Arzinger Law Firm

1

GENERAL PRINCIPLES

Forums For Adjudicating Employment Disputes

The Local Common Courts have exclusive jurisdiction over claims arising out of employment relations. The decisions of this type of courts may be subject to appeal to the regional Courts of Appeal, and afterwards to the Supreme Court (cassation).


The Main Sources Of Employment Law

The Labour Code of Ukraine dated 10 December 1971, No 322-VIII; The Law of Ukraine "On Remuneration" dated 24 March 1995, No 108-95-BP; The Law of Ukraine "On Employment of Population" dated 05 July 2012 No 5067-VI; The Law of Ukraine "On Vacations" dated 15 November 1996, No 504-96; The Law of Ukraine "On Collective Agreements" dated 01 July 1993, No 3356-XII; The Law of Ukraine "On Compulsory State Social Insurance" dated 23 September 1999, No 1105-XIV, as well as other legislative acts.

The special rules regarding labour relations during martial law in Ukraine under the Law of Ukraine No. 2136-IX "On the Organization of Labour Relations under Martial Law" were introduced in 2022 (still in effect).


National Law And Employees Working For Foreign Companies

Pursuant to the provision of the Ukrainian law “On International Private Law”, labour relations are governed by the laws of the jurisdiction where work is executed, unless international agreements provide otherwise (e.g. employment relations with Polish citizens may be governed by the Polish law based on the Treaty between the governments of Poland and Ukraine dated 24 May 1993).

Ukrainian labour law is applicable to employment relations concluded between Ukrainian nationals and non-national employers situated in Ukraine.

The labour relations of the national employee working in another jurisdiction are subject to Ukrainian law provided that:

  • The national Employee works for a diplomatic establishment of Ukraine domiciled in another jurisdiction;
  • The national Employee and the Ukrainian employer conclude an employment agreement that provides that the work shall be done outside Ukraine, if this does not contradict the laws of the country where the work is done; and
  • The law and international agreements of Ukraine provide accordingly.

National Law And Employees Of National Companies Working In Another Jurisdiction

Please see the response to the previous question.


Data privacy

In employment relations, it is important to follow the basic principles of data protection prescribed under Ukrainian law –

  • purpose limitation (data shall be collected for specified, explicit and legitimate purposes and not further processed in a manner that is incompatible with those purposes);
  • lawfulness (each data processing operation shall have a legal basis);
  • data minimisation (adequate, relevant, and limited collection of data to what is necessary in relation to the purposes of processing);

Depending on the purpose of data processing we may refer to different legal basis:

  • consent (it shall be freely given and can be withdrawn. At the same time, it’s not recommended to process personal data under consent if it is possible to refer to any other legal basis);
  • provisions of legislation (for instance, processing of some personal data by the employer to warrant safe work conditions);
  • performance of contract (it shall contain provisions on the collection and processing of personal data of some definite categories of personal data, for instance under a labour agreement/contract);
  • vital interest (it’s necessary to prove that such processing is needed to protect an interest which is essential for the life of the data subject or that of another natural person. Important to note that Ukrainian data protection law will still require consent of data subject when it’s possible to receive it);
  • performance of legal obligation (the employer is obliged to report some data to the state authorities, for instance, tax authorities, and it’s allowed to process it under this legal basis); and
  • legitimate interest (such interest shall prevail over the protection of rights and freedoms of the data subject).

There are also limitations on the processing of sensitive data by the employers. As a rule, the employer is obliged to notify the Ukrainian data protection authority of any processing of sensitive personal data. At the same time, if data processing is necessary according to the rights and obligations of the employer as controller of personal data under the law, there is no need for notification.

In case of transmission of personal data abroad or to any third parties the employer is obliged to notify its employees thereof.

Personal data shall be timely deleted as soon as the purpose of its collection and processing ceases to exist.

It’s also recommended to take measures for securing the accountability principle of personal data processing by adopting policies on personal data, appointing responsible personnel, keeping a register on personal data processing etc.

Illegal processing of personal data leads to administrative responsibility under Ukrainian law.

2

HIRING THE EMPLOYEE

Legal Requirements As To The Form Of Agreement

As a rule, employment agreements are to be concluded in written form. The obligatory written form is applied if –

  • the employee insists on it;
  • the agreement provides for severe working conditions dangerous to the health and safety of the employee;
  • it is required by legislation for certain types of workers/jobs;
  • the agreement on remote work or home-based work is concluded (except for cases when employees are transferred to such work regime temporarily due to pandemic or other emergency);
  • the employee is a minor;
  • the employer is a natural person; and
  • the contract as a special form of the labour agreement is concluded (e.g. with the CEO).

Mandatory Requirements
  • Trial Period

    • Probation period may be established upon agreement of the parties. Probation cannot be applied to certain categories of employees (e.g. minors, persons retired from military or alternative (non-military) service, pregnant women, single mothers with a child under the age of 14 or child with disability, internally displaced persons) or if a labour agreement is being concluded for less than 12 months. During the probation period, the employee has all rights and 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 (1) month – for workers (in this case, to define the term “worker” the Occupational Classification shall be used – "blue-collar");
    • three months – for any other employee categories; and
    • six months – in certain cases upon agreement with the trade union committee.

    During martial law, probation may be established for any category of the employee.

  • Hours Of Work

    • Subject to certain exceptions, the regular working week is 40 hours. 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 in a row or 120 hours per annum and is compensated at double rates.

    During martial law, Employers may establish a 60-hour working week for employees of critical infrastructure facilities and refuse to grant them any leave (except in some cases).

    Flexible Working hours: In the case of flexible working hours, employees may determine their working schedule at their own discretion.

    Such working regime comprises of:

    • flexible working hours;
    • variable working hours (an employee determines the periods of work at her/his own discretion within the normal limits); and
    • break time for rest and meals.

    Flexible working hours shall not be applied at:

    • continuously operating enterprises, institutions, organisations;
    • in case of multi-shift organisation of work;
    • in other cases, due to the specifics of activity, when the performance of duties by an employee requires her/his presence within clearly determined working hours; and
    • when such regime is incompatible with the requirements for safe working conditions.

    Flexible working hours may be set:

    • at an employee's request (without observing the notification requirements)
    • by the employer – in case of production necessity with at least two (2) months notice of changed work mode. During martial law, the mentioned notice period does not apply. However, the employer still must notify the employee of further changes in advance.

    In case of production and technical necessity to perform urgent or unforeseen tasks, the employer may temporarily (for a period of up to one (1) month during a calendar year) apply the general work mode to such employees (provisions of part 3 of Article 32 of the Labour Code on changing the essential working conditions do not apply). In case of violation of the established flexible working hours regime, additionally to appropriate disciplinary penalties, an employee can be transferred to the general work mode without observance of part 3 of Article 32 of the Labour Code.

  • Special Rules For Part-time Work

    • There are no special rules for part-time employees. The salary for part-time work is usually calculated based on the monthly salary rate in proportion to the time actually worked for the working month.

    Certain employees (e.g. pregnant women) have preferences in establishing the part-time work regime upon their request.

  • Earnings

    • The monthly salary for the full time worked by the full-time employee must not be lower than the legislatively established minimum wage, which is subject to review on an annual basis and approval by the law on the state budget for the respective year. The current monthly minimum wage amounts to appr. EUR 180.00 (UAH 7,100.00), starting from 01 April 2024 – EUR 200.00 (UAH 8,000.00).

  • Holidays/Rest Periods

    • Rest periods:

    • Midday break – from half an hour up to two (2) hours, must be provided not later than four (4) hours after the start of the workday. If the type of work does not allow the employee to enjoy the midday break in full, the special short breaks must be provided, as well as places for food consumption must be organised by the employer.
    • Daily rest – not less than twice the lengths of the shift (in case of work in shifts). All the time between working hours of the two (2) consequent working days of the employee pursuant to the Internal Labour Regulations of the employer is deemed to be the daily rest.
    • Weekly rest – a general day-off is Sunday (still may be altered). Usually, there are one or two (2) days-off for all employees depending on their working schedule established by the labour agreement and/or Internal Labour Regulations of the employer. The duration of the weekly rest period must not be less than 42 subsequent hours.

    Public holidays and free days (religious holidays): Public holidays (nine (9) per year) and free days (three (3) per year) are days off, as envisaged by the legislation. 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 a public holiday or a free day.

    Vacations: All vacations are calculated based on calendar days. The statutory paid annual vacation is 24 calendar days (basic vacation). For certain categories of employees, the law provides for a longer vacation period, for example:

    • employees with disability – 26 or 30 calendar days depending on the group of disability; and
    • employees under the age of 18 – 31 calendar days.

    There are also some additional vacation types in Ukraine, for example:

    • additional annual vacation for work under arduous and harmful work conditions – up to 35 calendar days;
    • additional annual vacation for special work nature (e.g. for non-standard working hours – up to seven (7) calendar days);
    • additional annual vacation for employees with two (2) or more children under the age of 15 or an adult child of type A, group I of disability – 10 calendar days;
    • additional annual vacation for the participants of military actions, war-disabled persons –14 calendar days;
    • additional study vacation – for the period of passing the exams;
    • research leave – for scientists – up to four (4) months;
    • maternity leave – 126 calendar days (140 in case of complications);
    • paid leave for a father (or another adult family member of a single father/mother, such as a grandparent) to take care of the child after birth – up to 14 calendar days;
    • childcare leave up to three (3) years of age (six (6) years – if the child requires home care);
    • adoption leave – 56 calendar days (70 calendar days in case of adoption of two (2) or more children); and
    • unpaid vacations – up to 30 calendar days if negotiated or for the period established by law (if the employer is obliged to provide such leave).

    All vacations may be roughly divided into two (2) types depending on the frequency:

    • annual vacations (e.g. for employees with children); and
    • one-time vacations (e.g. research leave, adoption leave etc.).

    Please also be aware that annual vacations are provided depending on the vacation type:

    • for a calendar year calculated from 1 January until 31 December (e.g. additional vacation for employees with children); and
    • for a year calculated from the date of the beginning of the employee's work (e.g. basic annual vacation, additional annual vacation for special work nature).

    The total number of days of annual vacations (both basic and additional) cannot exceed 59 calendar days. In addition to that, an employee may use one-time vacations if there is a necessary ground. The Collective Bargaining Agreement (CBA) and/or labour agreements may contain higher guarantees for employees regarding these matters.

    During martial law, the employer may limit the total number of days of paid vacation for employees to 24 calendar days (the rest of the days will be provided after termination/cancellation of the martial law or may be provided without payment). Also, employers may refuse to provide the employee the vacation (except for certain cases) if the employee is involved in the work of critical infrastructure or works under mobilization tasks.

    Also, additional types of unpaid leave have been introduced for the period of martial law – (i) mandatory leave of no more than 90 calendar days at the request of an employee who has left the territory of Ukraine or acquired the status of an internally displaced person; and (ii) leave by agreement of the parties for a duration of the martial period.

  • Minimum/Maximum Age

    • The minimum age for employment is 16 years (14 or 15 in certain cases upon approval by the parents/legal guardian and respective child-caring state authority).

    There are no limits to the maximum employment age. There also may be age limitations for certain state (civil) service and military service.

  • Illness/Disability

    • The employees in Ukraine are insured by their employers (and at the employer's expense) in case of illness or temporary disability via payment of the Unified Social Contribution (mandatory payment). The first five (5) days of illness or temporary disability are to be reimbursed by the employer subject to the provision of the medical certificate by the employee. The State Social Security Fund reimburses the loss of earnings to the employee for the period of illness or temporary disability starting from the sixth day of illness or temporary disability (with some exceptions).

  • Location Of Work/Mobility

    • Location Of Work

    The Law of Ukraine defines a workplace as a place (space) at which the employee permanently or temporarily provides work and which must be determined, in particular, under the employment agreement (contract).

    The other type of work location is called home-based. The workplace of home-based workers coincides territorially with their place of residence. The home-based workplace has a fixed area and the technical means necessary to manufacture products and render services. An employee's fixed workplace may not be changed without the parties' agreement, except when reasons occur that render an employee's work impossible.

    Certain employees have a pre-emptive right to work from home (pregnant women, women with children under 15, persons with disabilities and their family members, persons who, for objective reasons, cannot be employed directly at the employer's location etc.).

    Home-based work can be established only for persons who have or may be taught the necessary practical skills.

    Under the agreement on home-based work employees are subject to the employer's general work mode, unless otherwise provided by the labour agreement.

    Under the agreement on remote work (telework) an employee shall independently determine her/his workplace anywhere outside the employer's premises/territory and is responsible for ensuring safe and harmless working conditions. It is also possible to combine remote work with working on the employer's territory. Under remote work agreements the work is performed with the use of information and communication technologies.

    The agreement for remote work may be concluded only for work that does not imply any dangerous and harmful production (technology) factors.

    Under the agreement on remote work an employee distributes the working time at her/his own discretion, (s)he is not subject to internal labour regulations, unless otherwise determined by the labour agreement. Also, employees are entitled to right to disconnect.

    In both remote and home-based work modes the employer is responsible for the safety of the equipment provided to the employees (if any) as well as for conducting occupational safety trainings, but employees are responsible for ensuring their occupational safety at their workplaces.

    Work mobility:

    The work mobility results in transfer to different location together with the company and transfer within the employer's units.

    Transfer to different location together with the company (переведення на роботу в іншу місцевість разом із роботодавцем).

    Relocation of the business (to another city, region) is regarded as a significant change in the employment agreement. Thus, consent of the employee is required. The employer is to notify the employee about it at least two (2) months before the event (During martial law, the mentioned notice period does not apply. However, the employer still must notify the employee of further changes in advance). In case the employee does not accept the changes proposed by the employer, the employment agreement is subject to termination. Severance will also be due to a dismissed employee in the amount of at least one (1) average monthly salary. All reasonable costs connected with the relocation of the business incurred by the employee is subject to reimbursement by the employer.

    Mobility clauses can be included into the employment agreement. Where the job requires travel to other temporary locations, it is normal for the employer to reimburse all reasonable travel expenses.

    Transfer within the employer's units located at the same town, city etc. (переміщення).

    The employee may be transferred (relocated) within the employer's units located in the same town, city etc. without change in his/her labour functions on a permanent or temporary basis without his/her consent.

    If such transfer has led to a decrease in the salary of the employee, he/she is entitled to retain his/her previous average salary for two (2) months (or two (2) weeks – if the employee was transferred to another position with a lower salary due any changes in the organisation of work and production).

    Business trips:

    The employers have the right to send employees on business trips and unreasonable refusal of the employee from the assigned business trip may be a ground for the application of disciplinary measures to such an employee. However, there are certain restrictions regarding organisation of business trips –

    • a pregnant woman, a woman with a child under three (3) years of age, or a single father/guardian/one of the adoptive parents with a child under three (3) years of age may not be sent on a business trip by the employer; and
    • a woman or a single father/guardian/one of the adoptive parents with a child under 14 years of age or a child with a disability of group I subgroup A may not be sent on a business trip by the employer without the prior consent of the employee.

    If sent on a business trip, employees must be paid a daily allowance and costs for transportation and accommodation. Also, certain employees may work on itinerant work terms while having no fixed workplace and performing their work from different locations based on the employer's assignment. The CBA and/or labour agreements may contain higher guarantees for employees regarding mobility matters.

  • Pension Plans

    • The employer is required to make obligatory payments to the State Pension Fund on behalf of employees. The rate of the Unified Social Contribution is 22% of an employee’s remuneration (paid by the employer). Any other social insurance (voluntary) is left to the employer’s discretion.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)

    • It is prohibited to dismiss certain categories of employees, such as pregnant women, women with a child under three (3) years of age (six (6) – if the child requires homecare), and single mothers with a child under 14 years of age or child with disabilities, single fathers, adoptive parents/guardians, except for some cases (e.g. company's liquidation with the obligatory subsequent employment).

    Leaves:

    • maternity leave – 126 calendar days (140 in case of complications) – the woman may decide on the starting day of her maternity leave (as a rule, maternity leave is split in two parts: 70 calendar days before giving birth and 56 (70) – afterwards; however, staring from 2023, women may transfer the part or whole duration of the first part of this leave to the period after childbirth);
    • childcare leave up to three (3) years of age (six (6) years – if the child requires home care) (may be used by any of the parents or another child-caring member of the family);
    • adoption leave – 56 calendar days (70 calendar days in case of adoption of two (2) or more children) (may be used by any of the parents or another child-caring member of the family);
    • additional annual paid leave for child-care (for mothers or single fathers with a child of up to 14 years of age or older child with a disability of group 1 sub-group A) – 10 calendar days (17 – if there are two (2) or more grounds for such leave);
    • paid leave for a father (or another adult family member of a single father/mother, such as a grandparent) to take care of the child after birth – up to 14 calendar days; and
    • additional unpaid leaves as prescribed by the relevant laws for specific aims (e.g. in case of necessity to care for a child whose school or kindergarten has declared a quarantine).

    The CBA and/or labour agreements may contain higher guarantees for employees regarding these matters.

  • Compulsory Terms

    • Though the legislation doesn't explicitly envisage compulsory terms of the employment agreement, in practice the following obligatory terms may be singled out –

    • the names of the parties to the agreement;
    • the date of the employment commencement;
    • the remuneration and terms of its payment;
    • the hours of work;
    • the place of work; and
    • the job title/job description.
  • Non-Compulsory Terms

    • The parties to a labour agreement are free to agree on any other terms in addition to the compulsory provisions, provided that these terms do not contradict the law (except for cases when it is allowed – e.g. additional grounds for termination of the labour contract as a special form of the labour agreement (may be concluded only with certain categories of employees, if envisaged by laws – e.g. CEOs, members of the executive body of the company etc.).


Types Of Agreement

There are several criteria for classification of labour agreements:

  • Depending on the term for which labour agreements are concluded –
    • labour agreements concluded for an unlimited period;
    • fixed-term labour agreements; and
    • labour agreements concluded for the term of performing certain types of work.
  • Depending on the form in which labour agreements are concluded –
    • written labour agreements; and
    • labour agreements concluded in oral form (are formalised solely by the internal personnel order of the employer).
  • Depending on the type of engagement in labour activity –
    • part-time labour agreements;
    • full-time labour agreements;
  • Depending on the type of the employer-employee relations –
    • labour agreement with the employer as primary employer; and
    • labour agreement with the employer as a secondary employer (additional labour agreement).
  • There are also certain types of labour agreements related to short-term and seasonal types of work; however, they are currently regulated only by the outdated legislative acts from the Soviet era.
  • Also, there is a special type of labour agreement – labour contract, which may be concluded only with a limited number of employees as envisaged by the law (e.g. CEOs of the companies, members of the executive body etc.).
  • In 2021 the remote work agreement (mostly used for work via electronic communication tools) and home-based work (mostly used for manual work) agreement were introduced.
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  • In 2022 a simplified contractual regime for SMEs (small and medium-sized enterprises) was introduced allowing the parties to the labour agreement to regulate certain conditions and deviate from the mandatory norms of the Labour Code of Ukraine in a separate written agreement (for example, regarding the conditions of employment, working hours, grounds for dismissal, term of the agreement, terms of remuneration, labour norms, working time and rest periods, record keeping). This type of agreement may be used only during the validity of martial law in Ukraine.
  • In 2022 an agreement with non-fixed working hours was introduced. Under the following agreement:
    • the employee's obligation to perform work arises only if the employer provides such work without guaranteeing that it will be provided regularly (but with payment for not less than 32 working hours per month);
    • the employer may enter into no more than 10% of the total number of employment agreements (no more than 1, if the employer has less than 10 employees in total);
    • the parties must agree on the method and minimum period for notifying the employee of the start of work, in case of violation of these rules the employee has the right to refuse to perform the task;
    • the employer cannot prohibit the employee from working for other employers, but the agreement may contain additional grounds for its termination;
    • after 12 months of work, the employee has the right to apply to the employer with a request to conclude a fixed-term or indefinite-term employment agreement on general terms.

Secrecy/Confidentiality

As a rule, there is no implied duty for the employee to respect the confidentiality of the employer’s commercial and business information in Ukraine. To protect secret and confidential information, the employers must include such a provision in the employment agreement and/or job instruction, and/or internal regulations or conclude a separate NDA. It is recommended to specify the type of information that is regarded as a trade secret, and therefore protected, to prevent future disclosure in such NDA.

Moreover, the LLC's officials cannot disclose the information that constitutes trade secret or is confidential (in case of breach of such duty – the official may be dismissed immediately without any compensation granted). This prohibition also applies for the period of one (1) year after the termination of the labour agreement (contract) with such an official, unless otherwise specified in the agreement (contract) (e.g. longer).


Ownership of Inventions/Other Intellectual Property (IP) Rights

Ukrainian law provides creation of IP objects in the course of labour relations, but the classic “work for hire” concept is not directly applicable here because of the following.

There are different approaches to IP rights assignment under Ukrainian law –

  • as regards copyright law, the Civil Code of Ukraine and the special laws has a different regulation of IP transfer between the employer and employee. Under the special law of Ukraine «On Copyright and Related Rights» economic right to works shall be vested in the employer, unless otherwise stipulated in the agreement. At the same time, the Civil Code of Ukraine stipulates that economic IP rights belong to both the employer and employee, unless otherwise stipulated in the agreement between the employee and employer; and
  • as regards patents, Ukrainian law provides that an invention for hire shall be created with experience, manufacturing knowledge, manufacturing secrets and equipment of the employer. Under the special patent laws the employer has the right to obtain a patent for an employee’s invention, utility model and industrial designs for hire. In such a case, the employee shall submit to the employer a written report on the created employee’s invention and the employer shall file the application for obtaining such patent to the Office. Thereafter, an agreement must be concluded on the amount and conditions of the remuneration for such an invention or utility model. Otherwise, the right to obtain a patent shall pass to the employee and preference for acquisition of a license shall be given to the employer.

In view of this, it is recommended to include clear provisions on IP rights assignment into the respective agreements/contracts –

  • essential provisions shall be included in the agreements/contracts (i.e. it is necessary to identify created IP objects, scope of transferred rights, period, territory, and payment for transfer IP rights etc.); and
  • it is still necessary to certify the creation of IP objects and conclude acceptance certificates.

It is recommended to fix the creation of IP objects as a part of labour duties under job descriptions. Technical specification is also advisable.


Pre-Employment Considerations

Ukrainian labour and employment laws do not envisage any rules on pre-employment relations. Also, a job offer is not deemed to be a proper legal document that may entail any consequences for the parties.


Hiring Non-Nationals

Non-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 two years and is subject to renewal.

If a non-national has a permanent residence permit for living in Ukraine, the employer does not need to obtain any work permit.


Hiring Specified Categories Of Individuals

There are restrictions on the admission to certain hazardous activities, and restrictions on the types of work that vulnerable groups (e.g. children, persons with disability or pregnant women) can be required to undertake.

The current legislation of Ukraine also provides a norm of workplaces for persons with disabilities in the amount of 4% of the average number of employees per annum for employers with more than 25 employees; if there are eight (8) to 25 employees – in the amount of one (1) workplace.


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

Labour and employment legislation do not apply to the Outsourcing and Sub-contracting relations (civil law contracts/relations).

Temporary Agency Work as a non-standard form of work was partly implemented in 2013 via the so-called "out staffing"/personnel lease introduced into the Law of Ukraine "On Employment of Population". Under the respective provisions of the mentioned law, the employer may use the workforce of another employer (specifically hired by such other employer for provision to the employer-client) under the contract between them (subject to certain limitations and requirements).

The CBA may contain certain restrictions regarding these matters.

3

MAINTAINING THE EMPLOYEE RELATIONSHIP

Changes To The Contract

According to the Ukrainian legislation in case of changes in production and labour organisation 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 a situation, the employer shall provide respective employees with at least two (2) months prior notice before the changes come into force (During martial law, the mentioned notice period does not apply. However, the employer still must notify the employee of further changes in advance). 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 with the provision of severance payment in the amount of not less than one (1) average monthly salary.

When changing the essential conditions of work of a member of the primary trade union organisation, the consent of the elective body of the primary trade union organization must be obtained.

The CBA and/or labour agreements may contain higher guarantees for employees in this case.


Change In Ownership Of The Business

Change in ownership of the business does not affect the employment relations with the employees. However, the change in ownership is a ground for re-concluding the CBA (if any). If the new CBA was not concluded within a year after the change in ownership, the previous one (effective as of the date of change in ownership) ceases to be effective.


Social Security Contributions

All employees are subject to the following categories of the state social security:

  • insurance against temporary disability;
  • insurance against professional diseases or accident at work;
  • insurance against unemployment; and
  • pension insurance.

The contributions for the mentioned categories of the state social security must be paid by the employer (at its cost) in the form of the Unified Social Contribution (current rate – 22% of the employee's gross income paid by the employer to the employee).


Accidents At Work

The employers must provide safe working conditions for employees. The employers must provide fire and occupational safety instructions to their employees before they start their work (and afterwards – regularly). If the employee is injured, suffers from professional disease, or dies due to an accident at work or because of severe/improper working conditions, the employer is obliged to start an investigation as well as notify the respective state authority.

In the case of remote work the employee is liable for his/her work safety, however, the employer is still obliged to provide fire and occupational safety instructions to their employees before they start their work (and afterwards – regularly) regarding the equipment provided or recommended by the employer. Relevant training may be conducted electronically (via electronic communication tools).

It is compulsory in Ukraine for an employer to take out insurance to cover potential claims by employees for injury/death/professional disease in the workplace (via Unified Social Contribution). The insurance covers loss of earnings paid regularly unless the employee regains the ability to work. Employees are also entitled to as well as one-off compensation paid in cases of death or significant harm to health and working ability. The insurer for such cases of professional diseases or accidents at work is the State Social Security Fund. In some cases where the employer violates the requirements of fire and/or occupational safety, its management, responsible for controlling and preserving safety at working place may also be criminally liable.


Discipline And Grievance

Two (2) types of disciplinary measures may be taken against an employee for violation of the labour discipline: dismissal (in cases envisaged in the Labour Code) or written warning (reprimand). Also, some other disciplinary penalties may apply to some categories of employees by legislation, disciplinary statutes, and regulations (relevant only for specific spheres of activity or economy – e.g. in military sphere, medical sphere etc.).

A disciplinary penalty should be applied no later than one (1) month after the day of revealing the employee’s action, but not later than six (6) months after the violation was committed. Before the application of a disciplinary penalty, the employer must request a written explanation from the employee.

For every breach, only one (1) disciplinary penalty can be applied.

When choosing the type of penalty, the employer must consider the degree of the violation, the employee's guilt, the harm caused by the violation committed, relevant circumstances and the employee’s previous work record.

An employee may argue improper disciplinary penalty in court.

When imposing disciplinary matters on the member of the primary trade union organisation, the consent of the elective body of the primary trade union organisation must be obtained.


Harassment/Discrimination/Equal pay

The Labour Code precludes discrimination based on race, colour, ethnic and social origin, religious, political and other beliefs, gender identity, sexual orientation, property status, place of residence, suspicion or presence of HIV/AIDS, membership in a trade union, participating in the strike, addressing or intending to go to court or other bodies to protect their rights or to support other employees in protecting their rights, reporting possible corruption or corruption-related offences, linguistic, or other characteristics.

Under the Law of Ukraine On Ensuring Equal Rights and Opportunities for Women and Men, taking measures to prevent and protect against sexual harassment and other gender-based violence falls into the employers' obligations. Moreover, they shall create equal work conditions as well, while implementing equal pay for women and men with the same qualifications and working conditions. The employers are restricted from specifying gender in a vacancy advertisement, except for certain types of work which may be performed by a person of a specific gender only.

Also, a few general laws on non-discrimination also apply to the employment sphere.

Court disputes arising from the employee's claims against harassment or discrimination at the workplace are not common in Ukraine.

At the end of 2022, the legislation on protection of employees against mobbing and employer's liability for relevant violations was introduced. Among other things, the legislation requires the parties to include relevant provisions in the CBA and provides for additional employment termination grounds related to mobbing (if mobbing is proved by the court's decision).


Compulsory Training Obligations

Generally, there are no compulsory training obligations for employees, except for certain categories of professionals/workers subject to regular certification training (medical workers, teachers, attorneys, judges etc.).

The CBA and/or labour agreements may contain higher guarantees for employees and/or additional obligations for the employer regarding this matter.


Offsetting Earnings

As a rule, offsetting earnings are not usual for labour relations. There are two (2) ways to conduct the deductions from the employee's salary –

  • upon the employee's written application and agreement between the employee and employer on the return of the loan provided by the employer to the employee. Such deductions may be conducted on a monthly basis or as a one-time deduction.
  • pursuant to internal order/court decision on deductions from the employee’s salary (e.g. to cover/reimburse the employer's losses that occurred because of employees or to provide sums arrears to third parties in cases prescribed by law (e.g. alimony payments)). Such deductions may be done subject to the limits to the amounts that may be deducted from one (1) monthly salary of the employee (the maximum is 70% of the monthly salary).

Payments For Maternity And Disability Leave

Women are entitled to 126 calendar days of maternity (140 – in the case of delivery of two (2) or more children and in case of complications of childbirth).

The payment for pregnancy and delivery leave is provided based on the sick leave medical certificate. When calculating maternity pay, the employer considers an employee’s average salary for 12 months before maternity leave.

A woman (single father, adoptive parent, or child's guardian) is also entitled to an unpaid leave until the child reaches the age of three (3) years (six (6) years – if the child needs home care).


Compulsory Insurance

See the sections on Social Security and Pension Plan.


Absence For Military Or Public Service Duties

For employees, called up for fixed-term military service, military service for the officers by conscription, military service during mobilisation, for the special period or enlisted by contract, including reenlistment by a new contract for military service, the place of work and job position must be retained.

At the time of performance of state or public duties, if, under the current legislation of Ukraine, these duties can be fulfilled during working hours, employees are guaranteed to retain a place of work (position) and average earnings.

Employees involved in the performance of military or public service duties are provided with guarantees and benefits.

The CBA and/or labour agreements may contain higher guarantees for such employees.


Works Councils or Trade Unions

Citizens of Ukraine are entitled to participate in professional unions to protect their labour, social and economic rights, and interests. A trade union is a voluntary, non-profitable non-governmental organisation of citizens united by mutual interests by the nature of their professional (labour) activity (study). Trade unions are established 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 ones. Foreign citizens and stateless persons are not allowed to establish trade unions, but are entitled to join them, if this is provided by their charters.

The elected body of a primary trade-union organisation has the following rights:

  • to conclude and control the implementation of collective agreements with the employer;
  • to ensure that the employer observes and ensures the working safety regulations, and other legislation concerning employees’ rights;
  • to decide on provision of the consent to the employer for the dismissal of employees in certain cases defined by law;
  • to approve a schedule of vacations of employees, shifts schedules and certain other internal documents of the employer; and
  • to participate in social development of company, improvement of working conditions of employees etc.

There is no such institute as Work Council in Ukraine; however, labour collectives of the employers may assemble (in a form of the General Meeting of the Labour Collective or Labour Collective Conference) and elect their representatives for further participation in collective bargaining or other related matters.

The CBA may contain higher guarantees for the employees-members of the trade unions and/or additional obligations of the employer in respect of the trade unions and their members as compared to the legislative rules.


Employees’ Right To Strike

According to the Constitution of Ukraine, employees have the right to strike for the protection of their economic and social interests. Prohibition of a strike is possible only in cases envisaged by law. Strikes are also prohibited during the effect of the martial law. Also, certain categories of employees are not allowed to strike – policemen, firemen, militaries etc. (this ban is aimed at protecting the State's and social welfare).


Employees On Strike

Participating in a strike, except when the strike is illegal, shall not be treated as a breach of the employment agreement and may not be considered as a basis for bringing a disciplinary action against an employee. However, organisation of, or participation in, an illegal strike, will constitute a violation of the employment agreement.

Employees participating in a strike are not entitled for any payment for the whole period of the strike. Non-striking employees, prevented from reaching their workplace due to the strike, shall be paid an average salary for the whole period of the strike.


Employers’ Responsibility For Actions Of Their Employees

The employer bears civil responsibility for losses caused by an employee in the course of work (the employer later may claim for damages to be compensated by the employee to the employer within the limits established by law). The employer is not liable for the employee’s actions committed outside the course of employment or not related to the employee's work functions.

4

FIRING THE EMPLOYEE

Procedures For Terminating the Agreement

Parties may terminate employment only in limited circumstances listed by the Labour Code. The Labour Code of Ukraine provides an exhaustive list of grounds for termination of labour relations, among which are the following –

  • agreement of the parties;
  • expiry of the fixed-term agreement;
  • employee's will (with two (2) weeks' notice, unless there are certain significant reasons that impede employee from continuing his/her work);
  • grounds arising from the employer's initiative:
    • redundancy;
    • disciplinary violations (one-time gross violation – applicable for certain categories only (e.g. CEO, chief accountant), systematic non-performance of duties (if there are two (2) or more warnings applied to employee during a year), truancy, alcoholic intoxication etc.);
    • reinstatement of the wrongfully dismissed employees;
    • non-appearance at work for more than four (4) months due to temporary disability; and
    • recall of officials (applicable to certain categories of employees only) etc.

    Due to military actions in Ukraine, a new employer-initiated dismissal ground was introduced – dismissal due to the employer's inability to provide the employee with work in the cases of destruction of the employer's premises or facilities due to military actions.

Other grounds:

  • refusal of the employee to be transferred to work in another region together with the enterprise as well as refusal to continue work due to change of the essential work conditions;
  • coming into force of a judgment, pursuant to which the employee is sentenced to imprisonment or any other punishment excluding possibility to continue work;
  • absence at work for more than 4 months without information on reasons for such absence;
  • reasons as provided by the labour contract; and
  • reasons provided by other laws etc.

The CBA and/or labour agreements may contain higher guarantees for employees regarding these matters.


Instant Dismissal

The right to instant dismissal may be used only in case of recall of the company's officials (CEO or board members) with the obligatory payment of severance payment in the amount of at least six (6) months average salary.


Employee's Resignation

In case of termination on notice at the employee's initiative, the notice period is two (2) weeks (may be reduced if there is any good reason for that). During martial law, the employee may resign at any time without the mentioned notice period if he/she works in the area of military actions and there is a danger to his/her health and life.


Termination On Notice

Labour Code of Ukraine does not provide for such ground for termination of labour relations at the employer's initiative as termination on notice, even if both parties agreed to that in the labour agreement (except for cases when the contract as a special form of the labour agreement is concluded).


Termination By Reason Of The Employee's Age

The Labour Code of Ukraine does not provide for such ground for termination of labour relations. In case of retirement, the termination is usually formalised pursuant to other grounds (mutual agreement or termination at the employee's initiative).


Automatic Termination In Cases Of Force Majeure

The Labour Code of Ukraine does not provide for such ground for termination of labour relations, even by the will of both parties (except for cases when the contract as a special form of the labour agreement is concluded).


Collective Dismissals

Should the need arise to lay off part or all of its staff (par. 1 part 1 Art. 40 of the Labour Code), the employer is obliged:

  • to consult with the trade union (if any) at least three (3) months in advance;
  • to warn the employees at least two (2) months in advance;
  • to notify the employment service of the lay-off if it is massive. Lay-off is considered massive if during one month the following number of employees is laid off :
    • 10 or more employees– for enterprises with 20 to 100 employees;
    • 10% or more employees – for enterprises with 101 to 300 employees;
    • 10 or more employees – for enterprises with 301 to 1,000 employees;
    • 3 % or more employees – for enterprises with more than 1,001 employees.
  • to make severance pay in amounts not less than the average monthly salary.

There are limitations for this type of dismissal (e.g. employees’ seniority and other advantages must be taken into consideration if several employees occupying the same position are made redundant; transfer to other suitable position (if any) must be proposed during the whole notification period, ban on lay-off of pregnant women, women with a child of the up to three (3) years of age (in certain cases 6 years), single fathers etc.).

The CBA and/or labour agreements may contain higher guarantees for employees regarding these matters.


Termination By Parties’ Agreement

The parties have the right to terminate their relations at any time under their mutual agreement. No severance payment is required in this case, unless negotiated by the parties.


Directors Or Other Senior Officers

Apart from other general grounds for termination of the labour relations, the director of the company or its branch, or his or her deputy, chief accountant, his or her deputy and some state officials may be dismissed due to gross violation of their employment obligations.

Another ground to dismiss the director is his/her deliberate action resulting in untimely salary payment or payment of a salary below the statutory minimum.

A trade union can initiate the dismissal of a company's CEO for violating labour legislation, not participating in CBA negotiations, or not fulfilling his or her obligations under that agreement and violating other laws that govern CBAs.

Upon decision of the company’s shareholders, the company’s senior officers belonging to the company’s officials in terms of the labour, corporate and other legislation may be dismissed immediately without any reason with payment of severance pay of at least six (6) months average salary (recall of official).

There are also some special rules stipulated under the Law on LLCs. The officials of an LLC include members of the executive board, supervisory board and other officials envisaged by the charter of the company.

Additionally, the LLC's officials (members of the executive body, supervisory board or other persons enlisted in the charter) can be dismissed without any compensation in case of –

  • receiving a reward from the LLC not stipulated in the agreement (contract);
  • not providing the company with a list of their affiliates;
  • not reporting the conflict of interest to the executive body, the supervisory board (if any) or the participants;
  • disclosing the confidential information or trade secrets of the company; and
  • breaching of the non-compete clause envisaged by the Law on LLCs (applicable only for the head and members of the executive body).

If directors or senior officers belong to the category of employees with whom it is allowed to conclude the contract as a special form of a labour agreement under the law, they may also be dismissed under the additional grounds provided for by such a contract.


Special Rules For Categories Of Employee

There are special regulations for civil servants: judges, policemen, firemen, custom officers, state servants etc.

There are also additional guarantees provided by the legislation for certain socially vulnerable categories of employees: persons with disability, minors, pregnant women, employees with children etc.


Specific Rules For Companies in Financial Difficulties

The notice period for termination of employees due to liquidation, reorganisation, bankruptcy, or restructuring of the entity and staff redundancy must be at least two (2) months (with at least one (1) month average salary as a severance pay). The payments to employees have priority over other company's debts. Please also see the Collective Dismissals section.

The CBA and/or labour agreements may contain higher guarantees for employees regarding these matters.


Restricting Future Activities

Any clause restricting the future possibility of employment of an employee contradicts the Constitution of Ukraine and, therefore, is unenforceable.


Whistleblower Laws

Though the Labour Code does not directly contain any provisions on whistle-blowers' protection, respective rules and guarantees were introduced by the Anti-Corruption Law in 2016 (with certain amendments).

The whistle-blowers and their relatives cannot be denied employment, they cannot be dismissed or forced to dismissal, and no disciplinary or other negative actions can be taken against them due to or in connection with their actions on reporting the alleged violation.

Persons dismissed due to reporting an alleged violation are subject to instant reinstatement at their previous job (position) and must be paid an average salary for the period of forced absence under the respective general rules envisaged by the Labour Code for payments in case of wrongful dismissal. This rule applies also if the persons were transferred to another permanent lower paid job in connection with reporting the alleged violation.

The whistle-blowers, their relatives, can claim compensation of six (6) average salaries, if such persons refuse to be reinstated (two (2) year's average salary if their reinstatement at work is not possible), provided that their dismissal occurred due to reporting an alleged violation.


Special Rules For Garden Leave

The employment and labour legislation of Ukraine does not provide for the possibility to use the Garden Leave. The most proximate form of structuring relations in respective cases is temporary removal (suspension) of the employee from the fulfilment of his/her job duties, however, it is allowed only in limited number of cases envisaged by laws (in case of criminal suspension by the respective ruling of the criminal court, corporate suspension of the member of the executive body, suspension of the employee who refused to pass medical examination etc.).

During martial law, the labour agreement may be suspended in case the employer and employee cannot fulfil their duties due to military actions and/or martial law. In the case of such a suspension, the employees are not paid a salary, however, the employer must make respective calculations for future compensations (at the expense of the aggressor state or relevant state funds).


Severance Payments

The amounts of statutory severance payments are envisaged in the Labour Code and certain special laws (aimed at the protection of special categories of employees – e.g. military veterans). The minimum amount of statutory severance payment falls within the range from at least one (1) to six (6) average monthly salaries of the employee (depending on the ground for dismissal) calculated based on the salary and other payments received by the employee during two (2) months prior to the dismissal date.

As a rule, severance payments must be paid in case of dismissal at the employer's initiative (the list of such grounds is in the respective article of the Labour Code, but not all dismissals at the employer's initiative entail payment of the severance payment) or in case of dismissal due to refusal of the employee to continue his/her work after the change of his/her essential conditions of work.

The CBA and/or labour agreements may contain higher guarantees for employees regarding these matters.


Special Tax Provisions And Severance Payments

There are no special tax provisions regarding severance payments; they are taxed as salary.


Allowances Payable To Employees After Termination

No allowance shall be paid to the employee after termination of the labour relations. All settlements must be conducted no later than on the last day of work of the employee.


Time Limits For Claims Following Termination

The statutory time limit for claims following termination constitutes one (1) month after the date of receipt of the copy of the dismissal order and/or labour book from the employer by the claimant.

5

GENERAL

Specific Matters Which Are Important Or Unique To This Jurisdiction

Due to martial law in effect, the special rules regarding labour relations during martial law in Ukraine under the Law of Ukraine "On the Organization of Labour Relations under Martial Law" are currently in effect (the Law introduced certain simplifications and new temporary mechanisms).

In 2023 new Law of Ukraine "On Collective Bargaining Agreements" was adopted. However, due to the martial law in force in Ukraine, most of the provisions of the Law will come into effect only six months after the termination or cancellation of martial law. Also, legislative changes on increasing the liability for relevant violations will also become effective only six months after the termination or cancellation of martial law.

Recently, a labour reform was announced by the Ukrainian government to be accomplished in 2024. It includes adopting new Labour Code. Specific laws in various spheres of employment and labour are also planned to be adjusted.



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Contact a Contributing Author:
Kseniia Lotosh
Arzinger Law Firm
Ukraine


Disclaimer:

© 2024, Arzinger Law Firm. All rights reserved by Arzinger Law Firm as author and the owner of the copyright in this chapter. Arzinger Law Firm has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2024