Employer of Record in Ukraine

**Employment Contract Requirements**: Employment contracts in Ukraine must be in Ukrainian, or English with an official Ukrainian translation. The contract must specify: job title, duties, salary, benefits, work schedule, leave policies, and term (permanent or fixed-term). Employment defaults to permanent unless explicitly fixed-term. **Diia City Tax Regime**: If your Ukrainian employee qualifies under Diia City, the tax rate is 5% (vs standard 18-20%). Diia City is available to: tech companies, IT professionals, and startups. Registration with Diia City provides tax benefits, regulatory simplification, and flexible employment options. Not all companies or employees qualify—the EOR will determine eligibility. **Pension and Social Insurance**: Employer contributes approximately 22% total (combined with employee portion) to the State Pension Fund. Additionally, 3.6% social insurance tax covers unemployment and disability. The 1.5% military levy was added due to the conflict. Total employer contributions are approximately 27%. These are withheld from the employer's payments or paid separately depending on the structure. **Income Tax**: Personal income tax is withheld from employees (typically 18%, higher for some income) and remitted to tax authorities monthly. The EOR handles all calculations and filings. **Annual Leave**: Employees accrue minimum 20 working days per year. Leave cannot be completely forfeited—unused days must be paid out at separation. Employees can take leave flexibly with employer approval. **Public Holidays**: Ukraine observes 13 public holidays annually, on which employees are paid full salary for not working. If an employee works on a public holiday, they receive double pay or an additional day off. **Severance**: Termination without just cause requires one month base salary severance, plus unused leave payout. Just cause terminations (theft, gross misconduct) may reduce severance, but the employer bears burden of proof. **Flexible Work Arrangements**: The new Labor Code allows flexible work schedules, remote work, and gig contracts (under Diia City) with no formal approval needed. This makes Ukraine excellent for remote and flexible hiring arrangements. **Currency and Foreign Exchange**: Salaries are paid in Ukrainian Hryvnia (UAH). Foreign remittances are allowed through banks with proper documentation and foreign exchange compliance. **Risk and Compliance**: Given geopolitical circumstances, companies should: (1) Use reputable EOR providers with local infrastructure and insurance, (2) Maintain communication flexibility (understand employees may face disruptions), (3) Establish clear work-from-abroad policies if needed, (4) Keep compliance documentation current. **Contractor Classification**: Service contracts ("контракт на надання послуг") are legal but closely monitored. Regular work, employer control, and economic dependency suggest employment. The State Tax Service can reclassify and assess back taxes.