How to legally formalise the recruitment of foreign specialists to Ukrainian companies?

Employment of a Foreigner Under a Labour Agreement: What are the Peculiarities?

Generally, the labour relations of foreign citizens in Ukraine are regulated by the laws of Ukraine^[1]1, specifically the Law of Ukraine “On Employment of the Population” (hereinafter referred to as “the Law”).

Indeed, the Law establishes a specific procedure that precedes the conclusion of a labour agreement (contract) with a foreigner.

First and foremost, to employ a foreigner, it is necessary to determine the legal status of the potential employee. Certain categories of foreigners are entitled to work under the same conditions as citizens of Ukraine:

• foreigners who hold a permanent residence permit in Ukraine (they submit the same package of documents as a citizen of Ukraine, but provide their residence permit instead of a national passport);
• foreigners who have refugee status in Ukraine;
• foreigners who have been recognized as persons in need of complementary protection;
• and other foreigners of narrow specialization whose list is defined by the Law, for example, members of the clergy, athletes, individuals engaged in scientific activities, representatives of emergency rescue services, branches of foreign enterprises, etc., provided that the prescribed conditions are met.

If the foreigner does not belong to the mentioned categories, the employer must obtain a permit for the employment of foreigners (hereinafter referred to as “the Permit”).

To obtain the Permit, it is necessary to submit an application to the territorial body of the State Employment Service(employment center) (the application form is approved by the Resolution of the Cabinet of Ministers of Ukraine dated January 24, 2023, No. 68).

If the candidate is a citizen of the russian federation, the republic of belarus or other countries recognized as posing a threat to the national security of Ukraine, the Security Service of Ukraine is involved in the consideration of the Permit issuance.

The Permit can be issued for different periods of time, depending on the duration of the labour agreement and the potential employee’s plans to remain at the specified place of work.

It is important to consider that the Permit is tied to a specific employer, meaning that if the foreigner changes their place of work, the new employer must undergo the procedure for obtaining the Permit from scratch.

For a foreigner’s arrival in Ukraine for employment, there are several methods:

• immigration permit: the grounds for granting this permit are defined by Article 4 of the Law of Ukraine “On Immigration”. For certain categories of foreigners an arrival quota is established. This applies specifically to highly qualified specialists and workers whose acute need is felt by the Ukrainian economy, as well as their spouses and minor children in the case of joint entry. This quota is established annually by a Resolution of the Cabinet of Ministers of Ukraine.
• type D work visa: this is issued for arrival in Ukraine for the purpose of employment. To obtain this visa, a potential employee must apply to the Ukrainian consular office or embassy in their place of residence and submit a package of documents. These must include documents confirming the purpose of the trip, specifically: an employment contract or a work permit in Ukraine.

Concluding a Civil Law Agreement with a Foreigner: Are there differences from a Labour Contract?

If there are no actual labour relations between a foreigner and a company in Ukraine, meaning the foreigner is engaged to provide services as needed or to perform a specific task, a mechanism exists for concluding a civil law agreementwith them.

As a result of concluding such an agreement, labour relations do not arise between the parties, therefore, no work permit is required. A company that enters into a civil law agreement with a foreigner for the provision of services must comply with the requirements of civil legislation typically applied to contracts. In such an agreement it is important to specify exactly what service the counterparty will provide, what the result of such a service should be, and the amount of payment under the agreement.

It is crucial to avoid provisions similar to those found in labour contracts, such as specifying a work schedule, terms for granting vacation or sick leave, compensation, etc. That is, in the case of a civil law agreement, the company pays for the result of the services provided, rather than for the process of performing the work, as occurs with a labour contract.

However, it is worth noting that the existence of a service agreement does not grant a foreigner the right to cross the border. Therefore, it can only be concluded with a foreigner who is already legally residing in Ukraine, or if a foreigner residing abroad can be engaged to provide services in a remote format.

Signing a Gig-Contract with a Foreigner: When is it applied?

An effective mechanism today for engaging IT specialists to work in Ukraine is the conclusion of gig-contracts, as provided for by the Law of Ukraine “On Stimulating the Development of the Digital Economy in Ukraine”.

Such contracts can be concluded with foreigners only by Diia City residents. At the same time, the status of a Diia City resident can only be obtained by a legal entity registered under the laws of Ukraine that carries out one or more types of activities provided for by the Law “On Stimulating the Development of the Digital Economy in Ukraine”.

The customer under a gig-contract must be a Diia City resident, and the contractor or performer must be a gig-specialist – this can include a foreigner.

It is important to note that for working with a foreigner through a gig-contract, the company must also obtain the Permit.

Thus, concluding a gig-contract with a foreigner is possible only for Diia City resident companies and is not applicable to any other entity; therefore, only a limited circle of companies can consider this method of engaging foreign specialists.

Conclusion

For Ukrainian companies there are three primary mechanisms for engaging foreign specialists: concluding civil law agreements, labour agreements (contracts) and gig-contracts. The choice of a specific method depends on the nature of the relationship between the company and the specialist, as well as the purpose of their engagement.

Engaging foreigners helps partially resolve the problem of personnel shortages, allows for the acquisition of valuable expertise and introduces new approaches to work. This also contributes to increasing the competitiveness of Ukrainian companies in both domestic and international markets and is an essential element of modern labour relations in the context of globalization.

^[1] Article 54 of the Law of Ukraine “On International Private Law”