How To Handle Unexpected Relocation of Ukrainian Workers Abroad
In March 2022, Contractor Taxation received a request from a company in Israel that had numerous contractors located in Ukraine. Due to geopolitical conflict in the country, the company was looking for solutions to relocate the workers to Romania, in compliance and without delay.
Situations like this do arise when you hire remote contractors, that may need unexpected relocation to another country. This can be due to personal reasons, or as in the case of Ukraine, the need to leave an unsafe location. It is worth noting that many companies do hire contractors instead of employees, and they are often every bit as valuable due to their skills and experience. This justifies the cost and effort of relocation in order to retain them, as they may not be easily replaced.
The contractors could be either citizen of Ukraine or expats working there, so any solution had to be customized for each worker. The contractors can either be remote to the company’s headquarters or working on-site in a local branch office, but the solution works equally well to retain and relocate to a new country.
Relocation of Ukrainian Workers to Romania
In the case of the Israeli company, they had two important needs:
- Relocation of the Ukrainian workers to a country where they could be safe and
- Ensure little or no interruption in their business activity.
For the contractors, moving to a new country without much notice can be complex and stressful, and they will be concerned about housing, payment and new government regulations to follow. The company will want to make the transition quickly, both for worker safety and for operational continuity.
In this situation, a local partner with insight and relocation experience can be invaluable. Contractor Taxation offered a solution that took care of the transition by using a Romanian umbrella company to facilitate.
After relocation, all contractors would be expats facing immigration compliance rules. Because Ukraine is not a member of the EU, any Ukrainian relocated to Romania would need a work permit. In Romania, individuals cannot apply for work permits. Thus, a valid entity has to sponsor the work permits. This includes self-employed contractors.
The easiest solution for the company and worker is to use the umbrella company to meet immigration requirements. The Romanian umbrella company is set up and ready to sponsor work permits for any nationality, subject to immigration restrictions.
Hiring and Payment
The relocation would not necessarily affect the contracts with the company, as the contractors would continue to fill the same roles. There could be some adjustments based on the cost of living or currency of payment.
The umbrella company, as a third party to the relationship between worker and company, can facilitate payment to the Ukrainian workers in Romania. The umbrella company would handle all remittances from the company and make any required tax withholding or social contributions. Net earnings are then paid directly to the worker’s designated account. This offers a secure and facilitated service for both the company and workers during and after relocation.
The only other solution for the company would be to set up their legal entity in Romania for both work permits and direct contractor payment. Even if that is a reasonable and cost-effective long-term strategy, the umbrella company could be used in the interim until the entity is up and running. This ensures that operations continue uninterrupted, and the workers receive timely payment.
Costs and Logistics
There is a cost to using an umbrella company, but it is far less than setting up a new entity simply to pay contractors. It saves the company the time and money needed to hire local experts and professionals and gives the workers a local resource to turn to in the new country. Other costs will include the transport and housing of relocated workers, which would be the only way for the company to retain high-value talent.
There could be a logistical challenge for payments if the relocated contractors did not want to continue using their Ukrainian bank accounts. But once the contractors had secured their work permit and a Romanian address, they could set up a local bank account. This is another advantage of using an umbrella company for the transition, as they can secure work permits quickly and assist with identifying banking partners.
Expats in Ukraine
Expat contractors who may have been working in Ukraine will follow a similar process as Ukrainians but may have different needs. If expats are EU citizens, then they can enter Romania and work without a visa of any type. That is simpler of course, but they will still need a way to receive payment, so the umbrella company can handle that for them.
For others, it will depend on their country of citizenship but for most non-EU workers, the umbrella company solution will still be best.
How Contractor Taxation can help you to relocate remote workers
Relocation of contractors is not always as urgent as in the case in Ukraine, but it can happen without much notice. If your company needs to relocate contractors, then you will need a knowledgeable partner to assist you in the destination country. The process and hiring solution that you used in the original country may not apply.
Contractor Taxation has a global network of umbrella companies that can facilitate the transition of contractors and seamless payments.
Other benefits of umbrella companies include:
- Manages all contractor payments, tax withholding and any social contributions
- Issues the contractor a payslip each month, to a local or foreign account
- Sponsors work permits for contractors
- Helps set up the contract
- Moderates any disputes
- Advises on access to totalization and double taxation treaties
If you have questions about how an umbrella company can help you with hiring, payment and relocation or even with the relocation of Ukrainian workers, please contact us at Contractor Taxation.