Mobilized employees, the Territorial Defense, IDPs, and employees abroad: how to manage employment relationships during the war

If an employee is mobilized, assigned to basic military service, conscripted as an officer or reservist, or enlisted for military service under a contract, the employer releases them from work while retaining their job and position. There is no obligation to continue paying the employee's average earnings: this guarantee ceased to apply on July 19, 2022. However, a different rule applies to members of volunteer formations of territorial communities: their job, position, and average earnings are retained for the actual time spent performing territorial defense duties during working hours.

An employee's departure abroad or acquisition of internally displaced person (IDP) status does not, in itself, terminate their employment contract or create an absolute prohibition on dismissal. Employment arrangements must reflect the actual circumstances: remote work, unpaid leave, suspension of the employment contract — if both parties are objectively unable to fulfill their obligations — or another lawful procedure. Mobilized sole proprietors are entitled to substantial tax and unified social contribution exemptions, but mobilization does not automatically cancel VAT, ECR/PECR, or obligations toward employees if the business continues operating.

An employee has been mobilized, conscripted, or enlisted under a military contract

Part three of Article 119 of the Labor Code of Ukraine provides employment guarantees, in particular, for employees who are:

• assigned to basic military service;

• conscripted for military service as officers;

• conscripted for military service during mobilization in a special period;

• conscripted for military service from among reservists during a special period;

• enlisted for military service under a contract, including a new contract during a special period.

Such employees retain their job and position until the end of the special period or the date of their actual discharge from military service. Military personnel receive their military remuneration from the state. The employer is not required to continue paying their average salary at the same time.

An employer may provide additional payments to mobilized employees at its own expense under a collective agreement, remuneration policy, another internal regulation, or a separate decision. However, such payments are an additional employer-provided benefit, not a mandatory payment under part three of Article 119 of the Labor Code.

What documents does the employer need?

An employee's extended absence due to military service should be supported by a document confirming the fact and date of commencement of service. Depending on the circumstances, this may be an extract from an order, a certificate from a military unit, a military registration document containing the relevant details, a copy of a contract, or another official document.

An ordinary summons requiring a person to report to a Territorial Recruitment and Social Support Center (TCC and SSC) does not always mean that the person has already entered military service. It may justify release from work while complying with the summons, but for an extended release it is advisable to obtain a document confirming the actual start of military service. The State Labor Service allows employers to obtain a copy or photograph of the document from the employee through electronic communication.

If the employer reliably knows that the employee has been mobilized but has not yet received supporting documentation, the absence should not be recorded as absenteeism without a valid reason. Until confirmation is received, the period may be recorded as an absence for unexplained reasons. Once the document is obtained, the employer can issue an order effective from the actual commencement date of service and adjust the working time records. This approach is recommended by the State Labor Service.

Order releasing the employee from work

This is specifically a release from work, not termination of employment.

The wording «with retention of average earnings» should not be included in such an order for ordinary mobilization cases. The mandatory payment of average earnings under part three of Article 119 of the Labor Code ended on July 19, 2022.

How to record a mobilized employee's working time

If the company uses standard form No. П-5, release from work in connection with the performance of state and public duties is recorded using code «ІН», numeric code 22. Until supporting documents are received, when the reason for the absence remains unconfirmed, code «НЗ» may be used in practice, followed by an adjustment.

Standard form No. П-5 was approved by State Statistics Committee Order No. 489. A company may also use its own timesheet form, provided it has been properly approved and ensures the required recording of working time.

Unused leave before military service

An employee belonging to one of the categories of military personnel expressly listed in Article 83 of the Labor Code is entitled, upon application, to monetary compensation for all unused days of annual leave and the relevant additional social leave for employees with children. The application must be submitted no later than the last day of the month in which the employee was released from work due to conscription for military service.

This is the employee's right, not an obligation to pay compensation automatically without their application.

Injury, captivity, or disappearance

The guarantee of retaining a job and position does not always end on the date when the service member would formally have been expected to complete military service.

Article 119 of the Labor Code extends the relevant guarantees to employees who, during military service:

• sustained injuries or other damage to their health and are receiving treatment;

• were taken prisoner;

• were declared missing.

The guarantee remains in effect until the legally specified point following treatment, return from captivity, reappearance after being declared missing, or a court declaration of death. Therefore, information about injury, captivity, or disappearance is not grounds for automatically terminating employment.

When the employee returns from military service

After actual discharge from military service, the employee must provide the employer with a document confirming the discharge. Based on this document, the employer ends the period of release from work and formalizes the employee's return to their duties.

Mobilization does not mean that an employment contract cannot be terminated at all before military service ends. For example, an employee may resign voluntarily, or the parties may terminate employment by mutual agreement. The important point is that the actual grounds for termination must be a circumstance provided for by law, rather than the fact of military service itself.

If the company director is mobilized

Mobilization of a director does not automatically terminate their corporate powers, but the company must ensure continuity of management: signing contracts, banking documents, personnel orders, tax returns, and correspondence with government authorities.

First, check:

1. the company's articles of association;

2. decisions of the shareholders or another competent body;

3. information in the Unified State Register (USR) about the director and other persons authorized to act on behalf of the legal entity;

4. the internal allocation of job responsibilities;

5. banking and electronic signing authorizations.

The USR contains information not only about the director of a legal entity but also about other persons authorized to act on its behalf, including signing contracts and submitting documents for state registration, as well as any restrictions on their powers.

If the company actually changes its director or adds or changes a person authorized to act on behalf of the legal entity without a power of attorney, the relevant changes must be registered in the USR. Therefore, a universal statement that «mobilization of a director never requires changes to the USR» is incorrect.

A power of attorney may be used for representation in specific matters if this complies with the articles of association and decisions of the governing bodies. A power of attorney for representation does not automatically mean a change of the legal entity's director.

There is also no universal rule regarding remuneration for an employee replacing the director. If management responsibilities are already included in the employee's job duties, the situation differs from assigning new additional work. If an employee performs the duties of a temporarily absent employee alongside their main job, Article 105 of the Labor Code provides for additional remuneration, with the amount determined by the applicable remuneration terms and collective agreement.

An employee authorized to sign electronic documents must obtain their own electronic signature and the appropriate authority. The mobilized director's personal qualified electronic signature (QES) should not be transferred to another person.

An employee serves in the Territorial Defense Forces or is a member of a volunteer formation

The term «territorial defense» covers different legal statuses, so it is essential for the employer to determine the exact legal basis for the employee's participation in territorial defense.

A volunteer formation of a territorial community (VFTC) is not the same as military service through mobilization. The Law «On the Fundamentals of National Resistance» separately defines a VFTC as a paramilitary unit formed voluntarily to prepare for and perform territorial defense tasks.

A territorial defense volunteer contract is concluded with a VFTC member. The standard contract form was approved by Ministry of Defense Order No. 84. Article 119 of the Labor Code guarantees apply to employment relations.

Another point is important for employers: the average earnings of a VFTC member should not automatically be calculated for the entire contract period. Part one of Article 119 of the Labor Code guarantees average earnings for the time spent performing state or public duties if they are performed during working hours. Therefore, it is advisable to have confirmation from the commander or another document identifying the specific days or hours when the employee performed VFTC tasks or participated in training activities during their normal working hours. The official position of the Ministry of Economy also supports retaining average earnings specifically for this time.

Average earnings in this situation are calculated under Procedure No. 100 for calculating average wages.

An employee has gone abroad or become an IDP

Departure abroad, evacuation, or a change of residence does not constitute a separate form of employment arrangement. The employer and employee must formalize how work will continue or establish a lawful reason for absence.

The most common options are:

Mandatory 90-day leave for an employee abroad or an IDP

If an employee leaves Ukraine or acquires internally displaced person status, the employer must, upon the employee's application, grant unpaid leave for the period specified in the application, but for no more than 90 calendar days. This leave period does not count toward the length of service entitling the employee to annual basic leave.

Without the employee's application, the employer cannot unilaterally «send» them on such leave.

Remote work from abroad

If the nature of the work allows it to be performed remotely, the parties may formalize a remote work arrangement. Relocation itself does not terminate the obligation to work: once remote work is arranged, the employee must perform their job duties, and the employer must pay for the work performed.

It is advisable to specify communication channels, working hours or availability periods, document exchange procedures, reporting, information protection rules, and equipment use in writing.

When can an employment contract be suspended?

An employment contract cannot be suspended merely because the employee is abroad.

Article 13 of Law No. 2136-IX requires that armed aggression make it impossible for both parties to perform their obligations: the employer cannot provide work, and the employee cannot perform it.

When initiated by one party, suspension may last a total of no more than 90 calendar days during martial law. By mutual agreement, the period may be extended beyond 90 days, but not beyond the termination or cancellation of martial law. If the employer resumes the contract early, the employee must be notified of the need to return to work 14 calendar days in advance. Suspension does not terminate employment and does not deprive either party of the right to terminate the contract on another lawful ground.

Employee and employer must remain in contact

Each party to an employment contract must maintain the ability to communicate and notify the other party of changes to contact details, including address, email, or telephone number, within 10 calendar days at the latest.

An employee may notify the employer using the postal or email address recorded in the USR or, if this is impossible, by text message to the employer's official telephone number. If one party fails to communicate new contact details, a notification sent to the last known details may, under certain conditions, be considered valid.

For employers, this means that correspondence with employees who have left should be retained. It can help establish the reasons for absence and document the employer's attempts to maintain contact.

Can an employee who has left and is not working be dismissed?

There is no general provision prohibiting the dismissal of any employee solely because they have gone abroad or evacuated.

Clause 8-3 of part one of Article 36 of the Labor Code permits termination of an employment contract if both of the following circumstances exist simultaneously for more than four consecutive months:

1. the employee is absent from work;

2. the employer has no information about the reasons for the absence.

If the employer knows why the employee is absent, this ground cannot be used solely because the absence has lasted four months.

Dismissal for absence without a valid reason is separately provided for under clause 4 of part one of Article 40 of the Labor Code. War or being abroad does not automatically make every absence justified — the actual circumstances must be assessed and documented.

A special guarantee applies to an employee whose workplace is located in an area of active hostilities: during martial law, they cannot be dismissed for absenteeism under clause 4 of part one of Article 40 of the Labor Code due to absence from work. Such absence is unpaid and does not count toward service entitling the employee to annual basic leave.

Example from case law

In its ruling of July 9, 2025, in case No. 635/12429/23, the Civil Cassation Court of the Supreme Court found the dismissal of an employee under clause 8-3 of part one of Article 36 of the Labor Code unlawful. The employer had previously granted that employee unpaid leave during martial law upon their application. Because the employer knew the reason for the absence, the essential condition for this ground for termination — a lack of information about the reasons — was absent.

The practical conclusion for businesses is to retain applications, orders, electronic correspondence, and other documents explaining the employee's status.

Mobilized sole proprietor: single tax, personal income tax, military levy, unified social contribution, VAT, and ECR

The rules for mobilized sole proprietors have changed substantially. Paragraph 25 of subsection 10 of Section XX of the Tax Code provides relief from certain tax obligations for self-employed persons, including sole proprietors with or without employees, who have been mobilized, assigned mobilization duties under the relevant staffing arrangements, or are serving under a military contract.

The exemption period runs from the first day of the month of conscription or signing of the contract, but no earlier than February 24, 2022, through the last day of the month of demobilization or discharge from military service.

The tax exemption is applied automatically based on registry data

The main basis for exemption from personal income tax, single tax, and military levy is information on mobilization, military contracts, and demobilization received by the State Tax Service from the Unified State Register of Conscripts, Persons Liable for Military Service, and Reservists.

If the relevant information is missing, the law permits submission of an application and supporting documents.

The tax authority also explains that the exemption applies to persons registered as self-employed before mobilization or signing a military contract. If a person registered as a sole proprietor after conscription or signing a contract, paragraph 25 does not apply to them. Receiving business income while serving does not, in itself, disqualify an already registered sole proprietor from this exemption.

If a mobilized sole proprietor has employees

A sole proprietor may authorize another person to pay employees' salaries and other income. That authorized person calculates and withholds personal income tax and military levy from payments to employees.

The Tax Code establishes special deadlines for certain obligations after demobilization: payment of withheld amounts for the taxes specified by law within 180 calendar days, and submission of the corresponding returns within 150 calendar days after demobilization, subject to the conditions of paragraph 25 of subsection 10 of Section XX of the Tax Code of Ukraine.

Therefore, mobilization of the sole proprietor does not mean that employees' salaries become tax-exempt.

Unified social contribution for a mobilized sole proprietor

The unified social contribution is governed by Law No. 2464, not the Tax Code.

For a sole proprietor who is not an employer, a special provision exempts mobilized personnel or service members under contract from the relevant unified social contribution obligations for themselves during military service. Under the current mechanism, the exemption is applied based on information from the Unified Register of Conscripts. If the information is absent, the sole proprietor may submit an application and a supporting military document.

From October 1, 2025, the rules also changed for sole proprietors who are employers. A mobilized or contract-serving sole proprietor does not have to pay the unified social contribution or submit mandatory reports for themselves if another employer — including a security or defense unit in which the person is serving — has paid a contribution on their behalf of at least the minimum insurance contribution.

This rule concerns the entrepreneur's own unified social contribution and does not cancel their obligations as an insured employer toward hired employees.

VAT for a mobilized sole proprietor

Legislation does not provide a separate VAT exemption for mobilized sole proprietors. If a sole proprietor remains a VAT payer and has transactions or other reportable indicators, they must fulfill the relevant VAT obligations under the general rules.

If there are no supply or purchase transactions or other reportable indicators during a reporting period, a VAT return is not submitted under the general rule in paragraph 49.2 of the Tax Code of Ukraine, rather than because of mobilization itself.

Can the business of a mobilized sole proprietor continue operating?

Mobilization does not terminate a sole proprietor's state registration. The entrepreneur may organize business operations through employees or authorized persons within the law.

If a store, online store, establishment, or other business continues accepting cash, payment card payments, or carrying out other transactions classified as settlement transactions under the ECR Law, mobilization of the owner does not create a separate exemption from using an ECR/PECR. The ordinary rules and general statutory exceptions apply.

Consequently, the tax relief granted to a mobilized entrepreneur cannot be extended to business obligations for which the law provides no separate exemption.

Employee and working time records in Torgsoft

Torgsoft provides dedicated tools for maintaining employee information and recording actual working time. In «Working Time Registration» mode, the beginning and end of a working day can be recorded: the employee is identified by badge or number, and a comment can be added to the record. The software also maintains a log displaying the employee, workplace, and start and end times.

In the employee work log, users can review recorded arrivals and departures and, when necessary, manually create a work start or end record if the employee did not register it themselves. Working time tracking can be configured using badges or software login and logout events. The Torgsoft mobile app also provides working time registration; some payroll-related features require the corresponding additional option.

These tools are useful for monitoring employees' actual attendance and work, especially when some team members are working while others are temporarily absent. However, personnel documentation for mobilization, volunteer formation membership, leave, suspension of employment contracts, and lawful timesheet codes must be supported by employer orders and documents in accordance with labor legislation. Records of actual attendance or absence in Torgsoft do not replace these personnel documents.

Official sources

1. Labor Code of Ukraine No. 322-VIII — Articles 36, 40, 83, 105, 119, and 119-1.
   Labor Code of Ukraine — zakon.rada.gov.ua/go/322-08

2. Law of Ukraine «On the Organization of Employment Relations Under Martial Law» No. 2136-IX — Articles 5, 7, 12, and 13.
   Law No. 2136-IX — zakon.rada.gov.ua/go/2136-20

3. Law of Ukraine No. 4412-IX on exchanging contact information and suspending employment contracts — amendments to Articles 5, 7, and 13 of Law No. 2136-IX.
   Law No. 4412-IX — zakon.rada.gov.ua/go/4412-20

4. Law of Ukraine «On the Fundamentals of National Resistance» No. 1702-IX — legal status of volunteer formations of territorial communities.
   Law No. 1702-IX — zakon.rada.gov.ua/go/1702-20

5. Order of the Ministry of Defense of Ukraine dated March 7, 2022, No. 84 — standard territorial defense volunteer contract form.
   Ministry of Defense Order No. 84 — zakon.rada.gov.ua/go/z0307-22

6. Resolution of the Cabinet of Ministers of Ukraine dated February 8, 1995, No. 100 — Procedure for Calculating Average Wages.
   Procedure No. 100 — zakon.rada.gov.ua/go/100-95-п

7. Order of the State Statistics Committee of Ukraine dated December 5, 2008, No. 489 — standard form No. П-5 «Timesheet for Recording Working Time».
   Order No. 489 — zakon.rada.gov.ua/go/v0489202-08

8. Law of Ukraine «On State Registration of Legal Entities, Sole Proprietorships, and Public Associations» No. 755-IV — Article 9 concerning information about directors and other persons authorized to act on behalf of a legal entity.
   Law No. 755-IV — zakon.rada.gov.ua/go/755-15

9. Civil Code of Ukraine No. 435-IV — provisions on representation and powers of attorney.
   Civil Code of Ukraine — zakon.rada.gov.ua/go/435-15

10. Tax Code of Ukraine No. 2755-VI — paragraph 25 of subsection 10 of Section XX and paragraph 49.2 of Article 49.
    Tax Code of Ukraine — zakon.rada.gov.ua/go/2755-17

11. Law of Ukraine No. 4505-IX dated June 18, 2025 — current version of special tax rules for mobilized and contract-serving self-employed persons.
    Law No. 4505-IX — zakon.rada.gov.ua/go/4505-20

12. Law of Ukraine «On the Collection and Accounting of the Unified Contribution for Compulsory State Social Insurance» No. 2464-VI — Article 4 and special provisions of Section VIII concerning mobilized sole proprietors.
    Law No. 2464-VI — zakon.rada.gov.ua/go/2464-17

13. Law of Ukraine «On the Use of Electronic Cash Registers in Trade, Catering, and Services» No. 265/95-VR — Articles 2 and 3 and general rules governing ECR/PECR use.
    ECR Law No. 265/95-VR — zakon.rada.gov.ua/go/265/95-вр

14. Supreme Court, ruling of the Civil Cassation Court dated July 9, 2025, in case No. 635/12429/23 — application of clause 8-3 of part one of Article 36 of the Labor Code when the employer knows the reason for an employee's prolonged absence.