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Employment of foreign nationals in Ukraine

March 2012

Kristina Onyshchenko
Managing partner, Law
Nexia DK. Auditors & Consultants
Member of Nexia International

Recent years have seen a sustained growth in the number of foreign nationals seeking employment in Ukraine. Thus, for example, in the Lviv region alone, 289 work permits were issued to foreign nationals in 2010 and in 2011 this number went up to 473. The main cause of this trend is that Ukraine has become a significantly friendlier place for foreign investments and consequently foreign investors as well as local entrepreneurs are seeking to employ foreign talent to ensure high quality of management. In addition, it is also expected that the Euro 2012 soccer championship will make Ukraine even more attractive to foreign investors.

Ukraine’s government sets immigration quotas for each category of immigrants. One such category is highly skilled professionals *, who the Ukrainian economy is lacking so sharply. Immigration permits are issued to such people regardless of the currently applicable immigration quotas.

According to the law of Ukraine foreign nationals must follow a very complicated procedure to get a job. The employer must provide the job, get a permit to employ a foreign national, get extensions for the permit, pay the foreign national and ensure good working conditions, provide accommodation and other fringe benefits. As for the taxes paid by foreign nationals and for them by the employer, it has to be noted that they are exactly the same as those paid by and for Ukrainian citizens, including all the social taxes.

The main difference is that when hiring a foreign national, the employer must pay the fee for getting the employment permits for foreign nationals and temporary residence permits for their new hire. Furthermore, the employer must provide the foreign national with accommodation or reimburse them for the expenses of getting accommodation of their own. Thus the expenses of hiring a foreign national in Ukraine are always higher than the expenses of hiring a Ukrainian national.

Getting the documents

St. Sophia Cathedral,
Kyiv, Ukraine

To get a permit to hire a foreign national in Ukraine the employer must submit an application to the State Employment Centre or to its local branch in the region where the employer is registered. The law outlines specific requirements for the documents that must be submitted to the employment centre. These documents can be divided into two groups:

• Documents prepared by the employer;
• Documents that must be provided by the foreign national, including:
  • Copies of diplomas or qualification certificates;
  • Copies of the pages of the foreign national’s passport that contain his or her identification information;
  • 2 3.5x4.5 cm colour photographs (each photograph must be signed by the employer and stamped with the company’s seal on the back. It should be noted if the photographs are not signed or stamped the application may be turned down );
  • A certificate issued by proper authorities of the foreign national’s home country confirming that he or she is not serving a prison term for committing a crime and is not currently under investigation. As a rule such certificates that the foreign national has no criminal record can be issued by local police departments. It’s important to remember that no criminal record certificates are only valid in the territory of Ukraine for one month after issuance. If the foreign national is staying in Ukraine while his/her application for a work permit is being reviewed, a similar no criminal record certificate must be obtained in Ukraine.

An important aspect of the whole process is meeting the requirements for the documents. Every document issued by another country must be legalised or aposlilled, unless there are bilateral agreements between Ukraine and the foreign national’s country under which this is not required, translated into Ukrainian and certified in accordance with the procedure established by the law. As a rule this means that the document must be duly notarised and the translation must be signed by a certified translator.

A significant step in the process of preparing documents for employment of foreign nationals is the drafting of employment contracts. There are several mandatory requirements that must be met in an employment contract with a foreign national to avoid difficulties with getting a work permit:

• The terms of the contract with a foreign national must not be any worse than the terms of a similar contract with Ukrainian citizens and the pay must be at least equal to the amount offered to Ukrainian citizens employed in the same position;
• In Ukraine the standard work week is 40 hours regardless of whether people are employed full time or on flexible schedules. To avoid difficulties with getting a work permit for a foreign national it is recommended that certain limits be specified in the contract on how much the employee can work every day and that the contract explicitly specify the employee will have a 1 hour lunch break;
• Every employment contract with a foreign national is limited in time because it can only be entered into for the duration of the work permit;
• The employer must provide proper fringe and social benefits to the foreign national.

All the documents must be submitted by the employer to the state employment centre. Once the documents have been received the Centre will take up to 30 days whether or not a work permit can be issued. Work permits are issued for up to 1 year.

Visas: main requirements

Citizens of the European Union, the CIS, US, Canada, Cyprus, Japan and a number of other countries do not need a visa to travel to Ukraine and can stay in the territory of Ukraine without a visa for 90 days within a 180-day corridor. In addition, the CIS citizens can extend their stay for another 90 days if necessary. However, oftentimes visas are needed to sort out problems with staying in Ukraine. For example, when the period of visa-free stay has expired but the foreign national has to stay on in Ukraine for various reasons, the only option is to get a short term visa.

Under the amendments made to the Ukrainian visa regulations, there are three types of visas that can be issued to foreign nationals entering Ukraine:

Night Kyiv.
Arena-City entertainment centre

• Transit visas (type В) are issued to foreign nationals and people without citizenship who are travelling through the territory of Ukraine to another country or who are transporting cargo or passengers by road. Transit visas can be one-time, two-time and multiple entry which can be issued for a period of up to 1 year. In any case the stay in the territory of Ukraine cannot exceed 5 days on a transit visa;
• Short term visa (type С) is issued to foreign nationals and people without citizenship who need to stay in Ukraine for up to 90 days within 180 days after their first entry into Ukraine. Short term visas can be one-time, two-time and multiple entry, valid for 6 months or any other period specified in the documents on the basis of which it is issued. The maximum period of a multiple entry short term visa cannot exceed five years. Short term visas make sense for tourists or business travellers. Type C visas are often obtained by people seeking employment in Ukraine who plan later to get a work visa;
• Long term visa (type D) is issued to foreign nationals and people without citizenship who enter Ukraine in order to get documents allowing them to stay or live in Ukraine for a period longer than 90 days. If you have got a long term visa you can apply for temporary residence permit as a foreign national residing in Ukraine.

Residence permit in Ukraine

© RIA Novosti, Sergey Polyakov

Odessa seaport

Despite the fact that citizens of most countries do not need a visa to travel to Ukraine and when a visa is needed there are ample options to get one, the best way to stay in Ukraine over a long period of time is to get a residence permit. A residence permit allows the foreign national to come into Ukraine and leave it at any time during the validity period of the permit. The first residence permit is issued for one year, but later on it can be extended. The law specifies a list of grounds for issuing a residence permit, one of these is employment, another one is one’s family reunion.

The procedure for getting a residence permit is regulated by a set of sub-statutory regulations. A foreign national willing to get a residence permit must submit an application to the Chief Directorate of the State Migration Service (at the moment the new service is being created and its services are being temporarily provided by the State Department for migration, Citizenship and Registration of Natural Persons). The application package must include the following documents:

• Application for a residence permit;
• Request of the receiving party that a residence permit be issued to the foreign national;
• 4 3.5x4.5 cm photographs (on matt paper);
• Original passport (this is returned after being checked) with a type D visa with a special mark and copies of the pages of the passport containing identification information and the visa (if the residence permit is to be issued on the basis of employment in Ukraine);
• Translation of the passport pages with personal data into Ukrainian authenticated in accordance with established procedure;
• A document of title to residential property and an application from the foreign national to be registered at the residence address which has been reviewed by the State Migration Service of Ukraine;
• A copy of the document appointing the foreign national to his/her position, authenticated in accordance with established procedure (if the foreign national has already been hired);
• A copy of the passport of the authorised representative of the receiving party signed by the holder of the passport;
• A receipt confirming payment of the state fee for the issuance of the residence permit (USD 125)

If all the documents are in order a residence permit will be issued within the next 15 days. After a residence permit has been issued the foreign national must register at the location of his/her residence.

Taxation of foreign employees and payment of social insurance premiums

National Bank of Ukraine, Kyiv

Foreign nationals pay the same taxes as Ukrainian nationals. Under the Tax Code of Ukraine any income received by a foreign national in the territory of Ukraine is taxed in the same way and at the same rates as income received by Ukrainian nationals.

Thus when a foreign national is paid compensation, the employer must deduct a tax at a rate of 15% if the compensation does not exceed 10 minimal compensations as defined by the law of Ukraine as of the date the compensation is paid (at the moment the minimal compensation is UAH 1073, from April 1st it will be UAH 1094) and at a rate of 17% on the amount exceeding 10 minimal compensations (currently UAH 10,730).

As for social insurance premiums, when paying compensation the employer must pay the single social insurance premium at a rate of between 36.76% and 49.7% depending on the professional risk of the production process. When the employee is paid compensation a single social tax of 3.6% is deducted regardless of the amount of the compensation.

Ukrainean currency (UAH)

The existing mechanisms and algorithms for getting work permits and temporary residence permits are fairly effective. The amendments to the immigration law passed in 2011 improved the regulation in this area and provided additional instruments for people who want to move to Ukraine temporarily with their families after they get a job in Ukraine. These amendments and the state policy aimed at supporting foreign investments are having a positive impact on increasing the number of foreign nationals who want to work in Ukraine.

* RS: Unlike Russia, Ukraine does not have clearly defined criteria that a person must meet to qualify as a highly skilled migrant. The generally accepted opinion in Ukraine is that a highly skilled professional is somebody with a higher education degree and sufficient experience in the field in which they are seeking employment. A post graduate degree is another advantage.