Ukraine Payroll and Benefits Guide
What global businesses need to know about payroll in Ukraine
You may find this hard to believe, but four years into its conflict with Russia, Ukraine’s economy is proving to be remarkably resilient. After an initial shock to GDP when the conflict began in 2022, Ukraine has gradually recovered, and continues to post 4-5% rises each year. KPMG research has put this down to greater consumer demand, and a stable maritime corridor in the Black Sea that has enabled it to continue with key exports of food, metals and minerals, among other goods. The Ukrainian economy is 60% service-based, though, and has become a real hub for telecommunications and IT development, thanks to a hard-working and highly technologically skilled workforce.
It’s no surprise that the war is continuing to have an effect on things from a payroll and employment perspective. A number of major changes continue to be made in areas such as social security contributions and the military levy, while some employment conditions remain temporarily changed while martial law is in place. This guide gives you the latest info on running payroll in Ukraine.
Getting Started
Ukraine has made positive steps in recent years to simplify and add transparency to the business set-up process, given the bureaucracy and (in some cases) corruption that has been a problem in the past. Nevertheless, it’s strongly recommended to seek the advice of a partner with Ukraine-specific business expertise, and to allow plenty of time and resources for the set-up process.
The limited liability company (TOV) is the most widely used method for foreign entities to start a business in Ukraine. This requires registration with the trade register, the drawing up of a company charter, and the submission of information about the beneficiary owners. From there, companies should get their documents notarized, obtain a Taxpayer Identification Number and a VAT number, and open a permanent bank account in-country (which can take 1-2 business days).
There is no legal minimum requirement for share capital, although companies must make sure they have enough money to cover wage, tax, and social security contributions. If, however, you choose to open a joint-stock company, then there is a minimum share capital requirement of 1,250 times the minimum wage. As of 2026, that is 10,808,750 hryvnias (approx. £185,000; $245,000; €214,000).
Employment Considerations
Labor agreements/contracts (or civil service contracts) are required under Ukrainian law. Residents do not need a work permit in order to work in Ukraine. Non-residents have the same rights to work as residents, but must obtain work permits and residence permits in order to obtain employment. Indefinite term, fixed-term and seasonal work employment contracts are common.
In normal circumstances, maximum working time in Ukraine is 40 hours a week, normally spread over five days of eight hours each, although it is possible for employees to work six shifts of seven hours each with mutual agreement. However, under martial law conditions, the standard working week has been extended to 60 hours at places considered critical infrastructure. Shorter working weeks apply under certain labor agreements, and to workers under the age of 18.
Employees must not work more than four hours of overtime in two consecutive days, or more than 120 hours of overtime in a year. Overtime should be paid at double the normal rate, and this rate also applies to any work done on a designated rest day. This would also apply to public holidays, but these are considered normal working days for as long as martial law is in place. Any employee who has a disability, or is the mother to a child between three and 14 years old, must give their consent to work any overtime. Pregnant women, employees under 18, and women with children under the age of three are not allowed to work any overtime at all.
Notice periods are two months if instigated by an employer, or two weeks if instigated by the employee. However, notice periods can be waived entirely if agreed by both parties. Probation periods are generally one month for most employees, and three months for management and specialist workers.
Compensation, Bonuses and Severance
The minimum wage in Ukraine has been subject to regular and substantial increases in recent years. At the start of 2026, a new rate took effect of 8,647 hryvnias (UAH) per month (approx. £150; $195; €170). It’s worth noting that due to the weakening of the Ukrainian currency, these currency conversions are actually lower than they were when the previous rate of 8,000 hryvnias per month took effect in 2024. Although this was the first increase for two years, increases have not always taken place at the same time each year, so it’s worth keeping an eye out for potential changes on a regular basis.
Paying bonuses to employees in Ukraine is commonplace and there are no restrictions on doing so within the private sector. Entitlement to severance pay is a minimum of one month’s salary, or a minimum of two months if the employee has had to leave their job for conscription into military service.
Tax and Social Security in Ukraine
Income tax in Ukraine is levied at a flat rate of 18%. On top of this is the ‘military levy’, which was increased from 1.5% to 5% in December 2024. Non-residents working in Ukraine are taxed at the same rate, but only on income from their work in the country.
The social security contribution is only made by employers, at a rate of 22%. Previously, this was capped at a maximum of 15 times the minimum wage — however, as of January 1 2026, this cap has been increased to 20 times the minimum wage. A reduced rate of 8.41% applies in the case of employees with disabilities. The only contribution made by employees is 0.6% into a state fund for unemployment benefit.
Corporation tax is also 18%, although the rate applied to profits made by banks was increased from 25% to 50% at the start of 2026. VAT runs at 20%, but the exporting of goods out of the Ukraine is exempt. Certain other goods and services are also given reductions in the VAT rate to 7% or 14%.
Employers should note that the tax reporting year follows the financial year, and that corporation tax returns for each quarter should be made within 40 calendar days of the end of that quarter (60 days for the last quarter of the year).
Holidays and Leave
The minimum entitlement for paid leave in Ukraine is 24 calendar days once the employee has completed six months of service, with higher rates for employees who are disabled, are under the age of 18, or work in particularly hazardous jobs.
Ukraine has 11 days of public holidays each year. Under normal circumstances, employees would get time off on these days, including on the following Mondays for holidays that fall at weekends. However, during the current conflict, public holidays do not count as non-working days for as long as martial law remains in place.
Maternity leave entitlement is 18 weeks – ten before the birth and eight after it. An extra two weeks are provided in the event of a multiple birth. The mother’s full salary is covered by the Social Security Fund of Ukraine.
Paternity leave entitlement is two weeks, unpaid, and can be taken at any time during the mother’s maternity leave. However, if a mother returns to work before the end of her maternity leave, the father can take over the remainder if they apply to their employer in writing. Parents and grandparents can also apply for unpaid parental leave to care for a child under the age of three.
Sick leave for medically certified illness or injury is paid by the employer at full salary for the first five days of absence, after which the Social Security Fund of Ukraine picks up the bill at variable rates, depending on their length of service. This ranges from payment at minimum wage for employees with less than six months service, to the employee’s full salary if they have at least eight years’ service.
Ukrainian law also provides for bereavement leave (seven days), wedding leave (ten days), and employer-funded study leave if an employee is taking an exam.
Payroll in Ukraine: a summary
There have been many sweeping changes in Ukraine from a payroll and employment perspective in recent years — understandably so, given the ongoing conflict. Setting up a business operation in Ukraine may be complicated enough without adding in extra payroll headaches, so finding ways to smooth the path to compliance can be a real benefit. Working with a global payroll partner, one that can connect you to in-country payroll expertise, can therefore be invaluable.
This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.