Personnel accounting in a company in Ukraine: advice to foreign business in Ukraine
Today foreign business in Ukraine is opened in various forms and for various types of activities. The most common way to start a business in Ukraine is the registration of an LLC - with both foreign individuals and legal entities registered outside of Ukraine being the founders of the company in Ukraine.
The procedure of starting a business has many nuances, and today we would like to talk about one of them: how to hire the staff you need for your registered company in Ukraine.
The issue of hiring personnel and keeping personnel records in the Ukrainian company is one of the most frequent questions we hear from our foreign Clients. It is not surprising, because the work in the company should be done by someone, and this someone should be officially employed in Ukraine. Fines and other penalties for violating labor and tax legislation in Ukraine are always unpleasant for any kind of business.
If you want to gain insight on the issues of HR accounting in Ukraine - all the information will be further in our material. If you want to act for sure and to avoid unnecessary penalties in the issue of staff record keeping - consult our specialists.
We provide both individual consultations, and full comprehensive services for foreign businesses in Ukraine, which will include HR accounting, hiring of specialists, all staff payments, etc.
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How to hire staff for a company in Ukraine?
Starting a business in Ukraine, and when facing the need to recruit staff for your business, you can go two ways:
- hire desired employees in Ukraine;
- attract foreign staff and employ them in a Ukrainian company.
Of course, the employment procedure for both situations will be different. Let us briefly describe the algorithm of actions in both cases.
Employment of foreign employees in a Ukrainian company.
In order to employ a foreigner at a Ukrainian company, you need to get a Work Permit for a foreigner in Ukraine. The procedure is as follows:
Having agreed with a foreign employee on employment in the Ukrainian company, the following package of documents shall be prepared on behalf of the company in Ukraine (the employer):
- An application with the employee’s name and the position for which he or she is being invited;
- A draft employment agreement with the employee.
In addition, the employee must provide the following documents: copies of passport (notarized translation into Ukrainian) and a photo. Translation of the passport can be done through our trusted translator partners.
Once both sets of documents are ready, they must be submitted to the local Employment Center.
The review of documents may take about a week. However, in our practice it was possible to simultaneously obtain Work Permits for more than 30 workers in Ukraine.
After you receive the Permit, you can proceed to the employment procedure. We will describe it below. The only difference in the procedure is that a copy of the employment agreement with a foreign worker must be submitted to the Employment Center within 10 days after signing. Otherwise the Work Permit may be revoked.
A foreign worker can also get a Work Permit as an intra-corporate assignee. Read more about it here.
Please note! The foreigner’s Work Permit in Ukraine doesn’t allow a foreigner to stay longer than the established period of time (usually it's 90 days, but the period depends on the foreigner’s country of residence and visa policy in Ukraine). If you need a foreign worker in Ukraine for a longer period of time, it’s worth getting a Temporary Residence Permit for him/her. We have already described the related procedure here.
Lawyer’s note: When registering a business in Ukraine, many founders consider appointing themselves as director - in this case a person gets the opportunity to obtain a Temporary Residence Permit in Ukraine with slightly simplified requirements for the Work Permit - no minimum wage requirement will be applied.
Employment of a Ukrainian employee in a Ukrainian company.
The employment procedure (for a Ukrainian or foreigner with a Work Permit in Ukraine) consists of three stages:
- Drawing up an employment order;
- Execution of the employment agreement with the employee (in two copies for each party);
- Notification of the State Fiscal Service (SFS) on the hiring of an employee.
For official employment, the employee must provide the following package of documents:
- Passport or other ID document;
- Employment record book, if your company will be the main place of work for the employee.
After signing an employment agreement with an employee, a notification to the tax authority can be submitted online - through a special account. For this purpose, an EDS must be issued in advance. The notification is submitted after the issuance of the order, and before the actual start of work.
Please note! The start dates in the notification, the employment agreement and the employment order must be the same.
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How to keep personnel records in a Ukrainian company?
Maintaining personnel records for a company consists of many separate tasks and processes. Let’s break them down into easy-to-understand blocks.
Preparation of primary personnel documents in the company:
- personnel orders;
- staff schedule;
- personnel time sheet.
Execution of personnel documents in the company:
- sick leaves;
- certificates of employment;
- employment or dismissal of an employee.
Personnel record keeping
- personal personnel cards and personnel files;
- employment record books and registers of the employment record book transfers;
- books of personnel orders;
- personnel leave balances, etc.
Preparation and submission of reports on personnel to the state authorities of Ukraine. The list of reports may differ depending on the specifics of the personnel working for you.
It is important to properly record not only wages, but also those payments to employees that do not relate to wages, such as business trip expenses (travel, accommodation, meals), and one-time financial assistance (for social amenities). In addition, systematic financial assistance is included in the wage fund. Accordingly, documentation, accounting and taxation of such payments differ significantly.
As for another important issue for any foreign entrepreneur - taxation in the presence of hired personnel. We have covered this topic in detail here.
The standard “set” of payroll taxes in Ukraine consists of:
- personal income tax - 18%;
- military tax – 1.5%
- single social security tax – 22% of the minimum wage.
Maintaining personnel records is not only about timely payment of due taxes if you have employees, but also about painstaking paperwork. Violations in the HR record keeping and accounting can lead to penalties from both the tax authorities and the State Labor Service of Ukraine.
Our company offers a range of services for establishing and running a foreign business in Ukraine. Our Service packages may include:
- Business registration in Ukraine in any form of incorporation;
- Obtaining Work Permits for foreign employees, including the director of the company;
- Tax accounting of the company, which will include filing reports on the taxes of the representative office;
- Payroll - personnel accounting of the company, including operation of the client’s office, payment of salaries, taxes for the client, solution of issues with leaves, bonuses, insurance costs, etc;
- Accounting - work with the company's accounts, registration of incoming payments or expenses of the company;
- Legal servicing - business legal support that requires legal knowledge and skills - development of agreements, orders, internal documentation, everything you need for accounting.
The cost of services will depend on the amount of services you need, the number of personnel and other factors. You can see the price of already developed packages here. Or you can contact our specialists for a personal package of services.
Do you want to start a business in Ukraine easily and safely? Don’t hesitate to contact us! We will not only help you to choose a form of incorporation that will fully meet your needs, but also provide top-quality services for your business activity in Ukraine.
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