Labour Law in Ukraine

Labour Law in Ukraine. Ukrainian legislation deals with employees in general, making no distinctions based on their positions (with some minor exceptions). The Labour Code of Ukraine dd. 10.12.1971 is the principal legislative act governing employment relations in Ukraine. However, a number of its provisions are elaborated in the subordinate legislative acts. The specification of working conditions, remuneration and social privileges are commonly left to collective bargaining agreements provided that the agreements do not limit the guarantees established for employees, by law. The following defines some principal requirements vis-à-vis labour relations, established by the Labour Code and other legislative acts.

Working Hours

Working hours may not exceed 40 hours per week. For certain categories of employees, the working week is established at the level of 36 or 24 hours and for some categories irregular working hours are allowed. Overtime work is allowed by the legislation only in exceptional cases and may not exceed four hours within two days on the row or 120 hours per annum and is compensated at double rates.

Time Off

Employees are allowed to have breaks for resting and taking meals which last up to two hours. The breaks are not included into the working time. By a five-day working week employees have two days-off, and by a six-day working week – one day-off. The usual day-off is Sunday.

If a public holiday or a free day concurs with a day-off, the day-off is postponed to the next working day after such public holiday or a free day. In general, no work shall be done on daysoff. It is allowed in exceptional cases that single employees work on such days.

Work on public holidays is allowed in exceptional cases according to the legislation. Work on public holidays is remunerated in double amount. Upon request of an employee he/she can also get another day-off. Work on days-off is remunerated either in double amount or by giving another day-off (mutual consent is required).

Vacation and Holidays

Statutory paid annual vacation is 24 calendar days. For certain categories of employees the law provides for a longer vacation period or additional vacations, including social one. In case of dismissal of an employee he/she receives a monetary compensation for all unused days of the annual vacation and the additional vacation for employees with children. There are some additional vacation types in Ukraine, for example:

• additional annual vacation for work under arduous and harmful work conditions;
• additional annual vacation for special work nature;
• additional annual vacation for employees with children under the age of 15 or adult child of type A, group I of disability;
• additional annual vacation for the participants of military actions, persons disabled of war;
• additional study vacation;
• research leave;
• maternity leave;
• childcare leave up to three years of age;
• adoption leave;
• additional vacation for employees with children;
• unpaid vacations.

Salaries and Wages

The salary amount should be established by an individual employment agreement with an employee. The minimum monthly salary for unqualified labour may be no less than the threshold established by the labour legislation (currently UAH 3200.00). The minimum salary does not include such additional payments as payments for night work or overtime work, work in unfavorable working conditions and in increased risk for health, itinerant work, bonuses for holidays and anniversaries. The salary is subject to personal income tax that is presently levied at the rate of 18%. Salaries are paid in Ukrainian currency at least twice a month.

Guarantees and Compensation Payments

The labour legislation stipulates cases in which employees are entitled to salary even if they did not perform their work under the labour agreement – guarantee payments. Such payments are provided for employees in elective offices, donors, employees sent to qualification courses during working hours and some other categories.

Compensation payments are such remunerating expenses of an employee, which are connected to performance of the labour duties (in case of transfer, assignment to work in another region, business trips, amortization of tools owned by an employee for needs of an enterprise etc.).

Pension and Social Insurance

The employer is required to make obligatory payments to the State Pension Fund on behalf of employees. The rate of the unified social security contribution is 22 % of an employee’s remuneration (is paid by the employer). Any other social insurance (voluntary) is left to the employer’s consideration.

Employment of Foreigners

Foreign nationals may be employed by Ukrainian employers subject to prior obtaining of the Ukrainian work permit according to the procedure, established by legislation. A work permit is issued as a rule for one year and is subject to renewal.

Disabled Persons

The current legislation of Ukraine provides a quota of work places for disabled persons in the amount of 4% of the average number of employees per annum or, if there are 8-25 employees, in the amount of one work place.

Activity of Trade Unions

Citizens of Ukraine are entitled to participate in professional unions in order to protect their labour, social and economic rights and interests. A trade union is a voluntary, non-profitable non-governmental organization of citizens united by mutual interests by the nature of their professional (labour) activity (study). Trade unions are established in order to represent, exercise and protect labour, social and economic rights and interests of their members and can have a status of primary, local, district, regional, republican, or all-Ukrainian. Foreign citizens and stateless persons are not allowed to establish trade unions, but are entitled to join them, if this is provided by their statues.

Collective Bargaining Agreements

A collective bargaining agreement is concluded in order to regulate production, labour, social and economic relations and to coordinate interests of employees, owners and their authorized bodies. In a newly established enterprise a collective bargaining agreement shall be concluded upon initiative of one of the parties within 3 months after registration of the enterprise and shall be preceded by collective bargaining negotiations, in which both parties of the collective bargaining agreement shall participate.

There is no liability for lack of collective bargaining agreements, only for avoiding negotiations as to their conclusion. A collective bargaining agreement signed by the parties is subject to a notifying registration by the local state authorities. Any changes or amendments to a collective bargaining agreement shall be registered pursuant to the procedure for registration of collective bargaining agreements.

Labour Agreements

Under a labour agreement the employee obliges to work as provided by the agreement with adherence to the internal labour policy, and the employer obliges to pay the employee for the work and to ensure labour conditions necessary for work and as provided by the labour legislation, collective agreement and agreement of the parties.

It is not obligatory in Ukraine to conclude labour agreements in writing, except for some categories of employees (minors, work under some special conditions etc.) and in case if an employee insists on concluding the labour agreement in writing.

Terms of labour agreements which make the position of employees worse compared to the current legislation are null and void. Even though an employee may agree to such conditions, they may not be applied. A labour agreement may be concluded for an unlimited period of time, fixed-term or concluded for the period of execution of certain works. The laws of Ukraine prohibit unreasonable refuse in conclusion of a labour agreement (employment).

Labour Contract

A labour contract is a special labour agreement form for certain categories of employees where its validity term, rights and obligations of the parties (including material liability), financial conditions and organization of the employee’s work, contract termination terms, including early termination, may be stipulated pursuant to the parties’ agreement. Contracts are to be made in writing.

The laws of Ukraine directly stipulate the exact list of employees with whom the labour contracts may be concluded, for example scientists, employees of collective agricultural enterprise, directors of companies, policemen, teachers etc.

If the current legislation does not stipulate any possibility for contract conclusion in the respective case, the owner and the employee are not entitled to conclude the contract even upon their mutual consent.

Documents to be provided for employment

At conclusion of a labour agreement the future employee shall provide the following documents:

• passport or any other ID;
• labour book;
• a document on education (in cases provided by the legislation);
• a health status certificate (in cases provided by the legislation for workers on heavy, harmful and hazardous jobs and annually for persons younger than 21);
• military registration document;
• a copy of the individual tax number (for taxation purposes in regard to employee’s salary);
• a copy of the social insurance card;
• copies of child birth certificates (if the employee is entitled to child care privileges and guarantees).

The Labour Code prohibits requiring provision of documents which are not stipulated by the legislation as well as of information on employee’s party membership or nationality, domicile or temporary residence registration etc. Refusal in employment due to non-submission of documents not provided by the legislation is deemed to be unreasoned and is prohibited.

Employment Order

After agreement on work conditions with a potential employee, employment application submission, and in some cases conclusion of a labour agreement or contract in writing, an employment order shall be issued.

There is a standard approved form of the employment order, but in practice another more simple form of the order is used. The employment order is signed by the executive officer or any other authorized person. The employee reviews and signs the order. On the basis of the order an entry is made in the labour book.

The employee cannot be admitted to work without labour agreement set up by the employment order and without notification on employment sent to central executive authority that establishes and implements state policy on administering of single social contribution (currently tax authority).

Employer’s actions before employee’s admission to work

Before admission to work pursuant to the labour agreement the owner (an authorized body):

• explains to the employee his/her rights and obligations and informs his/her on work conditions, any harmful or hazardous production factors at the work place and possible consequences for the health, his/her rights and privileges for work remuneration according to conditions set out by the legislation and the collective agreement;
• provides to the employee for reviewing the internal labour regulations and the collective agreement;
• assigns the employee with a work place and provides all tools and accessories necessary for work;
• instructs the employee on safety and fire safety rules.

Probation period by employment

In order to determine whether the employee complies with the work at the beginning of his/her employment, a probation period is established for the employee upon agreement of the parties.

Probation cannot be applied to such persons:

• persons under age of 18;
• young employees after graduation from career scientific-educational institutions;
• young professionals after graduation from higher educational institutions;
• persons retired from military or alternative (non-military) service;
• disabled persons sent to work pursuant to recommendations of a medical and social expert examination;
• seasonal and temporary workers;
• workers in case of employment in other region or transfer to other enterprise, institution, organization, transfer to other position within the same enterprise;
• persons designated to a position;
• winners of the competitive election for a vacant position;
• persons who have passed internship with separation from the main work when hiring;
• pregnant women;
• single mothers with children under the age of 14 or with disabled children;
• persons who are to conclude a labour agreement of up to 12 month duration;
• internally displaced persons;
• in other cases, provided by the legislation.

There is no need to record information on employee’s probation period in the labour book. During the probation period the employee has all the rights and all the obligations provided by the labour legislation. The only exception is an additional reason for dismissal of the employee as such who did not pass the probation period.

Duration of a probation period cannot exceed:

• one month – for workers (at this, in order to define the term “worker” the Occupational

classification shall be used);

• three months – for any other employee categories;
• six months – in certain cases upon agreement with the trade union committee.

Change of essential working conditions

According to the Ukrainian legislation in case of changes in production and labour organization it is possible to change the essential work conditions (system and amount of payments, privileges, work regime, establishment or cancellation of part-time work, professions overlapping, change of categories or name of positions etc.). In such situation the employer shall provide respective employees with a two months prior notice before the changes come into force. If the previous essential work conditions cannot be preserved and the employee does not agree to continue work under the new conditions, the labour agreement shall be terminated.

Termination

Generally, employment relations, established for a definite period of time terminate after the employment term has expired. Employment relations, established for indefinite period, may be terminated by employee at any time by giving two weeks prior notice. Employers may terminate employment only in limited circumstances enumerated by the Labour Code. The labour legislation of Ukraine provides following reasons for termination of a labour agreement:

• agreement of the parties;
• end of the labour agreement term, except for cases when labour relations actually continue and neither party demands their termination;
• call or enrolment to military service, assignment to alternative service;
• transfer of the employee upon his/her consent to another enterprise or to an elective office;
• refusal of the employee to be transferred to work in other region together with an enterprise as well as refusal to continue work due to change of the essential work conditions;
• coming into force of judgment pursuant to which the employee is sentenced to imprisonment or any other punishment excluding possibility to continue work;
• reasons as provided by the labour contract;
• employment in violation of the requirements of the Law of Ukraine “On Preventing Corruption” established for persons who have retired or otherwise ceased activities related to the exercise of state or local government functions during the year from the date of such termination;
• reasons as provided by the Law of Ukraine “On Lustration”;
• reasons as provided by other laws;
• upon employee’s initiative;
• upon employer’s initiative:
• change in production and work organization, including liquidation, reorganization, bankruptcy or conversion of the enterprise, decrease of the personnel number or the staff
• determined employee’s inconsistency with position or work due to insufficient qualification or health condition hindering continuance of such work
• systematic non-performance of duties stipulated by the labour agreement or the internal labour order without reasonable excuse if disciplinary penalties have been previously imposed on the employee
• truancy (including absence from work for more than 3 hours within business day) without a reasonable excuse
• nonappearance at work during four months on the row due to temporary disability, except for maternity leave, if the legislation does not stipulate longer period of work (position) preservation for certain illnesses. If an employee has lost its ability to work because of a labour injury or a professional illness, his/her place of work (position) shall be preserved for the period of rehabilitation or assessment of disablement
• reinstatement at work of the employee who previously performed this work
• appearance at work under alcohol, drugs or toxic influence
• stealing at work place (including petty theft) of employer’s property determined by the court decision which came into force or resolution of a body authorized to impose administrative penalties or apply measures of public influence
• call or mobilisation of employer – individual entrepreneur during the special period
• determination of employee’s inconsistency with work within the probation period
• single gross violation of labour relations by the director of an enterprise, institution, organization of any ownership form, his/her deputy, head accountant of an enterprise, institution, organization, his/her deputy, or officials of the customs service, state tax inspections with special ranks and officials of the state supervision and auditing service and bodies of the state price control
• wrongful acts of directors of enterprises, institutions, organizations which caused delay in payment or payment of lower amounts of salary compared to minimal wage as stipulated by the legislation
• wrongful actions of the employee working with monetary values or merchandise if such actions lead to loss of employer’s trust
• immoral actions of educational personnel inconsistent with such work
• employment under subordination to an immediate relative in violation of the requirements of the Law of Ukraine “On Preventing Corruption”
• termination of authorities of corporate executives.

It is prohibited to dismiss certain categories of employees such as pregnant women, women with children under the age of three and single mothers with children under the age of 14 or with disabled children, except some cases regarding the companies’ liquidation with the obligatory subsequent employment. An employee is entitled to receive a one-month severance payment (or more, if provided for in the collective agreement) when dismissed upon the initiative of the employer for particular reasons.

An employee is entitled to receive a one-month severance payment (or more, if provided for in the collective bargaining agreement) when dismissed upon the initiative of the employer for particular reasons. If the owner violates labour legislation, collective bargaining or labour agreements, the employee is entitled to receive at least a three-month severance payment (or more, if provided for in the collective bargaining agreement) during dismissal for such reasons. If the authorities of a corporate executive are terminated by the owner (what is possible anytime without giving any reasons), the severance payment amounts to at least six month average salary of such an executive.

Suspension from work

In certain cases the employer is entitled to suspend the employee from work:

• if the employee appears at work under influence of alcohol, drugs or toxins;
• it the employee refuses or avoids obligatory medical examination, training, instructions and attestation in labour protection and fire safety;
• in other cases stipulated by the legislation.

Suspension means that during a certain period of time the employee is not admitted to work which he/she is obliged to perform under the labour agreement. At this, labour relations and the labour agreement shall not be terminated.

After the end of the suspension term the employee may be admitted to work, transferred to another work, brought to a disciplinary liability or dismissed. Members of the executive body of a company may be at any time suspended from performance of their duties if statutory documents of the company do not stipulate reasons for their suspension. A suspension of executive body members (including head of the executive body) is not subject to labour law but the civil (corporate) law. In this case, it means revocation of management powers which is a form of protection of corporate rights of owners and is not a suspension of an employee in the meaning of the Labour Code.

Suspension of an executive body member is possible only for a certain period of time and does not result in termination of labour relations. Dismissal of an executive body member who was suspended from performance of duties shall be carried out pursuant to the labour legislation.

Consequences of termination of a labour agreement

On the day of employee’s dismissal the employer is obliged to return the duly filled out labour book and to pay the employee off. In case of employee’s dismissal he/she receives monetary compensation for all not used days of the annual vacation or the additional vacation for employees with children.

In case the employee did not work on the day of dismissal, such payments shall be made not later than on the next working day after the dismissed employee claimed the payment. In case there was no payment within stated terms due to the fault of the employer and if there is no dispute as to the amount of payments, the employer is obliged to pay the employee his/her average salary for the whole period of such delay up to the day of the settlement.

Necessity to agree dismissal with a trade union

In the following cases the labour agreement with the employee may be terminated only upon prior agreement with the trade union member where the employee is a member:

• change in production and work organization, except for cases of company’s liquidation;
• determined inconsistency with the position held or work performed due to insufficient qualification or health condition hindering continuance of such work;
• systematic non-performance of duties under labour agreement or internal labour order without reasonable excuse if the employee has already been brought to liability in form of disciplinary penalty or measures of public influence;
• truancy (including absence from work during more than 3 hours within working day without a reasonable excuse;
• absence from work during more than four months on the row due to temporary disability, except for maternity leave, if the legislation does not provide a longer term for the work place (position) preservation in case of a specific disease;
• appearance at work under influence of alcohol, drugs or toxins;
• wrongful actions of employees working directly with money or merchandise, if such actions cause loss of employer’s trust towards an employee;
• immoral actions committed by education personnel inconsistent with work.

The legislation may provide for other cases of labour agreement termination upon initiative of the employer without consent of the respective trade union body as well. If the primary trade union organization does not have an elective body, the termination of the labour agreement shall be agreed by a representative of the trade union authorized to represent interests of the trade union members.

The dismissal consent of the trade union is valid only if the employee is dismissed due to reasons stated in the employer’s application. If the trade union consented to dismissal due to other reasons, the consent shall be invalid.

Liability for Violations of Labour Legislation

Currently a new system of state labour audit is being implemented in Ukraine. State and municipal auditors are vested with additional control mechanisms in order to eliminate i.a. such infringements as shadow employment, violations of minimal wages guarantees and salary payment rules.

Also, since the beginning of 2017 new (increased) fines were introduced for gross violations of labour law. As a result of state or municipal labour audit a penalty in the amount of up to 100 minimal salaries may be imposed upon offenders.