Hello, dear employers!
UAtalents team together with White&Case company collected frequently asked questions and prepare information about how to hire Ukrainians as a German employer. We want to give you more understanding of how works in Germany. Generally, we divided information into 5 different topics and so each topic we are going to analyze them separately:
- Residence and work permit;
- Employment contract;
- Social security insurance;
- Remote regular employee;
- Remote contract employee.
So, let's understand in more detail!
Residence and work permit
- Are German employers allowed to employ refugees from Ukraine?
YES! German employers are allowed to employ refugees from Ukraine in Germany if the refugees have a residence permit and a work permit.
The German government offers a temporary protection visa to all refugees from the Ukraine that operates as a residence permit. By default statutory provisions the work permit is not automatically granted together with the residence permit. However, the Federal Government has instructed the immigration authorities always to issue a work permit for Ukrainian refugees in connection with a temporary protection visa without needing a specific job offer.
The work permit issued under the temporary protection visa is generally not limited to certain areas of work or dependent on the remuneration level as would be the case under the default statutory provisions. However special professional access requirements (e.g. a license to practice medicine) need to be complied with.
2. Is there a possibility to employ refugees before they receive a visa?
YES! In principle, the employee is obliged to submit the residence and work permit to the employer before the start of the employment. Since the issuance of this residence permit can take several weeks, mainly if many people apply for the permit at the same time, the refugee will receive an interim resident certificate (Fiktionsbescheinigung) in the meantime. The refugee is allowed to work with this certificate when the label „Employment permitted” is affixed to it.
3. Which documents must the employer request from the employee?
The employer should check if the immigration authority has added the note: „Employment permitted“, to the interim resident certificate. This means that the employee is allowed to accept a job with the certificate (see no. 2).
- Is it necessary to provide an employment contract in the Ukrainian language?
No! The employment contract can be in German only. It would also be feasible to provide an English language employment contract.
2. Does the employment contract need to provide specific provisions?
Yes! The employer must not employ a Ukrainian citizen without a work permit. It is therefore recommended to stipulate that the commencement of the employment is subject to the condition precedent that the Ukrainian refugee provides a work permit.
SOCIAL SECURITY INSURANCE
- Do German employers have to pay social security contributions for employed Ukrainian refugees?
For Ukrainian citizens employed in Germany, the German labor law provisions apply. All Ukrainian employees in Germany are subject to German social security law as any other employee. This includes compulsory German health, nursery care, unemployment, and pension insurance. Therefore, the employer is obliged to pay the statutory employer contribution to these insurances for Ukrainian refugees as well.
2. Which documents must the employer request from the Ukrainian refugee?
Within two weeks after the commencement of the employment, the Ukrainian refugee is obliged to select German health insurance and to submit the health insurance certificate to the employer. The selected health insurance is obligated to accept the Ukrainian refugee as a member of the compulsory health insurance benefits scheme. If the Ukrainian refugee does not make use of the right to select health insurance and if there also has been no previous health insurance in Germany as will be the case for almost all Ukrainian refugees, the employer selects the health insurance itself and informs the Ukrainian refugee about the selection.
As soon as the employer has registered the Ukrainian refugee for the first time with the German social security insurance, the employee will shortly afterward receive a social security insurance number (Sozialversicherungsnummer). The Ukrainian refugee needs to provide the employer with this social security insurance number for consideration in the payroll.
REMOTE REGULAR EMPLOYEE
- Is it feasible for an employer in Germany to employ Ukrainian citizens that still reside in Ukraine as (regular) employees?
Yes! It is feasible for a Germany-based employer to remotely employ Ukrainian citizens that still live in Ukraine. The employment relationship will then generally be governed by Ukrainian employment, tax, and social security law. For this reason, it is recommended to employ the
Ukrainian individual under a Ukrainian employment law contract as compelling Ukrainian law would apply anyway. However, please see also “Engagement of Ukraine-Based Private Entrepreneurs” for an alternative to classic employment.
2. Is it possible to remotely employ Ukrainian citizens that reside in the neighbour countries of Ukraine as (regular) employees?
Yes! It is also feasible to remotely employ Ukrainian citizens that have fled to the neighbour countries such as Poland, Hungary, or Moldova. If the country is a member state of the European Union, the employment contract is governed by the law of the country that the parties determine.
If the applicable law is not determined by the parties, the contract will be governed by the law of the country in which the employee carries out his work. Furthermore, any choice of law must not result in a less favorable employment regime for the employee.
If the country is not a member state of the European Union, the labor law of the country in which the Ukrainian citizen works is applicable.
3. Is the employer of a (regular) employee obliged to pay tax in Ukraine?
No! Germany and Ukraine entered into a double taxation treaty (Doppelbesteuerungsabkommen). According to this treaty, profits of an enterprise residing in one treaty country are generally only taxed in such country. However, if the enterprise has created a permanent tax establishment in the respective other country, profits allocated to such tax establishment are taxed in the country in which the tax establishment is situated.
Generally, the risk of creating a permanent tax establishment exists when (i) an individual is employed for more than six out of twelve months, (ii) the activity is consistent with the core business of the employer and could not be considered as preparatory or auxiliary, or (iii) the work is mostly performed from one place (i.e. office or employee’s own apartment).
REMOTE CONTRACT EMPLOYEE
- Is it feasible for a company based in Germany to employ a Ukrainian citizen that still resides in Ukraine as an independent contractor?
Yes! An individual can be engaged as (an independent) “private entrepreneur” if such individual is materially independent of the instructions of the Principal. The individual is responsible to register as a private entrepreneur. In such a case, the individual would be responsible to pay all income taxes in Ukraine. Payments by the principal could be made to a bank account in Ukraine in Euro or US dollars. Invoices are generally not subject to VAT in Ukraine as services are provided to non-residents.
2. Is the employer (principal) of a Ukraine-based private entrepreneur obliged to pay tax in Ukraine?
No! This is generally not the case. In the case of the engagement of the individual as a private entrepreneur who will be acting independently and providing services to a non-resident entity, a such non-resident entity generally does not create a permanent tax establishment in Ukraine. A case-by-case analysis of the respective tax law situation from a Ukrainian tax law perspective is nonetheless recommended.
3. What should be avoided in order to safeguard the status of the private entrepreneur as an independent contractor?
Therefore, specific deliveries should be pre-agreed in the individual contract/order. The individual should use their own equipment, including office/apartment space, and the email address and signatures should make the contractor's status visible.