Employment 2021 Comparisons

Last Updated September 07, 2021

Contributed By Arzinger

Law and Practice

Authors



Arzinger is a leading independent law firm in Ukraine providing high-quality legal services to top international and local companies. The firm is headquartered in Kyiv and maintains two offices in western and southern Ukraine. Arzinger employs highly qualified professionals with vast experience in a wide range of areas, deep knowledge and understanding of the local market, and an international education and background. The firm has a team of over 70 seasoned legal professionals led by 11 partners. Arzinger is a member of Multilaw network (ranked as Band 1 Elite Network in 2021 by Chambers and Partners), which enables its lawyers to reach for local assistance in more than 50 jurisdictions. As a result, Arzinger can offer extensive legal advice to effectively support a variety of complex and challenging transactions, including cross-border matters. The firm renders tailor-made legal services of the highest quality to meet the clients' expectations.

During the last 12 months, the following significant changes in the labour legislation of Ukraine were enacted.

  • On 4 February 2021, Law No 1213-IX (which came into effect on 27 February 2021) improved the regulation of remote and home-based work compared to earlier legislative changes.
  • On 5 February 2021, Law No 1217-IX (which came into effect on 10 June 2021) started the transition to a paperless (electronic) employment record system to replace the outdated Soviet-era labour books system.
  • On 31 March 2021, the government made another step towards the shift from paper-form sick leave certificates to a digitalised sick leave record system via its amendment of Resolution No 328. The electronic sick leave register came into effect on 1 May 2021.
  • On 9 May 2021, Law No 1401-IX came into effect, equalising the rights of mothers and fathers in relation to childcare (an important step in the development of equality legislation). Among other changes in the provision of childcare leave for fathers and family members, the Law introduced new paid leave for fathers (or other adult family members) for up to 14 calendar days following the birth of a child. This one-time leave is provided within 3 months of the birth of a child.

Currently, there are several other legislative initiatives that have been recently adopted or are pending at the Ukrainian parliament (Verkhovna Rada of Ukraine) regarding the further de-bureaucratisation and digitalisation of labour legislation, such as gig contracts for Diya-City residents (Law No 1667-IX was adopted on 15 July 2021 and it came into effect on 14 August 20021), zero-hours contracts, etc.

It is worth mentioning that the labour legislation of Ukraine is gradually changing in response to modern challenges and requests of the employers and employees. Also, a necessity to respond to COVID-19-related challenges became one of the drivers for a more rapid upgrade of certain labour law matters (eg, remote and home-based work, digitalisation, etc).

Job Retention

During the COVID-19 pandemic, additional simplified rules for partial unemployment benefits for employees working reduced hours (as a result of the pandemic) were introduced in Ukraine. The benefits are paid to employees at the rate of two-thirds of the salary set for an employee of the relevant category (capped by the amount of one legislatively established minimum wage).

Individual entrepreneurs are eligible to such benefits at the rate of two-thirds of the base for calculating a single contribution for compulsory state social insurance (or two-thirds of one legislatively established minimum wage for those who are exempt from paying a single contribution).

Remote and Home-Based Work

Initially, remote work was introduced in March 2020. It allowed the employers to instruct the employees to work remotely from home for the period of quarantine (the quarantine is formally in place until 1 October 2021, although this is expected to be extended).

The Law of Ukraine No 540-IX dated 30 March 2020 introduced remote work and home-based work regimes for an indefinite period, ie, they may be applied by parties to a labour relationship regardless of the pandemic. Currently, these regulations are effective in the wording of Law No 1213-IX dated 4 February 2021 detailing the use of such work arrangements based on model written agreements on remote or home-based work. However, during the pandemic, the transfer of employees to remote/home-based work without concluding a written agreement is allowed by the employer's order.

Simplified Unemployment Regulations

During the COVID-19 pandemic, Ukrainian legislation was amended to simplify the rules for:

  • registering persons as unemployed – from the first day of the application filing; and
  • obtaining unemployment benefits – from the first day of registration as unemployed.

During the established COVID-19 quarantine, a person may apply for unemployment status and benefits via electronic means.

Financial Support

During the COVID-19 pandemic, the Ukrainian parliament adopted several laws on the provision of a one-time payment of UAH8,000 to employees and individual entrepreneurs/self-employed insured persons who had lost their earnings due to COVID-19 quarantine restrictions and additional lockdown restrictions under certain conditions (in December 2020 and in March 2021). 

Eligible for the payment were those who had no other employment and whose employer had paid unified social contributions for the previous periods and operated in the areas of economic activity included in the list approved by the government (eg, restaurants, small shops, etc).

Self-Isolation Sick Leave

During the COVID-19 pandemic, Ukrainian legislation was amended to provide for self-isolation sick leave with the payment of 50% of the average daily earnings regardless of the employees' seniority; this rose to 100% for medical workers who are required to isolate upon a doctor's instruction and under medical observation.

Unpaid Leave

Pursuant to Law No 530-IX (effective as of 17 March 2020), the employee may take unpaid leave for the whole period of the quarantine, and such leave will not be included in the total number of days of unpaid leave allowed for the employee per year (ie, 15 calendar days per year). 

Differences in the Status of White-Collar and Blue-Collar Workers in Ukraine

Unlike other jurisdictions, the legislation of Ukraine does not provide for different regulations or sets of guarantees for blue-collar and white-collar workers. All employees in Ukraine enjoy the same set of rights provided for by labour laws.

The only minor difference lies in different approaches to categorising the names of job titles and professions by the State Profession's Classifier and different procedures for approving the job descriptions for such professions – job descriptions for blue-collar workers (work instructions) must be additionally approved by the employer’s primary trade union organisation or representative body of the labour collective. 

Status of Corporate Officials

The labour and corporate legislation of Ukraine provides for specific rules for appointing, suspending and terminating the powers of officials of companies in Ukraine, for example:

  • the possibility of concluding labour contracts with some officials (eg, with members of the executive body of a joint stock company, CEOs of companies), where additional grounds for dismissal may be envisaged;
  • additional grounds for termination of employment under corporate legislation of Ukraine (eg, conflict of interests, breach of confidentiality, non-compete violations); and
  • "at will" immediate dismissal of such employees without providing the grounds for dismissal (paragraph 5, part 1, Article 41 of the Labour Code of Ukraine – recall of an official), with a severance pay of at least six average monthly salaries as a possible option.

Though corporate and labour appointment/suspension/termination may not coincide in time (because of the double nature of relations with such persons), such employees enjoy all labour rights and guarantees provided for by the labour legislation of Ukraine.

Specific Regulation for Certain Employee Categories

There are special regulations for civil servants: judges, police officers, firefighters, customs officers, state servants, etc. 

Employment Agreements in Ukraine

The absence of any written employment agreement is common practice in Ukraine, as employment relations are usually formalised via employment orders. However, the written form of such agreement is mandatory in certain cases (eg, with foreign nationals, minors, in case of employment contracts, agreements for remote/home-based work).

Types of Employment Agreements

There are various types of employment agreements in Ukraine depending on certain criteria, for example:

  • term (agreements for an indefinite term, fixed-term agreements and agreements concluded for the term of a certain project);
  • place of work (agreements for primary or secondary employment);
  • working time (full-time, part-time agreements);
  • status of the employee:
    1. agreement with ordinary employees; 
    2. contract as a special form of employment agreement with specific categories of employees – eg, with CEOs, members of the executive body of a company (contracts are mainly fixed-term agreements and may envisage additional grounds for termination);
  • type/mode of work: 
    1. short-term work agreements – regulated mostly by outdated Soviet-era legislative acts;
    2. seasonal work agreements – regulated mostly by outdated Soviet-era legislative acts; and
    3. agreements for remote/home-based work – introduced in 2020 during the COVID-19 crisis.

Currently, there are a few legislative initiatives that have been recently adopted or are pending on the introduction of gig contracts (for Diya-City technological park's residents – Law No 1667-IX was adopted on 15 July 2021 and came into effect on 14 August 20021), zero-hours agreements, and agreements with domestic workers.

Terms of Employment Agreements

Currently, the legislation does not provide an explicit list of mandatory terms for an employment agreement. However, the following information is required to be included in practice:

  • the parties' names and contact information; 
  • job title;
  • job description;
  • date employment commenced;
  • term;
  • remuneration;
  • work schedule;
  • place of work; and
  • type of employment (primary/secondary).

Working Hours

A regular working week in Ukraine is 40 hours (eight hours/day). Specific working hours arrangements are as follows.

  • Reduced working hours for certain categories of employees – not more than 36 or 24 hours a week as envisaged by the laws, eg, for teachers and minor workers. The salary of such employees is not affected by the reduced working hours mode.
  • Part-time work may be established by the parties' agreement and in certain cases upon an employee’s application, eg, for pregnant women. Such employees are paid based on their basic salary pro rated to the hours worked.
  • Irregular working hours may be established by the parties' agreement and are compensated by additional paid annual leave of up to seven calendar days. This type of work schedule provides for the possibility to engage an employee outside his/her regular working hours for completing certain tasks from time to time, without extra pay, usually established for CEOs and senior/middle-level management employees.
  • Flexible working hours introduced in the Labour Code of Ukraine in 2020 during COVID-19 crisis – this work regime allows the employee to determine his/her own work schedule within the total established norm of working hours per day/week/month, with the guaranteed right to disconnect at certain hours. In certain cases, part of an employee's working hours still may be determined by the employer, whereas the remaining time is scheduled by the employee. This working mode is not applied at continuously operating enterprises, institutions, organisations, in case of multi-shift work organisation, and in certain other cases.

Overtime Work

Overtime work is generally not allowed and may take place only under exceptional circumstances envisaged by the laws (eg, in case of an emergency/accident, for liquidation of its consequences, necessity to maintain continuous production, etc). Overtime work cannot exceed four hours on two consecutive days or 120 hours a year and is compensated at double rates.

Work on Days Off

Work on weekends, days off, public and religious holidays is allowed only in exceptional cases and is compensated at double rates or by an additional day off in lieu.

Minimum Wage

The gross monthly salary for a full-time employee cannot be lower than the legislatively established minimum wage (reviewed on an annual basis and approved by the Law on the State Budget of Ukraine for the respective year). Currently, the gross monthly minimum wage amounts to approximately EUR180.00 (UAH6,000.00).

Indexation

The salary of an employee is subject to mandatory indexation (an insignificant monthly increase if the inflation rate reaches a certain point), pursuant to a separate accounting procedure.

Employees are entitled to other types of compensations pursuant to legislation, employment agreements/labour contracts and/or collective bargaining agreements. Bonuses and certain other incentives are usually paid depending on provisions of collective bargaining and individual employment agreements as well as internal incentive schemes.

Foreign Employees' Salaries

Employment of foreign employees in Ukraine is possible subject to work permits previously obtained for them by the employers (with certain exceptions), provided that such employees are paid a gross monthly salary in the amount of at least ten (in certain cases five – eg, for employees of NGOs, charitable funds, etc) minimum wages. This requirement does not apply to the special category of foreign employees, eg, IT-specialists, art workers, ultimate beneficiary owners/participants of a Ukrainian entity employing them, graduates of top-100 best world universities (according to ARWU, QS World University Rankings or Times Higher Education World University Rankings), and some others.

Government and State Intervention

Though the government/state does not intervene, except for setting minimum wages and general incentive schemes for public servants and some other spheres, additional temporary measures can be introduced from time to time. By way of example, the government of Ukraine took temporary measures in response to the COVID-19 crisis to limit the salaries of officials of state companies (members of executive and supervisory boards) to ten minimum wages starting from April 2020 till the month in which the COVID-19 quarantine ends. However, that measure was cancelled as of October 2020.

Vacations

The duration of the statutory paid basic annual vacation is 24 calendar days (for certain categories of employees, such as teachers, persons with disabilities, minors, etc, longer vacations are established).

Additional annual vacations are provided based on the laws of Ukraine, employment agreements and/or collective bargaining agreements and include, among others, the following vacations:

  • for work in dangerous and harmful conditions – up to 35 calendar days;
  • for special work eg, non-standard working hours – up to seven calendar days;
  • employees with two or more children under the age of 15 or an adult child with a disability classed as type A, group 1 – 10 calendar days (calculated based on a calendar year, not a work year); and
  • participants of military actions  and war-disabled persons – 14 calendar days.

Other types of additional vacations include:

  • study vacation – for taking exams;
  • research leave for scientists – up to four months;
  • paid maternity leave – 70 calendar days prior to the birth, plus 56 calendar days after the birth (70 in case of complications); the payment for pregnancy and delivery leave is provided based on the sick leave medical certificate;
  • 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;
  • unpaid child-care leave up to three years of age (six years – if the child requires home care);
  • adoption leave – 56 calendar days (70 calendar days in case of adoption of two or more children); and
  • unpaid vacations – up to 15 calendar days per year if negotiated or for the period established by law (if the employer is obliged to provide such a leave).

The total number of days of annual vacations (both basic and additional) cannot exceed 59 calendar days. In addition, an employee may use one-time vacations, provided that there is a specific ground.

Sick Leave Compensation

The minimum sick leave payment for employees and other insured persons varies depending on the periods of social insurance paid for an employee by the employer or by an employee him/herself (eg, self-employed or individual entrepreneur):

  • 50% of the average daily earnings – up to three years;
  • 60% of the average daily earnings – from three to five years;
  • 70% of the average daily earnings – from five to eight years;
  • 100% of the average daily earnings – more than eight years.

During the COVID-19 pandemic, Ukrainian legislation was amended to allow sick leave to be granted with the payment of 50% of the average daily earnings, regardless of the seniority (100% for medical workers) to employees who are required to isolate upon a doctor's instruction and under medical observation.

Garden Leave

Unlike the legislation of some other countries, the laws of Ukraine do not provide for garden leave. However, the most proximate form of structuring relations in respective cases is temporary removal (suspension) of an employee from his/her job duties – allowed only in cases envisaged by the law (eg, in case of criminal suspension by the respective ruling of the criminal court, corporate suspension of a member of the executive body, suspension of an employee who refused to pass medical examination if obligatory, etc).

Confidentiality Obligations

The labour legislation of Ukraine does not explicitly provide for an employee's duty to respect the confidentiality of the employer’s commercial and business information, neither is there any related dismissal ground envisaged in the Labour Code of Ukraine. However, there are specific regulations introduced in 2018 by corporate laws for LLC's corporate officials, prohibiting them to disclose information that constitutes trade secret or is confidential. In case of breach, an official may be dismissed immediately without any compensation. This prohibition also applies for the period of one year after the termination of an employment agreement/contract, whereas another (longer) period may be specified in the agreement/contract.

Usually, employers include relevant provisions into employment agreements/labour contracts, job descriptions, internal regulations or conclude a separate non-disclosure agreement with employees to protect secret and confidential information.

Non-disparagement Clauses

The laws of Ukraine neither allow nor forbid including non-disparagement clauses into employment agreements, though such clauses are often included into termination agreements. However, enforceability is questionable due to difficulties in gathering respective evidence and the lack of relevant court practice.

Employee's Disciplinary Liability

Employees in Ukraine are subject to disciplinary liability in case of misconduct only in the following alternative forms:

  • written warning; and
  • dismissal – only in certain cases.

Other disciplinary penalties under legislation, disciplinary statutes and regulations may be applied to employees of specific areas of activity or economy eg, in the military services, civil service, etc.

The rules for applying disciplinary penalty are as follows:

  • for every breach, only one disciplinary penalty can be applied;
  • the employer must request a written explanation from the employee before deciding on whether to apply the penalty;
  • the penalty may be applied no later than one month after the employee’s action is revealed, but not later than six months after the violation is committed;
  • the employer must consider the extent of the violation, the employee's guilt, the damage caused by the violation committed, the relevant circumstances and the employee’s previous work record while deciding on the penalty to be applied;
  • the employer must obtain the consent of the elective body of the primary trade union organisation in case of imposing the disciplinary penalty (both written warning and dismissal) on a member of the primary trade union organisation; and
  • the employer must obtain the consent of the elective body of the primary trade union organisation in case of imposing the disciplinary dismissal as a penalty on a member of the primary trade union organisation.

The employee may appeal the applied penalty in court.

Employee's Material Liability

The employer has the right to apply material liability measures to an employee who caused damage to the employer in the amount of the direct damage caused, however, not more than the employee’s average monthly salary.

In certain cases (as per the exclusive list established by the Labour Code of Ukraine), the full material liability may be applied, for example:

  • if damage is caused by an employee in a state of intoxication;
  • if damage is caused by an employee outside his/her job function;
  • if an official is guilty of illegal transfer/dismissal of an employee;
  • if a CEO is guilty of untimely payment of salaries to employees for more than one month and it led to the payment of compensations to employees, provided that state/local budget authorities do not have any debt to such an employer;
  • in cases when a full liability agreement was concluded with an employee (allowed only in limited cases depending on the employee’s job title or in case of distant and home-based work); and
  • if an employee was entrusted with things of value and his/her position belongs to those implying full material liability, etc.

The material liability may be applied to an employee pursuant to an internal order or court decision on deductions from the employee’s salary. Such deductions may be done within the limits of the amounts deductible from one monthly salary of an employee (the maximum is 50% of the monthly salary).

The employee may appeal the applied material liability measures in court.

Non-compete Clauses

Non-compete clauses in Ukraine are not generally allowed as they may be recognised as contradictory to Articles 42-43 of the Constitution of Ukraine envisaging freedom of entrepreneurship and freedom to freely choose the employment. 

Non-compete during Employment

The only exception pursuant to the Labour Code of Ukraine is the prohibition of secondary employment during an employee’s work for the employer that may be established by an employment agreement/labour contract or collective bargaining agreement.

Post-employment Non-compete

Though many employers tend to include post-employment non-compete clauses into agreements with employees, such provisions may be recognised as void and unenforceable. Though some recent decisions of trial courts depart from that point of view, upholding employers' arguments, these decisions may not be relied on and will probably be revised by the courts of higher instance.

Non-solicitation Clauses

Non-solicitation clauses in Ukraine are not generally allowed and may be recognised as void and unenforceable (please see 3.1 Non-competition Clauses).

The collection, processing, and protection of personal data within the frames of employment relations in Ukraine must be based on the following principles.

  • Purpose limitation – personal data are to be collected for specified, explicit and legitimate purposes. Any further processing of these data in a manner that is incompatible with the mentioned purposes is prohibited.
  • Lawfulness – all data processing operations shall be done pursuant to the respective legal basis.
  • Data minimisation – the collection of data must be adequate, relevant, and limited to what is necessary in relation to the respective purposes of the data processing.

Basis for Data Collecting and Processing

The legal basis for data collecting and processing is as follows.

  • Consent – it must be freely given and may be withdrawn at any time. It is recommended to opt for another legal basis for data processing, if any, other than consent.
  • Statutory provisions – eg, processing of some personal data by the employer to warrant safe work conditions.
  • Performance of an agreement/contract – such an agreement/contract shall contain provisions on the collection and processing of personal data of definite categories, eg, under an employment agreement/contract.
  • Vital interest – it is necessary to prove that such processing is needed to protect an interest which is essential for the life of the data subject or another natural person.
  • Performance of a legal obligation – the employer is obliged to report certain data to the state authorities (tax or employment centre, etc).
  • Legitimate interest – such interest shall prevail over the protection of rights and freedoms of a data subject. 

Transmission of Data Abroad or to Third Parties

If personal data are to be transmitted abroad or to any third parties, the employer is obliged to notify the respective employees thereof.

Sensitive Data

In case of processing sensitive personal data, the employer is obliged to notify the Ukrainian data protection authority thereof, except when such processing is necessary pursuant to the rights and obligations of the employer as controller of personal data under the law.

Other Data Protection Rules

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

The illegal collection and/or processing of personal data leads to administrative liability under Ukrainian law.

Employment of foreigners in Ukraine is allowed only based on a work permit obtained by the employer for a specific person and his/her job title before the foreign employee commences his/her work. Further, foreign directors (members of the management board) are also considered to be in employment relations and require work permits.

Nevertheless, there are exemptions for certain categories of foreign employees. Thus, foreigners who have a permanent residence permit for Ukraine or foreign citizens of Ukrainian origin with a special "foreign Ukrainian" status do not need work permits to work in Ukraine.

While applying for a work permit, the employer submits, inter alia, a draft employment agreement to be concluded with a foreign employee and a statement guaranteeing that the work to be performed by the foreign employee is not related and does not require access to the information marked as a state secret. 

Foreign employees cannot be employed in positions that are related to the Ukrainian citizenship status and/or require access to state secrets.

Work Permits

The use of foreign workforce is possible only subject to the obtention of a work permit.

The procedure for obtaining a work permit for a foreign employee envisages the payment of a gross monthly salary of not less than ten minimal salaries (five minimal salaries in some cases), except for special categories of foreign employees – IT specialists, graduates of a university included in the list of world's top 100 universities, participants/founders/beneficiaries of a Ukrainian legal entity, highly paid professionals, etc.

A work permit is normally issued for one year and is subject to renewal for the same period of time. It may also be issued for a longer period for special categories of foreign employees (IT specialists, art workers, ultimate beneficiary owners/participants of the Ukrainian entity-employer of such employee, graduates of one of the world's top 100 universities, highly paid foreign professionals, etc) of up to three years.

Work permits are obtained at local employment centres within seven business days after the first-time application or within three working days in case of prolongation.

After a work permit is issued, the employer has the right to conclude an employment agreement/contract with the foreign national within 90 calendar days and shall notify the employment centre within ten calendar days thereof. No further registration requirements for the employers with regards to foreign employees are applicable in Ukraine.

Residence Permit

Foreign employees continuously staying in Ukraine (for more than 90 calendar days per 180-day period – for residents of visa-free states) are obliged to obtain a temporary residence permit based on the work permit obtained by the employer and a long-term Visa D-04 (employment visa, issued for 90 calendar days for the purposes of obtaining a further temporary residence permit).

An application for a temporary residence permit shall be filed by the employee personally not later than 15 working days before the expiration date of his/her legal residence in Ukraine (eg, Visa D-04 validity). The processing of the application takes up to 15 working days.

Residence Registration

A foreign national is obliged to register his/her place of residence in Ukraine within 30 calendar days of arrival in Ukraine and his or her receipt of a temporary residence permit (eg, an apartment lease agreement).

The Ukrainian legislation stipulates that all Ukrainian citizens united by mutual interests by the nature of their professional (labour) activity (study) have the right to ensemble and to establish trade unions (primary, local, district, regional, republican, or all-Ukrainian trade unions). Foreign citizens and stateless persons are entitled to join trade unions if this is permitted by the charter of the relevant trade union.

Powers of Trade Unions

Trade unions represent and protect labour, social and economic rights and interests of their members. The elective (management) body of a primary trade union has the right:

  • to conclude and control the implementation of collective bargaining agreements with the employer;
  • to ensure that the employer observes and ensures compliance with the working safety regulations and other legislation concerning employees’ rights;
  • to grant/refuse to grant its consent to the employer for dismissal of employees that are members of the trade union in certain cases defined by law; 
  • to approve certain internal documents of the employer (eg, vacation schedules, shifts schedules, remuneration policies, etc);
  • to participate in the social development of the employer, improvement of working conditions of employees, etc;
  • to require dismissal of the CEO if he or she violates the labour legislation of Ukraine, legislation on collective bargaining agreements and trade unions;
  • to obtain 0.3% of the remuneration fund for recreational, sport, and cultural activity of its members pursuant to a collective bargaining agreement;
  • to require that equipped premises are provided for trade union meetings and work, as well as to enjoy the right to place informational messages and notifications in the employer's premises accessible to the employees;
  • to access the employer's premises where trade union members are working;
  • to send informational requests to the employer and obtain responses about how employees' rights are ensured, including the rights of trade union members;
  • to enjoy additional paid vacation for trade union trainings of up to six calendar days (for members of the elective body of the trade union); and
  • to participate in the meetings of the management and supervisory bodies of the employers that are joint stock companies.

If a collective bargaining agreement is concluded, it may contain additional guarantees for the employees that are members of trade unions, as well as additional obligations on the employer in respect of trade unions and their members as compared to the statutory rules.

Unlike in other jurisdictions, there are no work councils in Ukraine (at least in the meaning and with authorities familiar to other countries). Still the interests of the labour collective are represented by the trade union or, if there is none, by the representative of the labour collective elected at the general meeting (conference) of the labour collective.

The meeting of the labour collective is deemed duly constituted if more than 50% of the employees are present and the decisions are made by the majority of votes. The conference of the labour collective is deemed duly constituted if at least two-thirds of the of the employees' delegates are present and the decisions are made by the majority of votes. The meeting of the labour collective/conference of the labour collective may establish a permanent body to represent the labour collective's interests between the meetings/conferences of the labour collective – labour collective council.

In case there is no trade union, the representative body of the labour collective:

  • represents and protects the interests of employees in cases prescribed by law;
  • approves shift schedules, vacation schedules, remuneration policies; and
  • represents the labour collective in bargaining procedure.

Additionally, the labour collective body adopts the internal labour regulations based on the employer's draft and has some other powers.

However, its authority is restricted compared to the authority of trade unions. If only trade unions are specifically vested with certain powers by the law (eg, to give consent to employees' dismissals in certain cases), in the absence of established trade unions in the company, employers are entitled to decide on these issues themselves.

A collective bargaining agreement is an agreement concluded between the employer and the representative body of the labour collective or the trade union(s) (if any) to protect the social, economic, and labour interests of the labour collective.

A collective bargaining agreement is concluded under a separate bargaining procedure established by the law upon the initiative of one of its parties. In case of any disagreement between its parties they may resolve such a dispute at the labour arbitration body or the National Mediation and Conciliation Service under specific procedures.

A collective bargaining agreement may contain the provisions on:

  • rules for introducing changes in production and labour;
  • remuneration, bonuses, supplementary payments and work norms;
  • guarantees, compensations;
  • work schedules and regimes, duration of the working time and rest periods;
  • work conditions and occupational safety; and
  • guarantees for trade unions and its members, etc.

A collective bargaining agreement may also contain broader guarantees for employees as compared to the legislative rules (eg, higher severance pay or longer vacations).

General Information on Termination of Employment

There is no "at-will" employment in Ukraine, unlike in some other jurisdictions.

The only exception is dismissal of corporate officials (ie, members of management and supervisory boards) due to termination of their corporate powers (with a severance pay in the amount of at least six average monthly salaries).

An exhaustive list of grounds for dismissal is set out directly in the Labour Code of Ukraine. Each termination ground has its specific procedure and notice period (if applicable) and requires that certain conditions be in place. 

Grounds for Termination of Employment

The grounds for termination of employment are as follows:

  • agreement of the parties;
  • expiry of the fixed-term agreement;
  • employee's will in case of an unlimited-term agreement (with two weeks' notice with some exceptions);
  • employee's will in case of a fixed-term agreement (only in case of significant reasons that prevent an employee from continuing his/her work);
  • employer-initiated dismissals:
    1. redundancy;
    2. disciplinary dismissals (one-time gross violation – applicable for certain categories only (eg, CEO, chief accountant), systematic non-performance of duties, truancy, intoxication, etc);
    3. reinstatement of wrongfully dismissed employees;
    4. non-appearance at work for more than four months due to temporary disability;
    5. dismissal for serious cause (please see 7.3 Dismissal for (Serious) Cause (Summary Dismissal)), etc;
  • other grounds:
    1. refusal of an employee to be transferred to work in another region together with the enterprise or a refusal to continue work due to change in essential working conditions;
    2. entry into force of a judgment, pursuant to which an employee is sentenced to imprisonment or any other punishment excluding the possibility to continue working; and
    3. other reasons as set out in a labour contract, etc.

Additional grounds for termination of employment under special regulations are established for civil servants: judges, police officers, firefighters, customs officers, state servants (eg, due to negative performance results of a civil servant), etc.

Collective Redundancy

In case of redundancy (including collective redundancy) the employer is obliged to:

  • consult with the trade union (if any) at least three months in advance;
  • warn the employees at least two months in advance;
  • notify the employment service if it is based on the following criteria:
    1. redundancy of ten or more employees within one month – for enterprises with 20 to 100 employees;
    2. redundancy of 10% or more employees within one month – for enterprises with 101 to 300 employees;
    3. redundancy of 20% or more employees within three months – regardless of the number of employees; and
  • provide severance (at least one average monthly salary, though higher amounts may be established by an employment agreement or collective bargaining agreement).

There are also other requirements/limitations applicable to the redundancy procedure, such as:

  • employees’ seniority and other advantages must be taken into consideration if several employees occupying the same position are being made redundant; 
  • transfer to another suitable position (if any available) must be proposed during the whole notification period; and 
  • ban on redundancy of pregnant women, women with a child of up to three years of age (in certain cases six years), single fathers, adoptive parents and guardians, etc.

Notice Periods

A notice period is not a prerequisite for all types of termination of employment in Ukraine. However, the legislation provides for different rules and terms for cases when a notice period is applicable/required.

Termination at the employee's initiative

  • In case of termination of an open-ended employment, the notice period is two weeks (this may be reduced if there is a significant reason on the employee's part – eg, moving to another country,  a sick relative, commencement of studies at an educational establishment, etc).
  • In case of a fixed-term employment agreement, no notice period is established and termination is possible only if there is a significant reason for such termination (agreement to be terminated on the date requested by the employee), unless an employment agreement/contract envisages specific rules in this regard.

Termination at the employer's initiative

  • The notice period for termination of employment due to liquidation, reorganisation, bankruptcy or restructuring of an entity and staff redundancy must be at least two months (with at least one month's average salary as severance pay).
  • In case of disciplinary dismissal, there are certain terms of the disciplinary procedure to be followed; however, they are not "notice periods", but rather limitation periods.
  • The Labour Code of Ukraine does not allow dismissal by the employer with notice (as a separate ground for termination), even if both parties agreed to that in the employment agreement.

The legislation of Ukraine does not allow severance pay/compensation "in lieu" of notice period where such notice periods are applicable.

Severance

Severance is to be paid only in cases and in amounts not less than those envisaged in the Labour Code of Ukraine and/or other laws aimed at protecting special categories of employees (eg, military veterans, Chornobyl catastrophe victims). 

The statutory amount of severance varies from one to six average monthly salaries of an employee (depending on the grounds for dismissal). The exact amount is calculated based on the payments received by an employee in the two months prior to the dismissal date.

Collective bargaining agreements and/or employment agreements may envisage a higher amount of severance than the statutory rate.

Dismissals for (serious) cause in Ukraine are mostly recognised as disciplinary dismissals – behaviour-related employer-initiated dismissals. Pursuant to the Labour Code of Ukraine there are the following types of disciplinary dismissals:

  • one-time gross violation of employment obligations – applicable only to a director of a company or its branch, or his or her deputy, chief accountant, his or her deputy and some state officials;
  • systematic non-performance of duties (if one or more previous warnings have been issued to an employee in the past 12 months);
  • truancy (absence at work for more than three hours without any significant reason);
  • appearance at work in a state of intoxication; and
  • misappropriation of property (upon a respective court decision).

Disciplinary dismissals require following the strict procedure established by the Labour Code of Ukraine for this type of dismissals:

  • the employer must request a written explanation from the employee and take it into consideration when deciding on the measures to be taken against the employee;
  • disciplinary penalties (a written warning or dismissal) may be applied only within a month of the misconduct becoming known to the employer (excluding the employee's sick leave and vacation periods), but no later than six months after the commitment of misconduct; and
  • certain employees cannot be dismissed pursuant to these grounds eg, pregnant women, women with a child of up to three years of age (in certain cases six years), single fathers, adoptive parents, guardians, etc.

Also, there are certain other types of "for cause" dismissals, though they are not formally recognised as disciplinary ones:

  • dismissal for immoral conduct (for specific employees eg, for teachers, judges, etc);
  • loss of trust (for employees who were entrusted with material values);
  • deliberate actions resulting in untimely salary payment or payment of a salary below the statutory minimum (for CEOs); and
  • additional grounds for termination envisaged by the labour contract (for employees allowed to conclude a contract as a special form of a labour agreement under the law, eg, CEOs).

There are also some special types of dismissals (without any compensation) applicable to LLC's members of the executive board, supervisory board and other officials envisaged by the company charter (pursuant to provisions of the Law on LLCs):

  • receiving a reward for their job function from third parties not envisaged in the agreement (contract);
  • failure to provide the company with a list of their affiliates;
  • not reporting a 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 the non-compete clause envisaged by the Law on LLCs (applicable only to the head and members of the executive body).

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

The legislation does not specifically provide for any definite terms of such type of agreements. However, the following terms are included in practice:

  • date of dismissal;
  • compensation/severance pay, if negotiated;
  • rules for transfer and acceptance of responsibilities due to termination of employment (eg, return of equipment, keys, car, mobile phone, documents, etc); and
  • post-termination confidentiality clauses, etc.

Releases or waiver clauses are not enforceable under Ukrainian legislation, though still often included in termination agreements.

The legislation of Ukraine does not provide for any specific limitations on termination agreement terms. The only specific exception is that the termination (including, the terms of the termination agreement) of relations with a member of the elective body of the trade union is to be agreed with the elective body of the trade union and higher trade union organisation.

The Ukrainian labour legislation provides special protection against employer-initiated dismissals (except for redundancy in case of liquidation) for the following categories:

  • pregnant women;
  • women with a child under three years of age (six – if the child requires homecare);
  • single mother with a child under 14 years of age or a child with disabilities, single fathers and adoptive parents or guardians;
  • young workers within first two years after they were directed to work for the employer;
  • minors may be dismissed only upon approval of the respective local state authority responsible for the protection of interests of children and youth;
  • mobilised employees, employees drafted to military service (or alternative non-military service), including under a military service contract, during the term of such service; and
  • employees that were elected as members of the elective body of the trade union within a year after termination of their election term.

Additional guarantees for certain other categories of employees in case of dismissal include:

  • the pre-emptive right to stay at work in case of redundancy or to be employed in similar positions that open up within one year of redundancy (eg, pre-retirement employees, employees with family duties, persons retired from military or alternative (non-military) service, etc);
  • protection against certain types of dismissals (eg, disciplinary dismissals, redundancy, etc) without the trade union's consent (for trade union members); and
  • protection against certain types of dismissals (eg, disciplinary dismissals, redundancy, etc) without the additional consent of the trade union of the highest rank (for members of the trade union elective body).

Also, additional guarantees in case of dismissal (eg, higher severance) may be established in employment agreements and/or collective bargaining agreements.

In case of an allegedly wrongful dismissal, an employee may challenge it in court within one month of receipt of a copy of the dismissal order.

Claims of a former employee may include a reinstatement claim, a demand regarding the payment of average daily earnings for forced truancy until the date of reinstatement as well as moral damages and court expenses (including legal support).

The Labour Code prohibits discrimination based on race, colour, ethnic and social origin, religious, political and other beliefs, gender identity, sexual orientation, age, property status, place of residence, suspected or actual HIV/AIDS diagnosis, membership of a trade union, participation in a strike, addressing or intending to go to court or other bodies to protect his or her rights or to support other employees in protecting their rights, reporting of possible corruption or corruption-related offenses, or other discrimination criteria.

Employers are obliged to take measures to prevent and protect employees against sexual harassment and other gender-based violence, create equal work conditions and implement equal pay for women and men with the same qualifications and working conditions pursuant to other anti-discriminatory laws of Ukraine.

Employers are prohibited from specifying gender and age in a vacancy advertisement, except for certain types of work which must be performed by a person of a specific gender.

Discrimination Claims

There are neither specific rules/procedures for discrimination claims at the legislative level nor separate courts or state bodies for handling discrimination cases. Still, court disputes arising from employees’ claims of harassment or discrimination in the workplace are not common in Ukraine.

Burden of Proof

In discrimination claims, the plaintiff (ie, the employee) is obliged to provide factual evidence that discrimination has taken place. If such evidence is available, the burden of proof regarding non-discrimination lies on the defendant.

Damages/Reliefs

An employee may claim for ensuring his/her equal rights as an employee, elimination of the discrimination, as well as moral compensation (non-pecuniary damages).

Local Level Regulations

Employers may establish specific rules for handling discrimination claims at the local level in the internal labour regulations or anti-discriminatory policies. Among the employers that have implemented such a system are numerous Ukrainian offices of international groups of companies. They usually have a separate compliance system that includes schemes for reacting to such allegations/violations (eg, whistleblowing hotline, internal investigation procedures) as a pre-court stage for processing discrimination claims internally. Any measure for consideration of such cases internally cannot preclude an employee from making a claim in court (via the general court procedure).

Individual employment-related disputes in Ukraine are subject to consideration by the following courts.

  • General courts – general jurisdiction over claims arising out of employment relations, with some exceptions.
  • Administrative courts – disputes between employees that are civil servants/public officers and their employer, disputes between employers and state authorities (eg, State Labour Service of Ukraine).
  • Commercial courts – disputes between companies and their officials in certain cases (corporate recalls and appointments). Disputes related to dismissal of officials due to their recall pursuant to paragraph 5, part 1, Article 41 of the Labour Code of Ukraine are to be considered by these type of courts, based on the recent position of the Supreme Court (previously, such cases were considered mostly by general courts).

There are no specialised employment forums in Ukraine.

Decisions of trial courts may be appealed in regional courts of appeal and afterwards in the court of cassation (Supreme Court).

Representation in Court

Representation in court is carried out exclusively by attorneys-at-law (professional legal aid), except in cases established by law (eg, legal guardians, self-representation, including of the employers by their in-house lawyers).

Limitation Periods

As a general rule, an employee/former employee may present a claim before the general court within three months of the violation of his/her labour rights (after such violation became known to him/her).

In case of an allegedly wrongful dismissal, a former employee may file a claim within one month of receipt of a copy of the dismissal order. 

In case of disputes regarding remuneration matters, the limitations for the period when such a claim may be made in court do not apply.

The administrative/commercial courts have separate limitation periods for lodging court claims.

During the COVID-19 quarantine, the limitation periods are prolonged for the period of its duration.

Class Action Claims

Unlike in some other jurisdictions, there are no class action claims in employment disputes in Ukraine.

Collective Labour Disputes

Collective labour disputes are handled by separate specialised authorities – a labour arbitration body or the National Mediation and Conciliation Service under specific procedures. Collective disputes arise in case of disagreements between a labour collective representative body/trade union and an employer regarding, or in the process of concluding, a collective bargaining agreement, in relation to a violation of its provisions or other guarantees/rights of employees separately or the labour collective in general.

The labour legislation of Ukraine allows the parties to an employment agreement to opt for pre-judicial dispute resolution resorts by filing a claim with the employment disputes commission in cases allowed by the legislation (eg, cases regarding reinstatement at work are subject to consideration only by the court). A commission may be established at a company with more than 15 employees, and there is no dispute resolution fee. However, these commissions are still rare in Ukraine. The possibility to apply to an employment dispute commission does not preclude an employer/employee from filing a lawsuit before a court.

Procedure

An employee may present his/her claims before an employment dispute commission within three months of the alleged violation of his/her rights (there are no limitation periods for remuneration-related disputes).

An employment dispute commission considers a case if at least two-thirds of its members are present at the respective meeting, and decisions are made by the majority of the members present. The decision may be challenged before a court by both employees and employers.

Mediation

Mediation is not yet formally acceptable in labour law disputes, though several legislative initiatives to implement this form of dispute resolution were taken in the recent years. The latest attempt is Draft Law No 5555 on amending the Labour Code of Ukraine to improve the procedure for individual labour dispute resolution.

Pursuant to it, the parties to a labour agreement will have a possibility to refer to a mediation procedure as a pre-court dispute resolution resort. In case the parties fail to reach an agreement through mediation, or in case of failure of the other party to perform the obligations under it, they will have a right to file a lawsuit before the court.

Mediation will not preclude the parties to an employment agreement from filing a lawsuit before the court.

In case of a court dispute, both an employer and employee/former employee may claim compensation for the court expenses (including attorney's fees) confirmed by duly formalised documents (eg, court and post fee receipts, agreement with an attorney, invoices, etc).

Arzinger Law Firm

Senator Business Centre
32/2 Moskovska St, 10th Floor
01010 Kyiv
Ukraine

+38 044 390 55 33

+38 044 390 55 40

pr@arzinger.ua www.arzinger.ua
Author Business Card

Law and Practice in Ukraine

Authors



Arzinger is a leading independent law firm in Ukraine providing high-quality legal services to top international and local companies. The firm is headquartered in Kyiv and maintains two offices in western and southern Ukraine. Arzinger employs highly qualified professionals with vast experience in a wide range of areas, deep knowledge and understanding of the local market, and an international education and background. The firm has a team of over 70 seasoned legal professionals led by 11 partners. Arzinger is a member of Multilaw network (ranked as Band 1 Elite Network in 2021 by Chambers and Partners), which enables its lawyers to reach for local assistance in more than 50 jurisdictions. As a result, Arzinger can offer extensive legal advice to effectively support a variety of complex and challenging transactions, including cross-border matters. The firm renders tailor-made legal services of the highest quality to meet the clients' expectations.