Recent Changes in the field of Labour Relations in Ukraine have been declared

On December 28th, 2014 the Verkhovna Rada of Ukraine adopted the Law of Ukraine «On Amendments to Certain Ukrainian Laws regarding Reform of Mandatory State Social Insurance and Legalization of Salaries Fund» No. 77-VIII (hereinafter - «the Law No. 77-VIII ») which became effective on January 1st, 2015.

The Law No. 77-VIII has introduced a number of amendments to the legislation of Ukraine aimed at regulating labour relations and increasing liability for violations of labour legislation:

1) The Labour Code of Ukraine has been amended with the following provisions:

• the requirement was stipulated that an employee cannot be allowed to work without an employment agreement, executed by an order of the owner or his authorized body, and notification of the authority in charge of administering the unified fee for state mandatory social insurance (hereinafter – «the Unified Social Fee») (currently, the State Fiscal Service of Ukraine) about hiring of any employee under the procedure to be approved by the Cabinet of Ministers of Ukraine. This procedure has not been developed and adopted by the Cabinet of Ministers of Ukraine currently;
• the requirement to register employment agreements concluded between individuals and individual employers at the State Employment Service of Ukraine was cancelled;
• Ukrainian courts were enable to deliver judgments on formalization of an individual's employment, as well as on the period of such employment if an individual has worked without entering into an employment agreement or worked full-time while being formally employed part-time. When issuing such judgments, courts may award salary to an employee in the amount not less than average salaries within relevant type of business activity in the region on top of any actually paid salary, as well as require accrual of respective amounts of personal income tax and the Unified Social Fee;

financial liability of employers in the form of fines for labour legislation violations was instituted, namely:

• actual admission of an employee to work without entering into an employment agreement (contract), hiring an employee for part-time work while being actually full-time work, set forth at an enterprise, and payroll of salary (compensation) without calculation and payment of taxes and the Unified Social Tax;
• violation of the terms of payment of salary to employees and other benefits provided by labour legislation, more than one month, payments are not in full;
• failure to comply with minimum state guarantees as regards labour remuneration.

Depending on violation, the amounts of such fines vary from one minimum statutory salary (as of January 1st, 2015 – UAH 1,218) per a violation to thirty minimum statutory salaries (as of January 1st, 2015 – UAH 36,540)payable for each employee, with regard to whom an employer commits a violation.

The State Labour Inspectorate of Ukraine will impose the above fines pursuant to the procedure to be approved by the Cabinet of Ministers of Ukraine. This procedure has not been developed and adopted currently.

2) The Administrative Offences Code of Ukraine has been amended with regard to administrative liability of employer's officials in the following respects:

• administrative fines were introduced for allowing an individual to work without an employment agreement, as well as for hiring a foreign citizen, a stateless person, or an applicant for a refugee status without obtaining a work permit;
• the amounts of administrative fines were increased for violations of labour law, as well as legislation on the unified tax for the Unified Social Fee and mandatory pension fund contributions.

3) The Criminal Code of Ukraine has been amended with regard to criminal liability of employer's officials:

• illegal dismissal of a whistle-blower employee because the latter has reported a breach of the Law of Ukraine «On Fundamentals of Preventing and Combatting of Corruption» is qualified as a gross violation of labour law that entails criminal liability;
• the amount of criminal fines for material violation of labour law and evasion of the Unified Social Fee and mandatory pension fund contributions was increased.