{"id":1830,"date":"2019-11-20T17:28:05","date_gmt":"2019-11-20T15:28:05","guid":{"rendered":"http:\/\/productcrafters.io\/blog\/?p=1830"},"modified":"2026-01-19T22:54:14","modified_gmt":"2026-01-19T20:54:14","slug":"how-to-organize-outstaffing-in-ukraine-in-the-right-way","status":"publish","type":"post","link":"https:\/\/stage.productcrafters.io\/blog\/how-to-organize-outstaffing-in-ukraine-in-the-right-way\/","title":{"rendered":"How to Organize Outstaffing in Ukraine in the Right Way"},"content":{"rendered":"<p><em>The article was translated.\u00a0<\/em><br \/>\n<em>Source: <a href=\"https:\/\/ain.ua\/2019\/10\/29\/autstaffing-kolonka-yurista\/\">https:\/\/ain.ua\/2019\/10\/29\/autstaffing-kolonka-yurista<\/a><br \/>\nWritten by Sergey Alexandrov, Managing Partner of Legal Ideas Law Firm<\/em><\/p>\n<p style=\"text-align: center;\"><span style=\"font-weight: 400;\">. . .<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Outstaffing is one of the work models of an IT company. According to this model, employees are rented out to the client company, as opposed to outsourcing, where teams work on individual projects\/services for their direct employer.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Sergey Alexandrov, the Managing Partner at Legal Ideas, wrote for AIN.UA a column on the features of outstaffing contracts.<\/span><\/p>\n<p style=\"text-align: center;\"><span style=\"font-weight: 400;\">. . .<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In Ukraine, the difference between outsourcing and outstaffing is supposed to be understood by every IT specialist. In fact, these concepts are not always clearly distinguished.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This leads to the improper use of these relationships in business and, consequently, to huge fines. For example:<\/span><\/p>\n<blockquote><p><i><span style=\"font-weight: 400;\">\u201cAs a result of this audit, the tax agency has accrued to the plaintiff a tax liability on income tax in the amount of UAH 4,404,821.88. (including UAH 2 202 410,94 on the principal payment and UAH 2 202 410,94 on penalties). &#8220;<\/span><\/i><\/p><\/blockquote>\n<p style=\"text-align: right;\"><i><span style=\"font-weight: 400;\">Quote from the Court decision\u00a0<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">There are enough examples of such penalties. Search up to the relevant query in the Unified State Register of Judgments issued 456 documents itself.<\/span><\/p>\n<h3><b>How it is settled<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Some people claim that outstaffing is not legally regulated in Ukraine. This is not quite true. There are a number of rules governing the provision of outstaffing services.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, there are some features:<\/span><\/p>\n<ul>\n<li><b><span style=\"font-weight: 400;\">There are not many norms, and it leaves a large field for maneuvers on the one hand for those who \u201care in the loop\u201d and on the other hand, creates a \u201cminefield\u201d for those who are not.<\/span><\/b><\/li>\n<li><b><span style=\"font-weight: 400;\">Not all legislative norms on this issue have come into force at this time.<\/span><\/b><\/li>\n<li><b><span style=\"font-weight: 400;\">This topic should be approached in a comprehensive way: from the standpoint of a businessman, lawyer, accountant, HR specialist, tax agency, state labor, staff.<\/span><\/b><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">In this regard, applying to outstaffing is much more complicated and risky than simple outsourcing. Outstaffers and those who hire workers can both have problems.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The following legal and practical considerations should be considered before signing an Outstaffing Agreement.<\/span><\/p>\n<figure id=\"attachment_1835\" aria-describedby=\"caption-attachment-1835\" style=\"width: 781px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" class=\"wp-image-1835 size-full\" src=\"http:\/\/productcrafters.io\/blog\/wp-content\/uploads\/2026\/01\/Screenshot_41.webp\" alt=\"Sergey Alexandrov, Managing Partner of Legal Ideas Law Firm\" width=\"781\" height=\"442\" \/><figcaption id=\"caption-attachment-1835\" class=\"wp-caption-text\">Sergey Alexandrov, Managing Partner of Legal Ideas Law Firm<\/figcaption><\/figure>\n<h3><b>Own staff<\/b><\/h3>\n<blockquote><p><i><span style=\"font-weight: 400;\">An outstaffer cannot lease an employee who doesn\u2019t belong to the company (the outsourcer, by the way, can).<\/span><\/i><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">For example, a programmer is given for an outstaff who is not an employee but a private entrepreneur (PE). By providing a PE (or employee of another company), you act as an intermediary. This is an outstaffing by no means and can be punished by the tax agency, acknowledging that the nature of such agreement is not real. Or simply saying &#8211; contracts are invalid.<\/span><\/p>\n<h3><b>What you should know about registries<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Outstaffers should be included in a special <\/span><a href=\"https:\/\/www.dcz.gov.ua\/storinka\/perelik-subyektiv-gospodaryuvannya\"><span style=\"font-weight: 400;\">List of Business Entities<\/span><\/a><span style=\"font-weight: 400;\"> that provide employment mediation services. It is made up by the State Employment Service.\u00a0<\/span><\/p>\n<blockquote><p><i><span style=\"font-weight: 400;\">As a rule, IT outstaffers hear about such a list for the first time, although the obligation to do so is enshrined in the Employment Act of Ukraine and is one of the criteria that control bodies and courts pay attention to when deciding on the legality of outstaffing.<\/span><\/i><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">The listing is free and not complicated. Therefore, you should not neglect this formality if you really want to outstaff your personnel.\u00a0<\/span><\/p>\n<h3><b>Fired \/ Employed<\/b><\/h3>\n<blockquote><p><i><span style=\"font-weight: 400;\">Very often, outstaffing companies, that \u201crent out\u201d their employees, fire them out and then the client hires them. It&#8217;s an interesting move, but a wrong one.\u00a0<\/span><\/i><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">In fact, under such a legal &#8220;scheme&#8221; it is no longer outstaffing, but a usual change of an employer by an employee. Therefore, both the outstaffer and his client will have trouble during the inspection. After all, why then the first one receives from the second money, and the second defined these sums as expenses &#8211; is a very interesting conundrum. The rights of the employee themselves are also violated, as they may lose the leave entitlement and other social benefits.<\/span><\/p>\n<h3><b>How to keep records of personnel\u00a0<\/b><\/h3>\n<blockquote><p><i><span style=\"font-weight: 400;\">Outstaffers should provide a staff schedule, sign an employment contract with each employee, job descriptions and submit special reports (form # 1-PA) to the employment center.<\/span><\/i><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">Outstaffers are often unaware of the need to submit special reports.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Make sure that in the client\u2019s office (the one who hires personal at the outstaffer),\u00a0 there is a notarized copy of the outstaffing contract, an employment contract with the employee, and an order (directive) of his assignment to work in the client\u2019s office. This will save a lot of nerves and money when the Tax Agency or State Labor Service will be investigating your client.\u00a0<\/span><\/p>\n<p><img decoding=\"async\" class=\"size-full wp-image-1837 aligncenter\" src=\"http:\/\/productcrafters.io\/blog\/wp-content\/uploads\/2026\/01\/glenn-carstens-peters-npxXWgQ33ZQ-unsplash-2.webp\" alt=\"How to keep records of personnel\u00a0\" width=\"1000\" height=\"665\" \/><\/p>\n<h3><b>How to set the salary of a &#8220;rented&#8221; employee<\/b><\/h3>\n<blockquote><p><i><span style=\"font-weight: 400;\">The requirement for a minimum wage is not known to everyone. The law obliges an outstaffer to pay his hired employee a salary not less than the salary paid by an employer to an employee for the same work.<\/span><\/i><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">For example, Google, with salaries 10 times higher than yours, approaches you as an outstaffing company. You are happy to let them your staff for rent. But in this case, you have to raise the wages of your employees to the level accepted by Google.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Of course, we talk about an official salary, so the costs will have to be increased by 41.5% of taxes too.<\/span><\/p>\n<h3><b>Prohibition of non-compete<\/b><\/h3>\n<blockquote><p><i><span style=\"font-weight: 400;\">This is another nuance that the IT outstaffing companies often hear about for the first time. The Employment Act of Ukraine explicitly prohibits to prevent the conclusion of an employment contract between the employee and the employer who provided the work.<\/span><\/i><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">That is, you can sign any NCAs and include the worst non-compete clauses in employment contracts. All this will be invalid, and your client can easily entice the employee. You will not be able to penalize anybody for this, nor will you reimburse your expenses for the alleged training of your employee-defector. Indeed, a legal mechanism for compensation in such cases can still be created.<\/span><\/p>\n<h3><b>Permission for outstaffing is required\u00a0<\/b><\/h3>\n<blockquote><p><i><span style=\"font-weight: 400;\">The obligation of such permission is provided in the order approved by <\/span><\/i><a href=\"https:\/\/zakon.rada.gov.ua\/laws\/show\/359-2013-%D0%BF\"><i><span style=\"font-weight: 400;\">The Cabinet of Ministers of Ukraine Resolution No. 395<\/span><\/i><\/a><i><span style=\"font-weight: 400;\"> of May 20, 2013.<\/span><\/i><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">Paragraph 2 provides that it shall enter into force on the date of entry into force of the Law on Amendments to Certain Laws of Ukraine on the Issuance of a Workers&#8217; Employment Permit for Further Work in Ukraine with Another Employer.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, this law has not been adopted yet, and that is why Resolution No. 395 itself has not yet entered into force. It is not yet possible to obtain such permission, even if desired.<\/span><\/p>\n<h3><b>How to properly formalize the relationship between an outstaffer and a client<\/b><\/h3>\n<blockquote><p><i><span style=\"font-weight: 400;\">You should sign a contract, recruitment requests, acts of acceptance and transfer of services. It is necessary to keep a record of the use of the amount of working time worked by each &#8220;hired&#8221; employee, to invoice for the services rendered, to have orders (instructions) for sending staff to work.<\/span><\/i><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">A professionally drawn up outstaffing contract does not solve all the problems but helps to get rid of many. The first thing that control bodies will check is the contract. And, in the case of outstaffing, downloading the template from the internet will only cause damage.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We should also note the constant and common problem of most IT companies &#8211; poor detalization of provided services in the contract, acts and invoices. Typically, something like &#8220;Contractor provided and Customer accepted personnel services&#8221; is simply written. And that&#8217;s all.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Such a general wording is a formal statement of the fact of the provision of services, from which it is impossible to determine how the contractor could set the actual time worked by his employee, the amount of work done, and as a consequence, to correctly calculate wages.<\/span><\/p>\n<h3><b>Economic feasibility<\/b><\/h3>\n<blockquote><p><i><span style=\"font-weight: 400;\">This is what the Tax Agency likes to use to prove the fictitiousness of outstaffs.<\/span><\/i><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">For example, if a client has their own programmers who receive a minimum wage, and now he rents programmers from an outstaffing company at a salary twice as higher, then the controlling authorities will have quite reasonable suspicions: Isn\u2019t it a cashing in of money?<\/span><\/p>\n<h3><b>There are three more bans<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">There are 3 other bans that are specified in the labor law. They are hardly used in the IT field, but it will be wrong not to mention them. Therefore, just be aware that an outstaffer is forbidden to send employees to workplaces to an employer who:<\/span><\/p>\n<ul>\n<li><b><span style=\"font-weight: 400;\">Reduced the number of (staff) employees during the year<\/span><\/b><\/li>\n<li><b><span style=\"font-weight: 400;\">the norm of the number of employees of the basic professions involved in the technological processes of the main production is not obeyed<\/span><\/b><\/li>\n<li><b><span style=\"font-weight: 400;\">employees are engaged to perform work in harmful, dangerous and difficult working conditions, as well as to work in the main professions of the technological process of basic production.<\/span><\/b><\/li>\n<\/ul>\n<h4><b>Conclusion\u00a0<\/b><\/h4>\n<p><span style=\"font-weight: 400;\">As you can see, outstaffing is not just a fashion word, it is not just a contract with a similar name. These are relationships, to some extent, complex, with a set of clear requirements. Failure to do so could result in millions of fines.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, these relationships are not so complex to be afraid of. Outstaffing is a long-tried and handy model of team recruitment for a project. All you need for safe outstaffing is professional training.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p class=\"p1\">Read more:<\/p>\n<p class=\"p1\">\u2013 <a href=\"https:\/\/productcrafters.io\/blog\/adding-svg-icons-to-your-react-native-app\/\">Adding SVG Icons to Your React Native App<\/a><\/p>\n<p class=\"p1\">\u2013 <a href=\"https:\/\/productcrafters.io\/blog\/creating-custom-react-native-ui-components-android\/\">Creating Custom React Native UI Components Android<\/a><\/p>\n<p class=\"p1\">\u2013 <a href=\"https:\/\/productcrafters.io\/blog\/how-to-create-wysiwyg-widget-editor-on-react-native\/\">How to Create WYSIWYG Widget Editor on React Native<\/a><\/p>\n<p class=\"p1\">\u2013 <a href=\"https:\/\/productcrafters.io\/blog\/responsive-react-native-apps\/\">Responsive React Native Apps<\/a><\/p>\n<p class=\"p1\">\u2013 <a href=\"https:\/\/productcrafters.io\/blog\/react-native-tips-to-style-you-app\/\">React Native Tips to Style Your App<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The article was translated.\u00a0 Source: https:\/\/ain.ua\/2019\/10\/29\/autstaffing-kolonka-yurista Written by Sergey Alexandrov, Managing Partner of Legal Ideas Law Firm . . . Outstaffing is one of&#8230;<\/p>\n","protected":false},"author":1,"featured_media":2258,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[20],"class_list":["post-1830","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-development","tag-fixed"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How to Organize Outstaffing in Ukraine: Complete Guide | ProductCrafters<\/title>\n<meta name=\"description\" content=\"Learn how to properly organize IT outstaffing in Ukraine. 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