Providing employers with compensation for hiring registered unemployed persons

In the current economic environment, the state actively supports employers who create new jobs and employ people registered with the employment service. One of the important tools to stimulate employment is providing compensation to employers for hiring registered unemployed persons. This program helps to reduce unemployment, increase social responsibility of business and develop regional economies.

Legal and regulatory framework

A mechanism for providing compensation is provided:

• The Law of Ukraine "On Employment of the Population";

• By the Resolution of the Cabinet of Ministers of Ukraine No. 347 of June 21, 2022. "On Providing Employers with Compensation of the Single Contribution to the Compulsory State Social Insurance";

• other regulations governing the employment of persons registered as unemployed.

These rules set out the criteria, conditions, amounts and procedure for obtaining compensation by employers.

The essence of state support

The state compensates employers for part of the costs associated with hiring registered unemployed persons. Depending on the category of employee and the terms of employment, compensation may be provided in the form of

• Reimbursement of the unified social tax (UST) for a certain period;

• compensation for labor costs (in whole or in part);

• financing the creation of a new job.

The main goal is to motivate businesses to hire people who have difficulty finding employment, including young people, people of pre-retirement age, people with disabilities, veterans, internally displaced persons (IDPs), etc.

Who is entitled to compensation

The right to receive compensation is granted to employers, which:

1. created a new workplace and employed a registered unemployed person at the direction of the employment service;

2. Provided the employee with official employment under an employment contract for at least 12 months;

3. pay taxes and contributions on time and have no debts to the budget.

Additional incentives are provided for companies that employ socially vulnerable categories of citizens.

Amount and terms of compensation

According to current regulations, the state can compensate:

• single social contribution (SSC) - in the amount of 100% from the accrued contribution within 12 months for each person employed;

• part of the unemployed person's salary - in the amount of up to two minimum wages per month for 6 months (within available budgetary resources);

• costs of creating a new job - in cases where the employer provides long-term employment (from 2 years).

The procedure for receiving compensation

1. Submitting an application to the employment center at the place of business.

2. Conclusion of the contract between the employer and the employment service.

3. Employment of the unemployed at the direction of the service.

4. Providing supporting documents (copies of the hiring order, payment documents for the payment of unified social tax, etc.)

5. Receiving compensation to the current account after verification of the data.

Compliance with the conditions is monitored by the State Employment Service, and in case of violations, the funds may be returned to the budget.

Peculiarities of compensation during martial law

Since the beginning of the full-scale war, the Ukrainian government has introduced a number of additional employer support programsaimed at preserving jobs and adapting the labor market:

• compensation of the unified social tax to employers who hire IDPs or people who lost their jobs due to the war;

• program "eRobota" - providing grants for business creation and employment of employees;

• simplified procedure for receiving compensation through electronic services of the Employment Service.

Such measures allowed thousands of people to find jobs even in difficult wartime conditions, and helped companies retain their human resources.

Benefits for employers

1. Financial relief - partial coverage of payroll costs.

2. Motivation to expand your business and create new jobs.

3. Improve your image as a socially responsible enterprise.

4. Reduced staff turnover through participation in state employment programs.

Problems of the program implementation

Despite the obvious advantages, there are also some challenges:

• complexity of procedures for small businesses;

• limited funding from the state budget;

• Bureaucratic delays in inspections and payments;

• lack of business awareness of existing programs.

To increase efficiency, it is necessary to simplify the mechanism for receiving compensation, expand online services, and strengthen communication between the employment service and business.

Conclusion.

Compensation to employers for hiring registered unemployed is an effective tool of the state employment policy that benefits both business and society. Such support stimulates job creation, legalization of labor and integration of socially vulnerable categories into the labor market.

As the economy recovers from the war, this mechanism should become a key element of employment development and partnership between the state and employers.

💼 If your business plans to use the state compensation program, legal team of Axel Legal will help:

• prepare documents for submission to the employment service;

• assess the possibility of receiving compensation;

• provide legal support and advisory support at all stages.

Together, we will help your business grow and help people find stable jobs.