Gig contracts in Ukraine: Holidays, sick leave, taxation
Under gig contracts in Ukraine, work is performed between IT companies and employees without the participation of FOPs. However, many companies are in no hurry to switch to this form of cooperation.
Gig contracts in Ukraine: advantages and disadvantages
In 2021, gig contracts were introduced in Ukraine to regulate work issues in the IT field. This form of cooperation should replace agreements with FOP contractors, but its benefits and risks are not yet fully understood.
Legislation on gig contracts was adopted with the aim of facilitating conditions for IT companies and reducing risks. However, there are many uncertainties and misunderstandings.
The need for randomness in the transitional phase
Many companies prefer the usual way of cooperation with FOPs, which, although it has its own risks, is understandable and well known.
However, this does not prevent companies from gradually moving to gig contracts, as this form of work will become the norm in the future. It is beneficial for the state to minimize the possibilities of FOPs for taxation and to work only with official contracts of gig specialists.
However, there are currently many uncertain points and unclear issues that require agreement between the parties.
Risk reduction in gig contracts: what to consider
One of the most important aspects when drawing up a gig contract is risk reduction. For this, you need to carefully write down all the details and terms of cooperation. Particular attention should be paid to the following provisions:
The law provides for a paid break for gig specialists for 17 working days per year. However, the specific terms of using this break should be discussed in the gig contract.
It is worth deciding whether compensation will be paid for the unused break and whether it can be carried over to the next year. This will avoid misunderstandings between the parties in case of termination of the contract.
Payment of sick and maternity leave
Payment of sick and maternity leave must be taken into account in the gig contract, since the amounts calculated on the basis of the minimum wage do not correspond to the actual income gig specialist. Therefore, the amount of compensation for such payments should be established and fixed in the gig contract.
It is also necessary to specify how expenses during illness will be compensated to avoid misunderstandings between the parties.
Gigs may also be eligible for travel compensation. This can be fixed in the gig contract, which will allow the company to take into account the costs of the specialist's stay outside the workplace.
If it is planned to provide various additional services and compensations (for example, recreation, food, etc.), it is necessary to bear in mind possible tax risks. Therefore, it is worth avoiding fixing such preferences in a gig contract.
The issue of taxation in gig contracts is complex and requires careful consideration. The law provides for a reduced tax rate of 6.5%, but this only applies to remuneration for services. Payment for breaks and sick leave is taxed at the standard rate of 18%. This point should be discussed and taken into account in the gig contract to avoid tax problems.
The importance of consistency in gig contracts
The main principle when drawing up a gig contract is consistency. All details and conditions of cooperation must be discussed and included in the contract. This will reduce risks and avoid misunderstandings in the future.
All gig contracts must be individual and take into account the specifics of each collaboration. A properly drafted contract will match the vision and expectations of both parties, which will serve as a basis for successful cooperation.
Author: Maksym Nosarev, founder of the legal company Tretten Lawyers, IT lawyer