Standard Conditions for Cooperation and Retention of Employees in Ukraine

If you want to open a branch office in Ukraine and hire employees, you definitely need to know the customary ways of working with Ukrainian employees. You will also learn from this article about additional opportunities that will help attract and retain employees.

Employment in Ukraine

The two most popular options for cooperation with developers and administrative staff in Ukraine are:

  • A contractor (SP) who is an individual who performs work under a work supply contract. Most IT specialists in Ukraine are employed in this way.
  • A hired employee who is an individual who does his/her job under a labor contract.

The main differences between the types of employment include:

  • Legislative protection. A contractor (SP), unlike a hired employee, is not protected by labor legislation in Ukraine.
  • Taxation. The hired employee places a greater tax burden on the employer than the contractor (SP).

The income tax, military fee, and unified social tax are paid by the employer for the hired employee. The contractor (SP) pays taxes out of his/her salary himself/herself. However, IT companies in Ukraine often compensate for the 5% tax and include it in the employee’s salary. You can learn more about payment of taxes in the article Accounting and Payment of Taxes.

The standard social package in Ukraine in the IT industry

You have to meet a number of conditions when working with Ukrainian employees:

  1. The area per staff member should be at least 4–6 m² / person. To make work comfortable, you must provide kitchens and meeting rooms for your employees. You can learn more about the requirements for office space in the article Choosing and Renting the Office Space.
  2. You have to provide your employees with annual leave. The standard vacation period in Ukraine is 15–20 business days with an option breaking them up throughout the year.
  3. You have to limit the working week to forty hours and provide two days off.
  4. You must provide up to ten paid sick days per year.
  5. The standard work schedule in Ukraine is eight hours, plus an additional hour for lunch and breaks.
  6. The language of communication at work in Ukrainian companies is mainly Ukrainian or Russian. The option of doing internal correspondence in English is common.

Standard employee benefits

IT in Ukraine is a fast-growing and competitive market, so you need to find ways to differentiate between other companies in order to attract and retain employees.

Incentives and preferential benefits will help. These are benefits, which play an important role in building loyalty and relations between employees and the company. Standard benefits you could use for your company are:

  • Floating start of the working day. In Ukraine, a 9 to 11 a.m. range is allocated for arrival of an employee at work, and a 6 to 8 p.m. range for the end of the business day, respectively.

In Ukraine, this is a standard benefit for employees, thanks to the popularity of the work–life balance concept. You should focus on employee performance rather than on hours spent by him/her in the workplace.

  • Employee insurance. In Ukraine, insurance is not included in the compulsory social package, so this could be an element in staff retention and the increase of loyalty to the company.

The minimum cost of insurance per employee is about $110 per year. If you are not able to insure your employees, you can offer them alternatives—a physician or compensation for treatment and medication.

  • Training. Conduct educational activities in your office with the involvement of speakers or pay for English courses, conferences, and training sessions for your staff to improve their skills.

A common practice in Ukraine is for employers to pay 50% of the cost of an event. The employer often also pays for employee certification upon successful completion.

  • Sports activities. You can equip a fitness space in your office or pay for training of your employees in any other gym.
  • Organize team building and corporate parties to maintain team spirit. Parties can be timed for holidays or important team achievements.
  • Compensation for the cost of travel by public transport or organization of transport to the office. This is an especially useful and affordable benefit for companies located in remote areas of a city.
  • Discounts for employees. Depending on the specifics of your business, you may provide discounts on company products.

Keep tabs on the loyalty of your employees regularly, find out what they like about the company and what they would like to change. Communicate with candidates at interviews to determine which benefits they believe to be valuable and which not. Adapt to the needs of your team and implement new incentives.

You may attract an HR manager for the analysis and implementation of benefits in your company, whose task is to create a friendly atmosphere in the team and increase loyalty to the company.

You can learn more about searching for and hiring an HR manager in the article Searching for and Hiring Administrative Staff.

Salary payment and increase

Ukrainian legislation provides for the payment of salary to employees twice a month. However, the generally accepted frequency of payment in the IT industry is at the beginning of the month for the previous month’s work or at the end of the month for the current month.

The salary is credited to the account of a contractor (SP) or paid in cash to an employee.

In order to retain employees financially, you need to implement regular salary reviews in your company.

The standard review period in Ukraine is once every six months or a year.

Be sure to announce to your employees the frequency of salary reviews upon entry into employment or after completing the probationary period.

Holding 1:1 meetings

In Ukraine, as in other IT companies around the world, holding 1:1 meetings is one of the tools for gathering feedback from developers. 1:1 meetings can be:

  • Scheduled, that is, held at regular intervals for company employees who have completed the adaptation period.
  • On request by the developer or manager to identify problems, to collect information and analytics, and to summarize—to resolve any problems encountered.

Employee dismissal

Step 1. When employing staff, set the terms for dismissal notice.

This is the period during which one of the parties, either the employee or the employer, may initiate a dismissal. 15–30 days pass from that moment until the employee’s last working day.

We recommend a period of thirty days to ensure stability for the employee and the employer. During this time, the employee will find a job, and the employer will find a substitute.

Step 2. Make sure you have told the employee about the issues.

Dismissal should not be a surprise to the employee. Hold regular meetings and give feedback to the employee.

Tell the employee that he/she is at risk, tell him/her about the things you are unhappy with in his/her work and what he/she needs to correct.

Step 3. Announce your decision to the employee.

Hold a 1:1 meeting with the employee to inform him/her of your decision. State your point of view and present arguments as calmly and accurately as possible.

Step 4. Hold an exit interview.

Hold a personal meeting with the employee on the last working day. Your task is to get honest feedback about working at your company. During the interview, find out which processes in the company could be improved.

The exit interview is an opportunity to leave a positive impression about the company. If the employee has any residual negative feelings, become a buffer for him/her: talk to him/her and give him/her the opportunity to speak out about the negatives during the exit interview.

How IT-Rex can help you

IT-Rex is here to help you understand and identify your needs, assist you in
opening your company branches and develop your business in Ukraine.
We will help you save time and effort by giving you expert consultation on the form of employment to choose for your employees. We will find an HR manager who will develop incentive and loyalty schemes, as well as determine and implement competitive benefits for your employees.

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