Practice Area Articles
Ukraine
February 05, 2024
By Paul Hastings Professional
Back to International Employment Law
KEY DEVELOPMENTS FOR 2024
Martial law
Due to the war in Ukraine, it is likely that the current martial law regime will be extended in 2024. Consequently, the Law of Ukraine No 2136-IX “On Organising the Employment Relationships in the Conditions of the Martial Law” dated 15 March 2022 (the “Law”) will remain valid in 2024, until the martial law ends or is lifted. The Law provides more flexibility to the employers in regulating the employment relationships during these unprecedented times. For instance, this relates to the employment termination, vacation, unpaid leave, working hours, employment documentation execution, circulation and retention, employment agreement suspension, etc. In 2024, the employees will continue to enjoy more flexibility initially caused by COVID-19 pandemic and later enhanced by the martial law, specifically by working remotely or from home. Therefore, the employers will have to pay close attention to properly regulating/documenting such work. They will also have to consult with a legal counsel regarding developing the optimal solutions for organising the efficient and safe use of their personnel.
Collective bargaining agreements legislation
On 23 February 2023, the Ukrainian parliament enacted the Law on Collective Bargaining Agreements No. 2937-IX (the “Law”) as part of Ukraine’s goal to harmonise the national labour and employment legislation with EU legislation. This Law has not become effective yet. It will come into force in six months after martial law ends or is lifted. The Law clarifies the sphere of application of the collective bargaining agreements (CBAs), establishes the procedure for application by the employer of the provisions of CBAs where there are several CBAs, as well as providing for a possibility to suspend and terminate certain provisions of CBAs, etc. Importantly, the Law envisages that all employees and employers, with no exception, have a right to conclude CBAs. In addition, the employer is obligated to notify its employees about the conclusion of a CBA and introducing amendments thereto. When this Law comes into force, the employers will have to ensure that their existing CBAs and the relations between the parties to the employment relationships comply with the new Law.
Legal succession in employment relationships
Another example of Ukraine’s commitment to adjust Ukrainian labour and employment legislation to align with EU regulations is the enactment by the Ukrainian parliament on 9 May 2023 of the Bill on Amending the Labour Code of Ukraine Regarding Legal Succession in Employment Relationships No. 8244 (the “Bill”). It is likely that that this Bill will be passed into law in 2024. The Bill is aimed at bringing the national legislation in compliance with the Council Directive 2001/23/EC on the Approximation of the Laws of the Member States Relating to the Safeguarding of Employees' Rights in the Event of Transfers of Undertakings, Businesses or Parts of Undertakings or Businesses. The Bill, among others, defines the legal succession in employment relationships, provides the procedure for such a succession, and establishes the employers’ obligation to notify the employees of the change of the business owner. After the Bill becomes law, the businesses would have to pay close attention to the employment law on business transfers.
KEY DEVELOPMENTS FOR 2023
Martial law
Due to the war in Ukraine, it is likely that the current martial law regime will be extended in 2023. This will result particularly in that the Law of Ukraine No 2136-IX “On Organising the Employment Relationships in the Conditions of the Martial Law” dated 15 March 2022 (the “Law”) will remain valid in 2023, until the martial law ends or is lifted.
The Law provides more flexibility to the employers in regulating the employment relationships during these unprecedented times. For instance, this relates to the employment termination, vacation, unpaid leave, working hours, employment documentation execution, circulation and retention, employment agreement suspension, etc.
In 2023, the employees will continue to enjoy more flexibility initially caused by COVID-19 pandemic and later enhanced by the martial law, specifically by working remotely or from home. Therefore, the employers will have to pay close attention to properly regulating/documenting such work. They will also have to consult with a legal counsel regarding developing the optimal solutions for organising the efficient and safe use of their personnel.
Collective bargaining agreements bill
On 6 October 2023, the Ukrainian parliament adopted in the first reading the Bill on Collective Bargaining Agreements No. 7628 (the “Bill”) as part of Ukraine’s goal to harmonise the national labour and employment legislation with the EU legislation. There is a good chance that this Bill will be passed and become a law in 2023.
The Bill proposes to clarify the sphere of application of the collective bargaining agreements (“CBAs”), establish the procedure for application by the employer of the provisions of CBAs in case several CBAs must be considered, as well as to provide for a possibility to suspend and terminate certain provisions of CBAs, etc. Importantly, the Bill envisages that all employees and employers, with no exception, will have a right to conclude CBAs. In addition, the employer will be obligated to notify its employees about conclusion of a CBA and introducing amendments thereto. Moreover, the liability for identified violations will be introduced.
In case the Bill is passed, and the respective law comes into force, the employers will have to ensure that their existing CBAs, and the relations between the parties to the employment relationships, comply with a new law.
Bill on labour
Another example of harmonisation of Ukrainian labour legislation with the laws of the EU is a Bill on Labour introduced by the Cabinet of Ministers of Ukraine in September 2022. It is reasonable to expect that this Bill might be enacted in 2023.
In case the Bill on Labour is passed, the respective law will come into force in six months after the date of its official publication. As of the same date the Labour Code of Ukraine, Law on Vacations, Law on Labour Compensation, and the other six legal acts will lose their validity.
The new Law on Labour, if passed in the current wording of the Bill, will apply to the employment relationships that commence after it comes into force. As for the employment relationships that commenced prior to that, the Law on Labour will be applicable to the rights and duties that originated or continue after its entering into force.
KEY DEVELOPMENTS FOR 2022
Potential legislative changes affecting the regulation of employment relations
The Bill No. 5388 on Amending Certain Ukrainian Laws Regarding Employment Relations’ Deregulation was passed in the first reading on 21 September 2021. If this Bill becomes a law, it might significantly affect the regulation of employment relations, including by simplifying a fixed-term employment agreement conclusion, lifting (in certain cases) requirements to agree employment termination with trade unions, distinguishing more clearly between the fixed-term and perpetual duration employment agreements, and adding new grounds for employee dismissal.
Some of the provisions in the Bill are ambiguous or conflict the existing labour legislation. Therefore, it is recommended that employers seek guidance of their legal counsels before implementing the statutory novelties offered by the Bill.
New statutory definitions for “employer”, “employee” and “employment relations”
The Bill No. 5054-1 on Amending the Labour Code of Ukraine Related to Defining Employment Relations and their Characteristics dated 25 February 2021, is aimed at providing clear statutory definitions of the terms: “employer”, “employee”, and “employment relations”, as well as establishing characteristics of employment relations. If enacted, it is anticipated that these amendments to the Labour Code should facilitate distinguishing between employment relations and civil law (contractual) relations. Currently, the criteria for establishing employment relations has been developed by scholars and the courts.
Since the proposed changes will affect the contractual relations with Ukrainian individual contractors, companies (including foreign companies) using services of such independent contractors should consult with their legal counsels to ensure that respective contracts do not contain provisions that could lead to their reclassification as de facto employment relations.
Passing of Bill No. 5266 on Amending Certain Ukrainian Laws Regarding Strengthening Protection of Employees’ Rights
The Bill No. 5266 on Amending Certain Ukrainian Laws Regarding Strengthening Protection of Employees’ Rights was passed in the first reading on 21 September 2021. The Bill aims to improve employee anti-discriminatory regulation, increase protection of employees’ rights during mass layoffs and during change of employers, as well as strengthen employee rights’ protection in the collective bargaining process.
If this Bill becomes a law, employers will have to be extra careful while making job announcements, providing job offers, laying off employees, etc. to ensure they do not violate new (amended) statutory provisions.
KEY DEVELOPMENTS FOR 2021
Improved regulation of flexible working hours/remote work (teleworking)
On 30 March 2020, Article 60 of the Labour Code was amended to introduce the notions of flexible working hours and remote work (teleworking) to the Labour Code. Although these changes were caused by the Government's response to the COVID‑19 pandemic, they will remain valid in the post‑quarantine times, providing more flexibility to employers and employees in regulating the working regime issues. Further development in this area is expected.
Changes in the business trips regulation
On 13 April 2020, the Ministry of Finance issued its Order No. 155 on Approval of Changes to the Instruction on Business Trips within Ukraine and abroad. This Order, in particular, clarified that an employer shall deposit funds for business trip‑related expenses to a payment card bank account of an employee before a business trip.
Equal childcare opportunities might be introduced
A draft Law No. 3695 was introduced on 19 June 2020, proposing to supplement the Labour Code and the Law on Vacations with a new type of vacation, namely a 14‑calendar day paid leave after childbirth. If the draft Law is enacted, this vacation could be equally taken by mothers, fathers, grandfathers, and grandmothers of newly born children.
KEY DEVELOPMENTS FOR 2020
Improved regulation of flexible working hours and remote work
On 30 March 2020, Article 60 of the Labour Code was amended to introduce the concepts of flexible working hours and remote work to the Labour Code. Although these changes were caused by the Government's response to the COVID-19 pandemic, they will continue to remain in force, in order to provide more flexibility to both employers and employees.
Introduction of new ground for dismissal
On 4 March 2020, the Labour Code of Ukraine was supplemented with a new legal ground which allows an employer to dismiss an employee if the employee has a permanent, real or potential conflict of interest that cannot be resolved.
Prohibition on dismissing employees during their sick leave or vacation
The Constitutional Court of Ukraine recently adopted a decision prohibiting the dismissal of employees employed on fixed-term employment contracts during their sick leave or vacation. The Constitutional Court declared that this statutory right applies to all types of employment relations and is constitutional.
KEY DEVELOPMENTS FOR 2019
Simplified procedure for Court settlements
In 2018, Ukraine launched a simplified procedure for listing the settlement of labour disputes to be heard by the Courts within 60 days. In addition, parties can represent themselves if they did not want to appoint a lawyer. Shareholders and business owners can seek compensation of damages in the commercial courts where damage has been caused by a Company Manager.
Order of the Cabinet of Ministers of Ukraine
The Order of the Cabinet of Ministers of Ukraine No. 649-p dated 5 September 2018 affects all employees and is aimed at “unshadowing of relations in the sphere of employment of the population”. As a result of this Order, the government instructed various Ukrainian state agencies to perform full audits of Ukrainian employers and to identify any undocumented employees. Such state audits may result in fines in the amount of UAH 111,690 for each identified undocumented employee.
Key case law developments
Until a new Ukrainian Labour Code is finally adopted, it is doubtful that Ukrainian employment laws will be dramatically amended in 2019. As a result, the State Labour Service and other state agencies will continue to play a significant role in the development of employment law in Ukraine, including interpreting ambiguous/contentious legal provisions. Case law will therefore still remain an important guidance for employers.
KEY DEVELOPMENTS FOR 2018
Law No. 2058 on Amending Certain Laws of Ukraine to Remove Obstacles for Attracting Foreign Investments
On 27 September 2017 Law No. 2058 on Amending Certain Laws of Ukraine to Remove Obstacles for Attracting Foreign Investments came into force. This simplified the procedure for issuing working permits to foreign nationals.
Clarification on Redundancy Scenario
An important clarification on redundancy was given by the Resolution of the Judicial Chamber on Civil Cases of the Supreme Court of Ukraine dated 09 August 2017, case 6-1264цс17. According to the Resolution, if at the time of the redundancy the employer has no vacant positions compatible with the respective employee’s education and qualification, the employer is not obligated to offer him or her the other position and can make such employee redundant.
Potential New Labour Code
2018 is expected to bring a new Labour Code, which would trigger significant reforms in the labour and employment area. In addition, there seems to be a good chance for the Parliament to finally pass the long-awaited Law on Mediation, which is expected to facilitate the amicable settlement of labour disputes in Ukraine.
Procedure for Exercising the State Control for Compliance
A new procedure dated 26 April 2017 introduces additional grounds for conducting state employment laws compliance audits and extends the rights of labour inspectors. As there are significant fines for violations (up to UAH 320,000, the equivalent of approximately EUR 100,000), employers should pay close attention to ensure that their activities are in compliance with employment laws.
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