A proposed new labor code to govern relations between employees and employers in Ukraine still has not been adopted by lawmakers. A bill passed its first reading in November. That's where it stopped. Talk of replacing the 1971 Soviet-era labor code has been ongoing for at least a decade.
But the current political crisis has stalled action again, making an April deadline set by the Ministry of Social Policy unrealistic, lawyers Valeriya Savchuk and Oksana Voynarovska, who sit on the parliamentary working group overseeing the draft, told the Kyiv Post.
Either way, the proposed new code still over-regulates employment contracts and is skewed in favor of employees. It’s simply not revolutionary, they said.
“It’s not enough – the principles stay the same,” Yuriy Zaremba of Avellum Partners said. “A labor code should allow an employer and employee to create their own terms of employment. But it does introduce many new changes … so it is a breath of fresh air.”
The new labor code would introduce background checks on employees and permit remote monitoring, via video cameras for instance.
Employers will also be able to dismiss employees for breaches of confidentiality.
Legal working hours will rise to 48 hours a week, but the extra hours will have to be agreed in writing and paid in advance. The probation period before a person can qualify for maternity leave will increase. It also will now be possible to fire pregnant women, women with children under three and single mothers with children under 15.
“Under the current code, it is impossible under any circumstances to fire a single mother, unless there is the complete liquidation of the company,” said Inesa Letych, a lawyer with Asters law firm. “This is very important for employers, because it means that even women with children can be dismissed if they do not work properly.”
On the other hand, irregular work such as freelancing or remote working is now regulated, along with irregular working hours and overtime.
Ukraine’s labor code dates back to 1971, 11 years before the death of Communist Party General Secretary Leonid Brezhnev. After the collapse of the Soviet Union in 1991, vested interests have been keeping the dysfunctional and hopelessly outdated code largely in place Members of parliament are still resisting changes outlined in a proposed new labor code.
Employers can’t discriminate by age, family situation, disability, sex, sexual orientation or criminal record.
Employers must also pay more when their employees work odd hours – an extra 30 percent of a person’s hourly wage, as opposed to 20 percent before.
The number of days of paid vacation could increase from 24 to 28 days per year.
Aside from overregulating contracts, the first draft of the new code fails to address obvious problems and even excludes some positive amendments made on the 1971 code.
For instance, according to Letych, legislation surrounding trade unions can cause major headaches for employers. At present a trade union can be created by just two people, with a simple recording of the minutes of the union’s first meeting enough to make it official. The union can then take measures to protect its members. Letych said that, theoretically, a person expecting to be fired could even create a trade union to try to stop it from happening.
“In my opinion, that’s not normal, because a trade union should represent the rights of more or less the majority of the employees … who would assess the situation more objectively,” Letych said.
Another shortcoming of the new code, according to several lawyers, is wording covering non-compete agreements. These restrict employees from, on termination of their employment, immediately working for a competing company or starting their own competing business using confidential knowledge gained from their previous employer.
“I have to tell employers it’s not enforceable in Ukraine,’” Zaremba said.
Because of Ukraine’s Soviet past, employees have traditionally enjoyed a privileged position in the law, at least on paper. Any moves to swing the balance of rights back towards employers is going to be unpopular, experts said.
According to Valentyna Danishevska of the Center for Commercial Law, the new labor code has been hobbled by politicians pandering to voters rather than looking at what’s best for the nation in the long run.
“With the threat of elections looming, lawmakers don’t want to do anything that could hurt their ratings,” Danishevska said.
The Center for Commercial Law spent two years campaigning for owners or investors to have the right to fire a poorly performing company director. Amendments were finally added to the previous labor code in March 2014, but are not included in the new version.
“Lawmakers are also company directors, you see,” Danishevska said.
The amendments awarded dismissed directors six months of severance pay, but since most receive the bulk of their salaries unofficially and a small part officially, this clause doesn’t have much of an impact.
The current Soviet-style code treats a director as an employee who can only be fired if the owner or shareholders can prove they are guilty of wrongdoing. When employment disputes with directors arise, it sets off a chain reaction of bribes, counter-bribes, and litigation that can take months for the courts to sort out.
“In some cases it’s been easier for people to kill the director than to fire him,” said Igor Nikolaev of the Center for Commercial Law.
A comparison of labor laws in Europe
Labor codes across Europe offer favorable conditions for employees, at least on paper, compared to the United States and some less-developed countries.
Sources: Ukrainian, Polish and French labor codes, European Commission: Shadow economy and undeclared work, Friedrich Schneider: The shadow economy in Europe (2013), European Commission: Undeclared work in the European Union (2013), Ukrainian State Statistics Service of Ukraine, Ukrainian Ministry of Economy
