On 16 May 2017 the Resolution of the Cabinet of Ministers of Ukraine No. 295 "Certain Issues of Implementation of Article 259 of the Labor Code of Ukraine and Article 34 of the Law of Ukraine "On Municipal Government in Ukraine" dated 26 April 2017 (the "Resolution") came into force. The Resolution approves: (i) the "Procedure on State Control Over Compliance with Labor Laws" (the "Control Procedure"); and (ii) the "Procedure on State Supervision Over Compliance with Labor Laws" (the "Supervision Procedure").

The Control Procedure establishes the procedure for carrying out state control by inspectors of the State Labor Inspection (including its territorial bodies) and by inspectors of local authorities to verify the compliance of companies and individuals who employ employees with labor laws. The Supervision Procedure provides the procedure whereby State Labor Inspection authorities can reveal violations committed by local authorities’ labor inspectors in the course of verifying compliance with labor laws by them.

By way of reminder, from 1 January 2017, local authorities were granted the right to initiate and/or arrange for inspections to verify compliance with labor laws. Until now, however, there was no clearly defined procedure to carry out such authorities.

Authorized Bodies and Forms of Control

Under the Control Procedure, control over labor law compliance shall be carried out by inspectors of the State Labor Inspection (including its territorial bodies) and by inspectors of local authorities. The control will be carried out in the form of inspection visits and off-site inspections.

Grounds for the State Control

Grounds for inspection visits are the following: (i) at the request of an employee whose employment rights were violated; (ii) upon the decision of the head of the control authority to carry out an inspection visit to reveal improper documentation of employment; (iii) upon a court decision; (iv) if information is obtained from the State Statistics Service, State Fiscal Service (including its territorial bodies) and Pension Fund (including its territorial bodies) regarding the violation of labor laws and employees' rights, etc.

Notification of Inspection Visits and Duration of Inspection

The labor inspector must notify the employer of a planned inspection visit, but is not obliged to notify of an inspection visit aimed at revealing improper documentation of employment. The duration of an inspection visit or off-site inspection cannot exceed 10 business days for all companies and two business days for micro /small companies.

Rights of Inspectors and Employers

The inspector has the right to: (i) visit at any hour of the day any industrial, office and/or administrative premises of the employer in case of an inspection visit aimed at revealing improper documentation of the employment; (ii) review any documents that must be maintained under labor laws and which relate to the subject matter of the inspection visit or off-site inspection and make copies thereof; (iii) have tête-à-tête conversations with the head of the company or its employees; and (iv) record the inspection visit by means of audio, photo and video equipment, etc.

The employer has the right to check if a labor inspector has the necessary service certificate, require an inspector’s adherence to labor laws and obtain advisory assistance from the labor inspector in the course of inspection visits or off-site inspections to prevent violations.

Result of the Inspection Visit or Off-site Inspection

An act is drawn up following an inspection visit or off-site inspection and, if labor law violations have been revealed, an improvement notice establishing a time limit to eliminate certain violations will be issued. If an employer duly executes the improvement notice, it won't bare any responsibility. Such provision is a significant step for employers, given that from 1 January 2017 a fine for labor laws violations can reach UAH 320,000 (approximately USD 12,075).

Supervision Procedure Main Provisions

The Supervision Procedure grants authority to State Labor Inspection officials to supervise the work of local authorities’ labor inspectors. The supervision is carried out mainly by collecting and analyzing information on whether the labor inspectors observe labor laws while conducting control over employers. The supervision may also be carried out by means of off-site inspection at the relevant location. Following the supervision, a conclusion is drawn up and, in case a violation has been revealed, an order containing the time limit for the labor inspectors to eliminate such violation is issued.