Optimization of Labor Relations during Martial Law

One of the areas of legislative activity during martial law is the adaptation of labor relations to the realities of war.

To this end, the Draft Law No. 7251 of April 5, 2022  “On Amendments to Some Laws of Ukraine on Optimization of Labor Relations” was registered in the Parliament.

According to the initiators of the Draft Law, it has been designed to create conditions for the proper functioning of enterprises and institutions in wartime by deregulating certain conditions of labor relations, overcoming old legislative gaps and conflicts in law enforcement, eliminating personnel deficit and labor shortages, prompt involvement of workers. taking into account the provision of their labor guarantees.

What Changes Are Proposed to Be Introduced in the Field of Labor Relations Regulation?

1) During the martial law regime, all notifications and documents on labor relations, orders (instructions) may be carried out and maintained in electronic form using technical means of electronic communications or by sending electronic media on which this document is recorded.

Electronic document management is aimed at ensuring effective management of the document flow, facilitating prompt access to documents and enabling all company’s structures to work in a single information space.

2) New grounds for termination of the labor contract at the initiative of the employer are stipulated, namely:

? inability to provide the employee with working conditions due to the fact that the production, organizational, technical facilities, means of production or property of the owner or their authorized body, which are necessary for the said employee’s work, have been destroyed as a result of hostilities.

In this case, the termination of employment shall not require the consent of the labor union and shall be carried out only if it is not possible to transfer the employee with their consent to another job position. The employee shall be paid a severance pay in the amount of not less than the average monthly salary.

It is proposed to provide the dismissed employee with the preemptive right to return to the position if the employer will be hiring employees of similar qualifications within one year from the date of the dismissal;

? absence of the employee at work and information on the reasons for such absence for more than four months.

3) The concept of part-time work is defined, which will ensure an opportunity for employees who have been forced to leave their jobs to find another job.

It is proposed to exclude such grounds for termination of the labor contract at the initiative of the employer as the dismissal of the employee from part-time work due to hiring another employee who is not part-time, as well as due to restrictions on part-time work provided by law.

4) Additional grounds for termination of the labor contract are introduced, such as:

? death of the natural person who uses hired labor, or the entry into force of a court decision declaring such natural person missing or declaring him/her dead;

? death of the employee, recognition by the court of missing persons or declaration of death.

Unfortunately, as a result of the armed aggression of the Russian Federation against Ukraine, it is increasingly necessary to terminate employment in connection with the death of an individual employee or employer.

However, the current mechanism of termination of the labor contract in such cases is not defined by the current legislation.

According to the State Labor Service of Ukraine, in the event of an employee’s death, the grounds for termination of employment are a duly executed death certificate or a court decision declaring the person dead or establishing the fact of the person’s death in the temporarily occupied territory of Ukraine.

In turn, in the event of the death of an individual employer, the employee is forced to apply to the court to establish the fact of termination of employment in a separate proceeding. Moreover, the court’s decision in this category of cases is not considered to be immediately enforceable. All of the above leads to a restriction of the employee’s right to freedom of labor and the possibility of its free choice.

According to the provisions of the Draft Law, in order to terminate the employment relationship in the event of the death of the employer, the employee shall apply to the local employment center with a request to terminate the labor contract. For its part, the employment center shall transfer relevant information to the Pension Fund and the State Tax Service. This will help to avoid the need to resolve the issue of termination of employment in court.

5) For the period of martial law, it is proposed to lift the ban on business and other paid activities for civil servants and local government officials (except for elected positions) in case they acquire the status of an internally displaced person or during the suspension of employment, downtime or unpaid leave.

At the same time, such persons will be prohibited from concluding labor agreements (contracts) or carrying out business transactions with legal entities of private law or individual entrepreneurs in respect of whom such civil servants and local government officials have exercised authority to control, supervise, prepare or adopt relevant decisions regarding their activities.

Persons authorized to perform the functions of the state or local self-government will be obliged to terminate any paid activities (except teaching, research and creative ones) within one month after the termination of martial law and/or downtime, termination of a labor contract, termination of an unpaid leave.

6) It is proposed to amend the Law of Ukraine “On the Organization of Labor Relations during Martial Law”, which entered into force on March 24, 2022, in particular:

? to extend the provisions of the Law to civil servants, officials of local self-government bodies, employees of representative offices of foreign business entities in Ukraine;

? to establish that the working hours during martial law may be increased to 60 hours per week only for the workers employed in critical infrastructure (defense, life sustainability of the population);

? during the period of martial law, to provide employees with annual basic leave of not more than 24 calendar days for the current working year. Unused days of leave for previous working years shall not be granted during martial law;

? to oblige the Cabinet of Ministers to approve the Procedure for determining and compensating employees and employers for labor-related sums of money lost as a result of the armed aggression against Ukraine at the expense of the aggressor state;

? to specify the procedure for establishing working hours and rest time, restore the mechanism of remuneration for work on weekends, provided by the Labor Code of Ukraine, etc.

At the same time, the Draft Law contains certain provisions that raise doubts about the appropriateness of their adoption, namely:

? it is proposed to clarify the procedure for suspending the labor contract by issuing an order by the employer, the approximate form of which shall be approved by the State Labor Service, which must be agreed by the military and civil administration and enter into force only after such approval;

? the State Labor and its territorial bodies have the right to conduct unscheduled inspections of compliance with labor legislation in terms of compliance with the requirements of the Law and to identify unregistered labor relations and termination of labor contracts during martial law.

Currently, the State Labor Service has stopped inspections of all types, both scheduled and unscheduled ones. After the termination or abolition of martial law, the inspectors of the State Labor Service will process all appeals of citizens regarding violations of their labor rights committed during martial law.

The Draft Law No. 7251 has been currently submitted to the committees. The scientific and expert opinion and the opinion of the Main Committee on Social Policy and Protection of Veterans’ Rights are expected based on the results of the analysis of the provisions of the Draft Law. If adopted, the relevant Law shall enter into force upon its official promulgation.

In addition, last year, at the initiative of the Government, the Verkhovna Rada of Ukraine registered the Draft Law No. 5388 of April 16, 2021 “On Amendments to Certain Legislative Acts of Ukraine on the Deregulation of Labor Relations”, which was adopted as a basis in September 2021, and since then it has been prepared for consideration in the second reading. The main purpose of the Draft Law is to simplify doing business in Ukraine and debureaucratize labor relations.

The main changes worth noting in the Draft Law are:

1) possibility of employers to enter into fixed-term labor contracts with employees for a period not exceeding five years, to enshrine additional rights, duties and responsibilities of the parties, material security and labor organization, termination of the contract, including early one, in the labor contract;

2) abolition of the obligation to agree the dismissal of the employee at the initiative of the employer with the labor union and the need to inform the employee in advance for two months about a significant change in working conditions in case of their improvement;

3) introduction of innovations on material liability of employees, in particular, the possibility of including conditions for full liability of an adult employee in a labor contract;

4) reduction of the list of cases of probation when hiring, in particular when concluding a labor contract with minors, pregnant women, persons with disabilities, and in the case of concluding a labor contract for up to 12 months, etc.

On April 6, 2022, the Committee on Social Policy and Protection of Veterans’ Rights, having considered numerous proposals and amendments received from MPs of various factions and groups, decided to recommend that the Parliament pass the Draft Law No. 5388 in the second reading and as a whole. Therefore, the text of the Draft Law before the second reading and a comparative table with the proposals and amendments of MPs are expected.

Thus, the course of the state to liberalize labor relations and simplify a number of procedures that do not correspond to modern economic realities can be traced; national legislation is being adapted to the provisions of EU directives, which is of particular importance in view of the European integration processes in Ukraine and the application for Ukraine’s accession to the European Union. 

Lawyers and consultants of the “Prime” Law Firm will be happy to give advice in the field of labor law, protect the interests and provide legal support in the event of labor disputes, as well as provide comprehensive legal support.

Read more:

Labor Relations during Martial Law: Legislative Novelties (in Ukrainian)

Relocation of Enterprises: Governmental Program