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Mercans CountryIntel ® Ukraine Payroll And HR Insights

Mercans offers complete payroll, PEO and HR services in Ukraine

A developed market economy, Ukraine has been undergoing a steady pace of reform which coupled with the availability of good talent and high quality undervalued assets makes the country an excellent investment destination. However, with the Russian ongoing invasion into Ukraine having unfolded in recent days, the escalating conflict will impact growth, the economy and its people (as well as the world economy) in time to come.

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Doing Business in Ukraine

Ukraine currently has 20 free trade agreements with 47 countries. In 2020, Ukraine had climbed five more places in the World Bank’s Ease of Doing Business ratings, to 64 out of 190 countries. The World Bank rates Ukraine second among all countries in the last 10 years regarding speed and depth of improvement in its business climate.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in Ukraine is straightforward. Choose how your company operates from a range of entity types which suit your individual circumstance.

Banking

Banking Hours: Monday - Thursday from 9:00 am - 3:00 pm

Working Week

The standard working week is from Monday to Friday from 9:00 am - 5:00 pm

Labor Law

Since 2014, Ukraine has embarked on an ambitious deregulation program aimed at achieving regulatory compliance with European Union standards and global best practices as well as easing doing business. Since 2022, IT companies in Ukraine will also receive access to more flexible regulation of labor relations, better protection of IP (intellectual property) rights, access to the legal mechanisms of the common law system and more.

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Main Industries

Coal, electric power, ferrous and nonferrous metals, machinery and transport equipment, chemicals, food processing

GDP Growth

2.40%

Dates & Numbers

dd/mm/yyyy

Official State Name

Ukraine

Population

44.13 million

Capital

Kyiv

Major Languages

Ukrainian

Currency

Ukrainian Hryvnia (₴)

Internet Domain

.ua

International Dialing Code

+380

Ukraine
Kyiv, UA
3:10 pm, September 28, 2022
18°C
overcast clouds

Payroll

Salary is payable to employees twice a month and the amount shall be indicated in the employee’s employment agreement. Companies that operate a multi-country payroll should take note that it is obligatory to maintain timesheets for companies in Ukraine (including small businesses). These records set the grounds for salary accrual.

It is acceptable to provide employees with online payslips

Payslip

Payroll report must be kept for 10 years

Reports

24 days of paid annual leave on completing a minimum of six months employment

Annual Leave

Employees are allowed 4 months of sick leave with full pay

Sick Leave

126 days of paid maternity leave, 70 of which has to be taken before the due date. While paternity leave isn’t officially recognised, fathers can take two weeks of unpaid leave

Maternity & Paternity Leave

2 months

Employee Termination

No provisions set by law

13th month salary

6500 UAH per month

Minimum Wage

If work exceeds the 40 hour work week. the overtime compensation is 100% over the employee's normal salary

Overtime

One month’s salary for every two years of employment.

Severance Pay

Tax and Social Security

Taxes are set out in the Tax Code. Residents are taxed on their worldwide income, subject to restrictions in any applicable Double Taxation Treaty (DTT). The same tax rates apply to tax residents and non-residents (with some exceptions). An individual is enrolled in the state social security system upon signing an employment contract with an Ukrainian employer who is responsible for payment of social security contributions (SSC) at its own expense. Such payment ceases when the employment is terminated.

Tax

The tax rate applies to all passive income (e.g. interest, dividends, royalties, investment profits). Income earned by tax non-residents from sources within Ukraine are subject to the same tax rates as those for tax residents unless otherwise stated.

18%

Corporate Income Tax

18%

Personal Income Tax

20%

Sales Tax

20%

VAT

Social Security

Foreign individuals working in the representative office of a non-resident company are not usually subject to the SSC. Remuneration paid by a non-resident company to an individual working in Ukraine is not subject to the SSC.

22%

Social Security Rate

22%

Social Security Rate for Employers

0%

Social Security Rate for Employees

Employment Law

An employee’s remuneration received is provided for performing employment duties and is subject to the USC (Unified Social Contribution) and regulated by law. The law stipulates that employers must employ the disabled as at least 4% of its annual average entire workforce.

Employment Agreement

All employees should be provided with an employment agreement which contains details on the employee’s position, date of hiring, salary, terms of payment and more.

Working condition

Employees working in specified hazardous conditions and employees aged between 16 and 18 may not work over 36 hours per week. While overtime is possible, this must be well documented and compensated.

Leaves

Employees are entitled to 24 calendar days of base annual vacation (except for individuals providing services under the civil law agreement). Employees may be entitled to additional vacation if working in hazardous conditions and due to the specific nature of work. Vacation allowance is calculated based on the employee’s average daily salary.

Employment termination

Termination can be initiated by either the employer or employee. All terminations are required to be in written form. An employer may terminate an agreement in a limited number of cases such as redundancy, systematic failure to fulfill their employment duties, deteriorating health, unjustified absence for more than three consecutive hours during a work day and more. The employer is obligated to pay the employee the salary for the number of days worked in the month of dismissal, compensation for unused vacation days and any other payments due (bonuses or allowances).

2 months

Minimum notice period for terminating an employee

12

Total number of public holidays

40

Working hours per week

7 days

Total number of days for Compassionate & Bereavement Leave

Immigration

Since 2017, obtaining a work permit has become simplified as the list of documents required was reduced and the period of work permit obtained shortened from a month to two weeks. There is also a minimum salary to be paid to foreign employees, depending on the minimum statutory wage.

Residency permits

There is no need to obtain a visa for applying for a work permit. The visa requirement will depend on the physical presence of the individual in Ukraine. It is generally a visa free regime for citizens of CIS (Commonwealth of Independent States) countries. The EU, US and Japanese citizens may enjoy visa free presence for 90 days in a 180 day period. Where a foreign individual intends to obtain a temporary residence permit, they must obtain the Visa D.

Work Permit validity

Three years

Required Documents

Completed application form

Copy of the passport showing personal details

Passport-sized color photo of the employe

Copy of the employment contract with certification

Documents confirming the power to represent the employee

Copies of higher education credentials for applicants who graduated from the top 100 universities

Certified copies of documents, copyright, and related rights for creative professionals

Copy of the agreement for a specific task (where the employee is sent to Ukraine for a specific activity)

Compliant, reliable, error-free and touchless payroll in Ukraine

Build the best team and hire top talent compliantly in Ukraine. Get in touch with Ukraine payroll outsourcing & PEO specialists for a free consultation!

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This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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