On 19 July 2022, the Ukrainian Parliament adopted Law of Ukraine No. 2434-IX (the "Law"), which provides for simplified regulation of labour relations for small and medium entrepreneurship and decrease of administrative burden on entrepreneurial activity. The Law is effective only during the martial law.
To whom does the simplified regulation apply?
The simplified regulation may apply on a voluntary basis in two cases:
- if an employer is a small or medium-sized enterprise or entrepreneur with an average number of employees per accounting period (calendar year) not exceeding 250 individuals
- if the amount of a salary of an employee exceeds 8 minimal wages (UAH 52,000 as of August 2022)
What does the simplified regulation imply?
The parties to an employment agreement may at their own discretion and by mutual agreement address their relations as regards entering into and termination of the employment relation, system of remuneration, labour standards, amount of salary, incentives, working and rest time, duration of weekly uninterrupted rest and other rights and guarantees of labour nature.
The requirements of the law regarding keeping the documentation on personnel matters, adoption of local regulations, and organizational and administrative documentation, including on working and rest time, vacations and other issues do not apply to employers who apply the simplified regulation.
How is the simplified regulation between an employee and an employer formalized?
Employees and employers that choose simplified regulation shall conclude a single-document employment agreement in writing or electronic form.
Terms of an employment agreement under the simplified regulation
An employment agreement may be either fixed term or entered for an indefinite term. The latter may be concluded for the specified period or for the performance of relevant work.
The Law also envisages the list of essential terms of a relevant employment agreement, in particular, a place of work, an employee's duties, terms of payment, work schedule, duration of work, and rest hours, duration of the annual leave, working conditions, terms of notification on termination of an employment agreement at the initiative of an employer, the procedure and form of information exchange between an employer and an employee, etc.
In addition, an employment agreement may provide for the grounds and procedure for engaging an employee to work overtime and at night, on holidays, non-working days, and weekends, specifying the amount of payment for such work. At the same time, the amount of such payment cannot be less than the amount determined by the Labour Code of Ukraine. The engagement of an employee in overtime work does not require the permission of a trade union.
Vacations under the simplified regime
The Law allows dividing the annual leave into parts of any duration or to grant its full duration as per an employee's request. At the same time, an unpaid leave due to family circumstances may be granted for the term that exceeds 15 days per year if such is provided by an employment agreement.
A salary for the whole time of annual leave should be paid before the start of leave, unless otherwise agreed in an employment agreement or collective bargaining agreement.
Termination of an employment agreement under the simplified regime
The parties to an employment agreement may at their discretion determine the grounds for its termination that are not envisaged by the Labour Code of Ukraine.
However, an employer has to substantiate the reasons for termination of an employment agreement at its initiative if such termination is based on grounds not listed in the Labour Code of Ukraine. In addition, the Law obliges an employer to pay an employee a compensative payment in the amount and order specified in an employment agreement, however not less than:
- half of a minimum wage if the work experience with a particular employer does not exceed 30 days
- a minimum wage if the work experience with a particular employer exceeds 30 days
- three minimum wages if the work experience with a particular employer exceeds 1 year
- five minimum wages if the work experience with a particular employer exceeds 2 years
To terminate such an employment agreement, the parties shall sign an additional agreement on termination of an employment agreement. Alternatively, if an employer terminates an agreement unilaterally, it shall send an official notice of termination of an employment agreement to an employee in the manner specified by an employment agreement or by registered mail with a description of the attachment.
The consent of the trade union to terminate an employment agreement is not required, except in cases of dismissal of members of the trade union bodies.
For further information, please contact Asters' Counsel Inesa Letych and Associate Iryna Shaposhnikova
