Is It Legal to Hire Employees in Ukraine During the War?
Since the war began, many international companies paused their hiring plans in Ukraine. Not because Ukrainian professionals stopped working, and not because business activity disappeared, but because the legal landscape suddenly felt uncertain.
Founders, CFOs, and HR leaders keep asking the same practical question:
Is it actually legal to hire employees in Ukraine during the war?
The answer is yes. Hiring in Ukraine remains legal. What changed is not the law itself, but the risk profile of hiring without proper structure.
What Continued to Work — Even Under Martial Law
Despite the introduction of martial law in 2022, Ukraine did not suspend its labor system. Employment law remains active, payroll continues to operate, and state institutions responsible for taxation and social security are still functioning.
According to the Ministry of Economy of Ukraine, more than 70% of formally employed Ukrainians continued working throughout 2023–2024, many of them remotely. The IT sector, which employs over 285,000 specialists, remained one of the most stable contributors to tax revenue during the war.
This matters for employers, because it confirms one thing:
employment relationships in Ukraine never moved into a “legal vacuum.”
What the War Actually Changed
The war introduced flexibility, not deregulation.
Remote work became the default rather than the exception. Employers gained temporary rights to adjust working hours and operational conditions. At the same time, core obligations did not disappear.
Salaries must still be paid.
Payroll taxes must still be reported.
Social contributions must still be transferred.
As of 2025, Ukrainian payroll still includes:
- 18% personal income tax
- 1.5% military levy
- 22% employer social contribution
These figures did not disappear during the war. They remained enforceable — and enforceable retroactively.
Why Legality Depends on Structure, Not Circumstances
Foreign companies often assume that wartime conditions relax enforcement. In reality, the opposite tends to happen.
Ukrainian authorities increasingly focus on substance over form. If a person works full-time, follows internal policies, reports to management, and performs core business tasks, the relationship is likely to be treated as employment — regardless of whether it is labeled as “contractor” or “freelancer.”
Misclassification penalties in Ukraine can result in:
- back payment of taxes and contributions
- fines per misclassified worker
- cumulative exposure across multiple years
War does not invalidate these assessments. It postpones nothing.
Why Employer of Record Became the Default Choice
This is why many international companies turned to Employer of Record as a risk-stabilizing structure.
Under an Employer of Record (EOR) in Ukraine model:
- a Ukrainian-registered entity becomes the legal employer
- employment contracts follow Ukrainian labor law
- payroll and taxes are processed locally
- statutory contributions are paid on time
For the foreign company, this removes one of the biggest unknowns: legal employer liability.
According to industry estimates, over 60% of foreign companies hiring in Ukraine since 2022 have used EOR or similar local employment structures, rather than opening entities or relying on contractors.
Not because it is faster — but because it is defensible.
Payroll Compliance Did Not Pause — and Neither Did Audits
One of the most persistent myths is that payroll compliance became optional during the war. It did not.
Ukraine continued to collect income tax and social contributions even at the peak of military escalation. Digital reporting systems remained active. Cross-checks between employment data and tax filings did not stop.
For foreign companies, this means one thing:
mistakes today will still exist tomorrow — with interest.
Employer of Record does not remove payroll obligations. It ensures they are handled correctly without forcing foreign teams to interpret Ukrainian tax law under pressure.
Relocation Changed the Risk, Not the Rules
Millions of Ukrainians temporarily relocated abroad. This created new questions for employers, but not new exemptions.
If an employee relocates and continues working from another country, the employer may face:
- tax residency issues
- permanent establishment risk
- payroll obligations in a new jurisdiction
These are not theoretical risks. They are actively assessed across the EU.
Employer of Record allows these changes to be addressed legally, without dismantling the employment relationship midstream.
The Cost of Waiting or Improvising
Some companies chose to wait. Others hired informally, planning to “formalize later.”
Both strategies carry measurable cost.
Delayed structuring often leads to:
- higher compliance expenses
- rushed legal corrections
- retroactive tax exposure
Informal hiring creates employment history that cannot be erased. Regulators assess what happened — not what was intended.
Legality is not something that can be fixed cheaply after the fact.
So, Is It Legal?
Yes. Hiring employees in Ukraine during the war is legal.
But legality depends on how employment is structured, not on the geopolitical situation. Companies that rely on compliant models — particularly Employer of Record in Ukraine — operate within the law even in unstable conditions.
In wartime environments, legality does not come from speed or improvisation.
It comes from structures designed to survive uncertainty.
For companies that want to hire employees in Ukraine comfortably and legally during the war, having the right local structure is critical. Brain Source International supports international businesses with compliant hiring in Ukraine through a structured Employer of Record model. This allows companies to employ Ukrainian professionals legally, manage payroll and taxes correctly, and reduce long-term legal and operational risk — without opening a local entity or relying on informal arrangements. The focus is not on speed alone, but on building employment relationships that remain stable, predictable, and comfortable to manage over time.