Date of publication: 1 August 2017
Leonid Gilevich, Lawyer
On 27 September 2017 the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine concerning the Removal of Barriers for the Attraction of Foreign Investments” shall come into effect, simplifying the rules for foreigners’ employment.
This is the first time that the employment procedure for foreigners shall be regulated by law and not by the Resolutions of the Cabinet of Ministers. For the last 10 years the issues related to the obtainment of foreigners’ employment permissions were regulated by three enactments that followed one another in succession. And, frankly speaking, this evolution of law not always provided for the simplification of procedure.
For example, the last of the adopted enactments – effective Resolution of the Cabinet of Ministers No 437 “Issuance, Prolongation and Revocation of Employment Permits for Foreign Nationals and Persons without Citizenship” – requires the employer to provide “the document issued by healthcare facility confirming that the person does not suffer from chronic alcohol addiction, toxicomania, drug abuse and other infectious diseases, the list of which is determined by the Ministry of Health”. Due to this wording many of the employers faced the issue that this notice was practically impossible to obtain overseas and the foreigner was forced to arrive to Ukraine for the corresponding test that implied additional expenses for the foreigner or his potential employer in situations when the obtainment of employment permit and the employment itself were questionable.
It is a pleasure to note that the amendments introduced by the Law indeed simplify the employment of foreign nationals in Ukraine and implement a differentiated approach to different categories of employees, taking into consideration the Ukrainian needs in foreign employees and investments. We have chosen the “Top-Developments” that in our opinion are essential to bring to notice:
1. Temporary residence permit – to be obtained for EURO 100 thousand of investments without any employment permits
The Law required from the foreign investor, who intended to visit Ukraine on regular basis in order to control the operations of his/her company, to obtain the permit for employment in his/her own company for further obtainment of temporary residence permit. This “mere formality” implied additional costs for wage and tax payments. Despite the requirement to obtain the permits for residence and employment, both documents were valid only for a year resulting in the necessity to extend the duration of these documents consuming additional expenses and time.
The new Law determines that the foreign founder, shareholder or beneficiary of the Ukrainian legal entity, who contributed to the charter capital of the respective legal entity not less than EURO 100 000, shall be entitled to the obtainment of temporary residence permit with 2 years of duration without the requirement to obtain the employment permit. In case the investor ultimately decides to be employed by his/her own company, he/she may obtain the employment permit valid for three years and the temporary residence permit with the same validity term.
2. Designation of “the special category” of foreign nationals and persons without citizenship entitled to three-year permit for employment
The term “special category of foreign nationals and persons without citizenship seeking employment in Ukraine” has been introduced. This category includes foreign highly paid professionals (in other words foreign nationals whose salary amounts to not less than 50 minimal wages (currently – UAH 160 000); founders, shareholders, beneficiaries of the legal entity established in Ukraine; graduates of the universities listed among the first Top-100 universities worldwide; foreign art professionals; and foreign IT-professionals. The employment permit may be issued for such categories for the term of three years (currently this term amounts to one year). Moreover, the requirement regarding the minimum wage (as described further) does not apply to these categories.
3. The list of documents to be submitted to obtain the employment permit has been significantly reduced
In addition to the abovementioned notice on the absence of diseases, the following documents have also been eliminated from the list: certificate of no criminal record, education documents. The list currently consists of only four documents for “general” cases: employer’s application, foreigner’s passport copies, foreigner’s photographs, and copy of draft labor agreement (contract). For certain categories of employees’ additional documents are required.
4. The validity terms of employment permits are diversified for different categories of employees
In particular, up to three years – for the abovementioned “special category” and the assigned expats, up to one year – for “ordinary” employees. At the same time the employer in his application may request the lower term than the maximum one.
5. The fee for the issuing or prolongation of the employment permit has been reduced
Currently the fee for permit issuance amounts to UAH 6 400. After the amendments are enforced the fee shall amount from two to six living wages for employable persons, adopted by law as of the first January of the calendar year in which the documents are filed (currently – from UAH 3 200 to UAH 9 600).
6. Foreigners’ employment on different positions at one or several employers has been regulated
Employment permit is required to be obtained at each position (this requirement is actually still valid), however the work of foreign highly paid professionals from now on may be used without the permit for the concurrent positions in case the term of labor agreement for the concurrent position does not exceed the term of the permit for the primary employment. Moreover, the foreigner may combine the work at the position designated in the employment permit with the work at the position of temporary absent employee given that the holding of several offices shall not exceed sixty calendar days within one calendar year. In addition, the procedure for the introduction of amendments to the employment permit due to different circumstances has also been regulated.
7. The minimal wage for foreign specialists has been established
The minimum wage for foreigners (despite “the special category”) in the majority of cases should amount to ten minimal wages (currently amounting to UAH 32 000). Previously there was no such formal requirement, although practically the employment centers strongly encouraged designating at least the average salary for a particular city/region. Such step, probably, should make the employers to take a balanced approach to the employment of foreigners that are not included into “the special category”, making the employment of Ukrainian citizens in certain cases more preferable in terms of expenses, and promoting the employment of highly qualifies expats. Although tax revenues shall increase due to the employment of each particular foreigner, the designation of minimal wage is likely to decrease the number of officially employed expats. Finally, the designation of minimal wage shall allow for steady planning of minimal expenses related to the employment of foreigners.
Consequently, from 27 September it will become easier for Ukrainian employers to obtain the employment permits for foreigners, and for the investors – to obtain the grounds for the long-term stay in Ukraine. Therewith, due to the increased differentiation of the requirements for employment and temporary residence permit obtainment, in each particular case the employers and investments are recommended to assess carefully the existing grounds for the execution of the permit for the employment and residence based on the best conditions and for the most suitable term.