Fines for labor law violations change. State Employment Service of Ukraine makes first comments.

As from the beginning of February 2020, the State Employment Service of Ukraine is to conduct its inspections on a more frequent basis. The implementation of this measure was preceded by an awareness raising campaign conducted in late January under Instruction of the Prime Minister No. 2313/0/1-20 dated 22 January 2020. Currently, labor inspectors are revisiting the employers who they reached during the campaign.

Please be advised that inspections may be carried out with or without prior notice. The inspection plan is available here.

Effective from 02 February 2020, the fines under the Labor Code of Ukraine have changed. The sponsors of changes aim to relieve the fine payment-related pressure on employers.

The fines have been decreased for the following violations:

• Hiring employees without employment agreements and paying salaries without accruing a unified social security contribution – 10 monthly national minimum wages (mNMW) instead of 30 mNMW (i.e. USD 1,925 instead of USD 5,775, in UAH equivalent); and only a warning to be applied to employers in I-III single taxpayer groups for the first breach identified.
  
  According to the State Employment Service, the warning may not be currently applied, since its form has not yet been approved. A repeated violation that occurs within two years will entail a fine of 30 mNMW (i.e. 5,775 USD, in UAH equivalent).
  
  Non-admitting inspectors to investigate the above violations – 16 mNMW instead of 100 mNMW (i.e. USD 3,080 instead of USD 19,245, in UAH equivalent).
• Failure to ensure minimum guarantees for labor remuneration (e.g., non-payment of annual leave, overtimes, etc.) – 2 mNMW instead of 10 mNMW (i.e. USD 400 instead of USD 1,925, in UAH equivalent) per each employee in respect of whom a violation has been committed.
• Failure to ensure minimum guarantees for employees involved in military and alternative (non-military service) – 4 mNMW instead of 10 mNMW (i.e. USD 770 instead of USD 1,925, in UAH equivalent) per each employee in respect of whom a violation has been committed. However, warnings shall be applied to legal entities and individual entrepreneurs that are employers in I-III single taxpayer groups.

No changes have been made to the fines for the following violations:

• Non-admitting inspections on other issues – 16 mNMW instead of 100 mNMW (i.e. USD 3,080 instead of USD 19,245, in UAH equivalent).
• Other violations – 1 mNMW (i.e. USD 190, in UAH equivalent). Please be noted that a fine is currently imposed for each individual violation and not for all violations in aggregate.
• Non-payment of salaries and other benefits – 3 mNMW (i.e. USD 580, in UAH equivalent).

In addition, a new basis for fines has appeared: a repeated labor law violation that occurs within a year will entail a fine of 2mNMW (i.e. USD 385 USD, in UAH equivalent).

Where an employer pays 50% of the fine imposed within 10 banking days from the date on which he received a relevant decision, it shall be considered that the fine has been paid in full.

In some cases where violations are promptly remedied, a fine may be avoided at all (e.g., wages are indexed).

Changes shall apply only to the violations identified after 02 February 2020.

We will be delighted to provide you with advisory support on matters related to compliance with the labor legislation.