Ukraine: A Guideline to Payroll and Employer of Record

Establish your presence globally with Neeyamo as we help you go beyond borders to manage your international payroll and hire new talent in Ukraine.

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Overview

Ukraine is located in Eastern Europe. Belarus borders it to the north; Poland, Slovakia, and Hungary to the west; and Romania and Moldova to the southwest, with a coastline along the Black Sea and the Sea of Azov to the south and southeast.

Prominent industries include coal, electric power, machinery, chemicals and food processing, woodworking, and tourism.

Neeyamo’s Global payroll services and Global Employer of Record services assist with onboarding and managing employees in Ukraine, along with processing a firm's payroll, compliance, benefits, and more.

Tools And Instances

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Global Payroll

Neeyamo’s global payroll solution covering 180+ countries

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Global Work

A tech-based EOR solution to manage your extended workforce

Facts And Stats

Capital

Kyiv

Currency

Ukrainian Hryvnia (UAH)

Official Language

Ukrainian

Fiscal Year

1 January - 31 December

Date Format

DD/MM/YYYY

Country Calling Code

+380

Other Languages

Russian, Belarusian

Time Zone

Ukraine Standard Time UTC +02:00

Global Payroll

Overview

What does payroll mean?

Payroll is the management of the entire payroll function of an organization across all countries of operation. Organizations use a single solution capable of doing this from one central location.

Handling payroll for a widespread workforce can pose a significant challenge for any organization, and compliance complications can worsen things. If companies spend more time processing payroll, it directly impacts day-to-day operations and their overall productivity.

Over the years, Global payroll companies such as Neeyamo have observed these complexities and strived to provide a global payroll solution through a single technology platform - Neeyamo Payroll.

What is Payroll System?

A payroll system is a software that is used to manage employee payments, inclusive of their wages, deductions, bonuses, etc.

Payroll Taxes

Payroll tax is the percentage amount retained from an employee's salary and paid to the government to invest in the general population's welfare. These are statutory in nature and are levied from both the employer and employee. Additional statutory contributions are made by employers towards aiding both short-term and long-term benefits for their employees.

Employee Taxes

Employees have to make the following payroll contributions:

  • 0.60% - Social Security
  • 18.00% - Flat rate for income tax
  • 1.50% - Military/Defence Levy

Employer Taxes

Employers must contribute 22.00% towards Unified Social Contributions with a maximum annual contribution of 237,600 UAH.

Payroll Cycle

Overview

Undoubtedly, payroll is a critical process for any organization. The pay cycle in Ukraine refers to the period for which an organization pays its employees, and this can vary depending on the pay frequency that the organization chooses to adopt.

Frequency

The payroll cycle in Ukraine is bi-weekly and runs twice a month between the 15th and 20th of each month and the 31st and 7th of the following month.

13th Month Cycle

There are no provisions in the law regarding 13th salaries.

Global Work

Overview

An Employer of Record (EOR) service provider helps you eliminate the hassle of handling complexities while onboarding a new employee in an international location. They help bridge the gap that otherwise mandates organizations to have a locally registered entity and a local bank account before making a job offer to an international hire.

An Employer of Record (EOR) service provider acts as a legal employer, facilitates salary payments, and manages other statutory requirements such as health insurance, payroll taxes, and employee benefits, ensuring compliance with local tax laws and regulations.

This allows organizations to focus on collaborating with employees in Ukraine for operational tasks, with the knowledge that they have a cost-effective solution to support their global payroll & HR requirements as they continue their international expansion.

Neeyamo strives to provide its customers with a seamless employee management experience and offers employer of record as well as global payroll compliance services with our Global Payroll Technology Stack.

HR Mandates and Practices

Minimum Wage

Effective January 1, 2024, the minimum wage increases to UAH 7,100 monthly.

Effective April 1, 2024, the minimum wage increase to UAH 8,000 monthly.

Overtime

Overtime work is any work beyond the daily hours permitted under labor law. Overtime may be at most four hours every two consecutive days or 120 hours a year.

Employers only may require employees to work overtime for work necessary for national defense, maintaining public utilities, finishing work that could not be completed during regular work hours because of unforeseen circumstances, preventing shipment delays, or continuing a process where a replacement employee is absent.

Overtime compensation is calculated as double the regular pay rate for each hour. Work performed on holidays also must be paid at double wages.

Data Retention Policy

Employers must keep records of withheld income tax remittances for each quarter and year.

Employers must keep records of social tax payments made, including calculations of the single social contribution, for each month and year.

Employers are required to retain records for all workers who are employed for more than five days.

Upon an employee's request, employers must provide records of the employee's hours worked and wages earned.

Hiring and Onboarding Requirements

Hiring

Advertisements for jobs hired by employment agencies must contain a notice to say that there is a prohibition on demanding an agency fee from prospective employees.

It is expressly prohibited to indicate any age or gender preference in job hiring. The only exceptions are advertisements for jobs that require an employee of a specific age or gender due to the nature of the job. Any other discrimination in employment based on race, ethnic origin, political, religious, or ideological views, membership in political parties and trade unions, age, social or ethnic background, financial status, place of residence, or language is prohibited.

Onboarding

The following information needs to be provided during onboarding:

  • Name
  • Address
  • Date of birth
  • telephone number
  • Taxpayer identification number

Documents for Expats:

  • ID Card
  • Temporary Certificate of Citizenship
  • Copy of Driving Licence
  • Residence Permit
  • Employment Permit
  • Foreign worker statistics card

Probation

An employee may be subject to a probationary period of no longer than three months. If the trade union consents in certain cases, the probationary period can be extended to up to six months. The probationary period for blue-collar workers must not exceed one month.

Sick leave or other absences, for whatever reason, are not included in the probationary period.

Leave

Public Holidays

Ukraine provides 11 paid public holidays. Employees are entitled to the following paid holidays each year:

  • Jan. 1 to Jan. 2: New Year's Day
  • Jan. 7: Orthodox Christmas , also known as the Holiday of the Nativity of Christ
  • Jan. 9: Orthodox Christmas 
  • March 8: International Women's Day
  • Apr. 16 to Apr. 17: Orthodox Easter Sunday, also known simply as Easter and as Light Christ Resurrection/Bright Christ Resurrection
  • May 1: Labor Day
  • May 9: Day of Victory Over Nazism in the Second World War , also known simply as Victory Day
  • June 4 and June 5: Orthodox Pentecost , also known as Trinity , as Holy Trinity Day as Day of the Descent of the Holy Spirit , and as Green Sunday
  • June 28: Constitution Day
  • Aug. 24: Independence Day
  • Oct. 14 to Oct. 16: Defenders' Day
  • Dec. 25: Catholic Christmas

Holidays occurring on weekends are moved to the following Monday concerning when paid leave is required to be granted.

Employers must provide employees who are members of religions other than Orthodox Christianity with up to three days a year to celebrate religious holidays.

The workday must be reduced by one hour on the day before a holiday, regardless of whether the employee has a five- or six-day week.

Employees are generally prohibited from working on holidays unless the employer is in the service industry or is continuously operating. Employees working on holidays must be paid double their regular salary. Employees may choose to receive another day off instead of extra pay.

Annual Leave

Employees are entitled to 24 days of paid annual leave after working for an employer for at least six months. Employees may additionally take up to 15 days of unpaid leave per year for personal reasons.

Maternity Leave

Female employees may take up to 70 days of paid leave before the due date and 56 days of paid leave afterward. Employees may take 70 days of paid leave after delivery in the case of multiple deliveries or complications during delivery. Women who are considered victims of the Chornobyl disaster may take up to 90 days of paid leave both before and after delivery. The State Social Insurance Fund pays maternity leave at 100% of the employee's average monthly salary for six months.

Paternity Leave

Effective on May 9, 2021, male employees are entitled to 14 days of paid leave to start within three months after the birth of a child. Those eligible include the father of a child, whether married or unmarried, and cohabiting and grandparents or adult siblings regardless of gender who care for the child of a single parent.

Other Leave

  • Child care leave: Employees may take paid leave to care for a child until the child is three years old.
  • Adoption Leave: An employee who adopts a child within two months of the child's birth generally may take 56 days of paid leave. However, the employee may take 70 days of paid leave when adopting multiple children.
  • Bereavement: An employee is entitled to bereavement leave of up to 7 days for the death of an immediate family member.
  • Marriage: An employee is entitled to 10 days of leave in the event of their wedding.
  • Study: Employees are entitled to paid study leave which the employer compensates. The length of the leave is dependent on the duration of the exam period.

Termination

Notice Period

The notice period is dependent on the individual initiating the termination as follows:

  • 2 months’ notice when the employer initiates the termination
  • 14 days written notice when the employee initiates the termination

Termination by mutual agreement has no notice period requirement.

Severance Pay

The minimum amount of statutory severance pays falls within the range of one to six months' average monthly salaries of the employee (depending on the grounds for dismissal), calculated based on the salary and other payments received by the employee in the two months before the dismissal date.

As a rule, severance payments must be paid in case of dismissal:

  1. At the employer's initiative (the list of such grounds is set out in the Labour Code, but not all dismissals at the employer's initiative will incur a severance payment)
  2. Due to refusal of the employee to continue in his or her work after a change to the essential conditions of his or her work
  3. Upon the employee's initiative due to a violation of the labour legislation by the employer.

The amount of severance does not depend on the seniority period in Ukraine.

Collective bargaining agreements and/or employment agreements/contracts may envisage more favorable employee guarantees (i.e., higher severance pay).

Visa

Overview

A Type D long-term visa allows an individual to enter Ukraine for 90 days to obtain a residence permit that would enable the individual to reside in Ukraine for more than 90 days. When the individual is in Ukraine using a Type D visa, or a multiple-entry visa, the individual must contact the State Migration Service of Ukraine to acquire a temporary or permanent residence permit.

One type of temporary residence permit that may be obtained is an employment permit, available to individuals who arrived in Ukraine specifically for employment. The individual's employer must communicate with the State Migration Service in advance of the individual's arrival in Ukraine to arrange for the individual to be able to receive the employment permit after arrival. The Ukrainian State Center of Employment would issue the employment permit.

U.S. citizens are ineligible for Ukraine's Type C short-term visa. Still, this type of visa is available to residents of other countries designated as eligible by the Ukraine Ministry of Foreign Affairs. The Type C short-term visa allows an individual to reside in Ukraine for up to 90 days within 180 days, starting with the first day the individual enters Ukraine using the visa.

Individuals from the countries of Armenia, Azerbaijan, Belarus, Georgia, and Russia may enter Ukraine for a period with no maximum duration without needing to acquire a visa. Individuals from some other countries may enter Ukraine for a threshold number of days without obtaining a visa.

Employee Background Checks

Legal and Background Checks

Employers are prohibited from carrying out checks about an employee's background at any stage except in cases strictly provided by law.

Further, processing information regarding race, ethnic origin, political, religious, or ideological views, membership of political parties and trade unions, criminal convictions, or information on an employee's health or sexual activity is prohibited. Processing this information is permitted only if it is necessary to carry out duties and has the express consent of the prospective employee.

It is prohibited to contact a previous employer regarding a job applicant or a prospective employee at any stage of the hiring process or during employment without the employee's consent. Employers are also prohibited from conducting social media checks during recruitment.

 

Last updated on August 14, 2023

If you have any queries or suggestions, reach out to us at irene.jones@neeyamo.com

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