Preemptive right for pre-retirees

On April 6, 2017, the Parliament has adopted the Law1, which supplements Article 42 (2) of the Labor Code of Ukraine with an extra item granting the preemptive right to retain the job in the event of redundancy for employees of pre-retirement age, having less than three years left to their pension. We remind that Article 42 of the Labor Code of Ukraine requires the employer who carries on the redundancy to give the preemptive right to retain the job to employees with higher qualification and productivity of work. If these features are equal, then the preemptive right shall be given to categories listed in paragraph 2 of the said Article (employees with family, those who have longer record of employment with this entity, ex-combatants, etc.).

As of today, the pension age is set for men and women at the age of 60, provided they have 15 years of secured employment record. At the same time, women, who were born before March 31, 1961, have the right to retire at 55-59.5, depending on the date of birth.

The Law will become effective after it is signed by the President and published, which is expected to be done by the end of April 2017.

INFLUENCES: Employers who carry on redundancies

RISKS: Recognition of dismissal carried under Article 40 (1) of the Labor Code of Ukraine as illegal with reinstatement of an employee of pre-retirement age, if his preemptive right was not considered

RECOMMENDATIONS: When carrying on redundancy of employees of 52-60 years old, the employers shall carefully consider their preemptive rights under Article 42 of the Labor Code of Ukraine


Changes to Work Permits Procedure

On January 18, 2017, the Cabinet of Ministers of Ukraine adopted the Resolution2, which amended the regime for work permits obtaining. Although most changes are of a technical character, there is a significant change in the term for conclusion of an employment agreement with a foreigner after the work permit is obtained. Employers are now obliged to conclude it within 90 calendar days from the date of the work permit. Before, there was no special term to conclude an employment agreement and the employer simply had to submit its copy to the State Employment Service (the “SES”) 7 business days after its conclusion. The Resolution has also changed the term for submission of this copy to the SES: it is now 10 calendar days instead of 7 business days.

The Resolution allows obtaining work permits not only for main (primary) jobs, but also for secondary (part-time) jobs. As regards technical changes, the Resolution obliges the SES to publish on its official web-site decisions rejecting applications or annulling work permits. Finally, the Resolution empowers the Ministry of Social Policy and Labor to enact the procedure for administrative challenging of the SES’ decisions rejecting to issue or prolong a work permit, and decisions annulling a work permit.

The Resolution became effective on February 3, 2017.

INFLUENCES: Employers who employ foreign nationals or stateless persons under work permits

RISKS:Recognition of termination under Article 36 (1) of the Labor Code as illegal with employee’s reinstatement, if termination was formalized only by an employee’s statement approved by his/her director

RECOMMENDATIONS: Where employees are terminated under Article 36 (1) of the Labor Code, the employer shall execute a termination agreement as a separate document signed by the employer and the employee

New visa rules

On March 1, 2017, the Cabinet of Ministers of Ukraine has adopted the Resolution[3], which brings new rules for Ukrainian visas. The changes have touched upon type D visas, which are required for foreigners who plan a long-term stay in Ukraine, longer than 90 days (inclusive employment purposes). Under the Resolution, type D visas will be multiple and will be issued for 90, instead of 45 days, as it is now (this is the term when a foreigner must enter Ukraine to initiate formalization of the temporary residence permit).

The significant simplification will have those who have effective multiple visas of Schengen Agreement, Australia, Great Britain, the USA, Japan, Ireland, New Zealand and Canada. These persons will not undergo a visa interview and their applications will not be checked by the Security Service of Ukraine, which may significantly speed up the visa process.

The Resolution entered into force on April 16, 2017.

Model Anticorruption Policy Approved

On March 2, 2017, the National Agency for Corruption Prevention (the “NACP”) approved the Model Anticorruption Policy of a Legal Entity. We remind that the Law “On Corruption Prevention,” effective from October 2014 (the “Law”), requires certain categories of legal entities to approve internally an anticorruption policy and appoint a compliance officer. Those categories who must follow these rules (Article 62 of the Law) are:

  • state or municipal legal entities (where state or municipality has more than 50% of control) having more than 50 employees and with annual revenues exceeding UAH 70 million;
  • all legal entities (including private ones), who participate in public procurement procedures with tender sum exceeding UAH 20 million.

According to the NACP’s decision4 of March 2, 2017, these legal entities have to approve their internal anticorruption policies on the basis of the approved Model Anticorruption Policy. The Model Anticorruption Policy contains all 15 obligatory chapters, required by Article 63 of the Law.

This decision of the NACP became effective on March 17, 2017.


Average Salary Compensation for Delay of Payment – Business Days to Compensate, Not Calendar Ones

In the resolution5 of March 1, 2017 in case No. 6-2807цс16, the Supreme Court of Ukraine (the “SCU”) delivered its legal opinion regarding the compensation of an employee’s average salary for delay of payment. According to Article 117 of the Labor Code of Ukraine, if the employer fails to pay sums owed by it to the dismissed employee as they fall due, the employer shall compensate the employee’s average salary for the time of delay until the day of factual payment.

Having analyzed an application of this legal norm by courts of lower instances in conjunction with norms of the Procedure for Average Salary Calculation as approved by Resolution No. 100 of the Cabinet of Ministers of Ukraine of February 8, 1995, (the “Procedure”), the SCU opined that the formula of delay calculation for business days shall be applied. In other words, having defined an average daily salary of the dismissed employee for 2 months preceding the dismissal, one shall multiple this sum by a number of business (not calendar) days in the delay period.