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New Rules for Control over Labor Law Compliance

On 16 May 2017, Resolution of the Cabinet of Ministers of Ukraine (the "CMU") "On Certain Issues of Implementation of Article 259 of the Code of Labor Laws of Ukraine and Article 34 of the Law of Ukraine "On Municipal Governance in Ukraine" of 26 April 2017 No. 295 became effective (the "Resolution").

The Resolution introduces new forms and rules for control over labor law compliance, extends current powers of labor inspectors, as well as amends the procedure for imposing fines for violation of labor law requirements.

The Resolution approves the Procedure for Exercising State Control over Labor Law Compliance (the "Procedure"). The Procedure, inter alia:

introduces specific forms for exercise of control by labor inspectors, namely, inspection visits and remote inspections.
Under the Procedure, officers of the State Service of Ukraine for Labor Matters (or its local departments) (the "Labor Service") and officers of executive bodies of municipal authorities may have the status of labor inspectors; sets forth the list of grounds and information that serves as a basis for labor inspectors to perform inspection visits (or remote inspections in certain cases). Such grounds include, amongst others, an employee's application regarding violation of labor law in respect of such an employee or an application of an individual, whose employment has not been properly formalized.
Furthermore, labor inspectors may control compliance on the basis of information regarding possible unreported employment from public sources or information from other state agencies regarding possible violations. For instance, the latter may include information from tax authorities regarding disparity between a company's workforce and its production volumes as compared to average data for the relevant industry; information from the State Pension Fund of Ukraine regarding a large number of services contracts with individuals, significant redundancies, a large number of employees working part-time, or other information; introduces certain new powers of labor inspectors to control labor law compliance. In particular, while performing inspection visits to check potential unreported employment,  labor inspectors may enter any workplace of an employer freely and without prior notice at any hour of day or night; provides that labor inspectors hold an employer liable for certain types of violations (e.g., unreported employment) and issue an order to remove such a violation, regardless of whether the employer cures the violation in the course of an inspection visit or remote inspection; allows labor inspectors to visit an employer in order to inform such an employer and its employees of the most effective practices of labor law compliance and in order to monitor labor law compliance.

The Resolution also amends the Procedure for Imposing Fines for Violation of Labor and Employment Laws, as approved by Resolution of the Cabinet of Ministers of Ukraine of 17 July 2013 No. 509, to provide for the following:

heads of executive bodies of municipal authorities are now directly empowered to impose fines for labor law violations, in addition to officers of the Labor Service; a report of a documentary onsite audit of an employer issued by tax authorities, which revealed labor law violations, may result in a fine imposed by labor inspectors.

For further information please contact Asters' partner Svitlana Chepurna
and senior associate Inesa Letych.

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