What Severance Pay Rules Must Employers Follow in Ukraine?

Which Employees Qualify for Severance Pay?

• Employees dismissed on employer’s initiative for changes in organisation, redundancy, or liquidation generally qualify for statutory severance.
• Employees who refuse transfer to another locality together with the employer or refuse to continue work due to significant changes in essential working conditions may be entitled to severance.
• Employees terminated due to the employer’s non-compliance with labour laws or collective agreements at the employee’s initiative can qualify for compensation similar to severance.
• Employees whose fixed-term contracts end early on the employer’s initiative for reasons not related to misconduct may be entitled to severance.
• Employees dismissed due to conscription or alternative military service can be entitled to specific termination payments under the Labour Code.
• Employees dismissed for culpable actions such as gross misconduct or systematic violations of labour discipline generally do not qualify for statutory severance.

What Are the Legal Timelines for Paying Severance?

Under the Labour Code of Ukraine, you must pay all amounts owed to an employee, including severance, on their last working day. If the employee was not at work on that day, payment must be made no later than the next day after they request settlement. You should also provide a written breakdown of all payments on or before the termination date. In practice, many employers align severance payment with the final payroll cycle, but delaying beyond the statutory deadline can trigger penalties. To stay safe, plan internal approvals so severance is calculated and ready a few days before the termination date.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company fails to pay severance correctly or on time in Ukraine, you risk financial sanctions, administrative liability, and labour inspections. The State Labour Service can review terminations, and employees can sue for unpaid amounts, average earnings for the delay period, and moral damages. Courts typically interpret ambiguities in favour of the employee, so underpaying or misclassifying a termination can become expensive quickly.

• The Labour Code allows employees to claim average earnings for the entire delay period until full payment is made.
• Labour inspectors can impose fines per affected employee for violations of wage-payment rules.
• Courts may award moral (non-pecuniary) damages where the employee proves distress from unlawful termination or non-payment.
• Reinstatement orders with back pay are possible if the dismissal grounds were misapplied or procedurally flawed.
• Repeated or serious violations can increase scrutiny of your wider HR and payroll practices.

Does Outsourcing Employment via an EOR Change Severance Liability?

Using an Employer of Record (https://www.playroll.com/employer-of-record) in Ukraine shifts day-to-day employment administration, but it does not remove the underlying legal obligations tied to Ukrainian labour law. The EOR becomes the legal employer on paper and is responsible for calculating and paying severance in line with the Labour Code. However, your company still drives business decisions, including when and why to terminate, which can be examined if a dispute arises. If you instruct an EOR to terminate outside statutory grounds or without proper notice and documentation, you may bear commercial or contractual liability to the EOR and indirectly for any claims. A well-drafted EOR agreement should clearly allocate who funds severance, handles disputes, and bears the risk of non-compliance.

Be 100 Percent Compliant in Offering Severance with Playroll

Managing severance in Ukraine means juggling statutory grounds for dismissal, notice rules, average-salary calculations, and strict payment deadlines. Playroll helps your team structure terminations so they fit within the Labour Code, documenting the correct legal basis and ensuring the right severance multiple is applied. You get clear guidance on when severance is mandatory, when it is not, and how to handle edge cases like relocations, organisational changes, or early contract terminations.

With Playroll, your company can standardise global offboarding while still respecting local Ukrainian rules. Our platform and in-country experts help you forecast severance costs, align internal approvals with legal timelines, and avoid underpayments that lead to disputes. Whether you employ directly or via an EOR, Playroll keeps your severance processes consistent, auditable, and defensible if a labour inspector or court ever reviews your decisions.