During the second quarter of 2015, a number of new laws have become effective, providing for new compliance requirements in labor & employment as well as in payroll taxation. This legal newsletter was prepared by Vasil Kisil & Partners to keep our clients and partners updated on legislative changes.

New Hire Notification Procedure Finally Adopted  

On June 27, 2015 new hire notification procedure1 (the “Procedure”) became effective. This Procedure has been awaited since January 1, 2015, when the new hire notification obligations became effective. In the absence of a procedure, the State Fiscal Service later clarified that no special notification is required until a procedure is eventually adopted. Employers must submit this form to the territorial bodies of the State Fiscal Service of Ukraine at their place of registration as a payer of Single Social Contribution in one of the following ways:

  1. by electronic means using the digital signature of responsible persons in accordance with the legislation about electronic documents and electronic signatures;
  2. in paper form together with a copy in electronic form; or in paper form,
  3. if the signed labor agreements concluded with no more than five persons.

From the practical standpoint, we have independently confirmed with at least one major tax return software developer that they plan to add the functionality for performing the new hire notification as soon as the State Fiscal Service upgrades its software to support it.

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Additional Guarantees for Mobilized Employees

On April 15, 2015 the Law of Ukraine2 extending guarantees for mobilized military servants became effective. In particular, it envisages the extending of labour guarantees (payment of average salary to mobilized employees) from 1-year period to longer periods for following categories:

  • for injured military servants – for all time of medical treatment until they are re-registered at local military recruitment offices;
  • for captured military servants – for the duration of their detention until they  return;
  • for missing military servants – for all time until they return or are announced by court as dead.

Furthermore, on June 11, 2015 entered into force the Law of Ukraine3 which prolongs this period of payment of average salary from one year to 18 months for all mobilized military servants. For those employees, who continue their service under the military contract regardless of their demobilization, abovementioned guarantees are also granted for the term of such contract.

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Redundancy Rules Clarified

On April 1, 2015 the Supreme Court of Ukraine delivered its Ruling(the “Ruling”) in case concerning employer’s obligation to offer vacant positions for employees affected by redundancy. The Court’s legal position expressed in the Ruling provides that an employer is obliged to offer for affected employee not just positions which are vacant on the day of his/her notification about forthcoming dismissal, but also vacant positions which appear during 2-months redundancy period including the day of dismissal.

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New Official Holiday

On March 25, 2015 the Law of Ukraine5 establishing new official non-working day came into effect. The new holiday is called the “Ukraine’s Defender’s Day” and it will be celebrated on October 14. It is important to follow the new holiday as well as to amend current labor agreements, collective bargaining agreements and policies to avoid breaches of employees’ rights.

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Changes of Payroll Taxation

On April 7, 2015, new law on tax cut of personal income tax6 (the “Law”)  was adopted. It aims at equation of taxation base for income tax and respective base for unified social contribution withholding. The Law enlarges the taxation base of income which is taxed at rate of 15% from 10 to 17 minimal monthly wages (approx. from EUR 520 to EUR 880). Hence, this difference will be taxed at rate of 15% instead of 20%, which allows employees to get an annual taxation discount of up to EUR 220. If signed into law by the President, the new rules will become effective starting from the next month after the Law as a whole becomes effective.

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