Hire employees in Ukraine
What a foreign company needs to know before employing people in Ukraine: whether you need a local entity, what an employee costs on top of a 22% employer contribution, how income tax and the military levy work, which temporary labour rules apply during martial law, and how FOP contractors and the Diia City regime compare with employment. Written for CHROs, CFOs, General Counsel and founders.
Quick answers
The questions leadership teams ask first.
Do I need a local entity in Ukraine to hire?
No. There are three routes:
- Employer of Record. Dryft Global employs the person in Ukraine through a compliant local employer, notifies the State Tax Service before day one, files the monthly unified tax calculation and runs payroll twice a month. You direct the work.
- Direct local entity. You form a limited liability company (TOV), which can register in about a day, then set up tax registration and payroll: plan for several weeks before the first payroll.
- Independent contractor (FOP). Lawful only for genuinely independent services. Where the work looks like employment, courts can reclassify it, with a fine of 30 times the minimum wage per worker plus back taxes.
When should I use an EOR instead of registering locally?
Use an EOR for your first engineers or business staff in Ukraine, when you want to start in days and do not want to build hire notification, twice-monthly payroll, the monthly unified tax calculation and martial-law compliance yourself. Your own entity earns its keep for a sustained team or a company that can qualify for the Diia City regime for IT companies.
What does an employee actually cost beyond salary?
The employer pays a unified social contribution (ESV) of 22% of gross salary, up to a cap set as a multiple of the minimum wage in the annual budget law. There is no employee social contribution. The employee pays 18% income tax and a 5% military levy, so net pay is 77% of gross. Private medical insurance is a common extra in technology roles.
How difficult is termination in Ukraine?
Dismissal is allowed only on statutory grounds such as redundancy, unsuitability or serious misconduct. Redundancy still requires 2 months' personal written notice during martial law, an offer of any suitable vacancy, and severance of at least one average monthly salary. Trade union consent is not needed during martial law except for union officials, and final pay is due on the dismissal day. Mutual agreement is the common clean exit.
Can Dryft Global legally employ my team in Ukraine?
Yes. Dryft Global employs your team in Ukraine through a compliant local employer structured for the staff provision rules. We issue Labour Code contracts, notify the State Tax Service before day one, pay salary twice a month, withhold income tax and military levy, pay ESV, file the monthly tax calculation, and manage leave, mobilisation and dismissal.
Hiring routes compared
Speed, set-up burden and liability differ by route.
| Factor | Direct local entity | Dryft Global EOR | Independent contractor (FOP) |
|---|---|---|---|
| Time to first payroll | Several weeks | Days to 2 weeks | Days |
| Local entity required | Yes, TOV | No | No |
| Hire notice, ESV and tax calculation | Your registrations | Handled by Dryft Global | Contractor's own |
| Staff provision rules | Not applicable | Structured compliantly by Dryft | Not applicable |
| Statutory liability | Direct corporate exposure | Assumed by Dryft Global | High if the work looks like employment |
| Best fit | Sustained team, local sales | First hires, engineering teams | Short independent projects |
What an employee costs in Ukraine
Ukraine combines all social insurance into one employer contribution, and the employee pays income tax and the military levy through withholding. The model below is a Kyiv software engineer on UAH 120,000 gross a month in 2026.
| Component | Employer share | Notes |
|---|---|---|
| Unified social contribution (ESV) | 22% | Covers pension, sickness, maternity, unemployment and work accident insurance |
| Employee social contribution | None | Abolished; no employee ESV is withheld |
| Income tax | None | Employee pays 18% |
| Military levy | None | Employee pays 5% |
| Total employer on-cost | 22% | On gross salary up to the ESV cap |
For an employee on UAH 120,000 a month, budget roughly UAH 1.76 million (about USD 38,700) a year before the EOR fee and any optional benefits. The employee's net pay is UAH 92,400 a month after 18% income tax and the 5% military levy. Candidates often compare employment offers with FOP contracts or Diia City pay, which are taxed differently, so show the net figure. Ask us for a cost model with current rates applied.
Payroll and tax
Salary is paid in hryvnia at least twice a month, no more than 16 calendar days apart and within 7 days after the period ends. This rule continues to apply during martial law. The employer notifies the State Tax Service before the employee starts work, withholds income tax and the military levy when salary is paid, and pays the 22% ESV. Legal entities file a single monthly tax calculation covering all three within 20 calendar days after the month end.
Income tax and military levy
Income tax is a flat 18%. The military levy is 5% of salary, raised from 1.5% on 1 December 2024 and due to return to 1.5% from the January after martial law ends. Qualifying IT companies resident in Diia City can instead apply 5% income tax, 5% military levy and the minimum ESV to staff pay, up to the equivalent of EUR 240,000 a year per person.
Minimum wage 2026
UAH 8,647 a month and UAH 52 an hour, set in the State Budget Law. The draft 2027 budget proposes UAH 9,546 a month.
Leave and mandatory benefits
- Annual leave. At least 24 calendar days. During martial law the employer may limit annual leave to 24 days, with unused days carried forward and paid out on dismissal.
- Public holidays. During martial law public holidays are ordinary working days. The statutory list resumes when martial law ends.
- Sick pay. The employer pays days 1 to 5, and the Pension Fund pays from day 6, at 50% to 100% of average earnings by insurance record.
- Maternity. 126 calendar days at 100% of average earnings, paid by the Pension Fund.
- Paternity. A one-off paid leave of up to 14 calendar days within 3 months of the birth.
- Working time. 40 hours a week. During martial law, critical infrastructure employers may require up to 60 hours.
- Mobilisation. An employee called up for military service keeps the job, but the employer does not pay salary during service; the state pays the serviceperson.
- Common extras. Private medical insurance, flexible hours, remote work and equipment.
Termination and notice periods
Probation can last up to 3 months, or 6 months in exceptional cases. After that, the rules are as follows.
| Item | Rule |
|---|---|
| Redundancy notice | 2 months' personal written notice, unchanged during martial law |
| Severance | At least 1 average monthly salary for redundancy or unsuitability |
| Employee resignation | 2 weeks' notice |
| Trade union consent | Not required during martial law, except for union officials |
| Final pay | On the dismissal day, including unused leave |
- Statutory grounds only. There is no at-will dismissal in Ukraine.
- Offer alternatives. Redundancy and unsuitability dismissals require that no suitable transfer is available.
- Protected employees. Pregnant women, women with children under 3 and single parents of children under 14 can be dismissed only on liquidation.
- Reservation. Employers with critical status can reserve employees from mobilisation within a quota, if pay is at least UAH 25,941 a month from 1 September 2026.
- Collective redundancy. Thresholds start at 10 employees in a month, with 2 months' notice to the State Employment Service.
Can I use independent contractors?
Only for genuinely independent work. Many Ukrainian IT professionals work as private entrepreneurs (FOP) in simplified tax group 3, paying 5% single tax, a 1% military levy and the minimum ESV. Courts and the State Labour Service look at substance: a set schedule, integration into your processes, regular pay for the process of work and your equipment all point to employment, and a B2B contract does not prevent reclassification. The fine is 30 times the minimum wage per worker, UAH 259,410 in 2026, plus back taxes at employee rates. Placing a worker under another company's direction is also regulated: since 2022 a staff provision company must be registered with the State Employment Service, pay at least the client's rate for similar work and respect placement restrictions. Ukraine has no separate EOR category, so the employing structure matters. For anyone who works like an employee, an EOR set up through a compliant local employer is the safe route.
The legal framework in brief
Ukraine is a civil law system where the 1971 Labour Code, as amended, sets minimum terms. A bill for a new Labour Code was withdrawn in July 2026, so the existing code continues to apply. The instruments you will hear most:
- Labour Code. Contracts, probation, working time, leave, notice, dismissal and severance.
- Law 2136-IX on labour relations under martial law. Temporary rules on working hours, leave, public holidays, suspension and dismissal while martial law applies, most recently extended to about 29 January 2027.
- Tax Code and the unified social contribution law. 18% income tax, the 5% military levy, the 22% ESV and the FOP simplified regime.
- Diia City law. The special tax regime and gig contracts for qualifying IT companies.
- Law on Employment of the Population. Work permits, issued in up to 7 working days for up to 3 years with no salary threshold above the minimum wage, and the staff provision register.
- Data protection. Law 2297-VI of 2010, overseen by the Ombudsman; a GDPR-aligned bill is awaiting final adoption.
- Corporate tax. 18%, with a treaty with the United States in force.
- Authorities. The State Tax Service, the Pension Fund, the State Labour Service, the State Employment Service and the Ombudsman.
Where the talent is
Official estimates of the population in government-controlled territory range from about 22 to 25 million (Ministry of Social Policy) to about 29 million (Institute for Demography), as there has been no census since 2001. About 245,000 IT specialists worked in Ukraine in 2025, and IT services exports reached USD 6.66 billion that year. Ukraine ranked 45th in the world for English proficiency in 2025. Time is UTC+2 (UTC+3 in summer). Ukraine has been an EU candidate country since 2022, with accession negotiations under way.
| Region | Talent and industry concentration |
|---|---|
| Kyiv | Largest IT and business services cluster, headquarters |
| Lviv | Largest western hub, strong IT cluster |
| Kharkiv | Software engineering, universities |
| Dnipro | IT services and engineering |
| Odesa | IT services and logistics |
Ukraine Implementation Kit
This page tells you the rules. The kit tells you what to do, in what order, and what goes wrong when you skip a step.
- Step-by-step checklist, from route selection to first payroll
- Contract, probation and hire notification before day one
- Gross to net and employer cost set-up under the 2026 rates
- Twice-monthly pay calendar and the unified tax calculation
- Martial-law rules, mobilisation and reservation checklist
- FOP reclassification and staff provision risk checklist
- Every official Ukrainian authority with direct links
This guide is general information, not legal, tax or immigration advice. Ukraine sets the minimum wage and the ESV limits in each annual budget law, and the martial-law labour rules apply only while martial law is extended. Confirm current figures and the employment structure with a qualified adviser or with Dryft. Last reviewed November 2026.
Ready to hire in Ukraine?
Tell us who you want to hire and where they sit. You will get a cost model and a compliant route within a day, from a person who has done this before.