Recruitment of Ukrainians. Things you should know

Since 24 February, Ukraine has been devastated by the outbreak of the full-scale Russian aggression in Ukraine. According to the United Nations High Commissioner for Refugees (UNHCR), 3.8 mln. people have already left Ukraine due to the military aggression of the Russian Federation. More than 44 000 people fleeing the war in Ukraine have registered at the Lithuanian Migration Department. Almost half of those registered are minors. People arriving from Ukraine have already started looking for work. Many Lithuanian businesses have offered their help as well as vacancies to Ukrainians fleeing the war.

As a response to the Russian full-scale invasion in Ukraine, the Council of the EU adopted a Decision on 4 March 2022 granting the temporary protection status to individuals fleeing the war in Ukraine under the Temporary Protection Directive.

Hiring a foreigner with temporary protection status may, at the first glance, seem challenging for a potential employer.First of all, the temporary protection has never been applied in the EU before. Secondly, the existing employment procedure for third-country nationals is rather complicated.

In this respect, we must understand that one of the aims of temporary protection is to facilitate the access of protected persons to the labour market so that they could start to support themselves financially as soon as possible.

Thus, in implementing the Temporary Protection Directive, Lithuania, like other EU Member States, has introduced norms that, among other things, simplify integration of individuals under temporary protection into the labour market.

Applicability of temporary protection status

First of all, it is important to determine the circle of individuals entitled to temporary protection status.

According to the Resolution No 224 of the Government of the Republic of Lithuania of 16 March 2022, the temporary protection status in Lithuania is valid from 4 March 2022 till 4 March 2023 and is applicable to individuals meeting the following criteria:

• individuals arriving to Lithuania as a result of the military aggression of the Russian Federation not earlier than 24 February 2022 and no later than 1 May 2022, and
• individuals who are Ukrainian citizens, as well as their family members, or stateless persons, or nationals of third-countries other than Ukraine, who had been legally residing in Ukraine with a valid permanent residence permit and could not return to their country of origin or another host country for safe and long-term residence before 24 February 2022, or
• individuals who are stateless persons or third-country nationals, as well as their family members who have been granted international protection or equivalent national protection in Ukraine before 24 February 2022.

Thus, the rights and benefits of temporary protection do not apply exclusively to citizens of Ukraine, though there are strict conditions under which a person is entitled to temporary protection.

Ukrainian nationals who had been residing in Lithuania before the start of the Russian military aggression or have arrived to Lithuania after 24 February 2022 for reasons other than humanitarian (e.g., students, employees who have obtained the work permit before the war, etc.) do not enjoy the benefits of temporary protection status. The general legal basis for employment applies to such groups of Ukrainians.

Migration and employment matters

The temporary protection provides for, among other things, the simplification of access to the labour market for those covered by it. In Lithuania, such a simplified procedure means the suspension of the obligation to obtain a work permit for those who wish to work at Lithuanian enterprises or institutions. In order to hire a person under temporary protection, the employer is not required to register the vacancy at the Department of Employment Service and apply for a decision on the compliance of the foreigner’s qualification with the needs of the Lithuanian labour market.

Upon arrival in Lithuania, an individual entitled to temporary protection must register with the Registration Centre of the Migration Department. The registered person obtains a specific document confirming temporary protection status and is entitled to apply for a national visa D or a temporary residence permit on humanitarian grounds.

Obtaining a national visa D or a temporary residence permit takes some time. In the meantime, however, a person holding a valid biometric passport of a Ukrainian citizen can start working immediately. If the individual does not have such a passport, the Migration Department provides a specific temporary document confirming the temporary protection status. To summarize, in order to employ a person under temporary protection, the Lithuanian employer will have to check whether the person holds one of the following documents:

• Biometric passport of a Ukrainian citizen;
• Certificate from the Migration Department confirming the status of temporary protection;
• National visa D;
• Temporary residence permit on humanitarian or temporary protection grounds.

The obligation of the employer to submit an electronic notification (the LDU announcement) to the Social Security Service when hiring a foreigner applies to all employees, including those under temporary protection. Such a notice must be submitted via the SODRA website no later than one business day before the employee starts working. The announcement must contain the following information about the employee:

• Personal data;
• Legal basis for staying in Lithuania;
• Country of origin of the employee;
• Information on the employment contract.

The Government of Lithuania has supported a proposal to waive for two years the state language proficiency requirement for foreigners under temporary protection, who wish to work in positions that usually require knowledge of the Lithuanian language . It shall facilitate the employment of Ukrainian teachers and other specialists by state institutions and agencies.

In terms of language, it should also be borne in mind that according to the Labour Code, the employment contract must be concluded either in Lithuanian language or in Lithuanian and another language acceptable to both parties. The other language may be English, Russian or any other language understood by both theemployer and the employee.

Another exception for Ukrainiansis that if they do not have proof of qualification, confirming their suitability for the position they are applying for, it is not required. However, if the foreigner applies for a position where qualification is strictly required by law (e.g., masseur, medical worker) or by internal regulations of the employer, this exception is not applicable.

As it is sometimes difficult for Ukrainian citizens to find work, the Employment Office is offering them additional help.

Employers with job offers for Ukrainian citizens are invited to register vacancies on the website of the Employment Office. When registering a vacancy where an employer would agree to employ war refugees from Ukraine, the box “For Ukrainians” (Lith. “ukrainiečiams”) should be ticked.

We would like to remind potential employers that they must pay the salary of a Lithuanian employee to employed Ukrainians working in the same position.

Please note that according to the Labour Code, salaries and other employment-related benefits, as well as per diem and reimbursement of secondment expenses, must be paid by transfer to the employee’s bank account. It is not required for a person to have a bank account when starting work, but it is obligatory to have an open bank account on payday.

Most Lithuanian banks offer quick and free opening of bank accounts. Currently, banking services for war refugees are provided by AB „SEB bankas“ and „Swedbank”, AB, AB Šiaulių bankas.

Tax matters

The procedure of reporting and taxing the income of foreigners in Lithuania is the same as for Lithuanian nationals. The standard Personal Income Tax rate that applies to employment income is 20% (in case the individual’s income does not exceed 60 average salaries per year) or 32% (if the income exceeds 60 average salaries per year).

It should be kept in mind that Ukrainianswho have come to Lithuania after 24 February 2022 might have received income from their Ukrainian employers. According to the Convention between the Governments of Ukraine and Lithuania “On the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital”, should a national of Ukraine stay in Lithuania for more than 183 days during a year, their Ukrainian-sourced income shall be taxed in Lithuania. In Ukraine, employment income paid via payroll is taxed at source. Thus, the double taxation issue may arise. The Law of Lithuania “On corporate income tax” allows tax residents of Lithuania to receive a foreign tax credit. It means that they are entitled to offset the personal income tax paid in Ukraine against the one in Lithuania. For that purpose, a person must submit to the Lithuanian Tax Office the Certificate issued by the Tax Office of Ukraine indicating the income received and taxes paid in Ukraine.

There can also be an opposite situation when a Ukrainian employee is a tax resident of Ukraine. That may happen if, e.g., the individual is registered as a private entrepreneur in Ukraine or has spent less than 183 days in Lithuania during the year. In this case, according to the Convention, the Lithuanian employment income must be taxed in Ukraine. Like in Lithuania, Ukrainian tax legislation provides for a foreign tax credit for tax residents of Ukraine through submitting to the Ukrainian Tax Authorities the Certificate on income received and taxes paid in Lithuania. Both Lithuanian and Ukrainian laws provide that reporting of foreign income is a personal responsibility of the taxpayer, and the employer is not obliged to monitor and report such income of the employee. The employer can help a Ukrainian employee who is going to report Lithuanian foreign income in Ukraine by providing an income statement – a document, sealed and signed by the employer that includes all the employee’s pay slips for the tax year, indicating different kinds of income and benefits paid to the employee and the taxes, as well as social security deductions.

Social Security

When an individual works under an employment contract (either fixed-term or permanent), the employer is under obligation to pay social security contributions for the employee. The social security contribution rates are as follows:

• 5% of the gross salary (withheld from the income of the employee)
• 77% in case of permanent contracts and 2.49% in case of fixed-term contracts (paid by the employer).

Ukraine and Lithuania have signed the Agreement “On Social Security”, according to which the social security contributions made by Ukrainian citizens during their work in Lithuania can be recognized by Ukraine and included into their Ukrainian pension record. For that purpose, the individual will have to submit to the Ukrainian Pension Fund the Certificate issued by the Lithuanian authorities indicating the period of work and the amount of social security contributions paid in Lithuania.