Absolutely! Employer of Record is your legal gateway to hiring software developers without the complexities of opening a legal entity abroad. Your EOR partner serves as the legal employer of programmers on your behalf, taking care of all the admin functions, like payroll, HR, legal, and benefits management. They also assume full liability for adhering to local labor laws, employment rules, and tax obligations, bearing any potential legal risks.

But make no mistake—you remain the one and only real employer of software engineers. From day one, you manage your team directly and integrate it into your culture and practices. All the bureaucracy? Gone. Legal risks and admin burdens? Off your shoulders. Instead, you focus on what matters the most—developing your software product.

So, an EOR service in Ukraine is simply a means for tech companies to swiftly expand into new markets and hire a development team compliantly. Exactly what tech companies like BigCommerce, People.ai, Dotmatics, and Sift did. With the help of Alcor, an EOR provider for tech, they have seamlessly and securely built fully backed teams of 30+ developers and fast-tracked their product growth.

There are two prevalent models for hiring Ukrainian developers: employment agreement and B2B contract. 

An employment agreement forms an employer-employee relationship governed by the Ukrainian Labor Code. For employers, this type of employment comes with tax obligations, including paying payroll taxes and social security contributions (SSC), as well as withholding income tax and SSC on behalf of the employee. Additionally, it is full of rigorous working terms and employee termination procedures. That’s where Alcor’s IT EOR in Ukraine can serve as your lifeline in the deep employment waters.

For employees, an employment contract serves as a safety net, securing their salary amount, benefits, working hours, paid time off (PTO), and termination terms. The downside? Their salary is paid in a local currency, which may be affected by inflation. 

A B2B contract is signed between a hiring tech company and a software developer, establishing a contractor-client relationship under the Civil Code. The programmer must register as a private entrepreneur to provide IT services. 

Unlike an employment agreement, in B2B relations, the employer is free from tax obligations, while the contractors handle taxes and social contributions on their own or via an EOR vendor in Ukraine. The reward is typically paid in USD, so inflation and exchange rate swings are not a concern. However, benefits, PTO, and working terms are typically negotiated individually and are usually more restrictive than those outlined in the employment contract. 

Ukraine also offers a separate legal and tax regime, Diia.City. It provides favorable tax rates and flexible employment models tailored specifically to the IT sector. 

An employment agreement typically entails tax obligations for both the employer and the employee. 

What does the employer’s share include?

1. Social Security Contribution, also known as Unified Social Contribution (USC), constitutes 22% and is not deducted from the employee’s pay. It’s subject to a maximum threshold of 20 minimum salaries, or about $3,774, and constitutes $830.40. Under the Diia.City regime, the same rate is deducted from a min. salary of $41,6 per month. 

USC is determined at the national level and collected by the State Tax Service. This tax authority then distributes it among the state-managed social insurance funds, like 

• Social insurance, 
• Pension,
• Unemployment insurance,
• Occupational accident and disease insurance.

Now, the employee’s share:

1. Personal income tax: 18% or 5% under the Diia.City regime
2. Military Tax: 5%

Both are deducted from the employee’s gross salary.

The employer is responsible for calculating and paying taxes and contributions, as well as reporting on them. An Employer of Record company in Ukraine, like Alcor, can take care of the taxes for you, so you wouldn’t have to worry about miscalculations or missed deadlines.

The second employment model is the B2B contract, which enables tech companies to hire Ukrainian software engineers as contractors. In this case, paying payroll taxes is not mandatory for the company. Developers, on their part, register as individual entrepreneurs (FOP) of the third group with a simplified tax system and are responsible for covering:

1. Single Tax of 5%
2. Military tax of 1%
3. Social security contributions of 22% from the minimum salary of $125 quarterly.

Ukraine is a goldmine of skilled software engineers, offering a competitive advantage without the Silicon Valley price tag. The average senior developer salary here constitutes about $63,000 per year, with the most in-demand tech talents, such as AI Engineers, Cloud Developers, and DevOps Engineers, earning between $52,000 and $75,000.

Even the highest-paid tech experts don’t break the bank in Ukraine. For instance, a senior Site Reliability Engineer gets about $72,000, while a Head of R&D receives an annual salary of $100,000.

That’s about 48% savings compared to the US. See yourself:

So, how much should you really budget to hire a software developer in Ukraine? To break down the total cost beyond just salary, you need to include:

• annual income of a software engineer,
• taxes, social contributions, and additional payments presupposed by the local labor laws,
• employee benefits package, which typically includes health insurance, professional training, hardware, and corporate merchandise, totaling about $6,350 in Ukraine and $15,400 in the US per developer/year,
• recruitment fee, which is typically 20% in Ukraine and 30% in the US of the senior developer’s gross annual salary.

Have a sneak peek at the figures:

Contact Alcor, your EOR service provider in Ukraine, to get precise payroll calculations for your tech positions and discover your true savings.

When hiring software engineers in Ukraine, as an employer, you must comply with the statutory employee benefits outlined in the Ukrainian Labor Code. They are mandatory for tech specialists working on the employment contract. Failure to provide these benefits may lead to legal troubles, penalties, and fines.

So, what are these statutory employee benefits?

• Social security contributions include retirement, pension, disability, healthcare, sickness, unemployment, and others.
• Annual vacation consists of predetermined paid days off.
• Leaves, including sick, maternal, paternal, parental, and adoption.
• National holidays, including Christmas Day, New Year’s Day, and Independence Day, are specified in the Ukrainian Labor Code.
• Termination protection includes a notice period and just cause.

There are also supplementary employee benefits, which are optional but good to have if you want to attract top software engineers in Ukraine, like:

• Private medical insurance is a common addition to basic medical coverage, typically covering diagnostics, vision and dental care, emergencies, mental health services, etc. 
• Tech courses & English classes to promote professional development;
• Gym membership is offered as a subsidized benefit or is fully paid by the employer.
• WFH setup & Internet allowance, relevant for international dev teams working remotely; 
• Stock options are predominantly offered to C-level experts.

According to Ukraine’s Labor Code, the standard workweek in the country is 40 hours, with the possibility of overtime, which should not exceed 4 hours for 2 consecutive days, and 120 hours per year (this limit does not apply during martial law). The overtime compensation amounts to 200% of the regular rate in regular hours and on national holidays.

When you hire software developers in Ukraine, their probation period typically lasts 3 months and can be extended to 6 months with the consent of the trade union. Usually, this period is sufficient to test the skills and assess the performance of the new hire. We at Alcor guarantee only high-quality tech talent, with 98.6% of our hires passing probation with flying colors. In the rare case that someone doesn’t meet your expectations, we provide a replacement at no additional charge.

Software developers working on an employment contract in Ukraine are entitled to the following paid time off (PTO):

Annual leave consists of 24 calendar days. Vacation days exceeding 24 days per calendar year may be monetarily compensated upon the employee’s request.

Sick leave: The first 5 days are compensated by the employer; thereafter, the Pension Fund compensates for the entire duration of the sick leave until the employee’s recovery or disability is determined. In both cases, the rate ranges from 50% to 100% of the employee’s average salary.

Maternity leave lasts for 126 calendar days, of which 70 should be taken before and 56 days after childbirth.

Extraordinary paid leave is covered by the employer and includes

• Paternity leave: 14 days, 
• Additional parental leave of 10–17 days for 2+ children under 15 or a child with a disability,
• Adoption leave: 56 days;
• Education/sports leave: duration varies by program.

Public holidays in Ukraine include 11 paid days, as per the annual leave entitlements for the year 2025. 

When a US-based tech company hires software developers in Ukraine, it should consider visa requirements. To travel on a business trip to the United States, a Ukrainian programmer should obtain a B1/B2 visa, which permits a stay of up to 6 months. It allows business-related activities, such as attending conferences and meetings, participating in short-term training or team-building, and exploring partnerships, but not permanent work in the United States.

To get it, a Ukrainian citizen should 

• Complete Form DS-160, 
• Pay the application fee of $185,
• Schedule and pass the interview at the nearest U.S. embassy/consulate,
• Prepare the necessary documents, including a valid passport, proof of corporate ties, and financial documentation (such as bank statements and a sponsor letter).

But no need to stress over these visa challenges. Alcor, your Employer of Record service provider in Ukraine, can seamlessly handle all aspects of visas for your software engineers, just like we did for US tech company ThredUP.

The termination of an employee in Ukraine is governed by the labor code, which establishes strict guidelines for the termination process, thereby protecting workers’ rights and posing risks for employers. Luckily, there are EOR companies in Ukraine like Alcor that serve as your compliance buffer, ensuring a smooth employee offboarding process.

General termination rules:

The notice period depends on the grounds for dismissal; in some cases, a 2-month notice applies, while others require no notice at all. 

Local requirements: Employment may be terminated only on specific legal grounds, following all statutory procedures and forms.

Termination payments: 

• Compensation for all unused paid vacation days accrued and any outstanding payments.
• Severance payments are applicable in certain cases, ranging from 1 to 6 months of the average salary.

Employees on leave and military service, pregnant women, mothers with children under 3 (or under 6 if home care is needed), and single parents with children under 14 or with disabilities are protected from termination.

Expanding your development team abroad often means establishing a local legal entity, which varies from country to country based on the local laws of business incorporation. Generally, you would need to navigate complex legal requirements, including selecting the type of entity, registering with relevant authorities, opening bank accounts, and ensuring compliance with local tax and social security laws.

The business incorporation process can drag on for months, draining tens of thousands of dollars in legal fees, registration, and insurance. What is even worse, failing to comply with local laws and practices can expose your tech company to hefty fines or even legal actions, putting your expansion plans at risk.

The EOR solution in Ukraine allows you to bypass the lengthy and expensive route of setting up your own entity abroad. For instance, with Alcor EOR for tech, you can hire developers through our readily established legal entities in LATAM or Eastern Europe, saving an average of 3.5 months on business incorporation. Plus, manage admin and legal complexities hassle-free. It’s a faster, safer way to expand your business compliantly without the financial burden.

Alcor’s Employer of Record for Tech is a 360-degree solution devised for the compliant and seamless hiring of software engineers in Latin America and Eastern Europe. With no need to open a legal entity, it saves tech companies an average of 3.5 months and tens of thousands of dollars in setup costs. This means you can skip the red tape and build your own team of 30+ developers in just three months, accelerating your software development and unlocking faster growth.

With our Employer of Record solution in geo, you get more than just HR & payroll:

• Tech-focused services: from FTE or B2B employment options and tax incentives to R&D deductions and tailored benefits for developers.
• 100% compliance: get shielded with guidance from our lawyers, who have expertise in IT law.
• Customized pricing: volume discounts, no hidden costs or pre-payment.
• Ongoing in-country support: our Dedicated Customer Success Managers go above and beyond to simplify your business expansion.
• All-in-one place: manage everything in one place, no need for multiple vendors.

But EOR is just the beginning…

You can upgrade it to our software R&D center solution, which includes:

• In-house tech hiring is handled by our 40 recruiters, who headhunt the top 10% of the market developers across LATAM and EE. With our 80% CV pass rate and 2-6 weeks to fill a vacancy, you can scale your team from 0 to 100 engineers in a year.
• Operational support encompasses additional services, including leasing office or co-working space, procuring equipment, setting up IT infrastructure, and employer branding.

The result? A fully backed tech R&D center with a software development team that’s 100% yours from day one.