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Employer of Record (EOR) in Ukraine

Employer of Record in Ukraine

Ukraine is known for its stringent labor laws that come with many complexities, causing much confusion for foreign employers. When considering Ukraine as part of your future growth plans, consider hiring an Employer of Record in Ukraine.

Skuad's Ukraine EOR solutions are tailor-made for your expansion needs. Skuad takes care of all the administrative, payroll, hiring, onboarding, and other employment procedures so that you can kick start your business goals as planned and achieve them without any delays. To know more about Skuad solutions, talk to us today!

Ukraine at a Glance

Estimated Population: 44.39 million (2019)
Currency: Ukrainian Hryvnia (UAH)
Capital: Kyiv
Languages used: Ukrainian and Russian
GDP: 153.8 billion USD (2019)

Employment in Ukraine

Process delays may hinder your expansion journey into Ukraine until you choose to work with a dynamic EOR Ukraine solution. Skuad is just what you need. It lives up to your expectations and goes the extra mile to make your expansion journey swift and smooth.

What You Must Know Before Employing in Ukraine

As per the Ukrainian employment laws, every Ukrainian employee needs to possess a labor book, a synopsis of the employee's employment history. The first Employer issues the book, and new employers need to update the same mandatorily. The book consists of heads like the start of employment, termination, professional development, workplace changes, and more.

For all workers in Ukraine, including local and foreign employees, the Ukraine labor laws govern the terms of employment, and all disputes are subject to Ukrainian jurisdiction. The Ukrainian law is the same for both national and foreign workforce, unless:

  • The applicable law is subject to international treaties.
  • Foreign employers had assigned them to work in Ukraine.
  • The employees work at a foreign diplomatic mission or Embassy.
Entitlements Explanation

Statutory Working Hours

40 hours per week; 5 days a week

Statutory Employment Rights of workers

  • Employment agreements do not have a limited period.

  • Due to Data Protection and Privacy Laws, only limited background checks can be conducted, and such verifications can be carried out only with the subject's consent.

  • Third-party background checks can happen only with the consent of the applicant.

Categories of Worker

Ukrainian law does not differentiate between workers. All employees are allowed to work as per an employment agreement. The employment laws govern employees, while civil laws govern self-employed and contractual workers.

Changing of employment terms and conditions
  • Employers can change certain vital conditions, for example, work schedule and salary.

  • Changes must be informed to concerned employees in writing, at least two months before the change. Consent of the employee is not required.

National Minimum Wages
  • The Minimum Wage in Ukraine has been set at UAH6,000 every month.

  • On an hourly basis, it is UAH36.11

Bonus
  • There are no guidelines on bonuses in Ukraine. For public sector employees, there are specific capped amounts.

Working Hours
  • The maximum permissible number of working hours, per week, in Ukraine is 40 hours.

  • For workers in the age group of 16 to 18 years, the working hours are 36 hours, and students in the age group of 14 to 15 years can work for 24 hours weekly when working during their vacations.

Working week
  • The law has laid down six days working with one day off.

Overtime
  • Only in exceptional cases, the use of overtime is allowed as per the law.

  • In the case of overtime, it should not go beyond 120 hours yearly for every employee.

  • Pay for overtime is double the hourly wage.

Shift workers
  • For shift workers, the work duration can only be up to 12 hours daily.

  • Employees cannot work successive shifts.

Leaves

Annual Leave: The minimum annual leave is 24 calendar days for regular employees on payroll and 31 calendar days for workers under 18.

Additional Paid Holidays: Few categories of workers have been identified who get additional paid holidays. For example, workers working under challenging conditions, workers in special types of production, and mothers with two or more kids under 14.

Sick Leave: Compensation for sick leaves is covered by Ukrainian State Social Security Fund.

Maternity Leave: 70 paid days before birth and 56 days after birth is mandatory. Women employees can take additional unpaid leaves till the child is three years old.

Paternity Leave: Workers can also avail of 14 days of unpaid paternity leaves if their wives are on maternity leave.

Paid Holidays

There are 11 public holidays every year. All of these holidays are paid for. These are:

  • 1 January – New Year’s Day

  • 7 January – Christmas (Julian Calendar)

  • 8 March – International Women's Day

  • 1 May – 2 May – International Workers Day

  • 9 May – Victory Day

  • 28 June – Ukraine Constitution Day

  • 24 August – Ukraine Independence Day

  • Moveable dates - Easter Monday

  • Moveable dates - Pentecost Monday

  • 14 October – Defender of Ukraine Day

  • 25 December – Christmas (Gregorian Calendar)

Employee health benefits in Ukraine

  • The state social security system provides mandatory employee benefits in Ukraine. These benefits cover unemployment, death, pension benefits, disabilities arising from occupational illness or accidents, and these benefits may be long-term or short-term.

  • There are supplementary employee benefits that cover retirement, medical and life insurance, and personal accident insurance.

  • Medical facilities are free in Ukraine, but the medical cover is usually not sufficient to cover all types of medical needs.

  • Private medical care costs a lot of money; hence, voluntary medical insurance covers medical services for employees. The Employer pays the premium of the insurance.

The Code of Laws on Labor of Ukraine

This Labor Code is the principal legislative Act, but not the sole act that applies to all kinds of enterprises, Ukrainian and foreign. As per Article 3 of the Labor Code, the employer-employee relationship in enterprises with foreign investment on Ukrainian soil is governed by this Code. It oversees organizations irrespective of ownership pattern, industry accessory, type of activity, etc. Thus, it is mandatory to follow the Code's provisions.

Article 23 of the Labor Code

Mentions employment agreements and their limited scope in detail.

Article 21 of the Labor Code

Mentions in detail about the rights and obligations of different parties for determining the employment contract terms, including duration of the contract, remuneration, and the termination grounds.

Article 36 to 49 of the Labor Code

These articles mention termination-related processes. The most frequent reasons for termination are staff reductions, unsuitability of the employee for the assigned job, etc. Please see the Termination section for more details on the notice period and other factors leading to termination.

Contractors Vs. Full-time Employees

In Ukraine, there are two types of acceptable employments:

  • Employees
  • Self-employed

Contractors are defined as solo or private entrepreneurs who work on a schedule and are responsible for their taxation and accounting. On the other hand, employees are employed by a company through an employment contract in Ukraine or an employment agreement in Ukraine.

The Employer handles the taxes and the accounting-related aspects in the case of employees and the social security contributions. Employees and their employment terms fall under the purview of employment laws in Ukraine. In case of worker misclassification, employers are liable to be fined and penalized as per the employment contract law in Ukraine.

As per the laws in Ukraine, the two forms of employment include:

  • Either a labor agreement or a labor contract
  • A civil contract for contractors.

Understanding the entire landscape of employment terms and contractual terms in Ukraine can be complex. With the help of Skuad's dynamic EOR services, you can circumvent all of that and get started with your business in Ukraine. Talk to a Skuad expert to know more details.

Hiring in Ukraine

Foreign companies can hire international personnel and local workforce with the help of a Ukrainian subsidiary or their representative office in Ukraine. Since similar labor laws apply to foreigners and locals, both types of employees enjoy the benefits and protections.

Some of the resources you can use to employ local employees in Ukraine include work.ua, glassdoor.com, jooble.com.ua, jobs.ua, rabota.ria.ua, Career Jet, and Learn 4 Good.

To hire employees in Ukraine, you need to begin the hiring process by creating job descriptions and then using the potential of leading hiring companies in Ukraine to shortlist candidates. The shortlisted candidates can be emailed, virtual interviews held, and the final candidates get selected for the job. The onboarding process needs to start with the offer of the employment contract or agreement and the terms of employment negotiated with the candidate.

By working with an Employer of Record in Ukraine like Skuad, you can be assured that the EOR completes every last aspect of hiring and onboarding employees. From searching for suitable talent to drawing the labor contracts and working out employee health benefits in Ukraine, our robust solution helps your expansion plans comprehensively. To know more about Skuad’s features and value-added services, get in touch with us today.

Probation and Termination

Probation

A duration of three months is fixed for newly-hired employees as a standard probation period in Ukraine. As per Ukrainian Labor laws, the probationary period in Ukraine cannot be more than three consecutive months. In some cases, the probation can be for six months, only after the Primary Trade Union Organization agrees to the same.

Termination of employment in Ukraine

Termination is permitted in Ukraine under the following conditions:

  • In a fixed-term agreement, the end of the term is specified in the contract.

  • A two-week notice for voluntary termination.

  • Violation of labor agreement or the law, or the internal regulations of the company.

  • Staff reduction

  • Liquidation.

In the last two cases, staff reduction and liquidation, the notice period from the Employer's end has to be two months. In case of voluntary termination, the employee needs to give a two-week notice to the Employer.

EOR Solution

Employer of Record in Ukraine is a solution that entails minimum stress and hassle from your end. Skuad is a crucial player in the Employer of Record EOR niche in Ukraine.

One of the biggest Skuad as an EOR solution provider is the cost-effective solution that keeps the business costs low and empowers your business with a unique competitive advantage.

Skuad is one of the prominent employers of record companies in Ukraine. It handholds the business/firm to hire the best local talent in Ukraine, take care of the HR admin jobs at the backend, onboard the employees, and ensure compliance with the Ukrainian Labor Laws. On a month-on-month basis, it takes care of the employee payroll and salaries, taxes, and benefits, all using one centralized solution.

Skuad's efficient employer of record services specializes in understanding client requirements and offering custom-made EOR solutions that suit business objections and expansion goals.

Our self-service platform can become your stepping stone to success in no time by ensuring top-notch services that include data compliance, 24x7 support, industry-best hire-to-retire services, and more. Keen to know more? Speak to us today.

Types Of Visas In Ukraine

Employing Foreigners

Employing foreigners to work for your company in Ukraine entails applying for a Ukraine work visa. However, the following categories of foreign workers do not require a work visa in Ukraine:

  • Refugees

  • Foreigners with immigration permits.

  • Foreigners with a permanent residence permit.

  • Foreign maritime fleet and airline representatives in Ukraine.

  • Foreigners who require temporary protection in Ukraine.

  • There are no minimum share capital requirements.

  • The company must submit proof that it can bear the wages, tax, and social security contributions.

  1. Sportspeople, artists

  2. Foreign media employees

  3. Clergypersons in Ukraine

  4. Teachers or people from the scientific community teaching at higher education institutes.

  5. Employers are working at foreign representatives' offices.

Ukraine Work Visa Requirements

  • Employers need to apply for work visas for their employees.

  • Documents required include passport copy, employment contract copy, passport-size photo, proof of being the Employer

  • Higher education document copies

  • An application

Types of Work Visas

  1. Transit (B Type) – is issued when foreigners travel through Ukraine and the transit period is not more than five days.

  2. Short-term (C Type) – is issued to foreigners when they intend to stay between 90 days to 180 days in Ukraine.

  3. Long-Term (D Type) – is issued to foreigners when they apply for the temporary residence permit and have plans to stay in Ukraine for more than 90 days.

Work Permits

Besides understanding the different types of work permits in Ukraine, it’s essential to understand that the Employer has to apply for a work permit. The other challenge is that there is no online filing system for Ukrainian work permits for foreigners – it means that a company’s representative needs to physically visit the State Employment Service of Ukraine and submit the work permit application and the documents.

The work permit is issued for the term mentioned in the employment contract and can be renewed multiple times. It usually takes seven days for the application to get processed. Once approved, the bank details are sent to you for payment of the work permit fee. Your employee needs to carry a certified copy of the work permit when traveling to Ukraine. Remember, it is not possible to apply for a Ukraine work permit without a job offer.

Speak to Skuad experts to understand better about work visas and permits in Ukraine.

Payroll & Taxes in Ukraine

  • The Ukraine Employer payroll taxes include contributions up to 22% of the employee's salary to the Unified Social Tax. This segment covers different benefits and social security extended to the employee. The employee needs to pay about 0.6% as an unemployment benefit.

Ukraine Payroll Tax Rate

Income Tax is 18%

borne by the employee

Corporate Tax is 18%

borne by the Employer

Military Tax 1.5%

borne by the employee

VAT is 20%

borne by the Employer

The tax reporting year is the same as the financial year. The corporate tax returns need to be submitted every quarter.

By choosing to go ahead with an EOR, payroll outsourcing in Ukraine is handled by experts at Skuad, helping you to remain focused on your expansion plans. To know more, speak to our experts today.

Incorporation

Setting up a business in Ukraine can be challenging because of bureaucratic problems and frequent changes in labor-related legislation. That is why it is good to use the services of well-versed local regulations and resources to enable easy workflow in Ukraine.

Since it is a growing economy, there are a lot of business opportunities in Ukraine. One way to expand your business is by incorporating a holding company in Ukraine. The limited liability company or TOV model is the most common model used to establish a company in Ukraine.

Incorporating a company in Ukraine

The process entails:

  • Registration with the trade register

  • Preparing the company charter

  • Submitting all details of the beneficiary owners.

  • Opening of a permanent bank account in Ukraine.

  • Registration with state tax authority for obtaining VAT. Alternatively, the company can register with the district tax office.

  • There are no minimum share capital requirements.

  • The company must submit proof that it can bear the wages, tax, and social security contributions.

Connect with Skuad experts to learn more about incorporation in Ukraine.

Professional Employer Organization (PEO)

PEOs and EORs have similar profiles, and it is pretty easy to confuse one from the other. However, there are quite a few differences between the two entities and how they operate.

A professional employer organization in Ukraine works as a co-employer with you in control of the entire hiring, onboarding, and termination process. It means that you need to have trained people with the know-how of local regulations to oversee the functioning of PEOs.

EORs work independently – they understand your requirements and hire people on their payroll to work for your organization. A single-point billing with the EOR takes care of your responsibilities – the rest, including paying salaries to employees, taxation and returns, social benefit contributions, etc., is the responsibility of the Employer of Record in Ukraine.

Skuad's proven excellence as a Professional Employer Organization (PEO) and EOR help support your organizational growth.

Conclusion

Hiring a remote team in Ukraine can meaningfully contribute to the success of your business. Hence, you need to make the decisions that help strengthen your company and its expansion plans. Managing the expansion, on the one hand, and the local workforce and ensuring compliance with Ukrainian labor laws, on the other, can be cumbersome and time-consuming. That's where Skuad's EOR and PEO solutions can play an active role in supporting your business growth, through and through.

To learn more about Skuad's solutions, please get in touch with us today.

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