Legal Updates of Labour & Employment Practice (Q3, 2017)

30 10 2017

LEGISLATIVE ACTS

New Work Permits Rules

On September 27, 2017, the Law1 which introduces new work permits rules has become effective. One of the biggest changes is the special minimum wage for expats. For those, who will work in NGOs, charity organizations or educational establishments the minimum wage shall be UAH 16,000 (approx. EUR 510), while others shall be paid at least UAH 32,000 per month (approx. EUR 1,020). Although the new rules are applied from September 27, 2017, the State Employment Service of Ukraine expects these minimum salary requirements to be met in respect of all expats, including those whose work permits were issued before the Law became effective. 

The Law highlights several categories of prioritized expats, who will benefit from 3 years-long work permits, without the minimum wage requirements applied to them. These categories include:

  • highly paid professionals (with a salary exceeding UAH 160,000);
  • shareholders or UBOs of employing companies;
  • top-100 world universities graduates;
  • creative workers;
  • IT specialists.

The adopted Law also shortens the list of documents required for a work permit. In particular, vacancy report (3-пн form), medical certificate, non-conviction certificate, an apostilled copy of university diploma will not be filed with the State Employment Service of Ukraine. 

Finally, the Law lifts the state fees for a work permit issuance and introduces the same fees for its prolongation (previously work permits were prolonged free of charge). The work permit for a term up to 6 months will be issued/prolonged for 2 living wages (UAH 3,200 or approx. EUR 102); for a term of 6 months to 1 year – 4 living wages (UAH 6,400 or approx. EUR 204); for a term of 1 year to 3 years – 6 living wages (UAH 9,600 or approx. EUR 306).


Pension Reform

On October 3, 2017, the Parliament passed the Law2 reforming the state pensions system. The main changes touch upon the pensionable insurance record (i.e. the period covered by social security payments paid in respect of the employee). The reform lifts the required pensionable insurance record from 15 to 25 years starting from January 1, 2018, which will be further increased annually by 1 year, reaching 35 years on January 1, 2028. At the same time, the pension age remains unchanged as 60 years, provided the required pensionable insurance record is met. 

For those who lack the required pensionable insurance record, there will be transitionary rules allowing to get the state pension with 15 years of the pensionable insurance record at the age of 63 years in 2018, or 65 years – in 2019. The transitionary numbers of the pensionable insurance record will also be increased annually by 1 year till 2028. 

The reform cancels almost all of the so-called special rules for “preferential pensions” that was paid to certain categories such as prosecutors, police, civil servants, members of the Parliament, etc. They will be paid under the general rules. The only “preferential” category left is military servants. 

The Law also raises the cap of the unified social security contribution (“USSC”) base to 15 minimum salaries – UAH 48,000 (approx. EUR 1,535). This means that the maximum amount of the USSC paid by the employer for its employees (i.e. the USSC rate of 22% applied to the capped base) will be raised to UAH 10,560 (approx. EUR 340) from the current amount of UAH 9,262 (approx. EUR 296). Furthermore, the reform abolishes taxation of pensions by the personal income tax.
 

JUDICIAL PRACTICE


No Paternity Leaves without Employer’s Approval 

The Supreme Court of Ukraine (the “SCU”) in its Resolutiondated September 13, 2017, explained that a father’s right to paternity leave is not absolute, but depends on certain conditions (i.e. actually taking care of a child; evidence that a child’s mother has ended her maternity leave; evidence that maternity payments are no longer received by the mother).

Article 179 para 7 of the Labour Code states that maternity leave may also be used in full or in part by a child’s father, grandmother, grandfather or other relatives who actually take care of a child. Article 20 para 4 of Vacations Act requires these persons to provide the employer with evidence that a child’s mother has ended her maternity leave, and that maternity payments are no longer obtained.

In the present case, the father submitted a paternity leave request to his employer. He did not wait for the employer’s decision and did not come to work from the next day. The employer sent him several warnings stating that his request had not been approved as he had failed to provide all the necessary evidence. Consequently, the father was dismissed for truancy and challenged his dismissal in court stating that he was on paternity leave and could not be dismissed. 

The SCU explained that the right to paternity leave is not absolute, unlike maternity leave. Hence, the father should have waited until the employer approved his paternity leave request. Therefore, his failure to come to work after the submission of the paternity leave request was found to be truancy which is a genuine basis for dismissal under Article 40 item 4 of the Labour Code of Ukraine.

 

Qualification Requirements for Redundant Employees

The SCU in its Resolution[4] dated August 9, 2017, explained when the requirement of the Labour Code to offer an alternative employment for redundant employees should be deemed fulfilled. 

Article 40, para 2 of the Labour Code states that economic dismissals are allowed only in circumstances of impossibility to transfer the employee to another job upon his/her consent. In accordance with Article 49-2, para 3 of the Labour Code, while giving a notice of contemplated economic dismissal, the employer shall simultaneously offer the employee another job within the respective profession or specialization. 

The SCU concluded that the employer is deemed to have fulfilled these requirements if it offered an employee a vacant job which can be fulfilled due to the employee’s education, qualification, experience, etc. So, the employer is obliged to offer a redundant employee only those available positions and vacancies that correspond to the employee’s qualifications.