Major Changes Introduced by the Law of Ukraine “On Organization of Labor Relations under Martial Law” No.2136-ІХ
Tax & Legal Alert
After the outbreak of the war and the imposition of the martial law, labor relations in Ukraine have considerably changed. To address employment relations in the new conditions, the Verkhovna Rada of Ukraine adopted a Law of Ukraine “On Organization of Labor Relations under Martial Law” No.2136-ІХ (hereinafter – the Law ), and the State Labor Service of Ukraine continues to issue recommendations and comments in respect of the legislation’s application. By this alert, we would like to share with you the insights on key changes in the labor legislation and provide short comments regarding the practical application of its certain regulations.
An employment agreement is commonly concluded in writing. Article 24 of the Labor Code of Ukraine determines the obligatory cases for entering into employment agreements in a written form. However, under the martial law, Article 2 of the Law allows determining a form of the employment agreement by mutual consent of the parties.
It is important to note that the Law does not cancel the obligation specified by Part 4, Article 24 of the Labor Code of Ukraine relating to the requirement to notify the State Tax Service of Ukraine about hiring a new employee, thus, irrespective of the absence of the general obligation to conclude a written agreement, it shall be still required to notify relevant authorities about the fact of hiring an employee. Also, it is worth noting that the provision on using an optional form for employment agreements shall not apply to the cases of employing foreigners, the obligation to submit a copy of the employment agreement among the package of documents in order to obtain a permit for employment of foreigners remains in force.
Changes in Significant Working Conditions
Significant working conditions include the amount of salary, benefits, working regime, combining of professions, job titles, etc., the list not being exhaustive. Earlier, it was required to warn about any change in significant working conditions at least two months ahead. Under the martial law, this regulation shall not apply (Part 2, Art. 3 of the Law). In the event it is impossible to retain former significant working conditions, and an employee does not agree to continue working under the new working conditions, then the employment agreement shall be terminated according to Para. 6, Article 36 of the Labor Code of Ukraine.
However, in the event an employee does not directly refuse from changing significant working conditions, but, due to military activities, is unable to move to a new location, then, instead of a dismissal, the employer should consider the introduction of the downtime (with payment of not less than two third of the tariff pay for the grade (salary) set for such an employee), or unpaid vacation, or suspension of the employment agreement.
Transfers (execution of the work by an employee that is not stipulated by the employment agreement) for the period of the imposed martial law shall be allowed without a consent of the employee if such a work is medically permissible and is used only for the purposes of preventing or liquidating the consequences of combat actions, as well as other circumstances that may pose a threat to human life or normal living conditions.
Besides, the salary amount should be not less than the average salary of the employee at the previous job. No transfers to other locations where active combat actions are under way shall be allowed without a consent of the employee.
Remote Work from Abroad
The Law regulating labor relations under martial law does not presuppose separate regulations in respect of remote work, therefore, the legislative regulation shall be effective that was adopted back in 2021 in response to lockdown restrictions.
Transfers to remote work shall not require making an obligatory notification about the fact two months in advance. For the period of the existing threat of a military aggression and an emergency of another kind, the remote work may be introduced by an order (resolution) of the employer, without entering into an employment agreement about remote work in writing.
The legislation neither presupposes for an employee’s obligation to notify the employer about his/her location, nor prohibits to perform remote work from abroad. I.e. the remote work from abroad shall not require any additional paperwork.
In the event employees stay abroad for a long period of time, then it is needed to pay attention to the issue of the employees’ tax residence. We recommend analyzing each case individually depending on the country to which an employee has left based on the provisions of international conventions on double taxation.
Track of Working and Off-Work Hours
The Law increases the normal duration of working time from 40 to 60 hours per week, and the reduced one from 36 (in certain cases 24) to 50 hours per week. Instead, the duration of uninterrupted weekly rest period may be reduced to 24 hours.
The increased duration of working time and the reduced time for rest shall be the right and not the obligation of an employer and should be applied only in the cases when a longer work is substantiated by the need to ensure the effective activities of a relevant enterprise engaged in the defense sphere or in the sphere of meeting civil requirements.
Also, in the period of the martial law, the following regulations of the Labor Code of Ukraine shall not be applied:
- Reduced work day by one hour on the eve of holiday and non-working days;
- Restricted marginal rates for overtime work;
- Transfers of holiday days to the days following the holiday or non-working days; transfers of days-off and work days in accordance with the recommendations of the Cabinet of Ministers of Ukraine;
- Prohibited engagement of employees to perform work on days-off, holidays, and non-working days and compensations for engaging to work on days-off, holidays, and non-working days.
The martial law does not limit reasons for dismissals that are commonly used in the normal period. I.e. the legislation shall continue to allow terminating employment agreements upon a mutual consent of the parties, staff redundancies, etc. The Law introduces only simplifications to some mechanisms related to dismissals under the martial law, in particular:
- In the event an employee is dismissed upon his/her initiative, the employment agreement shall be terminated within the period set by the employee himself or herself, and the requirements specified in Art. 38 of the Labor Code of Ukraine concerning a two-week notification shall not apply. The required reasons for that shall be as follows:
- The employee should not be the one who is forcefully engaged in socially useful works and not involved in the works at critical infrastructure facilities;
- There is a threat to the employee’s life and health due to the fact that an employer is located in the area of combat activities.
The area of military (combat) activities shall be the area, as determined by the decision of the Commander-in-Chief of the Armed Forces of Ukraine, in the land territories of Ukraine, air and/or water space in which, for a certain period of time, military (combat) activities are and/or have been held (Para. 26, Art. 1 of the Law of Ukraine “On Defense of Ukraine”).
- The Law allows dismissing an employee on the initiative of the employer in the period of his/her inability to work, and in the period of his/her being on vacation (other than a maternity leave and a child care vacation until the child reaches the age three years old). In such a case, a dismissal date shall be the first working day following the date when a temporary inability to work or a vacation ends.
I.e. the Law does not create any additional grounds for dismissals under the martial law, but only adapts the dismissal procedure to the current realities.
Annual basic paid vacations shall be provided to employees for a period of 24 calendar days. The Law does not set any limits to granting annual additional vacations.
An employer shall have the right to refuse an employee in granting any type of vacations (other than a maternity leave and a child care vacation until the child reaches the age three years old) if such an employee is engaged in performing works at critical infrastructure facilities.
At an employee’s request, an employer may grant him/her an unpaid vacation for an indefinite period of time (in the normal period, such a vacation leave may not exceed 15 days).
The Law does not relieve an employer from the obligation to pay salaries, even when combat activities are held at the employer’s location, and only allows delaying the fulfillment of this obligation until the enterprise’s operations are restored.
Also, an employer shall be relieved from a responsibility for violations in the terms of salary payment if it proves that the violations have been caused by military activities or other force majeure circumstances. The relief of the employer for untimely remuneration shall not exempt it from the obligation to pay salaries.
On the other hand, in the event the above circumstances are not proved, the employer shall bear the responsibility in accordance with the legislation. As of today, such a responsibility includes monetary penalties, as well as administrative and criminal responsibilities.
In the event an employer is unable to pay salaries, it should consider introducing downtime. If it is impossible to pay lower salaries, it makes sense considering the use of unpaid vacations or suspending employment agreements.
Suspension of an Employment Agreement
The Law has introduced a new element of settling labor relations – suspension of an employment agreement. Thus, in the event a military aggression is undertaken against Ukraine, which makes it impossible to render and fulfill work, the employment agreement may be suspended.
The suspension presupposes that an employer temporarily ceases to provide an employee with a work tasks and an employee temporarily stops fulfilling work under the concluded employment agreement. I.e. an obligatory condition for suspending an employment agreement shall be the inability of an employer to provide an employee with a work tasks and an employee to fulfill a relevant work. The suspension of an employment agreement shall not entail the termination of employment relations. Both an employer and an employee may initiate the suspension of an employment agreement.
When an employment agreement is suspended, an employer and an employee shall, wherever practical, notify each other of the fact by any means possible. The Law does not determine a form of notification about the employment agreement’s suspension, thus, such a notification may be prepared in writing or in an electronic form by using technical means of electronic communication.
When selecting whether to use an unpaid vacation or suspended employment agreement, an employer and an employee should consider that, in the event the employment agreement is suspended, there is a possibility of receiving compensation payments. Thus, the Law indicates that salaries, guarantees, and compensation payments for the period of the employment agreement’s suspension shall be fully reimbursed by the state that undertakes a military aggression against Ukraine. However, at the moment, the legislation has not determined a mechanism for such reimbursement.
Staff Records Management
The Law has allowed that the employers located in the areas of active combat activities shall independently determine a procedure for organizing staff records management and archive storage of human resource documents. Besides, an employer should ensure that the work performed by an employee be properly recorded and the labor remuneration expenses be appropriately accounted for. I.e. the employer should determine such a type of staff records management that would be practicable to organize under the martial law and introduce the new rules by a relevant order or resolution which the enterprise should comply with during the period of martial law.
Inspections of the State Labor Service of Ukraine
After the imposition of the martial law, the State Labor Service of Ukraine announced that it would suspend holding planned and extraordinary inspections until the martial law is terminated. However, after the martial law is stopped, the State Labor Service of Ukraine will review all applications about violated employment relations committed under the martial law, examine in detail all the circumstances that have caused such violations, and may enforce responsibility.
Also, we would like to share the links to resources from the government authorities that will be useful both to employees and employers:
1. “Responses to the Most Frequently Asked Questions in the Sphere of Labor Relations under the Martial Law” have been provided by the Directorate of Labor Market Development and Remuneration Terms of the Ministry of Economy of Ukraine
2. Recommendations to employers and employees for the period under martial law from the State Labor Service of Ukraine
We will continue following the changes in the labor legislation under the martial law and sharing useful information with you.
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