Employees are free to choose a bank to receive a salary

27/ 01/ 2021

Listen to online Stop   From 2021, the employee can independently choose a bank to receive a salary as provided by labor law. Thus, amendments to the Instruction On Cashless Payments in Ukraine in the National Currency came into force. After the international bank account number is introduced in Ukraine, the employer was able to form a payslip with the account number of an employee according to the IBAN standard, including an account that the employee opened in the bank of his/her choice. To receive a salary on the desired account, the employee only needs to inform the employer of the account number in IBAN format, which is issued by the bank when opening an account. According to the EBA member companies, this employees right was in fact not exercised in practice. One of the reasons so far has been the technical need for the regulator to provide additional time to banks and employers to adjust their automated structure, as well as the software and hardware systems. Another deterrent factor is that the employer has to pay for the transfer of funds at his/her own expense. The European Business Association continues to communicate with the relevant public authorities to ensure the full practical implementation of the employees right to freely choose a bank to create a salary account. In particular, it is important that every employee has the right to freely choose a bank and that rule shall be mandatory following the Law On Remuneration. This document states that it is prohibited in any way to restrict the employee in the management of his/her salary funds which also should cover the choice of a salary bank. Therefore, the European Business Association proposes to supplement Article 24 of the Law of Ukraine On Remuneration with the following provisions: An employee has the right to freely choose a bank institution for salary payment, and Article 25 with the following provisions: It is prohibited in any way to restrict the employee to freely choose the bank institution for the salary payment”. At the same time, it is proposed to consider the provision of administrative liability at the legislative level for non-compliance by employers with these requirements. In October 2020, the EBA received a letter from the Mineconomy in support of the EBA proposals to improve labor legislation in the framework of the Governments Program of Activities. Therefore, the business community supports the position of the NBU, which states that proper settlement of this issue will avoid conflicts between employers and employees, encourage banks to compete, improve customer service and expand the range of banking services.   Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.

From 2021, the employee can independently choose a bank to receive a salary as provided by labor law. Thus, amendments to the Instruction On Cashless Payments in Ukraine in the National Currency came into force.

After the international bank account number is introduced in Ukraine, the employer was able to form a payslip with the account number of an employee according to the IBAN standard, including an account that the employee opened in the bank of his/her choice. To receive a salary on the desired account, the employee only needs to inform the employer of the account number in IBAN format, which is issued by the bank when opening an account.

According to the EBA member companies, this employee’s right was in fact not exercised in practice. One of the reasons so far has been the technical need for the regulator to provide additional time to banks and employers to adjust their automated structure, as well as the software and hardware systems. Another deterrent factor is that the employer has to pay for the transfer of funds at his/her own expense.

The European Business Association continues to communicate with the relevant public authorities to ensure the full practical implementation of the employee’s right to freely choose a bank to create a salary account. In particular, it is important that every employee has the right to freely choose a bank and that rule shall be mandatory following the Law “On Remuneration”. This document states that it is prohibited in any way to restrict the employee in the management of his/her salary funds which also should cover the choice of a salary bank. Therefore, the European Business Association proposes to supplement Article 24 of the Law of Ukraine “On Remuneration” with the following provisions: “An employee has the right to freely choose a bank institution for salary payment“, and Article 25 with the following provisions: ” It is prohibited in any way to restrict the employee to freely choose the bank institution for the salary payment”. At the same time, it is proposed to consider the provision of administrative liability at the legislative level for non-compliance by employers with these requirements. In October 2020, the EBA received a letter from the Mineconomy in support of the EBA proposals to improve labor legislation in the framework of the Government’s Program of Activities.

Therefore, the business community supports the position of the NBU, which states that proper settlement of this issue will avoid conflicts between employers and employees, encourage banks to compete, improve customer service and expand the range of banking services.

Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.