leave until the child reaches 3 years of age.

Paternity Leave Ukraine

• There is no statutory paternity leave.

Working Hours in Ukraine

• The standard work week in Ukraine consists of up to 8 hours per day, 40 hours per week.

Overtime in Ukraine

• Overtime work must not exceed 4 hours in 2 consecutive days and 120 hours per year.
• Overtime must be compensated for generally at 200% of hourly rate for each hour of overtim

Termination of Employment in Ukraine

• Notice periods vary depending on the reason for termination.
• No notice period applies if parties agree on consensual termination.
• The general notice period for termination of a permanent employment agreement by an employee is two weeks (except where there is a justifiable reason for earlier termination).
• The notice periods for termination on the initiative of an employer are:
  • For economic or organizational reasons (changes in organization of production and labor, including liquidation, reorganization, bankruptcy, or restructuring of the entity and staff redundancy): two months.
  • For termination due to an unsatisfactory probation period: three days.
  • All other cases: on completion of the relevant procedures for termination.
• Depending on the reason for termination, employees may have the right to a statutory severance payment.
• If an employee terminates an employment contract for violation of labor laws or the employment agreement by the employer, he or she has a right to a severance payment of three average salaries (calculated as the average of all labor-related payments for the previous two months of employment).
• Employees can also receive a severance payment in the amount of one average salary in case of redundancy, dismissal due to unsuitable competence and qualification, and certain other cases.
• Terminating the employment of corporate officers’ triggers payment of six months of average salary.

Notice Period in Ukraine

• Notice periods vary depending on the reason for termination.
• No notice period applies if parties agree on consensual termination.
• The general notice period for termination of a permanent employment agreement by an employee is two weeks (except where there is a justifiable reason for earlier termination).
• The notice periods for termination on the initiative of an employer are:
  • For economic or organizational reasons (changes in organization of production and labor, including liquidation, reorganization, bankruptcy, or restructuring of the entity and staff redundancy): two months.
  • For termination due to an unsatisfactory probation period: three days.
  • All other cases: on completion of the relevant procedures for termination.

Severance in Ukraine

• Depending on the reason for termination, employees may have the right to a statutory severance payment.
• If an employee terminates an employment contract for violation of labor laws or the employment agreement by the employer, he or she has a right to a severance payment of three average salaries (calculated as the average of all labor-related payments for the previous two months of employment).
• Employees can also receive a severance payment in the amount of one average salary in case of redundancy, dismissal due to unsuitable competence and qualification, and certain other cases.
• Terminating the employment of corporate officers’ triggers payment of six months of average salary.

Ukraine Salary and Wages

13th / 14th Month Salary in Ukraine

• No
• There is no statutory requirement to pay the 13th or the 14th month salary.
• Employees are entitled to 24 days of holiday pay.
• There is no evidence that bonuses are common.
• However, Employees are entitled to unpaid annual leave for personal reasons such as honeymoon.

• Locally paid salaries are subject to the unified social tax, borne by the employer at a flat rate of 22%.
• The taxable base subject to the USC is capped per individual per month. Starting from 2018, the cap is set at 15 times the minimum wage set for the respective month (e.g. UAH 100,500 starting from October 2022).
• The minimum USC contribution is 22% of the minimum wage set as of the first day of the month of the salary payment (e.g. UAH 6,700 starting from October 2022).

Immigration Ukraine

Work Permit

• To work in Ukraine (either based on a direct employment agreement or being assigned based on an agreement between a Ukrainian and a foreign legal entity), a foreign national must have a work permit.
• No comprehensive quota system exists in Ukraine with respect to the issuance of residence and work permits to most foreign nationals.
• Obtaining a work permit is a rather burdensome and time-consuming procedure.
• The State Employment Center of the Ministry of Social Policy issues work permits, which are usually valid for a period of up to one year and may be extended for the same period.
• The employer of a foreign national must apply for a work permit with the local employment center and submit the following documents:
  • An application
  • Copies of passport pages bearing personal data
  • One color matte photograph of 3.5 cm by 4.5 cm
  • Copy of the draft employment agreement between the Ukrainian legal entity and the foreign national
• All documents issued in foreign countries and in foreign languages must be legalized, apostilled or notarized, depending on the country of issuance, before their translation into Ukrainian.
• In addition, the procedure for obtaining a work permit varies depending on the category of the employee.
• The rules make a clear distinction between the lists of documents needed to obtain work permits for direct employees, secondees and intracorporate transferees (a specific category of secondees).
• No special treatment is given to EU nationals.
• The application procedure is the same for all foreign nationals.
• The work permit application process may take up to two months.
• A foreign national’s work permit becomes invalid if the individual changes employers.
• A work permit is a basis for issuing a Long-term Visa D (a special type of entry visa, which may be obtained for the purpose of engaging in employment in Ukraine).
• This type of visa is a multientry visa (which is issued for a purpose of obtaining a temporary residence permit in Ukraine; a foreign individual is allowed to stay in Ukraine up to 90 days for obtaining his or her temporary residence permit).
• To commute freely to and from Ukraine, a temporary residence permit must be obtained.

Value Added Tax (VAT) in Ukraine

• As of 30 June 2022, there are four VAT rates: 20%, 7%, 14% and 0%.
• The rate of 14% applies on transactions for the import and supply of certain agricultural products (products of plant origin such as corn, soybeans, sunflower seeds and certain other goods) in Ukraine.
• The reduced rate of 7% applies to supply and import of registered medicines and specific medical goods, as well as medicines, medical goods, and medical equipment allowed to be used in clinical trials.
• The 0% VAT rate applies to the export of goods and some other specific transactions.

Mandatory Benefits in Ukraine

• These are mandatory benefits as postulated by law
• These include probationary period, annual leave, public holidays, sick leave, maternity leave, overtime pay, and severance pay
• Statutory benefits also include social security benefits

Payroll Accrual in Ukraine

Country Accruals Additional Information

Description

Social security contribution is 22% and is paid by the employer, while the employee pays 0.6% into a state fund for unemployment benefit. Ukrainian law provides maternity leave for pregnant employees/employees who have given birth, of 126 calendar days (or 140 calendar days for multiple births or in case of a complicated confinement). Maternity leave is fully paid (100% of an employee's average salary) from the Social Security Fund of Ukraine.

Payroll Accruals Additional Information

Accrued Benefits in Ukraine

Why use Global Expansion to hire in Ukraine

Establishing a branch office or subsidiary in Ukraine can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Ukraine labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Ukraine law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Ukraine. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Ukraine Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.