Present situation in Ukraine gives our society many challenges. Ukrainian economy suffered significantly in result of two years of instability, military and political escalation. Depreciating of Ukrainian currency led to increase of redundancies and unemployment rate grew. The situation is aggravated with inefficient labor legislation, which gives no remedies to prompt and adequate feedback to realities on labor market in Ukraine. Effective Labor Code is an archaic set of laws dated of 1972, which does not correspond neither to present economic environment, nor to needs of participants of employment relations.
New Labour Code had been drafted for more than 14 years already. Ukraine expected it to be adopted in 2007 and later in 2013, but unsuccessfully. In November 2015, new draft of Labour Code (the “New LC”) was approved on the first reading by the Verkhovna Rada of Ukraine (Ukrainian parliament) and forwarded to respective specialized Committee for finalization. On the wave of reforms in Ukraine and being pushed by the society we expect Verkhovna Rada to adopt the New LC in the beginning of 2016.
Since it happens, Ukraine shall experience some changes in labour legislation, which are claimed to be designed to find and set the balance between needs of employee and business, facing economic and social realities in Ukraine.
The New LC suggests concluding written employment agreements with all employees. Current legislation does not oblige parties to conclude written employment agreement. It is deemed that employment relations start when employee gets as access to work. On the contrary, the New LC shall oblige to conclude written employment agreements, which should bring benefit to employee as all covenants of the parties are fixed on paper. Those who are already employed without written agreements should bring it in compliance with new laws during 6-12 months.
At the same time, the New LC provides for abolishing of employment contract (special form of employment agreement, stipulated by Ukrainian labour legislation). Employers will be deprived from concluding contracts instead of agreements. In present time employment contract allows application of specific regulation of some aspects of employment relations. For instance, the contract may provide for extra responsibilities of the parties and additional, other than stipulated by law, grounds for termination. Legislator decided that such significant issues of employment relations as grounds for termination, volume of rights and obligations should be governed exclusively by law, not by the parties. Hence, all employment contracts effective on the date of adopting of the New LC shall be treated as fixed-term employment agreements and all (additional) commitments, which contradict the law, shall be deemed invalid.
One of progressive changes in recruitment process is that employer receives a legal right to collect information on candidate’s previous work experience before employing, pursuant to consent of the candidate.
The New LC also refreshes regulation of termination of employment. Employer shall be able to dismiss a single mother for failure or pure performance of her labour duties. Today such employees are totally protected from dismissal upon employer’s initiative and they may abuse this privilege brining harm to working process and business goals of employer. Thus, employers consider such step as reasonable and justified.
Other novelty is that an employer shall be able to dismiss an employee due to emergency or unforeseen events, such as military invention, natural disasters, etc.
Also, the New LC provides for an option of temporary suspension of employment relations in special cases, e.g. while an employee is performing a state or social duties.
The concept of flexibility in employment relations is reflected in two more novelties in the New LC. Soon new types of flexible working regime will be introduced. Divided working hours, distant work, self-scheduled working regime will be available to employees.
Redundancy procedure gets more flexible as well. The New LC stipulates optional approach to notification of employees on future redundancy. General notification period shall remain two months as it is now. Together with that an employer may reduce the notification period to one month, provided that he shall compensate an employee one average wage for application a short-term notice.
Also, the New LC extends the general limitation period for judicial recourse from 3 months to 1 year, giving employees an opportunity to wider exercise their right to protect the violated rights and interests.
Even if it is difficult now to foresee the extend of benefit from the New LC, we believe that substitution of old USSR-styled legislation is always a step forward for Ukraine.