Ukraine

Navigating the complexities of international expansion and talent acquisition can be a daunting task, especially when venturing into dynamic and promising markets like Ukraine. For businesses seeking to tap into Ukraine’s skilled workforce, understanding the nuances of local employment laws, payroll regulations, and HR practices is paramount. This is where Professional Employer Organizations (PEOs) and Employer of Record (EOR) solutions, such as those offered by WeHG (WeHireGlobally), become invaluable strategic partners.

This comprehensive guide delves into the intricacies of hiring and managing talent in Ukraine, highlighting the benefits of leveraging WeHG’s expertise to streamline your expansion and HR operations. We will explore the Ukrainian labor market, legal frameworks governing employment, various engagement models, and the specific advantages of partnering with an experienced PEO and EOR provider like WeHG.

The Strategic Appeal of the Ukrainian Market for Global Businesses

Ukraine presents a compelling proposition for businesses looking to expand their global footprint. With a substantial population of over 43 million people, a growing economy, and a burgeoning tech sector, the country offers access to a diverse and skilled talent pool. The strategic location of Ukraine, bridging Eastern and Western Europe, also makes it an attractive hub for companies with international ambitions.

Furthermore, Ukraine’s commitment to fostering a more business-friendly environment, coupled with a relatively competitive cost of labor, positions it as a desirable destination for foreign investment and talent acquisition. However, navigating the local regulatory landscape and ensuring compliance can be challenging for companies unfamiliar with Ukrainian employment laws and practices.

The Traditional Challenges of Establishing a Presence in Ukraine

Traditionally, companies seeking to hire employees in Ukraine would need to establish a local legal entity, such as a subsidiary or branch office. This process can be time-consuming, costly, and administratively burdensome. It involves navigating complex registration procedures, setting up local bank accounts, and establishing in-house HR and payroll functions to ensure compliance with Ukrainian regulations.

These challenges can significantly delay market entry, divert valuable resources, and increase operational complexities, particularly for small and medium-sized enterprises (SMEs) or companies testing the Ukrainian market.

WeHG: Your Streamlined Pathway to Ukraine’s Talent Pool

WeHG (WeHireGlobally) offers a modern and efficient alternative to the traditional approach. Our International PEO and Employer of Record (EOR) services in Ukraine are specifically designed to empower businesses to seamlessly access and manage talent in the Ukrainian market without the need for establishing a local legal entity.

What is a Professional Employer Organization (PEO)?

A Professional Employer Organization (PEO) acts as a co-employer, partnering with businesses to manage various HR functions. In a PEO arrangement, the PEO assumes responsibility for tasks such as payroll processing, employee benefits administration, HR compliance, and risk management. This allows the client company to focus on its core business operations while leveraging the PEO’s expertise and economies of scale in HR management.

What is an Employer of Record (EOR)?

An Employer of Record (EOR) takes on the legal responsibility of employing individuals on behalf of another company. In an EOR model, the EOR becomes the legal employer of the workforce in Ukraine, handling all aspects of employment, including hiring, onboarding, payroll, taxes, benefits, and compliance with local labor laws. The client company retains full operational control over the employees’ day-to-day tasks and responsibilities.

WeHG’s Ukraine PEO & EOR Solutions: A Comprehensive Overview

WeHG provides a comprehensive suite of PEO and EOR services tailored to meet the specific needs of businesses hiring in Ukraine. Our solutions are designed to simplify the process, reduce administrative burdens, and ensure full compliance with Ukrainian employment regulations.

Key Benefits of Partnering with WeHG in Ukraine:

• Rapid Market Entry: Begin operating in Ukraine and hiring talent within days, significantly accelerating your market entry timeline compared to establishing a traditional subsidiary.
• Cost and Resource Savings: Eliminate the significant costs and resources associated with setting up and maintaining a local legal entity, including registration fees, office space, and dedicated HR staff.
• Expertise in Ukrainian Labor Laws: Leverage our in-depth knowledge and experience with Ukrainian employment laws, ensuring full compliance and mitigating the risk of legal issues.
• Streamlined Payroll and Tax Administration: WeHG manages all aspects of payroll processing, including salary calculations, tax withholdings, and statutory contributions, ensuring accurate and timely payments while adhering to local regulations.
• Comprehensive HR Support: Access our comprehensive HR services, including onboarding and offboarding processes, contract management, benefits administration, and employee relations support.
• Reduced Administrative Burden: Free up your internal resources by outsourcing complex HR tasks to WeHG, allowing your team to focus on strategic business initiatives.
• Flexibility and Scalability: Easily scale your workforce in Ukraine as your business needs evolve, without the complexities of managing a local entity.
• Access to Local HR Expertise: Benefit from our team of local HR professionals who possess a deep understanding of the Ukrainian employment landscape and can provide valuable insights and support.
• Mitigation of Employment Risks: WeHG assumes the legal responsibilities of employment, helping to mitigate potential risks associated with non-compliance or employment disputes.

Understanding the Ukrainian Employment Landscape: Key Legal Considerations

Navigating the legal framework governing employment in Ukraine is crucial for any company hiring in the country. WeHG’s expertise ensures that your hiring practices and employment arrangements fully comply with all relevant Ukrainian laws and regulations.

Core Labor Legislation in Ukraine:

The primary legal framework governing employer-employee relations in Ukraine includes:

• Labour Code of Ukraine: This fundamental legislation outlines the rights and obligations of both employers and employees, covering aspects such as employment contracts, working hours, leave entitlements, and termination procedures.
• Law of Ukraine “On Collective Agreements and Agreements”: This law regulates the process of collective bargaining and the content of collective agreements at various levels (national, industry, territorial, and company).
• Law of Ukraine “On Remuneration of Labour”: This law establishes the principles and guarantees for the remuneration of labor, including minimum wage requirements and payment procedures.
• Law of Ukraine “On Vacations”: This law defines the types and duration of various types of leave, including annual leave, sick leave, and maternity leave.
• Law of Ukraine “On Employment of the Population”: This law regulates employment relationships and the activities of employment agencies.
• Law of Ukraine “On Social Dialogue in Ukraine”: This law establishes the legal framework for social dialogue between employers, employees, and the government.
• Regulations and internal policies of individual companies: These internal documents may further define specific employment terms and conditions within the bounds of Ukrainian law.

The Necessity of a Written Employment Contract in Ukraine:

Ukrainian labor law mandates that all employment relationships must be formalized through a written employment contract. This contract should clearly outline the terms and conditions of employment, including:

• Employee’s full name and details
• Employer’s name and details
• Job title and responsibilities
• Start date of employment
• Duration of the contract (fixed-term or permanent)
• Working hours and rest periods
• Salary or wage and payment terms
• Place of work
• Conditions of work
• Rights and obligations of both parties
• Grounds for termination of the contract

WeHG ensures that all employment contracts drafted for your employees in Ukraine are legally sound and compliant with local regulations, protecting both your interests and the rights of your employees.

Collective Agreements in Ukraine:

Collective agreements play a significant role in regulating labor relations in Ukraine. These agreements are negotiated between employers and employee representatives (such as trade unions or elected representatives of the labor collective) at various levels:

• National Level (General Agreement): Establishes general principles and standards for labor relations across the country.
• Industry Level (Industry or Cross-Industry Agreements): Sets specific terms and conditions for employees within a particular industry or sector.
• Territorial Level (Territorial Agreements): Defines labor standards and conditions within a specific region or territory.
• Company Level (Collective Agreement): Outlines specific terms and conditions of employment applicable to employees within a particular company or organization.

WeHG can help you understand the implications of relevant collective agreements for your business operations in Ukraine and ensure compliance with their provisions.

Different Forms of Employee Engagement in Ukraine:

In Ukraine, there are two primary forms of engaging individuals to perform work:

• Employment (Labor) Agreement: This is the traditional employer-employee relationship governed by the Labour Code. Individuals hired under an employment agreement are considered employees of the company and are entitled to the full range of employee rights and benefits.
• Civil Agreement (Contracting): This form of engagement involves hiring independent contractors or freelancers to perform specific tasks or projects. Civil agreements are governed by civil law rather than labor law and typically offer less protection and fewer benefits to the engaged individual compared to an employment agreement.

WeHG can advise you on the most appropriate form of engagement for your specific needs and ensure that all arrangements comply with Ukrainian law.

Ukraine Employment Contract and Labor Practices: A Closer Look

Understanding the nuances of Ukrainian employment contracts and labor practices is essential for effective talent management.

Types of Employment Agreements in Ukraine:

• Permanent Agreements: These are the most common type of employment contract in Ukraine, offering indefinite employment with no specified end date.
• Fixed-Term Agreements: These agreements are permitted under specific circumstances outlined in the Labour Code, such as for temporary assignments, seasonal work, or when the employment relationship cannot be established for an indefinite period due to the nature of the work or the employee’s interests. There are limitations on the maximum duration of fixed-term agreements and the number of successive renewals to prevent their misuse. WeHG ensures that all fixed-term agreements comply with these regulations.

Working Hours in Ukraine:

The standard working week in Ukraine is 40 hours, typically distributed as 8 hours per day from Monday to Friday. While this remains the norm, flexible and hybrid work arrangements are becoming increasingly prevalent, particularly for international teams. WeHG can help you establish compliant and effective working hour arrangements for your employees in Ukraine.

Overtime Regulations in Ukraine:

Overtime work in Ukraine is subject to specific regulations. Employees can work a maximum of 120 overtime hours per calendar year. Overtime work is generally compensated at double the regular hourly rate or through the provision of additional days off, as agreed upon in the employment contract or collective agreement. If an employment contract specifies flexible working hours, overtime pay may not apply under certain conditions. WeHG ensures that all overtime work is properly documented and compensated in accordance with Ukrainian law.

Vacation Leave Entitlements in Ukraine:

Employees in Ukraine are entitled to various types of paid leave:

• Paid Public Holidays: Ukraine recognizes ten official public holidays throughout the year.
• Annual Leave: Employees are entitled to a minimum of 24 calendar days of paid annual leave per year. This leave can be accumulated, but the total accumulated unused leave should not exceed 48 days. Ukrainian law prohibits working for more than two consecutive years without taking at least part of the annual leave. WeHG manages vacation leave requests and ensures compliance with these regulations.

Sick Leave Provisions in Ukraine:

Employees in Ukraine are entitled to sick leave for temporary incapacity to work due to illness or injury. The duration of sick leave is determined by a medical professional and can extend up to four consecutive months in most cases. The first five days of sick leave are typically paid by the employer at the employee’s average salary (calculated based on the previous six months’ earnings). Subsequently, sick leave benefits are usually paid by the state social security fund. WeHG manages the administration of sick leave in accordance with Ukrainian regulations.

Maternity Leave in Ukraine:

Female employees in Ukraine are entitled to maternity leave, which typically begins 70 days before the expected date of childbirth and extends for 56 days after childbirth (or 70 days in case of multiple births or complications). During this period, the employer is legally obligated to reserve the employee’s position. WeHG ensures compliance with all aspects of maternity leave regulations in Ukraine.

Severance Laws in Ukraine:

The regulations regarding severance payments in Ukraine vary depending on the reason for termination of employment:

• Termination by Voluntary Agreement or Mutual Consent: In this case, the employee is typically entitled to payment for any unused vacation days and their final month’s salary.
• Employer-Initiated Termination: If the employer terminates the employment contract for specific reasons outlined in the Labour Code (such as staff redundancy or systematic failure to fulfill job duties with documented evidence), the employee is generally entitled to:
  • Payment for unused vacation days.
  • Compensation equal to their average salary for a notice period (usually two months).
  • Severance pay, typically equivalent to at least one month’s average salary.

Termination of an employment contract by the employer is permissible only under specific circumstances stipulated in the Labour Code, such as staff redundancy, documented systematic failure to fulfill job duties, or unjustified absence exceeding three consecutive hours in one working day. WeHG ensures that all termination processes are handled in full compliance with Ukrainian labor laws, minimizing the risk of legal challenges.

Payroll and Taxes in Ukraine: Ensuring Compliance and Accuracy

Managing payroll and taxes in Ukraine requires meticulous attention to detail and a thorough understanding of local regulations. WeHG’s Employer of Record Ukraine solution handles all aspects of payroll processing and tax compliance, ensuring accuracy and adherence to Ukrainian statutory requirements.

Key Statutory Taxes in Ukraine:

• Social Security Tax (Unified Social Contribution – USC): Employers are required to contribute to the social security fund. The standard rate is currently 22% of the employee’s gross salary, with a minimum contribution based on the minimum wage. There is also a maximum taxable base, which in 2023 was capped at 15 times the minimum wage.
• Personal Income Tax (PIT): Employees in Ukraine are subject to a flat personal income tax rate, which is currently 18% of their taxable income.
• Military Tax: In addition to income tax, employees are also required to pay a military tax, which is currently 1.5% of their taxable income.

Payroll Processing with WeHG:

WeHG’s EOR services include comprehensive payroll processing, ensuring:

• Accurate calculation of salaries and wages.
• Proper withholding of income tax and military tax.
• Timely payment of social security contributions.
• Issuance of payslips to employees.
• Preparation and filing of all necessary payroll and tax reports with the Ukrainian authorities.

By entrusting your payroll processing to WeHG, you can ensure compliance, accuracy, and efficiency in managing your employees’ compensation in Ukraine.

Benefits and Perks in Ukraine: Attracting and Retaining Top Talent

Offering competitive benefits and perks is crucial for attracting and retaining skilled employees in Ukraine. While public healthcare is available, the perceived quality often leads many employers to provide private health insurance as a key benefit.

Common Employee Benefits in Ukraine:

• Private Health Insurance: A highly valued benefit that provides employees with access to better quality healthcare services.
• Meal Vouchers: A popular optional benefit that helps employees with their daily food expenses.
• Equipment Provision: For remote or hybrid work arrangements, employers often provide essential equipment such as leased cars, office space (or co-working stipends), computers, mobile phones, and sometimes even secretarial support.

WeHG can help you design and administer competitive benefits packages that align with local expectations and attract top talent in Ukraine.

Public Holidays in Ukraine: Planning for Time Off

Ukraine recognizes ten official public holidays throughout the year. Employees are typically entitled to these days off with pay. The public holidays in Ukraine include:

• New Year’s Day (January 1)
• Christmas Day (January 7 – Orthodox)
• International Women’s Day (March 8)
• Orthodox Easter (date varies)
• Labor Day (May 1)
• Victory Day over Nazism in World War II (May 9)
• Trinity (date varies)
• Constitution Day of Ukraine (June 28)
• Independence Day of Ukraine (August 24)
• Defender of Ukraine Day (October 1)

Employees may also take their annual leave at any time during the year, subject to managerial approval to ensure minimal disruption to business operations. WeHG helps manage employee leave requests and ensures compliance with Ukrainian regulations regarding public holidays and annual leave.

Why Choose WeHG (WeHireGlobally) as Your Ukraine PEO & EOR Partner?

WeHG offers a comprehensive and reliable solution for businesses looking to hire and manage talent in Ukraine. Our expertise in Ukrainian labor laws, combined with our streamlined processes and dedicated support, makes us the ideal partner for your international expansion.

Key Advantages of Partnering with WeHG:

• Seamless Onboarding: We ensure a smooth and efficient onboarding process for your new hires in Ukraine, handling all necessary paperwork and compliance requirements.
• Comprehensive Payroll and Compliance Management: We take care of all aspects of payroll processing, statutory tax filings, and compliance with Ukrainian labor laws, allowing you to focus on your core business.
• Competitive Benefits Administration: We can help you design and administer competitive benefits packages that attract and retain top talent in Ukraine.
• Dedicated Termination Support: We streamline the termination process, ensuring legal compliance and minimizing potential risks.
• Reduced Risk and Administrative Burden: By partnering with WeHG, you can significantly reduce the risks and administrative burdens associated with hiring and managing employees in Ukraine.
• Cost-Effective Solution: Our PEO and EOR solutions offer a cost-effective alternative to establishing a local legal entity.
• Expert Local Support: Our team of local HR professionals provides valuable insights and support, ensuring your success in the Ukrainian market.

Frequently Asked Questions (FAQ) about Hiring in Ukraine with WeHG:

1. What is an Employer of Record (EOR) in Ukraine? An Employer of Record (EOR) in Ukraine is a third-party organization, like WeHG, that legally employs individuals on behalf of your company in Ukraine. We handle payroll, taxes, benefits, and compliance with local labor laws, allowing you to manage your remote or hybrid teams without establishing a local legal entity.

2. How does using an EOR benefit companies hiring in Ukraine? An EOR ensures compliance with Ukraine’s complex labor laws, manages all aspects of payroll processing and tax filings, and administers employee benefits. This allows companies to focus on managing their teams and growing their business in Ukraine without the administrative burden and legal complexities.

3. Are hybrid work arrangements allowed in Ukraine? Yes, hybrid work setups are increasingly common and legally permissible in Ukraine. These arrangements should be clearly outlined in the employment agreement, specifying the terms and conditions of remote and in-office work. WeHG can help you establish compliant hybrid work policies.

4. What taxes are employers required to pay in Ukraine? Employers in Ukraine are primarily responsible for contributing to the Unified Social Contribution (USC), which is currently 22% of the employee’s gross salary (with certain minimum and maximum thresholds). Employees are responsible for paying personal income tax (18%) and a military tax (1.5%). WeHG manages all these contributions and withholdings.

5. Can unused vacation days be carried over in Ukraine? Yes, employees in Ukraine can accumulate unused annual vacation days, but the total accumulation should not exceed 48 days. Employees are legally required to take at least a portion of their annual leave every two years. WeHG helps manage vacation accruals and ensures compliance with these regulations.

6. How is sick leave managed in Ukraine? In Ukraine, the employer typically pays for the first five days of sick leave at the employee’s average salary. After that, the employee may be eligible for sick leave benefits paid by the state social security fund. The duration of sick leave is determined by a medical professional. WeHG manages the administration of sick leave in accordance with Ukrainian law.

7. What additional benefits can companies provide in Ukraine? To attract and retain top talent in Ukraine, companies often provide additional benefits such as private health insurance, meal vouchers, leased cars, office equipment for remote work, and secretarial support. WeHG can assist you in designing and administering competitive benefits packages.

8. What are the key public holidays in Ukraine? Ukraine recognizes ten official public holidays, including New Year’s Day, Orthodox Christmas, International Women’s Day, Orthodox Easter, Labor Day, Victory Day over Nazism in World War II, Trinity, Constitution Day of Ukraine, Independence Day of Ukraine, and Defender of Ukraine Day. Employees are entitled to these days off with pay.

9. Why should businesses choose WeHG as their PEO and EOR partner in Ukraine? WeHG offers a comprehensive and reliable solution for managing your international workforce in Ukraine. We handle all aspects of onboarding, payroll, compliance, and benefits administration, providing a seamless and cost-effective way to access and manage talent while minimizing risk and administrative burdens. Our local expertise and dedicated support ensure your success in the Ukrainian market.

Conclusion: Unlock Ukraine’s Potential with WeHG

Expanding your business into Ukraine offers significant opportunities, and accessing its talented workforce is a key driver of success. By partnering with WeHireGlobally for your PEO and Employer of Record needs, you can navigate the complexities of international hiring with ease and confidence. Our comprehensive solutions, deep understanding of Ukrainian labor laws, and commitment to providing exceptional service make us the ideal partner to help you unlock Ukraine’s immense HR potential. Contact WeHG today to learn more about how we can help you achieve your global talent acquisition goals in Ukraine.