What Happens If a Ukrainian Employee Relocates Abroad During the War?

Last Updated on 4 days ago by International Employment Specialists

Since 2022, millions of Ukrainians have temporarily or permanently relocated to other countries while continuing to work for their existing employers. Some remained employed by Ukrainian companies, while others continued working remotely for international organisations or accepted new positions abroad.

For employers, this created an entirely new set of workforce management challenges.

Can an employee continue working remotely from another country? Does relocation affect the employment contract? When do tax or payroll obligations change? Could a remote employee unexpectedly create legal or tax exposure for the employer?

Although remote work has become common, cross-border employment remains far more complex than simply allowing someone to work from another location. Employment law, payroll regulations, tax residency, immigration status and social security obligations may all be affected depending on where the employee relocates and how long they remain outside Ukraine.

Understanding these issues early allows employers to protect both their workforce and their business while remaining compliant across multiple jurisdictions. Companies expanding internationally often combine legal guidance with Employer of Record services to simplify cross-border employment while maintaining compliance.

Relocating Abroad Does Not Automatically End Employment

One of the most common misconceptions is that leaving Ukraine automatically terminates an employment relationship.

In reality, Ukrainian labour legislation allows employees to perform remote work from abroad, provided the nature of the role makes this possible and the employer agrees to the arrangement. Ukrainian authorities have confirmed that remote work may be performed outside Ukraine, and wages continue to be paid according to the employment contract for work actually performed.

For many businesses, particularly in technology, consulting, finance and professional services, employees have continued performing exactly the same responsibilities after relocating to countries such as Poland, Germany, Romania, Spain or the Czech Republic.

From a business perspective, productivity may remain unchanged.

From a legal perspective, however, several new considerations immediately arise.

The Employee’s Location Suddenly Matters

Before relocation, employment usually involved only one jurisdiction.

Once an employee begins working permanently from another country, employers may become subject to employment, payroll or tax rules outside Ukraine.

Questions that HR departments frequently receive include:

• Should payroll remain in Ukraine?
• Does the employee become a tax resident elsewhere?
• Must the employer register in another country?
• Are local labour laws now applicable?
• Does the company create a permanent establishment risk?
• Is an Employer of Record required?

The answers depend on several factors, including the employee’s immigration status, the duration of their stay, local legislation and the company’s operational activities.

This is why international employers increasingly treat employee relocation as both an HR matter and a compliance issue.

Temporary Protection Does Not Automatically Solve Employment Compliance

Many Ukrainians relocated under the European Union’s Temporary Protection framework or similar national humanitarian programmes.

Temporary protection generally grants the right to live and work in the host country. However, it does not automatically determine how an existing employment relationship should be structured or which country’s employment and tax rules apply.

For employers, this distinction is important.

An employee may legally reside and work in another country while the employer still needs to evaluate:

• payroll obligations
• tax residency
• social security contributions
• employment law requirements
• reporting obligations

Immigration permission and employment compliance are related—but they are not the same issue.

Tax Residency May Change Over Time

One of the most significant consequences of long-term relocation concerns taxation.

Many employers incorrectly assume that continuing to pay salaries through Ukrainian payroll automatically resolves tax obligations.

In reality, employees who spend extended periods in another country may become tax residents there under local legislation or applicable tax treaties.

Although every jurisdiction applies its own residency rules, employers should carefully assess situations where employees remain abroad for prolonged periods, establish a permanent home, or shift the centre of their personal and economic interests to another country.

A change in tax residency does not always mean immediate double taxation, particularly where double tax treaties exist, but it often requires additional analysis and may affect payroll reporting or withholding obligations.

Ignoring these issues can expose both employers and employees to unexpected tax liabilities.

Payroll May Become More Complicated Than Expected

Continuing Ukrainian payroll while an employee lives abroad may appear to be the simplest solution.

However, prolonged remote work from another jurisdiction may raise questions regarding:

• income tax withholding
• employer registration
• local payroll reporting
• mandatory social security
• employment documentation
• reporting obligations

Ukrainian employers are still required to properly formalise employment relationships and comply with payroll and tax reporting obligations regardless of whether work is performed remotely.

As the number of relocated employees increases, maintaining compliance across multiple countries becomes considerably more complex.

Many multinational organisations therefore reassess whether local payroll or alternative employment models are more appropriate.

When Does an Employer Face Greater Compliance Risk?

Not every relocated employee creates significant legal exposure.

Short-term remote work is generally less problematic than long-term relocation.

Risk typically increases when:

• the employee permanently settles abroad;
• business activities are carried out exclusively from another country;
• local clients are managed directly;
• contracts are negotiated or signed abroad;
• management decisions are made outside Ukraine;
• several employees relocate to the same jurisdiction.

In these situations, employers should evaluate not only employment compliance but also potential corporate tax implications, including whether the employee’s activities could contribute to creating a permanent establishment in the host country.

For businesses expanding internationally, these assessments have become an essential part of workforce planning rather than an occasional legal review.

Different Countries May Mean Different Employer Obligations

One of the biggest challenges for international employers is that there is no single set of rules covering employees who relocate abroad.

An employee working remotely from Poland may trigger different employment and payroll obligations than someone living in Germany, Spain or the Netherlands. Although many European countries apply similar employment principles, labour legislation, tax residency rules and social security requirements remain national matters. Companies planning long-term operations often transition to an Employer of Record in Poland to simplify local employment compliance. Businesses employing professionals in Germany frequently use an Employer of Record in Germany to manage payroll, employment contracts and statutory compliance.

For example, one country may require employer registration after certain conditions are met, while another may focus primarily on tax residency or social insurance obligations. Some jurisdictions also apply stricter rules regarding permanent remote work than others.

For this reason, employers should avoid applying the same approach to every relocated employee. Instead, each situation should be assessed individually based on the employee’s location, duration of stay, immigration status and the nature of their work.

Social Security Is Not Always the Same as Income Tax

Payroll discussions often focus on income tax, but social security obligations can be equally important.

Within Europe, social security coordination is governed by international agreements and regulations, but determining where contributions should be paid depends on several factors, including:

• the employee’s country of residence;
• the employer’s location;
• the place where work is physically performed;
• applicable bilateral or multilateral agreements.

It is possible for an employee to have one country’s tax obligations while remaining covered by another country’s social security system under specific circumstances.

Because these rules are highly technical, employers should avoid assuming that payroll arrangements used before relocation remain compliant indefinitely.

Remote Work Can Create Permanent Establishment Risk

Another issue that many employers overlook is the potential creation of a permanent establishment (PE).

Permanent establishment generally refers to a situation where a company’s activities in another country become sufficiently significant to create corporate tax obligations there.

Not every remote employee creates a PE.

However, the risk increases when an employee:

• negotiates contracts on behalf of the company;
• signs commercial agreements;
• manages local operations;
• generates revenue within the host country;
• regularly represents the business before customers;
• performs key management functions.

For example, a software developer working remotely from another country usually presents a lower PE risk than a country manager responsible for business development and contract negotiations.

Because permanent establishment rules differ between jurisdictions and depend on individual circumstances, companies should review higher-risk roles before allowing long-term international remote work.

When an Employer of Record Becomes the Better Solution

For many organisations, allowing employees to remain on their original payroll works well during short-term relocation.

However, as remote work becomes permanent, maintaining compliance through the home-country employer alone may no longer be the most practical option.

This is where an Employer of Record (EOR) can provide a compliant alternative.

Instead of requiring the foreign company to establish its own legal entity, the EOR becomes the employee’s legal employer in the host country while the employee continues working exclusively for the original business.

The company retains responsibility for:

• day-to-day management;
• performance reviews;
• project allocation;
• technical supervision;
• career development.

Meanwhile, the Employer of Record manages:

• locally compliant employment contracts;
• payroll administration;
• income tax withholding;
• statutory social security contributions;
• employee benefits;
• HR administration;
• local labour law compliance.

This model enables companies to continue working with relocated employees while reducing administrative complexity and compliance risk.

Common Scenarios Employers Face

The most appropriate employment solution often depends on the employee’s individual circumstances.

No two situations are identical, which is why employers should avoid applying a one-size-fits-all policy to cross-border remote work.

Practical Steps for Employers

Businesses employing Ukrainian professionals who have relocated abroad should establish a structured review process rather than making decisions on an ad hoc basis.

A practical framework includes:

1. Confirm where the employee is physically working.
2. Determine whether the relocation is temporary or permanent.
3. Review immigration and work authorisation requirements.
4. Assess potential tax residency implications.
5. Evaluate payroll and social security obligations.
6. Consider whether local labour law applies.
7. Assess permanent establishment exposure.
8. Decide whether the existing employment model remains appropriate or whether an Employer of Record would provide a more compliant solution.

Taking these steps early helps prevent compliance issues from developing into costly legal or tax problems.

Expert Insight

The biggest mistake employers make is assuming that remote work automatically remains governed by the same employment framework after an employee crosses a border.

In practice, international remote work often affects multiple legal areas simultaneously, including employment law, payroll, taxation, immigration and corporate compliance.

Companies that regularly review employee locations and adapt their workforce strategy accordingly are far better positioned to support international mobility while reducing operational risk.

Conclusion

The relocation of Ukrainian employees during the war has fundamentally changed how international businesses manage remote work and cross-border employment. What may begin as a temporary arrangement can gradually evolve into a long-term employment relationship governed by multiple legal systems, creating new responsibilities for both employers and employees.

Rather than focusing solely on where payroll is processed, organisations should take a broader view that includes employment law, tax residency, social security, immigration requirements and potential corporate tax exposure. Addressing these issues proactively helps reduce compliance risks while providing employees with greater stability and clarity.

As international workforce mobility continues beyond the immediate circumstances of the war, businesses need employment strategies that are flexible, compliant and scalable. Whether maintaining existing employment arrangements or transitioning to an Employer of Record, choosing the right model allows organisations to support their people while confidently managing the legal and operational complexities of cross-border employment.

Support Your International Workforce with Confidence

Whether your employees have relocated temporarily or your business is building a long-term international workforce, Brain Source International helps companies manage cross-border employment through compliant hiring, Employer of Record in Ukraine, global payroll and workforce consulting.