EOR in Ukraine: How Foreign Businesses Can Legally Hire Specialists

Ukraine is one of the leading IT and engineering hubs in Central and Eastern Europe. The strong skills of its IT specialists, engineers, marketers and BPO professionals attract companies from the US, the EU, the UK and Asia. However, setting up a subsidiary (LLC) in Ukraine or registering a representative office of a foreign company to hire a few employees or teams takes considerable time and money.

Promotion (“PROMOTION OUTSOURCING” LLC) offers international businesses an Employer of Record (EOR) service: personnel outstaffing for foreign companies. It is a ready-made legal and operational solution for employing staff in Ukraine lawfully without registering a local company, in compliance with Ukrainian labour and tax legislation. Launching a project usually takes from 5 to 20 calendar days (not counting the time needed to find candidates).

Source: the “Outstaffing” service page

🔎 What EOR (Employer of Record) Is and How It Works

Employer of Record (EOR) is a model in which Promotion acts as the official employer of specialists who work for your company in Ukraine. We take on the employer’s obligations: HR administration, payroll, payment of taxes and contributions, and compliance with Ukrainian labour law. The allocation of responsibilities between the parties is set out in the contract. Your company retains operational management, task setting and oversight of the specialists’ work results.

✅ Benefits of Promotion’s EOR for Foreign Businesses

1. Fast Market Entry Without Registering a Legal Entity in Ukraine

• No company registration in Ukraine: you do not need to go through the bureaucratic procedures of setting up an LLC or a representative office in Ukraine, opening local bank accounts or hiring in-house accountants.
• Quick start: launching a project takes from 5 to 20 calendar days, whereas setting up your own legal entity takes time for registration, opening accounts and setting up accounting.

2. Compliance with Ukrainian Labour and Tax Legislation

• Compliance with the Labour Code of Ukraine: all employment relationships are formalized in accordance with Ukrainian labour legislation (employment contracts, HR orders, statutory social protections).
• Tax discipline: Promotion calculates, withholds and pays personal income tax (18%) and the military levy (5%), and also calculates and pays the single social contribution (22%).
• Lower permanent establishment and reclassification risks: the specialists are employed by Promotion under employment contracts, so the risk of their relationship with the client being recognized as disguised employment is lower, but it does not disappear: it remains if the actual working conditions do not match the contract. At the same time, EOR eliminates the risk of the foreign company having a permanent establishment, provided that the requirements of current legislation are met: the decisive factor is the employees’ functions. If, for example, they habitually negotiate the material terms of contracts or conclude contracts on behalf of the foreign company, the risk remains (subparagraph 14.1.193(c) of the Tax Code of Ukraine and the applicable double tax treaty). The specific structure should therefore be assessed with a tax advisor.

Sources: Tax Code of Ukraine (paragraph 167.1, subparagraph 14.1.193, paragraph 16-1 of subsection 10 of Section XX); Law of Ukraine “On Collection and Accounting of the Single Contribution for Mandatory State Social Insurance” (Article 8)

3. Financial Transparency

• One monthly invoice: your finance team receives a single consolidated B2B invoice for EOR services covering payroll, taxes and the SSC, as well as the provider’s fee under the contract, with no reserves or security deposits.

4. Protection of Intellectual Property and Confidentiality

• Securing IP rights for the client: the economic (property) IP rights to works that an employee creates in the course of employment (software code, designs, documentation, etc.) belong to Promotion as the employer under the employment contract and in accordance with Article 14 of the Law of Ukraine “On Copyright and Related Rights”. Promotion transfers these rights to the client on the terms of the B2B agreement. The author’s moral rights (including the right to be named as the author) cannot be alienated under the law.
• NDAs and data protection: employees sign non-disclosure agreements (NDAs). Personal data is processed in accordance with the Law of Ukraine “On Personal Data Protection”; for EU clients, data processing terms can additionally be aligned with GDPR requirements in a separate agreement.

5. Comprehensive HR Support and Business Assistance

• Payroll and social benefits: calculating and paying salaries, administering sick leave, annual leave and maternity benefits.
• Additional benefits package: health insurance, reimbursement of training or gym costs, provision of work equipment, as agreed with the client.
• Military registration and HR records: support with mandatory military registration and maintenance of HR documentation in line with current legal requirements.

6. Flexibility and Scalability

• Scaling: from a single specialist to large teams; headcount reductions are carried out in compliance with the notice periods and employee safeguards of the Labour Code of Ukraine.
• Support when cooperation ends: the end of a client’s project is not in itself a ground for dismissal. If cooperation ends, Promotion handles the termination of employment contracts on the grounds and in the manner established by the Labour Code of Ukraine: with notice to employees within the statutory time limits, safeguards for protected categories of employees, final settlement and severance pay. How the client reimburses these costs is determined by the contract.

⚖️ Comparison: Your Own LLC, Contractors (Sole Proprietors) or EOR from Promotion

Sources: Civil Code of Ukraine (Part 3 of Article 95); Law No. 2811-IX “On Copyright and Related Rights”; launch timeline: the “Outstaffing” service page

To see how EOR compares with hiring under the Labour Code and the Diia City regime, read our article “Diia City vs EOR vs Labour Code: What to Choose in Ukraine”.

📋 Step-by-Step Process for Launching EOR in Ukraine

1. Consultation and budget calculation: defining the positions, salary levels (gross and net) and additional benefits for the specialists.
2. Signing the B2B agreement (Master Services Agreement, MSA): concluding the agreement between your foreign company and Promotion.
3. Formalizing employment: signing the employment contract (under the Labour Code of Ukraine), an NDA and an agreement on economic (property) IP rights to works created in the course of employment (under the Civil Code of Ukraine and the Law of Ukraine “On Copyright and Related Rights”).
4. Onboarding and start of work: the employee starts working on tasks under your direct management.
5. Monthly servicing: Promotion issues a single invoice, pays salaries, pays taxes and the SSC, and provides an HR report.

🏢 Why International Companies Choose Promotion

• Over 27 years of experience: Promotion has been working in Ukraine’s HR outsourcing and HR consulting market since 1999.
• Included in the State Employment Centre’s List. “PROMOTION OUTSOURCING” LLC is included in the List as a business entity hiring employees for subsequent work for other employers in Ukraine.
• Transparency: annual financial statements with an auditor’s report are published on the company’s website.

Source: the “About Promotion” page

📩 Planning to Engage Specialists in Ukraine?