Legal Updates of Labour & Employment Practice (Q3-4, 2019)

LEGISLATIVE ACTS

Reducing fines for violating the labour legislation
The Verkhovna Rada of Ukraine adopted on 12 December 2019 Law No. 378-IX (the “Law”), by which it amended the Labour Code of Ukraine to the extent related to reducing fines for violating the labour legislation. Given below is a comparison table showing changes in fine amounts:

Moreover, the legislator surprised with some intriguing novelties. Specifically, an employer is granted a 50% discount on a fine if it is paid within 10 banking days after the resolution imposing the same was served. 

The President of Ukraine signed on 31 January 2020 the Law, which then was published in the Holos Ukrainy newspaper. The Law took effect on 2 February 2020.

Procedure for inspection visits changed yet again

The Cabinet of Ministers of Ukraine issued on 4 December 2019 resolution No. 1132 (the “Resolution”), by which it approved amendments to recently adopted resolution No.  823. Though the Cabinet of Ministry has had unhappy experience when resolution No.  295 was contested (the resolution was found unlawful as the State Regulatory Service did not approve its draft), the newly adopted Resolution has taken legal effect; however, the State Regulatory Service decided not to approve it.

In particular, the Resolution provides that:

• desktop inspections of enterprises may no longer be undertaken;
• the State Labour Service is entitled to decide to make inspection visits for any issues (previously it was the finding of non-documented employment relations only) based on information received from mass media and other open sources;
• the State Labour Service should not warn a company of scheduled inspection visits;
• a warning should be issued (in addition to a report and order) for violation of the labour legislation based on findings of the inspection visit;
• The State Labour Service analyses whether it is appropriate to make another inspection visit if the company was visited for inspection during the last six months;
• an employer may no longer request the State Labour Service to make "voluntary" inspection visits.

The resolution took effect on 31 December 2019 after its text was published in the Uriadovyi Kurier newspaper, No. 251.

CASE LAW

Covert video surveillance of employees may be carried out if a balance is kept between the employee's right to respect for his or her private life and the employer's right to protect its property

The Grand Chamber of the European Court of Human Rights rendered on 16 October 2019 its final judgment in the case of López Ribalda and Others v. Spain regarding the employer introducing covert video-surveillance of employees' workplaces. 

Narrative: the applicants were employed as cashiers. The employer installed covert and hidden video surveillance cameras after finding that cash was short coming. The cameras recorded as employees stole goods, which served as the ground for dismissal.

ECHR’s assessment: Article 8 of the Convention is not violated since the balance was struck between the employees' rights to respect for their private life and the employer's right to protect its property, considering that:

• there were lawful reasons for video-surveillance (reasonable suspicion of theft);
• the applicants worked in the premises open for public;
• video-surveillance measures were taken for 10 days (time limited);
• a limited number of persons could review video recordings;
• video recordings were not used for any purpose, other than identifying the persons responsible for the theft;
• there were no other measures available to reveal the thieves.

Obligating a company to remove its director from position pursuant to article 38 of the Labour Code of Ukraine is not a remedy available for a violation of right 

The Company director asked court to compel the Company to remove him from the position of General Director pursuant to article 38 of the Labour Code of Ukraine. The reason behind the claim is that the employment relations with the Company director cannot be terminated as no quorum may be established at general meetings due to death of a company participant and a dispute between the heirs. 

Having considered that, under the Company's articles of association, it was the Company's general meeting who was exclusively competent to resolve such issue as removal of the director from position, the Supreme Court  concluded that the claimant chose an improper, inefficient, and non-statutory remedy to protect violated rights. Finally, in view of the scope of case review, the Supreme Court resolved that the cassation appeal shall be dismissed.

Guilt as a mandatory element to bring an employer to liability for delaying severance settlements

The Supreme Court  dismissed on 27 December 2019 a cassation appeal filed by an employee with whom no severance settlements were made on the last day of employment in view that there was Force Majeure officially certified. 

The claims for recovery of the salary, compensation for unused days of annual leave, severance pay and average salary for the time of delay in the severance settlement may not be sustained in view that the employer is not at fault. As provided in article 117 of the Labour Code of Ukraine, such elements of an offence as the owner's failure to observe the time limits of severance settlement and the owner's guilt shall constitute the ground to bring the owner to liability for delay in severance settlements. Moreover, the court notes that an employee is paid salary for performed works, rather than for a mere fact of having employment relations.

IMPORTANT DRAFT LAWS ON LABOUR AND EMPLOYMENT

In Expectation of a New Labour Code of Ukraine

We remind that several draft Labour Codes have been registered so far: draft law No. 2410 dated 8 November 2019  and alternative draft law No. 2410-1 dated 08 November 2019. 
However, it is draft law No.  2708 submitted on 28 December 2019  by the Cabinet of Ministers of Ukraine to the Verkhovna Rada of Ukraine (also the “Draft Law”) that attracts attention now, as it is aimed at abolishing the Code of Labour Laws of Ukraine dated 10  December 1971 as the main source of labour law and liberalising the labour legislation to create equal game rules and keep the balance of interests between employees and employers, and simplifying the starting and ending of employment relations.  

Unfounded Dismissals at the Employer’s Initiative May Now Become Lawful

The Draft Law separately defines the grounds for termination of employment that are “beyond the parties’ control” and also introduces the so-called “termination at will,” which is uncommon in the post-Soviet space. If this Draft Law is enacted, dismissals at the employer’s initiative will be possible on the following grounds:

1. At the employer's own initiative for no cause, however, not on the grounds of or for reasons related to
   1. discrimination or retaliation;
   2. employee’s intention to become a staff representative;
   3. employee’s filing of a complaint against the employer or participation in an action brought against the employer.
2. due to the employee’s violation of an employment agreement;
3. employee’s absence from work because of temporary disability (4 consecutive months or 150 days in a work year);
4. reinstatement of the employee who performed this work earlier;
5. employee’s absences (exceeding 10 consecutive working days);
6. determining, during a probationary period, that the employee is unsuitable for the job or position.

Furthermore, in order to distinguish between an employment agreement and a civil agreement, the Draft Law lists the features of labour relations, which include the following:

1. a person is regularly paid for work performed for the benefit of another person;
2. work is performed personally; 
3. on the instructions and under the control of the person for whose benefit the work is performed;
4. the workplace and equipment are provided by the person for whose benefit the work is performed; 
5. working time and rest time are determined by the person for whose benefit the work is performed; and
6. the work is similar to that performed by full-time employees of the person for whose benefit the work is performed.

Additionally, the Draft Law abolishes a contract as a special form of an employment agreement and introduces new types of employment agreements (a student employment agreement, a domestic worker employment agreement, etc). 

Electronic Workflow 

On 27 December 2019, the Verkhovna Rada of Ukraine registered Draft Law No. 2686  (the “Draft Law”), which proposes to introduce an electronic form of employee workflow, i.e. to abolish employment record workbooks.

If the lawmakers enact the said Draft Law, employees of the Pension Fund will enter employment-related information into the register of insured persons of the State Register of Compulsory State Social Insurance.

Strike Procedure and Lockouts

On 27 December 2019, the Verkhovna Rada of Ukraine registered Draft Law No. 2682 (the “Draft Law”), which proposes to remove a collective labour dispute from the Ukrainian legal framework. Instead, the Draft Law proposes to introduce a strike procedure, whose stages are as follows: 

1. employees’ demands are raised by collecting employees’ signatures and the employer is notified in writing of the employees’ strike demands; 
2. negotiations are conducted between the body responsible for managing the strike and the employer (an agreement on the resolution of strike demands may be concluded as a result of this stage); 
3. a warning of a strike is sent to the state authority and the local self-government authority at the place where the strike is planned to be conducted; 
4. a strike is conducted (work is stopped in full or in part); and
5. the body responsible for managing the strike decides to end the strike.

New Regulation of Trade Union Activities

On 27 December 2019, the Verkhovna Rada of Ukraine registered Draft Law No. 2681 (the “Draft Law”), which proposes to align current legislation with the existing working conditions, to narrow the powers of trade unions and strengthen the role of an individual employee in the trade union activities.
If the Draft Law is enacted, an elected body of a primary trade union organization will no longer make decisions to require that owners terminate employment agreements with heads of enterprises. The Draft Law will also lift a ban on dismissal, at the employer’s initiative, of employees elected to trade union bodies within one year after the expiration of the term for which trade union members were elected. Additionally, the Draft Law removes the employer’s obligations to provide premises for trade union operation and to deduct trade union contributions from employees’ salaries.

Author: Oksana Voynarovska, Partner, Valeriya Bezpala, Partner, Oleksandr Melnyk, Counsel, Attorney-at-Law