17 November 2017

Employment of expatriates in Ukraine

In the process of their legal employment in Ukraine, expatriates have always encountered a number bureaucratic difficulties. During the past decade, the issue of obtaining work permits by foreign nationals has been regulated by three different regulations, which replaced each other in turns. And it’s fair to say that the evolution of the national legislation in this field has not always resulted in the simplification of the procedure. Nevertheless, reforms have been finally implemented in this bureaucratic area. The procedure for employment of expatriates has been for the first time regulated by a special law.

 

Starting from 27 September 2017, amendments to the Procedure for issue, extension, and cancellation of work permits for expatriates took effect. The previous Procedure was partially voided, and today the matters of the issue of the permits to foreign nationals are regulated in the Law of Ukraine “On Employment of Individuals” dated 5 July 2012. The amendments have established entirely new rules of the game for the employers in the area of obtaining work permits for expatriates.

 

The objective of the new rules is to raise the level of investment attractiveness of Ukraine via streamlining the legalization procedure and to attract foreign IT specialists to the country.

Legal Department of ALCOR proposes you to familiarize yourself with the principal amendments introduced by this Law and to find out how they will affect the process of legalization of expatriates on Ukraine’s territory.

 

Who is eligible for Work Permit?

 

From now on, the Law defines an additional, “special” category of expatriates enjoying certain preferences*, which includes the following persons:

  1. Foreign IT experts, including foreigners occupying positions related to the development and implementation of the deliverables of computer programming (operating systems, computer software and its components, web-sites, on-line services) and creation of cryptographic means of data protection for legal entities, which, according to the Standard Industrial Classification of Economic Activities are mainly engaged in computer programming activity (to verify the information on the main code of economic activity 62.01., the employment center normally refers to the Uniform State Register).
  2. Founders, shareholders, and beneficiaries of Ukrainian legal entities (the employment center verifies the information on the establishment of the statutory capital referring to the Uniform State Register).
  3. High-paid foreign professionals, including expatriates whose salary is at least 50 minimum wages (which in 2017 is equal to UAH 160,000).

*the opportunity to obtain the Work Permit for 3 next years + no requirement to pay to expatriates minimum wage of UAH 32,000. The preference as regards the minimum wage does not apply to the category of expatriates specified in paragraph 3, i.e. to the high-paid professionals.

 

Other foreigners are also entitled to obtain work permits in accordance with general rules and procedures. A key requirement of the Law is the payment to the foreigner of the salary in the amount no less than 10 minimum wages, which is UAH 32,000 (in 2017).

 

Stages of obtaining Work Permit

 

  1. Post information on the vacancy via local employment center, i.e. the employer, as before, is obliged to prepare report according to standard form 3-ПН (while the Law does not contain respective formal requirement, in practice the employment center, when reviewing the package of documents, needs to make sure that the company does have the open vacancy).
  2. Submit the package of the documents to the employment center.
  3. If the candidate is approved – pay the state duty for the issue of the Work Permit.
  4. Sign employment contract with the foreigner and submit its copy to the employment center.

 

Term of validity of Work Permit vs. Cost

 

Please, note that starting from 27 September 2017 the state duty must be paid not only for obtaining the Work Permit, but also for its extension.

 

The amount of the state duty depends on the term of validity of the Work Permit and comprises:

  1. For permits valid for 6 months – 2 living wages/UAH 3,200*;
  2. For permits valid from 6 months to 1 year inclusive – 4 living wages/UAH 6,400;
  3. For permits valid from 1 to 3 years – 6 living wages/UAH 9,600.

* as at 1 January of the year of submission of the documents by the employer (for 2017).

 

As we mentioned before, Work Permits valid for more than 1 year may be obtained only by “special” categories of expatriates (see above).

 

Time frames for extension and amending Work Permit

 

  1. The employment center is obliged to review the package of documents on the issue or extension of a Work Permit within 7 working days and 3 working days.
  2. The employer must submit the application for extension of a Work Permit at least 20 calendar days in advance of the expiration of the current work permit.
  3. The fees for issue or extension of a Work Permit must be paid within 10 working days after the day of obtaining the decision of the employment center.
  4. The employment contract must be signed no later than within 90 calendar days from the date of issue of the Work Permit.
  5. The employer must submit a copy of the employment contract to the employment center within 10 days from the moment of its signing.
  6. The employer must submit to the employment center the application for making amendments to an effective Work Permit within 30 days from the moment of occurrence of respective changes (change in the company’s name, issue of new passport to the employee, change of position).
  7. The employer is obliged to advise the employment center about the dismissal of an employee within 3 working days.

 

Documents required to process an application for Work Permit

 

In addition to the usual for the employer applications, translations of passport, etc., the employment contract with the foreigner is one of the most important documents subject to review by the employment center when processing the package of the documents. The employment center studies this document very scrupulously, since non-compliance of the draft employment contract with the requirements of the law may represent the ground for denial of an application for the work permit and entail cancellation of the valid permit.

It is critical that the employment contract specifies the position, amount of salary (considering requirements of the legislation), the term of effect of the contract (such term may not exceed the term of validity of the Work Permit).

 

For the purpose of extension of a Work Permit, the applicant must, in addition, submit the draft of the new employment contract or supplement agreement thereto to the extent that there are any changes in the conditions of labor of respective foreigner.

 

Grounds for cancellation of Work Permit

 

  1. Rescission of the employment contract with the foreigner.
  2. Failure to pay the state duty for the issue/extension of the Work Permit within the deadlines established by the law.
  3. Failure to submit a copy of the employment contract with the foreigner to the employment center within the established deadline.
  4. Identification of false data in the documents submitted by the company, identification of which was impracticable during the original review of the application.
  5. Establishment of the fact of exploitation of the labor of the foreigner on the terms and conditions other than those stipulated in the Work Permit.

As we can see, the amendments are sufficiently radical, and, in fact, they introduce a new procedure for execution of the documents. The amendments should simplify for the employers the process of execution of the work permits for expatriates, and, in addition, these novations should give the foreign investors additional opportunities to expand their businesses in Ukraine.

 

It should be pointed out that not all amendments to the legislation discussed above will really simplify the procedure for obtaining the permits for expatriates, but we do hope that they will have a positive effect on the process of implementation of the new norms in practice and will increase the transparency of the process of execution and issue of work permits to expatriates.

 

Full text of the Law with the changes and amendments is posted on the web-site of Verkhovna Rada of Ukraine.

 

Should you have any questions as regards the amendments to the Procedure for the issue, extension and cancellation of work permits for expatriates, please, do not hesitate to contact Legal Department of our company to obtain required advice or assistance.