Hire employees in Ukraine

Ukraine is the number one destination in Europe when it comes to IT outsourcing. Software development is the country’s most advanced and most popular industry and Ukrainian developers rank among the best in the world. Considering that around 85% of them have a very good command of English, communication within your global team will definitely not be a problem.

Also in terms of cost efficiency and time zone, Ukraine proves to be a top hiring destination: Salaries are quite low compared to other European countries and the time zone is very convenient for companies with international teams in Europe and North America.

When hiring workers in Ukraine, it is mandatory to provide a written employment contract which can either be concluded for a fixed or an indefinite period. In both cases, the agreement must be in Ukrainian.

In addition, Ukrainian labour law distinguishes between employment agreements (used in most cases) and employment contracts (use limited by law) which are more flexible and can contain additional provisions.

While the latter must include details about employment length, rights, duties, liability and termination, the only formal requirement when it comes to an employment agreement is the determination of a probation period.

Probation Period

Probation periods in Ukraine must not exceed three months. For unskilled workers, it is even shortened to one month.

Please note: The imposition of martial law has brought about some (temporary) changes regarding employment rules and regulations in Ukraine. One of them being the increase of the normal weekly working time from 40 to 60 hours—along with a possible reduction in an employee’s weekly rest period to 24 hours.

Another significant measure includes the possibility to suspend the employment agreement in the event of a military aggression against Ukraine, which makes it impossible to render and fulfill work. More information can be found here.

Working Hours and Breaks

A normal working week in Ukraine is limited to 40 hours, corresponding to eight hours per day over five working days. When the working week comprises six days, the maximum number of working hours per day is seven. Special regulations apply to pregnant women who may demand a shorter working week.

After four hours of work, employees have the right to take an unpaid break which must not exceed two hours. Workdays preceeding national holidays are shortened by one hour.

Overtime

Generally speaking, employers are not allowed to request overtime work from employees. However, there are certain exceptional circumstances where Ukrainian labour law allows overtime work. In these cases, overtime is to be paid at double rates. The same pay rate applies for work on rest days and on public holidays.

Overtime work must not to exceed four hours on two consecutive days and 120 hours per year. Pregnant women and employees under 18, among others, are not allowed to work overtime.

According to the law, employees in Ukraine must be paid twice a month. Payments are due no later than 7 days after the end of the respective pay period. In no case should the period between payments be longer than 16 days. If the usual payment day falls on a public holiday or on a weekend, the payment is to be made the day before.

Minimum Wage

The Ukrainian national minimum wage is currently (February 2023) set at UAH 6,700 per month. The hourly pay rate cannot be less than UAH 40.46.

Sick Pay

Employees who are unable work due to sickness or temporary disability are entitled to sick pay. The employer covers the first five days of sick leave upon presentation of a medical certificate. After that, sick pay is covered by social security.

The amount of sick pay is calculated based on the last twelve months’ wages and the employee’s length of service:

• 50% – 0 to 3 years at the company

• 60% – 3 to 5 years at the company

• 70% – 5 to 8 years at the company

• 100% – more than 8 years at the company

If the employee has been working for the company for less than six months, the calculation is based on the minimum wage.

Bonuses

It is neither required nor common practice for employers in Ukraine to pay their employees a 13th salary.

Employees and employers in Ukraine are subject to the following tax and social security contribution rates (last review February 2023):

Taxes

Employers

18%

---

• 18% corporate tax rate

• 20% VAT (standard rate)

Employees

19.5%

---

• 18% income tax

• 1.5% military contribution

Social security

Employers

22%

---

22% of employee’s salary (unified social contribution) capped at 15 times the minimum wage

Employees

0%

---

Employees don't contribute to the social security system.

Please note that the social security contributions indicated above do not necessarily reflect the actual employment costs. These may differ depending on the employment contract and due to other factors (e.g. 13th and 14th salary, health insurance allowances, accrual for severance pay, etc.).

Annual Leave

Employees in Ukraine are entitled to a minimum of 24 days of paid leave per year, i. e. two days per month. Disabled workers and those over 55 receive three additional days. Employees under 18 get 31 paid vacation days. However, annual leave can only be claimed after the first six months of consecutive work.

Unpaid leave is limited to 15 days per year. Employers are obliged to grant unpaid leave in certain cases, e.g. honeymoon. For other circumstances such as the death of a family member, unpaid leave may be granted but is not compulsory.

Ukraine observes eleven public holidays.

Maternity Leave and Paternity Leave

Maternity leave in Ukraine is 126 calendar days – 70 before and 56 days after birth. It can be extended to 140 days, and in some cases even to 180 days. While on maternity leave, the employee receives her full wages which are paid by social security.

Since 2021, fathers are entitled to 14 days of fully paid paternity leave.

Parental Leave

Mothers and fathers are allowed to take additional parental leave until the child turns three. This leave is unpaid, but parents with at least 2 children under 15 are entitled to 10 days of additional paid leave per year.

Additional Leave and Benefits

On top of the leave entitlements detailed above, employees in Ukraine enjoy the following benefits:

• up to 30 days of unpaid leave to care for a sick family member

• up to 10 days of marriage leave

• study leave depending on the length of the exam period

Furthermore, it is quite common for employers to provide their employees with private health insurance.

The employment may be terminated due to one of the following reasons:

• by default as specified in the contract

• staff reduction

• in case of liquidation

• in case of a proven violation of labour agreement, labour law or other

• voluntary termination of employment

• by mutual agreement

While the notice period for employees is two weeks, employers have to give two months’ notice when dismissing an employee. Pregnant women, women with children under three as well as employees close to retirement are protected from dismissal by law.

Final Pay

The final payment is to be made on the employee’s last working day and should consist of the employee’s final salary (prorated), a compensation for any unused annual leave and any outstanding bonus payments. It is common for employers to issue a severance payment equal to one month’s wages or more.