Hiring Employees in Ukraine in 2025: What You Need to Know

Ukraine is rapidly establishing itself as one of Eastern Europe’s premier destinations for remote and distributed hiring. Renowned for its robust tech sector, highly educated workforce, and competitive labor costs, Ukraine continues to attract international companies despite recent geopolitical challenges. 

Ukrainian professionals are particularly sought after in IT, engineering, finance, and creative industries, making the country a focal point for global talent acquisition.

For US-based companies, hiring in Ukraine offers numerous advantages. The combination of deep technical skills, cost efficiency, and a time zone that bridges the US and Europe enables American businesses to scale teams quickly while maintaining high quality and productivity. 

Ukraine’s growing remote-friendly infrastructure and English proficiency among young professionals make cross-border collaboration easier than ever before.

How to Hire Employees in Ukraine

Assess Your Hiring Needs

• Full-time vs. Project-Based Support: Decide if you need dedicated, long-term team members or short-term contractors for specific projects. Ukraine’s workforce is flexible, supporting both models.

• Local Compliance Requirements: If hiring employees (not contractors), be prepared to issue a formal written contract and comply with Ukrainian labor laws, including social contributions and statutory benefits.

• Onboarding Speed vs. Long-Term Control: For rapid onboarding and minimal local setup, consider working with an Employer of Record (EOR). If you seek long-term control and plan to scale extensively, establishing a legal entity may be worthwhile.

Hiring Options in Ukraine

• Set Up a Legal Entity: Open a local company to hire employees directly. This offers full control but requires navigating complex registration, legal, tax, and HR compliance processes.

• Partner with an Employer of Record: An EOR such as RemotePass serves as the legal employer, handling compliance, payroll, benefits, and taxes on your behalf. You manage the employee’s day-to-day work while the EOR ensures adherence to Ukrainian regulations.

EOR vs. Legal Entity: Key Differences

Aspect	Employer of Record (EOR)	Legal Entity
Pros	Fast onboarding, no local infrastructure required, handles compliance, payroll, benefits	Full HR control, best for large-scale hiring, direct employer branding
Cons	Slightly higher per-employee cost (service fees), less direct control over legal process	High setup complexity, longer time to hire, must manage compliance directly
Costs & Implementation	Low upfront cost, predictable monthly fee, can hire in days	Significant upfront investment, implementation in weeks/months
Compliance & Payroll	EOR assumes legal risk, ensures payroll/tax compliance, manages statutory benefits	Company is responsible for compliance, handles payroll/tax filings and benefits administration

EOR vs. Legal Entity

Understanding Worker Classification in Ukraine

Employees vs. Contractors

Correctly classifying your Ukrainian workers is crucial for compliance.

Aspect	Employee	Contractor
Legal Relationship	Employment contract, subject to labor law	Civil contract, governed by commercial law
Taxation	Employer withholds tax, pays social contributions	Contractor manages own taxes
Work Structure	Fixed hours, direct supervision	Project-based, autonomous
Benefits	Receives statutory benefits	No statutory benefits, negotiable
Misclassification Risk	Low if compliant	High if role resembles employment

Difference Between Employees and. Contractors

Legal and Tax Implications

Misclassifying an employee as a contractor can result in fines, retroactive taxes, and legal disputes. Ukrainian authorities closely scrutinize working relationships. Ensure that contractor agreements clearly define project scope, deliverables, and payment terms to avoid unintended employment classification.

Hire and Pay Contractors

• Contractors are responsible for their own tax filings and social contributions.
• Payments are generally made upon invoicing for completed work.
• For ongoing, full-time roles with supervision, an employment relationship is likely required by law.

Hiring Costs and Payroll in Ukraine

Hiring Costs Overview

• Base Salaries: Tech roles average $2,000–$4,000/month, depending on experience and specialization.
• Employer Contributions: Employers must contribute to social security funds, adding 22% to the gross salary.
• Benefits: Statutory paid leave, sick leave, and other benefits are mandatory. Health insurance is commonly expected.
• EOR Fees: If using an EOR, expect a service fee (commonly $400–$700/month per employee). For a detailed comparison of EOR and staffing agencies, see this breakdown.

Payroll Setup Steps

• Register your entity for tax and social security (if hiring directly).
• Set up payroll software or engage a payroll provider/EOR.
• Collect employee tax IDs and bank details.
• Calculate and remit payroll taxes/contributions monthly.
• Issue payslips and ensure timely payment.

Income Tax Rates

• Flat personal income tax rate: 18%
• Additional 1.5% military tax
• Employer social security contribution: 22% of gross salary

Payment Methods

• Direct deposit to Ukrainian bank accounts
• International wire transfers (for contractors/foreign currency)
• EOR payroll: EOR handles all local payroll, taxes, and compliance

Using Global Payroll Services

Global payroll providers and EORs simplify multi-country payroll, compliance, and reporting. EORs streamline payroll and benefits management, ensuring accuracy and compliance while reducing administrative overhead.

Compliance Risks When Hiring Employees in Ukraine

Incorrect Payroll Contributions

Failure to pay the correct amount of social security and tax contributions exposes companies to fines, audits, and back payments.

Permanent Establishment Risk

Repeated or ongoing engagement of Ukrainian workers may trigger “permanent establishment” status, creating local corporate tax obligations. Using an EOR can help mitigate this risk, especially in countries with complex employment laws.

Statutory Benefits

Ukrainian law mandates paid annual leave, sick leave, and sometimes severance. Non-compliance can result in penalties and employee claims.

Misclassification Risks

Improperly classifying full-time workers as contractors can lead to substantial legal and tax liabilities. Review work arrangements regularly and consult legal experts or EORs to ensure proper classification.

Regional Law Variances

While Ukrainian labor law is largely national, some local regulations (such as tax incentives or employment quotas) may apply if hiring in multiple cities.

Onboarding New Employees in Ukraine

Before Their First Day

• Issue and sign a written employment contract. For a detailed overview, see the complete guide to Employer of Record services.
• Collect identity documents, tax IDs, and bank information.
• Provide pre-onboarding materials: company policies, code of conduct, and benefits overview.

On Day 1

• Welcome the new hire via your communication tools.
• Introduce them to their team and assign a remote work “buddy.”
• Provide access to company systems, software, and necessary hardware.

During the First 90 Days

• Set clear performance objectives and check in regularly.
• Offer orientation on company culture and Ukrainian work norms.
• Gather feedback on the onboarding process.

Offer Letter Essentials

• Position and job title
• Compensation details
• Working hours and remote work policy
• Start date and probation terms
• Termination and notice period clauses

NDAs and Confidentiality

• Non-disclosure agreements (NDAs) are standard, especially for tech and IP-sensitive roles.
• Clearly define confidentiality and data protection requirements in both the NDA and employment contract.

Background Checks

• Background checks are permissible with candidate consent.
• Common checks include previous employment, education verification, and in some cases, criminal record checks.

Managing Remote Employees in Ukraine

Computer and App Access

• Ship company laptops and peripherals if required, or supply a hardware stipend.
• Provide access to relevant software, cloud apps, and collaboration tools from day one.

Intellectual Property Protections

Securing your company’s intellectual property (IP) is essential when working with Ukrainian employees or contractors.

• Types of IP rights: Copyright, patents, trademarks, and trade secrets.
• Explicitly state IP ownership in employment and contractor agreements. In tech and IT, industry-specific EOR solutions ensure proper management of IP and confidentiality.
• Include clauses covering software code, inventions, designs, and other deliverables.

Complying with Ukraine Labor Laws

Working Conditions

• Employees are entitled to safe working conditions, set working hours (usually 40 hours/week), paid annual leave, and sick leave.
• Overtime is regulated and must be compensated according to law.
• Remote work must be formalized in the employment contract.

No At-Will Employment

Unlike the US, Ukraine does not permit at-will employment. Employment can only be terminated for legally specified reasons and with proper notice.

Trade Unions and Collective Bargaining

• Trade unions play a significant role in some industries.
• Collective bargaining agreements may apply, especially in large companies or state enterprises.

Terminating Employees in Ukraine

Acceptable Termination Reasons

• Redundancy or staff reduction
• Poor performance (with documented evidence)
• Mutual agreement
• Other reasons specified in the Labor Code

Arbitrary or unjustified dismissal is prohibited. All terminations must be documented and follow due process.

Notice Periods and Legal Protections

• Standard notice period is two weeks, but may be longer as specified in the contract.
• Severance pay is often required, particularly in cases of redundancy or mutual agreement.
• Employees have the right to challenge dismissals perceived as unlawful.

Why U.S. Companies Should Consider Hiring in Ukraine

Access to Skilled Talent

• In-demand roles: Software engineers, QA specialists, data analysts, project managers, and finance professionals.
• Over 130,000 STEM graduates annually, many fluent in English.
• Strong culture of technical education and self-development.

Cost Efficiency

• Salaries and employment costs are significantly lower than in the US.
• Remote-first and EOR models reduce the need for local offices or compliance teams.

Time Zone Overlap

• Ukraine’s time zone enables partial to full overlap with both US and European business hours.
• Ideal for distributed teams needing round-the-clock operations, 24/7 support, or agile development cycles.

Growing Remote-Friendly Infrastructure

• High internet penetration and widespread use of remote work tools.
• Abundance of coworking spaces in cities like Kyiv, Lviv, and Kharkiv.
• Mature IT and startup ecosystem, fostering innovation and global business practices.

Hire Quickly and Compliantly in Ukraine with EOR Support

Ukraine stands out as a premier hiring destination for US companies looking to tap into a deep pool of skilled, cost-effective, and adaptable talent. 

Navigating Ukrainian labor laws, compliance, and cultural norms is essential but manageable, especially with the right global EOR partner. By leveraging Ukraine’s tech-savvy workforce, favorable time zones, and growing remote infrastructure, US businesses can scale teams quickly, reduce costs, and maintain a competitive edge.