Benefits and Compensation in Ukraine

Employee benefits are the perks and incentives offered to a company’s employees apart from their take-home salary. Some commonly offered employee benefits include leaves, bonuses, health insurance, etc. 

The primary objective of providing employee benefits is to ensure they can take care of the additional expenses incurred while delivering their responsibilities. However, the scope of benefits extends far beyond that. These benefits keep employees motivated and encourage them to stay with the company. Employee turnover is reduced significantly when the company provides excellent benefits.

When you create the benefits and compensation policy in Ukraine, you must follow all the existing labor laws of the country. While most companies stick to the list of mandatory benefits prescribed by the Government, some companies provide supplemental benefits to their employees. There are no rules governing supplementary benefits. Companies can provide any supplemental benefits to employees at their discretion.

Compensation Laws in Ukraine

The benefits and compensation policy in Ukraine is created after factoring in all the prevailing labor laws in the country. Here are a few compensation laws in Ukraine that you must consider. 

• Per the labor laws of Ukraine, adhering to all the terms and conditions of the employment contract is crucial once both the employee and the employer sign the contract. 
• All companies operating in Ukraine must have a labor book to record the employment history of all employees who have been a part of the organization at any time. 
• The law of Ukraine governs employment relationships if the employee works in a company in Ukraine. 
• Employers cannot pay their employees less than the statutory minimum wage. 
• If an employee in Ukraine works for four consecutive hours, they are entitled to a break. However, this break must be at most 2 hours. 
• The employer needs to keep a record of the overtime work performed by the employees. 
• As per the labor code, an employer cannot discriminate against an employee based on race, gender, sexual orientation, etc., when deciding the employee’s compensation. 

How to Design an Employee Benefits Program for Employees in Ukraine?

To create a compensation and benefits policy in Ukraine, you must follow the steps listed below:

Step 1: Set an objective and finalize a budget

• Before drafting the employee compensation and benefits in Ukraine, you must fix a budget for the entire activity. 
• Once you create a budget, you must get it approved by the critical stakeholders. You can start with the activity as soon as the budget is assigned. 
• Decide on the objectives you want your benefits plan to achieve, and ensure that they are per the labor laws in Ukraine. 

Step 2: Research the industry standards and understand the employees’ expectations

• Try understanding the employee benefits in Ukraine that other companies offer. You can consider companies that are a part of the same industry and those that belong to the other industry. 
• Once you have the industry standards, you can try to understand your employees’ expectations from the benefits plan. 
• You can understand the employees’ expectations by sharing a form to collect the data. 

Step 3: Add the element of flexibility

• Companies often have employees with diverse needs. Hence, you need to make the benefits plan flexible to meet the requirements of different employees. 
• The compensation package in Ukraine can be made much more flexible if you calculate all the elements of the compensation structure separately. 

Step 4: Show the first draft to the important stakeholders

• As soon as you are ready with the policy’s first draft, you must take all the essential stakeholders through it. 
• Apart from the list of benefits, the plan must also chalk out how these benefits can be used. 
• Try to get feedback on the benefits plan from the top management and incorporate them into the plan before you release the final draft. 

Step 5: Analyze

• You must thoroughly check all the elements of worker’s compensation in Ukraine before you release the plan at a company level. 
• The plan needs to be carefully examined to ensure it still applies in the different environments in which the firm operates.
• Before implementing the plan, you must test it in various business settings.

Before you release the plan, you must proofread the plan and check for errors. In case you spot any errors, you must fix them immediately. 

Types of Guaranteed Benefits in Ukraine

There are several guaranteed benefits offered by different companies in Ukraine. Let’s have a look at these benefits.

Minimum wage

• The national minimum wage in Ukraine stands at 6,700 UAH. In 2022, the minimum wage was 6,500 UAH, increasing by 200 UAH.
• It is mandatory for all companies operating in Ukraine to pay a salary that is at least equal to the minimum wage. 

Working hours and overtime

• In Ukraine, the prescribed number of working hours is 40 per week, and it is distributed over five working days. 
• The employees can choose a working week of 6 days where they can work 7 hours per day.
• Employees who work beyond 40 hours are entitled to overtime pay. The employment contract states the terms of the overtime pay. 
• Any overtime hours beyond 40 in a week are compensated at a rate equal to 200.00% of the employee’s regular hourly wage. 
• Instead of money, another rest day may be used to compensate for overtime work completed on a rest day.
• The employees are allowed to work for up to 4 hours as overtime on two consecutive days. Employees cannot work overtime beyond 120 hours in a year. 

Paid leaves

• Once an employee completes six months with the organization, they are entitled to paid annual leaves.
• In Ukraine, the companies must provide at least 24 days of annual leave.
• The number of leaves offered to minors and people who work in challenging jobs is slightly more due to the nature of work. 

Public holidays

• The employees are offered 12 public holidays in Ukraine. 

Sick leaves

• Ukraine has a very flexible sick leave policy. The employees in the company are entitled to four months of paid sick leaves. 
• However, the amount paid as salary to the employees during sick leaves depends on the time they have worked for the organization. 
• If the employee is less than six months old, they are entitled to a minimum wage. 
• Employees who have worked for the firm for 0 to 3 years get 50% of their average salary. 
• For 3 to 5 years of employment, the sick leave entitlement increases to 60% of the employee’s average salary.
• Employees who have spent 5 to 8 years in the company are entitled to 70% of their average salary.
• For anyone who has been a part of the company for over eight years, sick leaves are paid at 100% of the average salary. 

Maternity leaves

• In Ukraine, pregnant employees can take maternity leave. Employees can take a paid maternity leave of 126 days. 
• Out of these 126 days, 70 leaves must be taken before the child’s due date, and 56 leaves can be taken after birth. 
• The employees on maternity leave receive their regular salaries from the Social Insurance Fund. 

Paternity leaves

• There are no provisions for paternity leaves in Ukraine. However, companies in Ukraine allow their male employees to take unpaid leave for two weeks. 
• If the mother has unused maternity leaves, the father can avail of those leaves.
• To do this, a father must submit an application to his employer with a copy of the kid’s birth certificate, proof of the child’s parentage, and a letter from the mother’s employer attesting to the latter’s return to work.

Parental leaves

• Employees can take parental leave in Ukraine only when their maternity leaves end. They can take these leaves up to the time the child turns 3. 
• These parental leaves are unpaid. 

Bonus

• Payment of a 13th-month bonus is not mandatory in Ukraine. However, employers can give employees a bonus by adding a clause to the employment contract. 

Employee Benefits for Expatriates

Expats in Ukraine are offered the same employee benefits as resident employees. Like all regular employees, the expats have access to medical benefits for employees in Ukraine. Expats can also avail themselves of any supplementary benefits the company offers. Expats also enjoy allowances like mobile and fuel allowances. 

Expats can also obtain housing privileges and food stipends. Expats are also eligible for several benefits that the employer agreed on when signing the employment contract. While establishing the employment contract for expats, you must list these benefits.

How are Employee Benefits Taxed in Ukraine?

Ukraine has a flat-rate taxation system. All employees employed across companies must pay an income tax of 18%. 

The employees’ total gross income on which the taxes are calculated includes the monetary value of all the benefits provided to them. Employees must pay taxes on benefits, such as medical insurance, because they are a part of the taxable income.

Restrictions for Ukraine Benefits and Compensation

In Ukraine, most of the incentives and bonuses are taxed. To determine the employee’s tax obligation, you must know the value of these benefits. The employer is responsible for ensuring all taxes are paid on time to the organizations and government authorities in charge of employee social security and taxation.

When setting up benefits and compensation in Ukraine, be sure your company has been formally formed and has the required business authorizations. Businesses must give their employees at least the minimum wage required by law. The labor rules in Ukraine must be properly considered while designing a compensation package. 

Supplemental Benefits for Employees in Ukraine

Employees can avail of several supplemental compensation and benefits in Ukraine. Let’s look at some of these popular supplemental benefits:

Bereavement leaves

In case of a death in their immediate family, employees in Ukraine can take a bereavement leave of up to 7 days. 

Marriage leaves

Ukraine allows employees to take a leave of 10 days if they are getting married. 

Study leaves

In Ukraine, employees are entitled to paid time off if they want to appear for an exam. The employer also bears the course fee.

Medical Insurance

While health insurance is a required benefit for employees, most firms opt to have their staff members covered by a private insurance plan. These plans offer superior protection and can be expanded to include vision and dental care.

How Multiplier Can Help with Benefits Management in Ukraine

While launching a business, you must hire qualified employees so they can grow and profit the company. Employers must abide by local rules and ordinances when drafting employment contracts and providing employee benefits. Multiplier, a global PEO platform, can help you execute this plan.

With Multiplier, you have access to experts who are well-versed in handling all kinds of business-related difficulties. With the assistance of our knowledgeable staff, you won’t need to establish a countrywide subsidiary to manage the workforce effectively. With our assistance, you can increase your business and cut labor expenses.