Employer of Record in Ukraine

Hiring in Ukraine for the first time can be overwhelming, especially when navigating unfamiliar employment laws. Whether you hire independent contractors, set up a legal entity, or use an EOR service, understanding the local employment landscape is crucial for success. Playroll’s comprehensive guide can help you get started if you're hiring locally or relocating a team member.

Companies can hire employees in Ukraine in the following three ways:

• Setting up a local entity. Entity establishment reduces risk exposure and enables direct hiring, but can be costly and time-consuming – making it less practical for companies seeking quick and flexible solutions for hiring in Ukraine.
• Partnering with an Employer Of Record. An EOR, like Playroll, is a third-party entity that serves as the legal employer of your international workforce which hires, pays, and manages compliance with Ukraine’s labor laws and tax regulations.
• Hiring independent contractors. Hiring contractors gives companies a flexible, affordable alternative to hiring local employees, though it involves unique misclassification risks.

Businesses can only operate smoothly in Ukraine if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Ukraine below, to avoid any compliance issues.

Employment Contract Requirements

When hiring in Ukraine, written employment contracts in Ukrainian are mandatory for both fixed and indefinite terms. The labour law distinguishes between employment agreements, commonly used, and more flexible employment contracts, limited by law. The only formal requirement in employment agreements is specifying probation periods.

Onboarding Process

We can help you get a new employee started in Ukraine quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.

For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Ukraine

In Ukraine, the standard work week consists of 40 hours spread across 5 days. Alternatively, employers have the option to implement a 6-day workweek with a duration of 7 hours per day.

Overtime in Ukraine

Overtime in Ukraine is compensated at 200% of the regular hourly rate for hours beyond the standard 40-hour workweek, with a maximum of 4 hours in two consecutive days and not exceeding 120 hours yearly. Certain groups are restricted from overtime, while consent is required for others, and in specific cases, overtime may be mandatory to address production disruptions.

Probation Period in Ukraine

The probation period for an employee is determined by their job role. Non-qualified employees have a probation period of 1 month, while specialists and managers undergo a 3-month probation period.

Fiscal Year in Ukraine

1 January - 31 December is the 12-month accounting period that businesses in Ukraine use for financial and tax reporting purposes.

Payroll Cycle in Ukraine

The payroll cycle in Ukraine is usually semi-monthly, with employees being paid between the 15th and 20th of each month.

Minimum Wage in Ukraine

The minimum wage for employees in Ukraine is typically 48 UAH per hour, amounting to ~8000 UAH per month for a typical 40 hour work week.

Bonus Payments in Ukraine

Ukranian law does not include provisions for 13th salaries.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 22% on top of the employee salary in Ukraine.

Employee Payroll Tax Contributions

In Ukraine , the typical estimation for employee payroll contributions cost is around 2.1%.

Individual Income Tax Contributions

In Ukraine, the individual income tax rate is a flat 18%, calculated uniformly across all income levels.

Pension in Ukraine

In Ukraine, the old-age pension is granted to men at 60 with 35 years of coverage, and women at 60 with 30 years of coverage. Hero-mothers with 5 or more children can retire at 50, along with specific caregiving roles or Chernobyl accident contributors. Partial or deferred pensions are also possible under specific conditions.

Mandatory Leave Entitlement in Ukraine

The annual leave entitlement in Ukraine is 24 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Ukraine

The following are the 10 recognised holidays in Ukraine in a calendar year:

Paid Time Off in Ukraine

Following six months of continuous employment, employees in Ukraine are entitled to a minimum of 24 days of paid annual leave. This allowance may be extended for minors and those in challenging or hazardous occupations. Additionally, unused leave days can be accumulated for later use.

Maternity Leave In Ukraine

In Ukraine, a pregnant employee is entitled to 126 days of paid maternity leave, with 70 days taken before the expected due date and 56 days after childbirth. The Social Insurance Fund provides compensation for maternity leave at 100% of the employee's average salary.

Paternity Leave In Ukraine

Paternity leave in Ukraine allows fathers to take up to 14 paid calendar days leave within the first three months after the birth of their child.

Sick Leave In Ukraine

In Ukraine, employees are entitled to up to 4 months of paid sick leave. During this period, the employer covers the first 5 days, and reimbursement is obtained from the Social Insurance Fund. The compensation from the Social Insurance Fund varies based on the employee's length of service:

• Less than 6 months of service: based on minimum wage
• 0-3 years of service: 50% of their average wage
• 3-5 years of service: 60% of their average wage
• 5-8 years of service: 70% of their average wage
• More than 8 years of service: 100% of their average wage

Parental Leave In Ukraine

In Ukraine, mothers, fathers, and grandparents have the right to unpaid parental leave, which can be taken after the conclusion of maternity leave and extends until the child reaches 3 years of age.

Bereavement Leave

An employee in Ukraine is eligible for bereavement leave for a maximum of 7 days following the death of an immediate family member.

Marriage Leave

In Ukraine, an employee is entitled to 10 days of leave in celebration of their wedding.

Study Leave

Employees in Ukraine have the right to paid study leave, and the employer provides compensation. The duration of the leave depends on the length of the exam period.

Adoption Leave

A person who has adopted a child has the right to leave in connection with the adoption of a child, provided that the application for the leave is received no later than three months from the date of entry into force of the court decision on the adoption of the child.

Termination Process in Ukraine

In Ukraine, at-will terminations are not permitted beyond the probation period. Termination must be justified and based on specific scenarios, such as:

• Voluntary employee resignation
• Mutual agreement
• Unilateral decision by the employer (e.g., probation period, changes in production or labour organisation, intoxication at work, incompatibility with the position, unsuitability for the job, systemic non-fulfillment, or absence from work for over 4 months due to temporary incapacity)
• Contract expiration

Notice Period in Ukraine

The notice period for termination varies depending on the initiator:

• Employer-initiated termination: 2 months notice
• Employee-initiated termination: 14 days written notice
• Mutual agreement: no notice period

Severance in Ukraine

In Ukraine, the severance payment amounts to one month's salary for every 2 years of employment.