Ukraine 9 min

How to hire and pay independent contractors in Ukraine

Written by Pedro Barros
Pedro Barros


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Today, it’s easier than ever for companies to access top talent worldwide. If you’re a small company or a start-up, that’s looking for support on a short-term project or doesn’t have the resources to hire full-time employees, hiring global contractors is a solid option.

However, the logistics of contracting and paying independent contractors can seem cumbersome. Hiring independent contractors in Ukraine is no different. Misclassifying workers or failing to comply with Ukrainian labor laws can lead to expensive legal repercussions. You'll also need to create compliant contracts and abide by all local labor and tax laws.  

While there are some critical factors to consider when hiring in Ukraine, don't stress. We have put together this guide to walk you through the process of hiring and paying contractors in Ukraine. In this article, we’ll cover labor laws in Ukraine, tax and compliance practices, and how to avoid misclassification risks.  

Unique considerations of hiring independent contractors in Ukraine

There are some key steps for hiring anyone as a contractor, which you can read in our guide on how to hire independent contractors. However, here’s what you should specifically keep in mind while hiring independent contractors in Ukraine. 

  • Worker classification: While Ukraine does not set out legal distinctions between different worker categories, workers can either be employees or self-employed individuals called contractors. In Ukraine, the local labor laws govern employees, whereas the civil laws govern self-employed contractors. 

  • Contract creation: Ukraine's law requires anyone hiring a worker in Ukraine to provide an employment contract. This can either be an employment agreement or contract for employees or a civil contract for contractors. 

  • Local labor laws: You must stay compliant and abide by relevant local labor laws, chiefly the Code of Laws on Labor of Ukraine. These include guidance on probation periods, termination, severance pay, and minimum wage, among others. 

  • Local tax practices: Staying compliant with any local tax practices in Ukraine is also important. You may need to make a social security contribution to the Unified Social Tax or present forms to the Internal Revenue Service (IRS) if your company is based in the US. 

  • Currency and payments: Ukrainian currency is the Ukrainian hryvnia (UAH). You will need to consider the easiest and most cost-effective transfer options and conversion costs. 

In a nutshell, as a hiring manager or founder, make sure to ask yourself:

  • Will your worker be an employee or self-employed? 

  • Have you created a contract? 

  • Are you compliant with relevant labor laws?

  • Are you aware of any necessary tax contributions and regulations?

  • How will you make and manage payments to your contractors?

How do I pay an independent contractor in Ukraine?

Paying contractors abroad can be tricky and it often incurs hidden costs. However, there are several methods you can use to manage contractor payments.

Bank transfer

Transfers via the Society for Worldwide Interbank Financial Telecommunications (SWIFT) allow you to deposit money directly into the accounts of your contractors. This method is safe, secure, and accepted worldwide, but it incurs costly transfer fees. Making and tracking many individual payments can also get complicated without a centralized payroll system. 

Online money transfer

You might also choose to use one of the many online transfer companies specializing in making international payments. While these platforms may have favorable exchange rates, they often add on hefty transfer fees or take commissions on each payment. Some examples of money transfer services you could use include Wise, Xoom, or Remitly. 


Recent laws have legalized bitcoin and cryptocurrency in Ukraine, and it looks like their use will grow exponentially. Cryptocurrency payments can be a good option for paying contractors in Ukraine, as long as it's viable for both the employer and the contractor. Using this method means you'll avoid being at the mercy of bank exchange rates and international transfer fees. However, you must still remain compliant with Ukrainian tax regulations.

Global payroll

If you want to reduce time, costs, and risks related to paying contractors in Ukraine, you may want to work with a global payroll provider. Remote’s global payroll services allow you to quickly and accurately make payments to contractors. It helps you be compliant with local labor laws and avoid possible legal complications or penalties. You can manage all payments from one place, which will make things easier if you have teams in multiple countries. 

What are the risks of misclassifying Ukraine's independent contractors as employees? 

In many countries, you can either classify a worker as an employee or contractor. But, you can misclassify workers when a worker's contract does not accurately reflect the work they perform. 

An independent contractor typically has a flexible, autonomous working relationship with their employer. On the other hand, an employee's working hours, performance, and location are defined by their employer. Employees, however, are entitled to worker benefits such as paid leave, social security, or pension contributions. 

Employee vs. independent contractor in Ukraine

In Ukraine, the law makes a distinction between an employee and an independent contractor. The main difference is that an employee must abide by local labor laws, whereas independent contractors are governed by civil law. According to Ukraine's Labor Code, self-employed contractors do not have the same protections as employees.

Risks of misclassification in Ukraine 

Misclassifying a worker, intentionally or by mistake, can have serious consequences. Any money that was effectively not paid — in the form of employee benefits and tax contributions — may have to be repaid. The employer may also need to pay additional fines or penalties.

Misclassification can also lead to questions over who owns the intellectual property or IP. This can lead to the loss of IP rights as well as messy legal proceedings which can damage the reputation of your company. 

In Ukraine, there is a gray area around worker classification, which can be confusing to navigate. Civil contracts can be associated with below-board working agreements, so it is best to proceed with care and get expert help.

Mitigation of the risks

Partnering with a global contractor management service like Remote can help you classify your workers correctly, minimizing the dangers of misclassification. Remote’s local legal and tax experts can help you hire international contractors quickly, with total legal compliance every time. 

What are the labor laws in Ukraine?

A complex but essential aspect of hiring and paying independent contractors in Ukraine is staying compliant with local labor laws.  

Ukraine's labor laws are outdated, and lack legislation around modern workplace issues. Remote working regulations, for example, were introduced as late as 2021.

An independent contractor with a civil contract is exempt from the laws set out in Ukraine's Labor Code. Therefore, employers are not obliged to provide worker benefits such as paid leave, overtime, and other contributions.  

On the other hand, the benefits that an employee is entitled to from their employers, as described in the Labor Code, include:

  • A minimum monthly wage of UAH 6,700 (about $181)

  • 24 annual vacation days and 5 sick leave days 

  • Protection from discrimination 

  • Dismissal only with a valid reason

  • Severance pay 

  • A maximum trial period  

As a foreign employer, you must know which regulations you need to follow. Using a global contractor management and payroll service such as Remote can help you create compliant contracts and benefits packages and onboard foreign contractors quickly. 

Tax and compliance practices for hiring and paying contractors in Ukraine

Employers are not obliged by Ukraine's law to contribute toward taxes, as these will be declared and paid individually by the independent worker. 

For US companies, there are some additional steps you need to take to stay tax compliant while hiring independent contractors. For instance, you have to present certain forms to the Internal Revenue Service (IRS), including:

  • Form W-8 BEN: US companies must inform the IRS of the money paid to any contractors outside the US (over $600) using this form.     

  • Form 1096: This form is essentially a cover sheet for recording certain information returns regarding contractors. It should be filled out by US-based employers who are hiring contractors who are US citizens or residents in Ukraine or globally.

Luckily for you, Remote has made tax compliance for US companies a simple process. When you onboard contractors through Remote, they will be directed to fill and submit the relevant tax forms to you — making it easy for you to stay compliant with tax regulations.

How do I convert an independent contractor in Ukraine to an employee?

An independent contractor’s duties and scope of work can change over time. For instance, they may take on additional tasks that are in line with those of an employee. If this is the case, the right thing to do is to update their contract to reflect the change in responsibility. Converting your contractors to employees means that they can be protected by employment law and receive benefits. 

If you are wondering whether you should convert your contractor to an employee, here are a few questions to ask yourself: 

  • Has your contractor's duties increased significantly since they started? 

  • Would you like to offer benefits to your contractor? 

  • Would you like additional protection over your company's IP? 

  • Do you want to incentivize your contractor to stay with you and not work for a competitor? 

  • Are you confused by labor laws and worried about staying compliant?

If you answered yes to one or more of these questions, then it might be time you converted your Ukrainian contractor into an employee. For further guidance on this topic, read our guide on converting a contractor to an employee

The best way to hire independent contractors in Ukraine

Hiring contractors from Ukraine can be an excellent way to make the most of top talent in the country. Remember, when you’re hiring independent contractors in Ukraine, you have to:

  • Define your worker’s classification and create compliant contracts

  • Understand and abide by local labor and tax laws

  • Choose the right tools to manage your contractors and make payments

Global employment is a complex and time-consuming process. Unless you have a reliable contractor management platform to do all the hard work for you. Remote makes it easy for you to hire, onboard, and pay international contractors. With Remote, you can:

  • Onboard contractors with our localized contracts

  • Automate invoicing approvals and contractor payments

  • Manage all your contractors in one place

  • Stay compliant with local labor and tax laws

Want to learn more about how you can take your business to the next level with our contractor management services? Contact our friendly team today! If you’re ready to onboard contractors in Ukraine with Remote, sign up and get started in minutes.

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