On May 16, 2017, the Resolution of the Cabinet of Ministers of Ukraine “Certain issues concerning implementation of Article 259 of the Labour Code of Ukraine and Article 34 of the Law of Ukraine “On Municipal Self-Government in Ukraine” of April 26, 2017, No. 295 (the “Resolution”), came into force. The Resolution significantly changes existing rules for labour audits.
The Resolution sets a detailed procedure for the conduct of on-site (“inspectional visits”) and off-site audits, which will replace scheduled and unscheduled audits. The audits will be carried out by the State Labour Service (the “SLS”), as well as by labour inspectors of municipal self-government bodies of regional level and in local communities. The latter inspectors may check compliance with labour legislation concerning remuneration and proper documentation of labour relations.
The new grounds for labour audits under the Resolution include, among others, (1) complaints of persons whose employment is not properly documented, (2) information of the State Pension Fund, the State Statistics Service, the State Fiscal Service, trade unions as well as (3) information from public sources, including media. The new rules also allow inspectors not to notify the employer on the forthcoming audit, should they believe “it will harm the audit results”. In addition, to conduct the audit, the inspector’s official ID is now sufficient, while the SLS’s resolution and approval became things of the past.
The Resolution has substantially widened the inspector’s rights, which now include rights to enter any premises at any time (without permission or notification), to request certified copies of audited documents or extracts thereof, to call the police in for the purposes of audits. At the same time, the employer’s rights were narrowed, since the right to record audits by means of audio and video equipment was removed. Moreover, the employer may deny the inspector from conducting the audit only should the latter fail to show the official ID.
Upon completion of audits, if any violations are detected, labour inspectors issue remedy orders that set a deadline for elimination of the violations. Should the employer comply with the remedy order, it will not be fined, except for the fines for “shadow employment” violations, which are imposed in any case. Finally, employers may ask the SLS for analysis of their compliance with labour legislation and issue of recommendatory notices.
Since the beginning of 2017 fines for labour law violations has significantly increased. That is why employers should carefully revise their compliance with the law and be prepared for labour audits.