Ukrainian employers and employees increasingly work in a reality that the existing Labour Code barely recognises. The core of the legislation dates back to the Soviet era, when the standard model was a large factory, fixed schedules and life-long employment. Today companies operate across time zones, rely on project teams and mix remote, hybrid and office work. The gap between law and practice is widening.
Experts interviewed for the article argue that this gap is no longer a technical problem. It affects investment decisions, productivity and the ability of Ukrainian business to compete for talent with neighbouring countries. At the same time, any reform must balance flexibility with social protections, especially in wartime conditions.
Main problems with the current Labour Code
Analysts highlight several structural issues:
- Overly detailed regulation of working time. Many provisions assume a rigid nine-to-five model and complicate flexible schedules, shift work and project-based employment.
- Limited tools for remote and platform work. The law does not clearly reflect realities such as fully remote teams, digital nomads or mixed contracts with several employers.
- Complex procedures for hiring and dismissal. The formal process creates legal risks for both sides and pushes smaller companies into the grey zone.
- Outdated approach to collective agreements and social packages. Many companies use modern HR practices that are not properly recognised in law.
As a result, a significant part of actual employment relations is governed by internal policies, civil contracts or informal agreements rather than predictable labour rules.
Why reform matters for investors
For foreign and local investors, labour regulation is one of the first questions in any due diligence. A code that is formally strict but informally ignored creates legal uncertainty: disputes can be resolved based on literal provisions that no one in fact follows.
Modernised legislation could:
- reduce transaction costs when scaling teams or opening new offices in Ukraine;
- clarify rules for flexible formats such as gig work, project contracts and remote employment from other regions;
- align Ukrainian practice with European standards, which is important for integration into value chains and for EU-based partners.
This is particularly relevant for sectors with high added value – IT, shared service centres, engineering and creative industries – where competition for talent is global.
Key elements of a modern Labour Code
Experts suggest several principles for the reform:
- shifting from micro-regulation of every situation to a framework based on rights, responsibilities and transparent procedures;
- digital by design: allowing electronic HR records, e-signatures and remote onboarding as standard tools;
- clearer separation between employment contracts and civil law contracts, reducing the grey zone;
- strong but realistic protections for vulnerable groups, including mobilised workers and those returning from the front.
Such changes would not remove the need for inspections or courts, but would make outcomes more predictable for both workers and businesses.
Window of opportunity during recovery
Reconstruction will require rebuilding entire sectors and creating hundreds of thousands of new jobs. Doing this on the basis of outdated rules risks locking Ukraine into a low productivity model for another generation. At the same time, reform is politically sensitive and needs broad consultation with unions, employers and civil society.
For investors, the signal to watch is whether Ukraine uses the recovery decade to refresh its social contract in the labour market. A modernised Labour Code can become one of the quiet but decisive factors that determine where new factories, service centres and headquarters are located after the war.
