Employment in Ukraine
Educated Workforce at Competitive Costs Ukraine has plenty of universities and vocational schools, thus providing well educated workforce. Educational institutions include apprenticeships as part of their curriculum, thus enabling their students to have some practical work experience before they graduate, which reduces on-the-job training period and related costs. Ukraine is known for low labor costs for skilled and educated workforce. The minimum statutory monthly wage is only UAH 1004 (approximately US$ 125 or EUR 100) as of December 2011. Otherwise, wages are negotiated freely. Bonuses only have to be granted if they have been agreed in the individual employment agreements or in collective agreements. The employer has complete discretion at creating its bonus/incentives program (or not paying any bonuses) and providing (or not) additional benefits (e.g., private medical insurance, corporate car or mobile, etc.). Ukrainian labor laws allow for a variety of flexible working practices such as fixed-term agreements, shift systems, 24/7 operations, part-time or flexible hours employment, all of which enhance Ukraine’s international competitiveness as a suitable investment location for internationally active businesses.
Public Support Programs Companies can be supported by wage subsidies if they create workplaces for (and hire) disabled employees. Also, the State Employment Service provides training for the employees who are registered as unemployed, thus enabling companies to employ staff with fresh knowledge and skills, with background enriched by work experience in a different (previous) position or industry.
Hiring Workforce Companies are supported in their search for suitable employees by both the state and the private sector. The State Employment Service has tens of thousands of potential employees in their register and is able to refer them for interview on short notice free of charge. It is represented in each municipality throughout Ukraine with its local Employment Centers. There are also numerous private providers of recruitment services, which could perform a more targeted search. These companies normally charge the hiring fee of one to two gross monthly salaries of the employee that they procure.
In addition, there are several specialized newspapers and job search websites where employers may place advertisements for vacant positions in addition to their own websites. Ads for specialists and highly qualified staff are usually placed in English-language newspapers or leading business newspapers, whereas ads for skilled workers or low-qualification jobs normally appear in local papers.
Temporary Staff
Engaging employees through a third party (temporary staffing agency) is an established practice for international businesses in Ukraine. However, doing so can significantly increase costs (VAT at 20% on top of the employee’s salary and the related social security contributions at approximately 36%). Further, due to potential for misclassification claims it is not recommended, as not yet expressly recognized in the Ukrainian legislation.
Anti-Discrimination Any unjustified denial of employment is prohibited. The Labor Code guarantees equal employment opportunities to all, irrespective of their background, race, nationality, gender, language, social position, political or religious affiliation, profession, place of residence, or other factors. Any direct or indirect deprivation of rights, or the granting of any direct or indirect advantages, within the term of employment on the grounds specified above, is unacceptable. Similar, but more specific, provisions are found in the Law on Providing Equal Rights and Opportunities for Females and Males. The employers are prohibited from advertising job vacancies exclusively to males or females, or from requiring, while concluding an employment agreement with a prospective employee, any data regarding his/her private life or family planning. Collective agreements must contain certain measures on providing equal rights and opportunities for females and males and must specify the terms of fulfillment thereof.
Migration matters Foreign citizens and stateless persons require a work permit for performance of paid work in Ukraine (unless they have a permanent residency certificate). Obtaining such work permit for high-skilled employees is quite easy, as no quotas exist either by industry, by region of Ukraine, by country of the employee’s origin or by any other criterion. Applications for work permits are reviewed quickly (within 1 month), but additional 4-6 weeks must be factored in for preparation of the application documents, some of which have to be obtained from various Ukrainian authorities or insurance and medical institutions.
Business visitors from a number of developed countries (the EU, USA, Canada, Japan) may come without a visa for up to 90 days in total within 180 days. Visitors from other countries are eligible for visitor visas valid for up to 5 years.
Employment Agreement Should be drawn up in writing, although verbal agreement is also legally binding, if the employee has been admitted to work. In principle, the agreement can be formulated in any language, but a binding Ukrainian version is necessary, as Ukrainian courts (and other authorities) require a Ukrainian translation of any agreement drawn up in another language. The employment agreement with the chief executive (the Director) of the Ukrainian legal entity is called “employment contract” and is a distinct form of an employment agreement in that the terms of the employment contract may be more detailed and may deviate from labor laws, including contain additional grounds for dismissal by the employer. There are legally fixed forms for employment agreements with certain categories of employees, on the basis of which the customarily used forms of employment agreements have developed. A useful Ukrainian law employment agreement must address certain points, such as: Name of the position and the job description; Start date, the duration of the employment (indefinite or fixed-term); Working time (daily, weekly, monthly, etc.); Probationary period; Wage, bonuses and benefits; Vacation entitlement; Non-disclosure agreements and non-compete obligations.
Probation Probation may be established for up to 3 months (1 month for low-skills work), but this condition must be stipulated in writing and announced to the employee before admittance to work. During the probationary period, the employer may dismiss the employee at any time if the employer determines that the employee does not meet the criteria established for the job position for which he/she was hired.
Fixed-term employment Generally, employment must be for undefined duration, but fixed-term employment is allowed if it can be justified (e.g., project work, seasonal employment, etc.). Such fixed-term agreements but must be expressly terminated before expiring. It is for the employer to decide whether to renew the agreement or not. Extending a fixed-term agreement (or letting it expire without actually terminating the employee) will transform it into an employment agreement concluded for indefinite term.
Work Time A normal work week is eight hours per day 5 days a week (40 hours per week). Work on weekends, holidays, during nightime is permitted without any special authorisation, if justified by the nature of business and appropriately compensated (normally, at double of the employee’s usual rate). Alternative work hours arrangements are possible, which allow individuals to work 60-hours’ weeks. The duration and number of breaks depends on the total number of hours worked per day. Employees are entitled to at least one meal break of at least 30 minutes, normally after working 4 hours per day. Overtime is possible in certain circumstances, but must be documented in a certain way and must be compensated with additional time off or by payment at double rate. The Labor Code limits the total amount of overtime in one year to 120 hours, and an employee may not be required to work more than four hours of overtime during two consecutive days. Minors, pregnant women, and women with children under the age of three may not be required to work any overtime. Therefore, for employees whose job position naturally requires to work in excess of 8 hours a day from time to time, different arrangements are available (the summary calculation of work time, open-ended work day, etc.).
Vacation and Public Holidays Annual paid vacation must be provided at 24 calendar days minimum. The usual days off are Saturday and Sunday, plus 10 national holidays and 3 non-working days following certain religious holidays. If a holiday falls on weekend, there is no work on Monday (or other closest normal work day) following such holiday.
Sick Leave The duration of the sick leave is determined by a doctor, and can be for up to 4 consecutive months (after which the employement may be terminated). The employer pays the employee’s average salary for the first 5 days of a sick leave, while afterwards the cost is borne by the state social security fund.
Maternity Leave A maternity period starts 70 days before the expected birth date and ends eight weeks after delivery. Pregnant employees are only allowed to work during this time if a doctor certifies that the work will not be harmful to the health of the mother and child. In cases of premature or multiple births, the employee is not obliged to return to work for a period of up to twelve weeks after delivery. Also, the young mother (or one of the family members who actually takes care of the child) can take a childcare leave until the child is 3 years old.
Termination of Employment Employment can be terminated by the employer or the employee. All terminations of employment require written form (paper form). Electronic termination (e.g. via email) is not possible. Pursuant to the Labor Code, an employer may terminate a labor agreement only in a limited number of cases, including, but not limited to: staff redundancy; the employee’s systematic failure to fulfill his or her employment duties; the employee’s insufficient qualifications or deteriorating health condition; the employee’s unjustified absence from the workplace for more than three consecutive hours during one working day; and certain others. In contrast, a labor contract (as opposed to a labor agreement) may also be terminated for any grounds specified in the contract. Ukrainian law prohibits the dismissal of pregnant women, women who have children below the age of three (or, in special circumstances supported by medical evidence, below the age of six), and single mothers who have children below the age of 14 or disabled children under the age of 18. Under the Labor Code, the dismissal of an employee, who is a trade union member, requires, in certain circumstances, the prior consent of his/her trade union. In such cases, the consent of the relevant trade union should be requested prior to the termination. Immediate termination of employment may be considered in cases of serious misconduct rendering it unacceptable for either party to continue the employment relationship.
Certain procedures must be strictly followed and the timelines observed to ensure that the termination is effective. An employee must submit a notice of resignation with a minimum notice period of 14 days. The employer is obligated to provide a notice only in case of redundancy, which must always be issued in writing and on paper - notice of termination in electronic form is insufficient.
Participation of Employees in Company Management Works Councils and Trade Unions Works councils are in-house committees composed of elected representatives representing the interests of the employees. Their activities range from information and non-binding consultation rights to exercising co-determination rights in organizational and social affairs. However, the works council generally has no powers to interfere with company management. Trade unions may be created by employees unbeknownst to the employer. While powers of trade unions are broader and more defined relative to those of works councils, their ability to influence management is limited, unless the collective agreement stipulates more extensive and specific powers than those expressly envisaged in the law.
Functions and Rights Works councils and trade unions have informative and advisory rights relating to company internal policy and organization. Specifically, they can negotiate rules pertaining to organizational and social issues, and may have to be consulted regarding specific personnel decisions. They may have input on matters such as: end and beginning of daily working hours (not the duration as such) vacation schedules internal behavioral rules safety issues (accident prevention) surveillance installations internal social facilities (e.g. cantines) general company wage structures (but not individual salaries).
Personal Data The law On Personal Data Protection is consistent with the relevant legislation of the European Union, but does not place quite as onerous obligations on the employers.
All of the information included in this document is for informational purpose only, and may not reflect the most current legal developments, judgments, or settlements. This information is not offered as legal or any other advice on any particular matter. The Firm and the contributing authors expressly disclaim all liability to any person in respect of anything, and in respect of the consequences of anything, done or omitted to be done wholly or partly in reliance upon the whole or any part of the contents of this brochure. No client or other reader should act or refrain from acting on the basis of any matter contained in this document without first seeking the appropriate legal or other professional advice or the particular facts and circumstances.