Since non-governmental organizations (NGOs) do not generate commercial profits, their funding largely depends on grants, donations and support from donors. Therefore, it is crucial that salary calculations are as transparent as possible and comply with regulatory requirements and donor guidelines.

Salary is a financial motivation for employees. In NGOs, where specialists are often hired for temporary projects or part-time positions, fair and clear payments help ensure a high level of employee engagement.

Key Principles of Salary Calculation

In Ukraine, salary calculations are governed by the Labor Code, the Law of Ukraine “On Remuneration of Labor” and other regulatory acts. These documents define how salaries are calculated and establish the payment deadlines.

To ensure proper salary calculation, the following are required: employment contracts, provisions on remuneration, orders for hiring, dismissal, salary increases, employee bonuses and monthly timesheets. These measures help avoid misunderstandings and ensure transparency in calculations.

Key Aspects of Payments

• Payment for Actual Work Time or Volume of Work — salaries are calculated based on the number of hours worked, the volume of completed work or labor productivity. Employers can choose from hourly, piece-rate or mixed systems of payment.
• Minimum Wage — the legislatively established minimum wage is the mandatory minimum amount an employer must pay an employee, regardless of productivity or hours worked. As of April 1, 2024, the minimum wage is set at 8,000 UAH per month.
• Additional Payments, Bonuses, and Incentives — in addition to salaries, employees may receive various allowances (for night shifts, hazardous conditions, high qualifications) and bonuses, which stimulate productivity and are determined by the organization’s internal policies.
• Payment for Non-Worked Time — in cases such as vacations, sick leave or performing state duties, the salary for this time is retained and calculated based on the average earnings.
• Deductions from Salary — salary deductions include taxes (18% Personal Income Tax and 1.5% Military Tax). The total amount of deductions cannot exceed 50% of the salary, with some exceptions.
• Compliance with Payment Deadlines and Indexation — salaries must be paid twice a month. Employers are held accountable for delays. Additionally, salaries are subject to indexation according to the inflation coefficient.

Salary Structure

Salaries in non-governmental organizations (NGOs) consist of several key components.

The basic salary is determined in the employment contract and depends on the position and payment schedule. It can be a fixed rate or hourly payment, depending on the working conditions. Additional payments and bonuses form part of the motivational budget, which may include performance bonuses, overtime pay or other supplementary payments.

Deductions and taxes include mandatory withholdings, such as personal income tax, unified social contribution and military tax. Accurate tax calculations are essential to ensure social protection for employees and to minimize the risk of conflicts with state authorities.

Specific Features of Salary Calculation in NGOs

The specifics of salary calculation in NGOs are defined by the nature of their activities and funding. These organizations often operate on the basis of short-term or flexible contracts that account for the unique requirements of each project.

Grant programs play a significant role in salary processes. Since most NGOs are funded by donor resources, payments must strictly adhere to donor requirements. This obligates NGOs to carefully plan budgets, report to donors and maintain proper accounting practices.

Challenges and Issues

Certain challenges can arise in the process of salary calculation, including typical errors in calculations and contract preparation. Incorrect documentation or tax calculations can lead to fines and a loss of donor trust.

To avoid common issues, it is recommended to:

1. Stay updated on current legislation, with the support of specialists such as those at UHY Prostir.
2. Use specialized software for HR administration.
3. Regularly review all documents related to salary calculations.
4. Establish an internal audit system to detect errors in reporting and calculations in a timely manner.
5. Organize training for staff responsible for payroll to minimize human error risks.

These measures will help NGOs ensure accurate salary calculations and avoid problems with state authorities and donors.

If you are interested in salary calculation assistance, contact the specialists at UHY Prostir. You can do this through the feedback form or the “Contacts” section on their website.