Amending the Labor Code of Ukraine

Recently adopted bill No. 1233 dated September 2, 2019 “On Amendments to the Labor Code of Ukraine (on Elimination of norms that violate the rights and legislative interests of employers of Ukraine)” is not falling from grace among many bills that are widely discussed on the network.

It is not surprising.  Until recently, the legislator has actively proclaimed that supervision and responsibility of employers would be strengthened.  Moreover, the seriousness of such statements was beyond dispute after the first months that followed countermanding of the moratorium on the measures of public supervision over the observance of labor legislation and submitting the Draft Law on Amendments to the Labor Code of Ukraine to the VRU regarding Strengthening the Protection of Workers’ Rights  employment contract and removal from work. This Draft Law was offered, even, to authorize officials of the State Labor Service to determine independently the existence of employment  relations.  However, it is now proposed to significantly change the trend of the state approach in the sphere of labor relations.

In its essence, Bill No. 1233 deals with the reduction of fines under Art.  265 of the Labor Code, in particular:

– regarding admission of an employee to work without concluding of an employment contract instead of a fine of 30 minimum wages, it is proposed to apply employers’ written warning for committing such a violation for the first time, and for a repeated violation within the year – it is proposed to impose a fine of 4 times the minimum wage.

– regarding failure to comply with the minimum state guarantees in the remuneration and guarantees and benefits to employees, involved in performance of the duties provided for by the laws of Ukraine “On military duty and military service”, “On alternative (non-military) service”, “On mobilization training  and mobilization”, it is proposed to apply a 2 fold minimum wage instead  of a fine of 10 times the minimum wage at the time the violation is detected;

– regarding non-admission to inspection, it is proposed to apply a fine of 8 times the minimum wage instead of 100 times the minimum wage established by law at the time the violation is detected;

– regarding other violations of labor law requirements, employers will be offered a written warning instead of 1 minimum wage fine.  For a repeated offense committed within a year – a fine of 1 minimum wage is proposed.

It sounds really good at the first glance: today the amount of fines really scares entrepreneurs.

However, from a legal point of view, is preventing infringement not precisely the purpose of legal liability?

From this perspective, the bill looks quite populist, whereas for the purpose of “reducing economically unjustified penalties for violating the labor laws of Ukraine and stopping the process of liquidation of small and medium-sized businesses in Ukraine due to destructive penalties used”, it happens something like this: “it sounds expensive to break the law for small and medium-sized businesses, they need to reduce fines.”  Will the sanction for those listed in Art.  265 Code of Labor Laws breaches lose its preventive function as a result of the proposed amendments, and will workers, whose rights it becomes cheaper to breach, fall victim to such amendments?  Perhaps, in this context, it would be better for the legislators to think – how to make sure that representatives of small and medium-sized businesses are not to be forced to break the law at all?

-Elena Dvortsova, attorney at Dynasty Law Firm.

Publications 31 October, 2019

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