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Outstaffing in Ukraine: Legal Requirements, Benefits and Checklist
Published 25.09.2026 · updated 07.10.2026
As the Ukrainian economy transforms, the labour market remains volatile and staff shortages grow, the B2B sector faces a key challenge: keeping its business model flexible without increasing the HR and administrative burden. Outstaffing (the provision of personnel) is one of the most effective tools for optimizing headcount and minimizing HR risks. In this article, we look at the legal nuances of outstaffing in Ukraine (in particular, the requirements of Article 39 of the Law of Ukraine “On Employment of the Population” (No. 5067-VI)), as well as its economic rationale and how to implement it safely.
⚖️ What Is Outstaffing Under Ukrainian Law?
Outstaffing is an HR management model in which employees are officially on the staff of a provider company (the outstaffer) but in practice perform their duties for the benefit and under the direction of the client company. For more about the service, see our Outstaffing page.
Ukrainian legislation does not use the term “outstaffing”, but the provision of personnel is governed by, among others, the following provisions:
- Article 39 of the Law of Ukraine “On Employment of the Population” sets out the rules for business entities that hire employees for subsequent work for another employer.
- Subparagraph 14.1.183 of the Tax Code of Ukraine defines the provision of personnel as a commercial or civil-law agreement under which the service provider (a resident or a non-resident) places one or more individuals at the disposal of another person to perform the functions specified in that agreement.
Important: business entities that hire employees for subsequent work for other employers in Ukraine are included, upon application, in the List of business entities providing employment intermediation services and business entities hiring employees for subsequent work for other employers in Ukraine (Part 3 of Article 36 of the Law of Ukraine “On Employment of the Population”; paragraph 5 of the Procedure approved by Resolution of the Cabinet of Ministers of Ukraine No. 400 of June 5, 2013). The List is maintained by the State Employment Centre. Before signing a contract, it is worth checking whether the provider is on this List.
Sources: Law of Ukraine “On Employment of the Population”; Tax Code of Ukraine; Procedure approved by Resolution of the Cabinet of Ministers of Ukraine No. 400 of June 5, 2013
📊 Why Businesses Choose Outstaffing: 4 Key Advantages
| Optimization area | Traditional in-house staff | Outstaffing model |
|---|---|---|
| Headcount | Constrained by limits, hard to change | Flexible: as many people as the project needs |
| HR administration | The full record-keeping cycle is handled by the company | The provider keeps HR records and runs payroll; the client provides data on hours worked |
| State Labour Service inspections | All responsibility lies with the company | HR matters and the requirements of Article 39 are the duty of the official employer (the provider); occupational health and safety on site is the client’s responsibility; the client-side circumstances on which the prohibition in Part 4 of Article 39 depends (staff reductions, etc.) should be checked before the contract is signed |
| Cost structure | Payroll + single social contribution (SSC), HR department | The provider’s service fee under the contract (including VAT) |
1. Headcount optimization. Many international and large Ukrainian companies have strict limits on the number of staff positions (headcount limits). Outstaffing makes it possible to bring in qualified specialists for long-term or seasonal projects without increasing the official number of employees in the staffing table.
2. Relief from the HR and administrative burden. HR administration and payments to employees are transferred to the provider:
- Calculating and paying salaries, bonuses and compensation.
- Processing leave, sick leave certificates and the documents for pregnancy and childbirth (maternity) benefit payments.
- Calculating and paying the SSC, personal income tax and the military levy.
- Filing reports with the tax and statistics authorities.
3. Minimizing risks during inspections. The duties of formalizing employment relationships, calculating and paying salaries, paying the SSC and taxes, and maintaining HR records and reporting rest with the official employer, the provider, so during inspections by the State Labour Service of Ukraine it is primarily the provider that answers for HR matters concerning these employees. If HR records are kept by a provider included in the State Employment Centre’s List, in strict compliance with the Labour Code of Ukraine, the client company’s HR risks are significantly reduced.
At the same time, the client remains responsible for safe working conditions at its own site. In addition, the prohibitions in Part 4 of Article 39 of the Law of Ukraine “On Employment of the Population” depend on circumstances at the client’s end (staff reductions within the past year, engaging workers in work under harmful working conditions, etc.), so these circumstances need to be checked together with the provider before the contract is signed. The risk of reclassification also stays with the client: if the contract with the provider is a mere formality and the employment relationship in fact develops with the client, this may be treated as de facto admission of an employee to work without a formalized employment contract (Part 2 of Article 265 of the Labour Code of Ukraine).
4. Financial transparency and budget control. Instead of a complex system of payments to many employees, the client company receives a single monthly invoice and a certificate of services rendered. This simplifies financial planning and makes it possible to account for outstaffing costs as payment for services, while clients that are VAT payers can include the VAT in their input VAT credit on the basis of the provider’s tax invoices registered in the Unified Register of Tax Invoices.
If the provider is a VAT payer, the tax is charged at the 20% rate on the full cost of the service, including the reimbursement of salaries and the SSC. For a client that is not a VAT payer, this amount cannot be recovered as input VAT credit and becomes an additional cost.
Sources: Labour Code of Ukraine, Article 265; Tax Code of Ukraine, paragraph 198.6
✅ How to Set Up Outstaffing Lawfully: A Compliance Checklist
For an outstaffing arrangement to be legally sound and not raise questions from the tax or other supervisory authorities, a few rules need to be followed:
- Checking the provider’s status: make sure the provider company is included in the List maintained by the State Employment Centre (Part 3 of Article 36 of the Law of Ukraine “On Employment of the Population”), is a VAT payer and has no tax debt. We covered what other information is worth requesting from a provider in our article How to Choose a Reliable Outstaffing Provider: The Ultimate Checklist.
- Subject matter of the contract: the subject of the contract must be the provision of personnel with the relevant qualifications, not the performance of work.
- Employee moving to the client (Part 1 of Article 39 of the Law of Ukraine “On Employment of the Population”): the provider may not prevent the employee and the client from entering into an employment contract.
- Safeguards for employees’ rights: under Part 1 of Article 39 of the same Law, the provider must pay the employee a salary no lower than the minimum wage and no lower than the salary the client’s employees receive for the same work, provide working hours and rest periods on the terms established for the client’s employees, and pay the SSC for the employee.
- Prohibitions (Part 4 of Article 39 of the same Law): the provider is prohibited from assigning employees to a client that has reduced its headcount (staff) within the past year or has not complied with the headcount standard for employees in core occupations involved in the technological processes of main production. It is also prohibited from assigning them to a client that engages workers in harmful, hazardous and arduous working conditions or in core occupations of the technological process of main production. This is especially important to take into account if you plan to transfer your own employees to a provider.
- Occupational health and safety and safety briefings: although the employees are on the provider’s staff, the client, which ensures safe working conditions at its site, gives them an induction briefing (in the occupational health and safety office, conducted by an OHS specialist or another authorized professional) and an initial briefing directly at the workplace (conducted by the immediate work supervisor). The provider, as the employer, in turn gives an induction briefing when hiring the employee.
Sources: Law of Ukraine “On Employment of the Population”, Articles 36 and 39; Model Regulation on the Procedure for Training and Testing Knowledge on Occupational Health and Safety (NPAOP 0.00-4.12-05), paragraphs 6.3, 6.4 and 6.8
🤝 Why Entrust Your Outstaffing to Promotion?
Promotion, a company that has been on the market since 1999, offers a comprehensive approach to personnel outstaffing in Ukraine, combining in-depth knowledge of labour law with modern HR administration technology:
- Legal compliance: HR and military registration records and payroll are maintained in accordance with the Labour Code, the Tax Code and the Law of Ukraine “On Employment of the Population”.
- 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.
- Payroll calculation: automation helps minimize the risk of errors in calculating salaries, taxes and levies.
- Flexible terms: transparent pricing and a dedicated account manager for the client’s project.
📌 Brief Conclusions
- Ukrainian legislation does not use the term “outstaffing”, but the provision of personnel is governed by Articles 36 and 39 of the Law of Ukraine “On Employment of the Population” and subparagraph 14.1.183 of the Tax Code of Ukraine.
- Before signing a contract, check whether the provider is included in the List maintained by the State Employment Centre.
- Assigned employees must be paid no less than the client’s employees doing the same work.
- A provider is prohibited from assigning employees to a client that has reduced its staff within the past year, has not complied with the headcount standard for employees in core occupations involved in the technological processes of main production, or engages workers in harmful, hazardous and arduous working conditions or in core occupations of the technological process of main production. These circumstances should be checked before the contract is signed.
- The provider takes on HR records, payroll, taxes and the SSC, but occupational health and safety on site (including the induction and initial briefings) and the risk of reclassification remain with the client.
- Input VAT credit is available only to clients that are VAT payers; for a client that is not a VAT payer, the tax charged on the full cost of the service is an additional cost.
Need advice on optimizing your staffing structure? Promotion’s experts are ready to analyse your current staffing table, check whether your engagement of personnel complies with the requirements of Article 39 of the Law of Ukraine “On Employment of the Population”, and calculate the economic efficiency of outstaffing for your business. Learn more about the service on our Outstaffing page. For a tailored B2B solution, email us at contact@promotion-global.com, call +38 (044) 379-12-14 or submit a request on the Contacts page.
Have questions about outstaffing and EOR?
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