Quick facts

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Ukraine, located in the heart of Eastern Europe and occupying a land area of 603,700 square kilometers, is the second largest country in Europe after Russia. It is divided into 24 provinces (oblasts) and the Autonomous Republic of Crimea, with Kyiv as its capital and the largest city. Ukrainian is the official language, and the currency is the hryvnia (UAH). Ukraine’s population was estimated at 41 million people as of the beginning of 2022. It’s Europe’s land of wide, fertile agricultural plains, with large pockets of heavy industry in the east.

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Employment Contracts

Can be permanent and fixed-term with possible extension for another period. After the 2nd extension the contract will get indefinite. Acvian’s Ukraine PEO or Ukraine EOR is able to provide a  solution of how to extend fixed-term contracts several times.

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• Can be bilingual, however Ukrainian will prevail.

• Shall be signed in person; e-signature is not allowed.

• Backdated agreement is not possible.

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Employees can be onboarded within one business day if all documents are provided in time (passport, id, additional statements).

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Probation Period

The probationary period is typically between one-three months. It is not mandatory, however it will secure employers from severance payment in case of dismissal during the probation period.

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In the employment landscape of Ukraine, a pivotal aspect for both employers and employees to understand is the probation period. A standard part of most employment contracts in Ukraine, the probation period provides an opportunity for the employer to assess the new employee’s competence and suitability for the job, and for the employee to determine if the job meets their expectations.

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The Ukrainian Labor Code allows for a probation period up to three months, but for certain roles, it can extend to up to six months. However, this must be explicitly stated in the employment contract.

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During the probation period, both parties have the right to terminate the employment agreement with a three-day notice.

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Once the probation period is successfully completed, the employee is then confirmed in the position, offering a degree of job security. By comprehending these details, companies can navigate Ukraine’s labor law environment more proficiently, making the Employment of Record (EOR) service a valuable tool for enterprises operating within or expanding into Eastern European nations.

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Working Hours

The standard amount of working time for workers cannot exceed 40 hours per week.

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They are spread over five days, with two days reserved for rest. The standard working day shouldn’t exceed eight hours, however, for specific industries with difficult or hazardous conditions, it may be reduced. Overtime is permitted but strictly regulated, requiring mutual agreement between employer and employee, and often entails additional pay.

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Furthermore, it’s crucial to acknowledge the provision of annual leave, which comprises 24 calendar days. Companies must take note of these factors to ensure compliance and uphold employee rights. Deep understanding of these employment specifics can foster smooth operations, workforce satisfaction, and overall success in Ukraine’s business landscape.

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Vacation Days

Employees are entitled to a minimum of 24 calendar days of paid annual leave after six consecutive months of employment with the employer. After the expiration of this six-month period, employees can take paid annual leave.

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The vacation allowance is measured based on the average daily salary of the employee. For the purposes of the vacation allowance, the average daily wage is measured on the basis of the employee’s compensation for the preceding 12 months (or any other applicable period), divided by the number of calendar days during the 12-month period (days of statutory holidays and days of unpaid leave are not included).

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Sick Leave

Employees are entitled to sick leave in the event of sickness or accident, provided that the certificate of sick leave (or other document) from the medical institution confirms the illness or injury. For the first five days of sick leave, an employer must pay the allowance at the same rate as the daily wage.

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After the sixth day, compensation is paid by the Social Security Fund of Ukraine.

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Wages and Salary Payment

Employees in Ukraine are entitled to the standard minimum wage, which is modified every year.

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Starting January 1st, 2024, the minimum wage stands at 7,100.00 UAH gross monthly.

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By April 1st, 2024, it will increase to 8,000.00 UAH gross per month.

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Public Holidays

Important: holidays are not celebrated during martial law.

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Public holidays are paid and not included in the minimum annual holiday entitlement:

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• 1st of January – New Year
• 8th of March – International Women’s Day
• 1st of May – Labour Day
• 5th of May – Easter (2024) (movable)
• 6th of May – Easter Monday (2024) (movable)
• 8th of May – Victory Day in the 2nd World War
• 23rd of June – Orthodox Whit (2024) (movable)
• 24th of June – Orthodox Whit Monday (2024) (movable)
• 28th of June – Constitution Day
• 15th of July – Day of Ukrainian Statehood
• 24th of August – Independence Day
• 1st of October – Day of Ukrainian Defender
• 25 of December – Christmas

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Employer Taxes

Effective January 1st, 2024, the Social Security Contribution (SSC) stands at 22%, capped at 106,500 UAH (equivalent to 15 times the minimum wage of 7,100 UAH). The single contribution rate, also known as the minimum insurance contribution, is set at 1,562.00 UAH per month. This implies that the maximum SSC is calculated as 22% of 106,500 UAH, resulting in 23,430.00 UAH.‍

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For monthly gross salaries below 106,500 UAH, the contribution is 22% of the gross amount.

The 22% of the gross salary is allocated to various funds, including the unemployment fund, accident fund, pension contribution, and temporary disability fund.

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Notably, certain private pension funds are not within the scope of the coverage.

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Employee Taxes

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• Personal Income Tax: 18%
• Military Tax: 1.5%

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Notice Period

The general notice period for termination of a permanent employment agreement by an employee is two weeks.

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When parties agree to a mutual termination, no notice period applies.

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Termination and Severance Pay

Depending on the reason for termination (dismissal, redundancy etc.), Ukraine EOR employees may have the right to a statutory severance payment from one to three monthly average salaries.