We consider it necessary to inform you on the (new) standpoint of the Fund for Social Protection of Persons with Disabilities regarding the compliance with the standard on employment of persons with disabilities.
According to the legislation of Ukraine, every employer has to comply with the standard on employment of persons with disabilities. In practice, however, it turned out that a number of foreign representative offices and companies did not consider it to be obligatory.
Thus, foreign representative offices were not on the list of the entities required to employ the 4% of persons with disabilities out of average staff quantity. This fact was confirmed by the Fund's clarifications.
However, in January 2012, amendments to Article 1 of the Law of Ukraine “On the Fundamentals of Social Protection of Persons with Disabilities in Ukraine” entered into force and foreign representative offices were included in the term “enterprises, institutions and organizations.”
Therefore, the legislator has extended the requirement of employment of persons with disabilities to foreign representative offices. The Fund confirmed this position in its letter dated June 20, 2014.
For a long time, the issue of the foreign representative offices’ compliance with the standard has not been raised neither by the Fund nor the representative offices themselves. Only in 2022, ten years after the amendment of the law, the Fund started sending out notices on the need to pay sanctions due to non-compliance to the employment standard, and since the beginning of April 2023 – filing lawsuits against foreign representative offices for recovering the funds.
It is also interesting that just in May 2023, the Central Interregional Department of the State Labor Service published a piece of news regarding the execution of the standard on its website. It explicitly states that foreign representative offices are not obliged to comply with the standards on employment.
Currently, a significant number of cases, in which the Fund is trying to impose administrative and economic sanctions on foreign representative offices, awaits court hearings. We expect that now is the time the court practice on application of sanctions on foreign representative offices for non-compliance with the standard is set to be developed.
Since the calculation of such a sanction is conducted (1) regarding each workplace that did not meet the standard, and (2) on the basis of the average annual salary, the amounts of sanctions reach several million hryvnias in the pharmaceutical sector. In addition to that, the Fund also charges penalties for the untimely payment of sanctions.
The abovementioned obligation to employ persons with disabilities, and the sanction for non-compliance with the standard, applies not only to the foreign representative offices, but to all legal entities as well.
Despite the absence of legislative changes, it is impossible to ignore the Fund's particular activity in this direction. Only in 2023, the court issued hundreds of decisions that imposed sanctions on employers-legal entities. Based on our preliminary calculations, the number of decisions this year exceeds the previous one at least threefold.
If you have concerns about compliance with the standard, we recommend taking the following steps:
If you need assistance in the review of the legal proceedings, assessment of risks and possible sanctions, please contact Partner Vitalii Savchuk by email savchuk@l-a.com.ua or by phone +380 44 425 4050.
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