Minimum Wage and ESV Increase Schedule in Ukraine: What Businesses Need to Know

 

On September 1, 2020, a new stage of labor remuneration reform began in Ukraine. The Government, following the President’s instructions, identified resources for a phased increase in social standards.

This decision directly impacts the payroll system, the amount of the Unified Social Contribution (ESV), and social security benefits.

In this article, we will break down the new figures in detail, explain which specific calculations are subject to revision, and provide a practical checklist for accounting to avoid fines and reporting errors.

For ease of navigation, use the table of contents below:

Minimum Wage Increase Schedule

Following the necessary calculations, the Head of Government presented an official schedule of changes. The increase will take place in several stages, allowing businesses to gradually adapt to the new financial conditions.

Planned Increase Stages:

• From September 1, 2020 — increase to 5,000 UAH.
• From January 1, 2021 — increase to 6,000 UAH.
• From July 1, 2021 — increase to 6,500 UAH.

Impact of Changes on ESV for Entrepreneurs

An increase in the minimum wage automatically leads to an increase in the Unified Social Contribution (ESV). This is critical for individual entrepreneurs (FOPs) who make quarterly payments.

According to established norms, starting from September 2020, the ESV amount will be 3,300 UAH per quarter (instead of the previous 3,117.18 UAH).

By July 2021, this figure will continue to rise, reaching 4,290 UAH. Entrepreneurs should account for this burden in their financial plans in advance.

ESV Increase Stages: Detailed Calculation

To prevent errors in accounting calculations, it is vital to follow the current rates. Below is a monthly and quarterly accrual plan to assist your accountant.

1. Period from January 1, 2020:
   ESV is 1,039.06 UAH per month (4,723 UAH * 22%) or 3,117.18 UAH per quarter.
2. Period from September 1, 2020:
   The amount increases to 1,100 UAH per month or 3,300 UAH per quarter.
3. Period from January 1, 2021:
   Accruals will amount to 1,320 UAH per month or 3,960 UAH per quarter.
4. Period from July 1, 2021:
   The maximum rate is 1,430 UAH per month or 4,290 UAH per quarter.

Consider these changes when planning your budget and filing tax reports. Timely adaptation will minimize the risks of penalties and fines from regulatory authorities.

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Legal Expertise

Author: Denys Fedorkin

Managing Partner of the law firm Law Business Association (LBA). Specializes in tax law, real estate transactions, and comprehensive business protection (anti-raid activities). Combines deep legal knowledge with a practical understanding of business processes.

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