Employment of foreigners: proposals of the LDN were taken into account in the new law

Publication date: November 7, 2022

Author: Anna Karpenko, consultant of the Legal Development Network on finance and taxation

The proposals of the Legal Development Network were taken into account in the Law, which improves the legislation on the employment of foreigners. A few months before its adoption, representatives of the Network turned to the Ministry of Economy with proposals to simplify the procedure for the employment of foreigners, stressing that the issue is urgent and needs urgent changes.

The Legal Development Network (LDN) has been providing advisory support to small and midsize businesses (SMB) since day one of the large-scale invasion. It was the work with SMB that caused the practical necessity of conducting a survey to determine the needs of businesses in the conditions of martial law.

A survey of business representatives conducted in May 2022, which aimed to determine the needs and problems of SMBs in the conditions of a full-scale war in Ukraine in the legal, labor, tax, and financial spheres, once again confirmed that it is extremely important for businesses to simplify the procedure for employing foreigners in order to have labor resources that will ensure uninterrupted operation of enterprises.

The main problematic issues that we identified as a result of the survey were as follows:

• reimbursement of utility costs to enterprises that housed the Armed Forces;
• business needs in the process of relocation;
• exchange rate regulation;
• VAT taxation of import of production equipment,
• and, actually, employment of non-residents.

Based on the results of the survey, the LDN turned to the Ministry of Economy with proposals to simplify the procedure for the employment of foreigners, which related to:

• introduction of an electronic service for issuing employment permits for foreigners;
• reducing the list of necessary documents for obtaining such a permit.Таким чином нам вдалося ще раз наголосити, що зазначене питання є досі актуальним і потребує невідкладних змін до законодавства.

And already on October 15, Law No. 2623 “On Amendments to Certain Laws of Ukraine Regarding Employment of Foreigners and Stateless Persons in Ukraine and Provision of Mediation Services in Employment Abroad” entered into force, which improves legislation on the employment of foreigners.

What has changed?

With the adoption of Law No. 2623, the following main changes took place:

• The circle of persons who have the right to obtain a permit free of charge has been expanded.
• Equal working conditions have been created: the norm, which previously required the establishment of wages for foreigners in the amount of at least 10 and 5 of the minimum wages, has been abolished.
• The validity period of permits has been updated and the fee for issuing a permit has been increased depending on its validity period. At the same time, the amount of the fee for extending the validity of the permit is reduced by one subsistence minimum from the amount of the fee for issuing the permit for the corresponding period.
• The list of documents for obtaining or extending a permit has been supplemented.
• It is possible to submit documents through electronic services, in particular through the employer’s electronic office, through the center for providing administrative services, and through the Unified State Web Portal of Electronic Services (Diia).

In addition, monitoring of payment by employers of the single social contribution for foreigners is introduced. Failure to pay the single social contribution by the employer is now grounds for revoking the permit.

A permit is not issued to foreigners who are included in the list of persons associated with terrorism, or against whom measures have been applied in accordance with the Law of Ukraine “On Sanctions”. And for citizens of the russian federation, the republic of belarus, as well as other states that pose a threat to the national security of Ukraine, the issuance and extension of the permit takes place in agreement with the regional bodies of the Security Service of Ukraine.

How was it before, and why are changes important?

It is worth recalling that the draft Law on Amendments to Certain Laws of Ukraine on Employment of Foreigners and Stateless Persons in Ukraine (Draft Law No. 5795 dated 16.07.2021) was submitted for consideration on July 16, 2021, and provided for the following:

• simplification of access to the administrative service for obtaining a permit for the employment of foreigners;
• improvement of the list of documents;
• improving the grounds for issuing and extending the validity of permits;
• establishment of equal conditions of payment for both citizens of Ukraine and for foreigners and stateless persons residing in Ukraine on legal grounds;
• strengthening control over compliance with legislation in the relevant field.

As we can see, Law No. 2623 introduced the changes expected by the business. In particular, it became possible to submit documents through electronic services, the norm on the requirement to establish a payment of more than 10 and 5 minimum salaries was canceled. At the same time, the cost of obtaining a permit has increased. The list of documents for obtaining a permit was also clarified, which does not reduce the previously approved list of documents required for submission.

To get advice for small and midsize businesses on legal and tax issues use:

• the phone 096-032-35-38
• and the e-mail: bizconsult@ldn.org.ua

The consultant is available from Monday to Friday, from 11:00 a.m. to 1:00 p.m.

*Find more about the results of the survey at the link: https://bit.ly/zvitopytuvannia.

Sources:
Law No. 2623 – https://zakon.rada.gov.ua/laws/show/2623-20#Text
Draft Law No. 5795 – https://itd.rada.gov.ua/billInfo/Bills/CardByRn?regNum=5795&conv=9

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