How can a foreigner hire employees in Ukraine?

• Corporate & Taxes
• Investment & transactions

Having opened a company in Ukraine, a foreign businessman may ask himself: how to hire employees for the company? Is it possible to hire foreigners or Ukrainian citizens only? How to do it in compliance with Ukrainian legislation?

Labor law in Ukraine is one of the strictest and often takes the side of employees. Terms and conditions of employment in Ukraine are regulated in detail.

In general terms, in order to commence labor relations, the following steps are required:

- to conclude Employment Contract between the employee and the company;

- to issue Labor Order on hiring the employee;

- to notify Ukrainian Tax Authorities on hiring the new employee.

However, this procedure expands in the case when the employee is a foreign citizen. In order to hire a foreigner in the Ukrainian company, work permit is required. Without compliance with this requirement, the Ukrainian host company can be penalized, and the foreigner may be deported from Ukraine.

Basic documents required to apply for the work permit:

a. application;

b. copy of passport with duly notarized translation into Ukrainian;

c. color photo;

d. draft Employment Contract certified by the employer;

e. Power of Attorney for a representative in Ukraine.

Monthly salary of the foreign employee shall be not less than 10 minimum wages in Ukraine (now it makes up ca. EUR 1,800 per month). Such requirements do not apply in the case of founders, members, beneficiaries of the Ukrainian host company.

Work period for the foreigner in Ukraine is limited by validity term of his/her work permit. Typically, permit shall be issued for one year and shall be renewed annually. In the case of founders, members, beneficiaries of the Ukrainian host company, as well as for highly paid foreign specialists with monthly salaries amounting to 50 minimum wages in Ukraine (now it makes up ca. EUR 9,300 per month) validity term of work permit can be up to three years.

A special situation arises when the host company has not been registered yet and it is necessary to appoint the first director - a foreigner. The difficulty is that the Ukrainian company’s director should have work permit to be employed legally. Meantime, work permit can be obtained by the company-employer only upon its state registration. However, the company has not been registered yet and cannot be registered without the appointed director. We have a vicious circle here. In such a case, the Ukrainian company’s first director can be a citizen of Ukraine appointed temporarily, followed by his/her changing as soon as work permit is issued.

It should be noted that work permit does not provide for the foreigner the right to stay in Ukraine for a long time. In order to reside legally in Ukraine, it is necessary to apply for a visa D and then for a residence permit in Ukraine. For tax issues, it will be required to obtain an individual tax number as well.

Please note also that the renewal procedure for work permit shall commence 20 days before expiration of the current work permit, in such case it will pass in a simplified form.

Marta Sverdlykivska

sverdlikovskaya@interlegal.com.ua