Tax & Legal Weekly Digest


Major Changes Introduced by the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine on Optimization of Labor Relations” No. 2352-ІХ

Tax & Legal Alert

On 19 July 2022, the Law of Ukraine "On Amendments to Certain Legislative Acts of Ukraine on Optimization of Labor Relations" (hereinafter, the “Law”) entered into force. The Law continues the implementation of a series of updates related to the working conditions during martial law and, also, makes changes that are indirectly determined by the situation in Ukraine and will remain in force after the end of the war. Please find a brief analysis of the main amendments below.

Salary of Mobilized Employees

The Law amends Article 119 of the Labor Code of Ukraine (hereinafter, Labour Code), which provides for guarantees for employees during their performance of state or public duties. In particular, the Law cancels the requirement for the employer to maintain the average salary of an employee called up for military service (including under a contract). From now, the employer has only to maintain the place of work and the position of such an employee.

Also, the period of absence of an employee in connection with the military service should not be included in the length of service, which gives the right to an annual basic paid vacation (Para. 2, Part 1 o Article 9 of the Law of Ukraine "On Vacations").

New Grounds for Termination of Employment Relations at the Initiative of the Employer

The Law provides for new grounds for dismissal, in particular:

  • Absence of the employee at work and information about the reasons for such absence for more than four consecutive months (Para. 83, Part 1 of Article 36 of the Labor Code).
  • Impossibility to provide the employee with the work specified in the employment agreement due to the destruction (absence) of production, organizational and technical conditions, means of production or property of the employer as a result of hostilities (Para 6, Part 1 of Article 41 of the Labor Code).

The procedure of documentary confirmation of the impossibility of providing an employee with a job is not regulated by the Law, we believe that, in each case, the degree of reduction in production capacity should be assessed separately and an appropriate decision should be made. Dismissal on this ground also includes the following mandatory actions of the employer:

  • Notification of the employee about his/her further dismissal not later than 10 calendar days in advance;
  • The employee should be provided with severance pay in the amount of at least the average monthly salary;
  • If there are trade union/trade union representatives in the company, they must be provided with information about the grounds for dismissal and the list of employees who may be dismissed no later than 10 calendar days before the planned day of dismissal;
  • If the dismissal of employees is of mass character (as prescribed by Article 48 of the Law of Ukraine “On Employment of the Population”), the employer is obliged to inform the State Employment Service about it 10 calendar days before the dismissal.

Suspension of an Employment Agreement

The Law clarifies that suspension of the employment agreement (hereinafter, the “suspension”) is possible in connection with the armed aggression against Ukraine, which excludes the possibility of both sides to fulfill the obligations stipulated by the employment agreement, and provides the following details regarding the mechanism of application for the suspension:

  • It can be carried out for a term of no longer than the period of martial law;
  • It should be introduced by the employer’s order, which must contain information about the reasons for the suspension, the method of exchanging information with employees, the period of the suspension, the number, categories, and personal data of the relevant employees, and the conditions for the renewal of the employment agreement;
  • In case of cancellation of the suspension until the end of martial law, the employer must notify the employee about the need to return to work 10 calendar days before the resumption of the employment;
  • The suspension cannot be a hidden punishment and cannot be applied to heads and deputy heads of government bodies, as well as local self-government officials holding the elected positions;
  • Order on the suspension may be appealed by the employee to the State Labor Service, and, as a result, the employer may be ordered to cancel the relevant order or to eliminate the violation of the labor legislation in another way. Such orders may be issued in agreement with the military administration;
  • Effect of the rule regarding the possibility of appealing the employer’s suspension order has a retroactive effect, that is, the employee has the right to appeal the order that was issued before the Law entered into force.

Inspections of the State Labor Service

The Law provides for a possibility of conducting scheduled and unscheduled State Labor Service’s inspections during martial law. However, during the period of martial law, in case of the full implementation of prescriptions on the eliminated violations (detected during the implementation of unplanned measures of state supervision (control)) within the prescribed period, the fines provided for in Article 265 of the Labour Code shall not be applicable.

Conclusion of an Employment Agreement: Changes in the Procedure

The Law expanded a list of information that the employer must acquaint an employee with before commencing the work (Article 29 of the Labor Code). In particular, the employer must additionally inform a potential employee about:
o A place of work (information about the employer, including its location), the job function that the employee is required to perform (position and list of job duties), the date of commencing the work performance;

  • Information about the professional training arranged (if such trainings are provided);
  • Duration of an annual leave, terms, and the amount of remuneration;
  • The procedure and notice periods on termination established by the employment agreement that should be observed by the employee and the employer;
  • In case the employee is hired under a fixed-term employment agreement, the employer should also make him/her aware about vacancies that meet his/her qualifications and provide for the possibility of concluding an open-ended employment agreement (Article 23 of the Labor Code).

The Law allows providing such information in a manner agreed upon with the employee. That is, instead of a notice against the employee's signature, the employer may apply the means of electronic communication for such familiarization. This issue will be considered in more detail below.

Simplification of the Doc-Flow

The Law allows that employees be familiarized with the employer's documents related to their rights and obligations by using electronic communication networks, with the use of an improved electronic signature or a qualified electronic signature, if such an option is provided for in the employment agreement (Part 3, Article 29 of the Labor Code).

At the same time, the employment agreement may provide for alternative ways for familiarizing the employee with the employer's documents and exchanging information (except for the information about harmful and dangerous factors, whereas such information should still be provided against signature).

It is important to note that the Law does not cancel the employer's obligation to draw up documents related to the employees' rights and obligations in writing, but only provides for additional options for familiarizing employees with relevant documents.

Change in the Essential Working Conditions

The Law clarifies that, during martial law, the employer should notify the employee about changes in the essential working conditions no later than the changes are introduced, regardless of the cancellation of the obligation to notify about relevant changes at least two months in advance (Part 2, Article 3 of the Law of Ukraine “On the Organization of Labor Relations in the Conditions of Martial Law”).

Payment of Salary Before a Vacation

The Law stipulates that salary for the entire vacation period shall be paid before the beginning of ta vacation unless otherwise stipulated by the employment or collective agreement (Part 4, Article 115 of the Labor Code). It should be noted that, previously, there was an imperative obligation for the employer to pay salary no later than three days before the start of a vacation, and a failure to comply with this obligation was often interpreted by the State Labor Service as a violation of the legislation.

Duration of Working Hours

In March 2022, the legislation provided for the possibility of establishing a normal duration of working hours in the amount of 60 hours per week (and 50 hours for a reduced duration of working hours). The Law introduces some clarifications to this rule, in particular:

  • The normal duration of working hours may be increased to 60 hours per week only for the employees employed at critical infrastructure facilities (defense sector, the sphere of ensuring the livelihood of the population, etc.). At the same time, the duration of reduced working hours during martial law may not exceed 40 hours per week.
  • Increases in normal working hours are not applicable for under-aged persons.
  • In case of establishing an increased duration of working hours, the salary increases proportionally (Article 6 of the Law of Ukraine “On the Organization of Labor Relations in the Conditions of Martial Law”).

Vacations during Martial Law

After the imposition of martial law, the legislation provided for the limitation of the duration of annual basic leave to 24 calendar days. The latest changes introduced a clarification that the limitation of annual basic leave shall be carried out at a discretion of the employer. If the duration of an employee’s annual basic leave is more than 24 calendar days, granting unused days of such a leave during the period of martial law shall be transferred to the period after the termination or cancellation of martial law (Part 1, Article 12 of the Law of Ukraine “On the Organization of Labor Relations in the Conditions of Martial Law”).

The Law also provides for a new type of leaves for persons who have been forced to change their place of residence. During the period of martial law, the employee who has left the territory of Ukraine or acquired the status of an internally displaced person may apply for a leave of absence for a period of up to 90 days, and the employer is obliged to grant such a leave. This type of a leave does not provide for the preservation of wages and is not included in the length of service, which gives the right to annual basic leaves.

Payments Upon Dismissal

The Law provides for a new obligation for the employer – in addition to issuing an order on dismissal, it is also necessary to provide a written notice of accrued and paid amounts upon the dismissal (Part 1, Article 47 of the Labor Code). Each type of payment (basic and additional wages, incentive and compensatory payments, other payments to which the employee is entitled under the terms of the employment agreement, etc.) must be indicated separately in such a notice. The calculation should be provided on the day of payment of corresponding amounts.

Other innovations related to settlements upon dismissal:

  • In the event of a dispute about the amount of sums charged to the employee upon dismissal, the employer must, in any case, pay the undisputed sum within the time limit set by the Law;
  • In case of non-payment due to the fault of the employer to the dismissed employee within the terms specified by the Law, in the absence of a dispute about their amount, the employer must pay the employee his/her average salary for the entire time of delay until the day of the actual calculation, but for no more than six months;
  • If there is a dispute about the amounts due to the dismissed employee, the amount of compensation for the delay cannot exceed the amount of six salaries of the employee.

We will continue following changes in the labor legislation under martial law and sharing useful information with you.

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