Hiring international employees can be an attractive option for growing companies. Countries like Ukraine offer more cost-effective skilled talent than the US and Canada along with other benefits.
While salaries are important, there are many other costs to keep in mind when it comes to global hiring. For example, employers are typically required to make mandatory social security contributions. They may also provide staff with additional benefits like health care when competing for top talent.
This article will walk you through the various fixed and variable costs of hiring in Ukraine.
Costs to Consider When Hiring Around the World
The basic hiring costs in Ukraine include:
- Employee’s gross annual salary
- Taxes and benefits
- Vacation pay and other leaves
- Overtime pay
- Severance pay
Plus, you may want to add certain optional costs like benefits, bonuses, and extras.
Mandatory Costs of Hiring an Employee in Ukraine
Salary
A highly-educated nation, Ukraine has established itself as an important market for talent outsourcing. It is particularly popular for IT talent, representing a large pool of skilled technology professionals. While the ongoing conflict does pose concerns over the market’s stability, hiring in Ukraine is an excellent opportunity to bolster the local economy.
The minimum wage in Ukraine is UAH 6,700 per month or about USD 181.
However, salaries for skilled workers and sophisticated IT talent will vary greatly. You can get an idea of average salaries by doing some market research or partnering with a local staffing agency.
Mandatory taxes and benefits
Payroll costs in Ukraine add up to about 22% of the employee's gross salary, all of which goes towards social insurance.
Employers and employees both contribute to taxes and funds. So, employers must also withhold:
- 18%: Personal Income Tax
- 1.5%: Mandatory Military Tax
Mandatory bonuses
There are no mandatory bonuses in Ukraine. However, it’s customary to offer performance-based or end-of-year bonuses.
Paid leave
There are several types of paid leave entitlements in Ukraine.
- Public holidays: There are 12 public holidays in Ukraine.
- Paid vacation days: Full-time employees are entitled to 24 days of paid annual leave. Those under 18 receive 31 days.
- Sick leave: Ukrainian employees are entitled to paid sick leave. The first five days are paid by the employer and subsequent days are paid by social security.
- Maternity leave: A new mother is entitled to 126 days of maternity leave (140 days in case of multiple births). Mothers may also take childcare leave until the child reaches three years of age. This is paid for through a government allowance, although employers may choose to provide additional benefits.
- Paternity leave: Ukrainian labor law stipulates that new fathers can take 14 days of unpaid paternity leave.
Overtime pay
Standard working hours are eight hours per day, 40 hours per week. The standard workweek is Monday to Friday. If an employee works overtime, they receive double the pay.
Severance pay
When an employer terminates an employee, they may be obligated to provide severance pay. The amount owed will depend on the reason for termination and ranges from one to three months of a regular salary.
Additional Costs of Hiring Ukrainian Talent
Today’s talent market is extremely competitive. To hire top Ukrainian talent, employers may also want to offer a benefits package, which can help both search and retention. Here are some benefits you might consider offering Ukrainian employees along with other possible costs.
Benefits
Offering the right benefits package can help you stand out from the competition. In Ukraine, many employers offer benefits like extended retirement plans, training funds, flexible work arrangements, gym memberships, accommodation stipends, and more.
Bonuses and extras
Finally, you’ll want to consider smaller expenses like gifts for special occasions, comped meals or coffees for meetings, etc.
Average Cost of Hiring One Employee in Ukraine (Annual in USD)
Below is an estimate based on a salary of $100,000 for an employee in Ukraine. This salary is for ease of calculation only. It will change as per your hiring goals including the employment contract, the candidate’s experience, and the type of position.
- Salary: $100,000
- Employer Taxes: $22,000
- 22%: Social Insurance
- Total: $122,000 + Benefits (discretionary)
Note that these totals do not include other standard costs like soft benefits commonly offered in Ukraine.
A Global EOR Can Help You Manage International Payroll
With so many costs to consider, it may feel overwhelming to start hiring globally. An Employer of Record (EOR) can help. An EOR like Borderless can help you compliantly hire and pay employees in Ukraine.
If you’d like to begin global hiring but aren’t sure where to start, book a demo with Borderless. We’ll walk you through every step, so you can reap all the benefits without the added headaches.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
