Employing in Ukraine
Home to seven world heritage sites, the chicken Kiev and the third-busiest McDonald’s in the world (yes, really), Ukraine lies in the heart of Europe — there’s even an obelisk to mark the spot!
The country is the second largest in Eastern Europe after Russia and is bordered by the former-Soviet superpower as well as Poland, Slovakia, Hungary, Moldova, Romania and Belarus. Thanks to its strategic positioning and good connections, Ukraine is the ideal location for international companies looking to do business in the Slavic nations.
Despite a turbulent political and economic past, Ukraine’s progressive approach to Europe, current political situation and implementation of important reforms have created new opportunities for doing business in the country.
And now, thanks to investment and an influx of people seeking to live and work in the country, Ukraine’s economy and population are growing.
Today, there are numerous advantages of setting up a business there, including low competition levels, minimal taxation rates, easy reporting and the huge potential of human resources.
An employer of record, sometimes known as an international PEO can help you quickly hire and onboard workers in Ukraine – often with just two weeks’ notice. Establishing your own local entity without risk and saving costs, this type of service makes an EOR in Ukraine worth checking out!
An Overview of Employing in Ukraine
In Ukraine, salaries must be paid at least twice per month (once every 16 calendar days) on dates stipulated in the employment contract or agreement.
Common practice is to pay workers on either:
• The 15th day and last day of the month or
• The 22nd day of the month and 7th day of the next month
If a payment date coincides with a non-working day, wages should be paid the day before.
Wages are subject to indexation and a monthly minimum wage can be subject to change on a nearly monthly basis.
There are no restrictions or guidelines related to bonuses for private-sector employees.
Ukraine offers a public healthcare system to all Ukrainian nationals. Basic treatments are covered as part of the national healthcare; however, additional fees may be added for certain medical treatment. Private healthcare options are available and may be offered to an employee as part of an additional contractual allowance or benefit.
Employers make monthly social security contributions to the state at a percentage of the employee’s gross salary. This covers pension, healthcare, sickness, maternity leave, unemployment and workplace accidents. Employers will then be reimbursed for certain statutory benefits such as sick leave and maternity pay.
Monthly social contributions (USC) are made by the employer each month at a rate of 22% of an employee’s monthly salary. The USC maximum threshold is capped at 15 minimum statutory salaries. Personal income tax (PIT) is withheld by the employer from an employee’s salary. Employers are obligated to submit PIT reports on a quarterly basis to the State Authorities of Ukraine.
A contract must be executed in its original written form. The contract may be executed in dual-language form, provided that one of the languages is Ukrainian.
The employer must register the employee with the tax office before the start date. Foreign nationals must apply for a long-term visa, which is valid for 90 days; this then enables them to register for a temporary residence permit.
Contracts may only be terminated in accordance with the procedures stipulated in Ukrainian labour law.
In the case of dismissal, an employee is entitled to monetary compensation for any unused annual leave.
The following employees are protected from dismissal initiated by the employer:
- Pregnant women
- Mothers with children under three
- Single mothers with children under 14
- Mothers of children with disabilities
Working hours mustn’t exceed 40 hours per week, and hours must be recorded. Employees are entitled to a five-day working week with two days off.
Employees are entitled to a rest break after a period of four hours’ work. Rest breaks are not considered in the working hours and should not exceed two hours.
Overtime work is restricted by legislation and is permitted only in exceptional cases. Ukrainian labour law states that overtime must not exceed four hours within two consecutive working days or 120 hours per annum. Any additional hours’ work should be compensated at double rates.
Vacation allowance should be paid at least three days before the annual leave is taken.
An employer can award a maximum of 15 days unpaid leave per year for family circumstances. The number of days should be agreed by the employer.
Holiday & Leave
All employees are entitled to statutory paid vacation of 24 days, once they’ve been employed for a continuous period of six months. Pro-rata leave is calculated at a rate of two days of vacation per month worked. Annual leave must be agreed between the employer and employee. The division of annual leave may be requested by the employee, provided that the main part is a minimum of 14 continuous days.
All unused annual leave may be carried forward by a maximum of 12 months from the end of the working year in which the leave was accrued.
If a public holiday coincides with a day off, the holiday rolls forward to the next working day (or where necessary, an employee can instead opt for double remuneration). The day before a national holiday is generally one hour shorter.
Public Holidays 2022
Please note: Employees practising other (non-orthodox) religions registered in Ukraine are entitled to up to three days off each year to celebrate major holidays.
Employees are entitled to five days sickness leave paid at their regular salary by the employer. From the sixth day of leave, compensation is paid by the social security fund. Employees may receive a sick leave allowance of between 50% — 100% of their average wage, dependent on the length of their employment record.
All employees must provide a medical certificate as evidence of sick leave. For minor illnesses, 14 days is considered the maximum time for sick leave. In the case of long-term, more complex illnesses or employees requiring surgery, a period of four months may be negotiated.
|Number of years in employment||Sick leave allowance (%)|
|Less than three years||50%|
|Three to five years||60%|
|Five to eight years||70%|
|More than eight years||100%|
Maternity & Paternity
Female employees are entitled to 126 days of paid maternity leave (140 days for multiple births). This is subsidised by the social security fund and should be paid at 100% of the employee’s average salary.
Partners are entitled to 14 days of unpaid paternity leave following the birth of their child.
Ukrainian law entitles parents adopting a newborn baby to 56 days of leave following the birth of the child. This is awarded to one parent only.
A relation of a child is entitled to unpaid leave to take care of a child following maternity leave until the child reaches three years of age. Parental leave can be shared and is transferrable. These rights are available to:
- The child’s mother or father
- Any relative or guardian who cares for the child
- Adoptive parents or step-parents
Employees are entitled to three days of statutory sick leave allowance per instance of illness to take care of a family member. This is paid for by the social security fund for the first three days. Following this, employees may request up to 30 days of unpaid leave per instance of illness.
Keen to engage an EOR in Ukraine?
At TopSource Worldwide, we work with local experts to help you navigate the various admin and cost obstacles you may come across along your expansion journey
To find out how we can help your business with our employment solutions, contact us today.