The coronavirus pandemic and the future of work
Author: Inesa Letych
Source: 2019 Ukrainian Law Firms, 7 May 2020

The COVID-2019 outbreak and the restrictive measures that followed are having a serious effect on employment. Surprisingly, while the impact of the pandemic is definitely negative, there is still one positive consequence. Ukraine has taken at least one step forward towards flexibility and modernization of its labor legislation. Even these tiny changes will influence the practical outcome of the situation and change the future pattern of employment relations. In any event, major practical changes are still to come.

Legislative changes: additional flexibility and limited state support

Similarly to the rest of world, with the start of the pandemic and introduction of restrictive measures Ukraine put into effect several laws aimed at the survival of business and the State of Ukraine itself. Yet, unlike in certain countries, local employers got almost zero support in dealing with the payment of wages. Ukraine offered neither reimbursement for salaries or payroll taxes nor any other similar arrangements to help employers. The only additional survival opportunity is potential state aid for partial unemployment in case of reduction in the working hours of employees. The assistance is tiny and its maximum level is just one statutory minimum wage (UAH 4,723, or roughly USD 170).

On the positive side, new laws finally introduced options of flexible schedule and remote work for staff. In the past, similar arrangements were not easy to implement due to lack of clear legislative guidelines. In addition, new laws offered local employers an option of unpaid leave for the whole period of quarantine for their employees, which requires the consent of employees. Nevertheless, the rules on staff redundancy, other dismissals or salary deductions remain as strict as before.

Practical approaches of business and drastic measures in the state sector

Despite massive business disruption and unexpected challenges, retention of valuable members of staff remains a priority for many local businesses. This is the reason why many companies are refraining from staff redundancies or other dismissals, and choose moderate measures to deal with situations. This often includes temporary unpaid leave or introduction of shorter working hours. As Ukrainian labor legislation does not allow quick or unilateral introduction of similar measures by employers, dialog and negotiations with employees is a key solution for the majority of businesses.

While business tries to balance between cutting expenses and respecting employees’ rights, the state decided to act quickly and sharply in relation to state sector employees. As a temporary measure for the period of the quarantine, legislation requires that all state institutions and state-owned entities limit the salaries of civil servants and other employees to the maximum amount of ten minimum statutory wages (UAH 47,230, or roughly USD 1,700). However, it remains questionable whether this solution is legally grounded, especially with regard to state sector employees with active employment contracts. The reaction to this unprecedented restriction is predictably negative and future court disputes seem unavoidable.

What’s next?

The negative consequences of the pandemic for the employment market are not easy to predict at the present time. Lots of employees may lose part of their earnings, or even their jobs. However, the extent of this will depend on how quickly business returns to normal. As a logical consequence, a number of employment disputes and relevant litigations may rise as soon as courts reopen for normal work.

What we can definitely expect as a new trend is new flexible workforce arrangements, from remote working to flexible work schedules or virtual offices. Hopefully, this may also help to move Ukraine forward with labor law reform and adoption of the new Labor Code.

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