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Ukraine increases minimum wage and penalties for employment law breaches

02/ 01/ 2019
  Beginning 1 January 2019, Ukraine raised the minimum statutory monthly wage from UAH 3,723 (EUR 117) to UAH 4,173 (EUR 132), and increased financial penalties against employers for breaches of employment legislation linked to minimum wages. Hence, starting 1 January 2019 the following financial penalties will apply to employers who fail to keep proper documentation of relations with employees or comply with minimum wage and other salary requirements: UAH 417,300 (EUR 13,160) – for creating obstacles to perform a state labour inspection aimed at revealing off-the-books employees and shadow wages; UAH 125,190 (EUR 3,950) – for every employee who: works without an employment agreement in place; works full-time, but with an employment agreement for a part-time position; receives a shadow wage; is not paid in a timely manner with delays exceeding one month; and is not paid a salary or a mandatory payment in full. UAH 41,730 (EUR 1,315) – for every employee not provided with employment benefits and compensation entitlements (i.e. not paid for night or overtime work); UAH 12,519 (EUR 395) – for failure to pay salaries or other due payments in a timely manner (i.e. a delay of one month), or for failure to pay such payments in full; also for creating obstacles to perform a state labour inspection (other than inspections for off-the-book employees and payments of envelope salaries); and UAH 4,173 (EUR 132) – for other breaches of employment law (i.e. failure to notify the state authority of hire of a new employee). Payment of these financial penalties, however, will not release employers from possible administrative and criminal liability for breaches of employment law. Furthermore, given the recent tendency for an increase in minimum wage, analysts predict that in the coming years financial penalties for violations will grow in step with wages. If you have further questions or would like more detailed information regarding compliance with Ukrainian employment legislation, please contact the authors of this publication. Authors: Olexander Martinenko,  Senior Partner, olexander.martinenko@cms-cmno.com Nataliya Nakonechna, Senior Associate, nataliya.nakonechna@cms-cmno.com

Beginning 1 January 2019, Ukraine raised the minimum statutory monthly wage from UAH 3,723 (EUR 117) to UAH 4,173 (EUR 132), and increased financial penalties against employers for breaches of employment legislation linked to minimum wages.

Hence, starting 1 January 2019 the following financial penalties will apply to employers who fail to keep proper documentation of relations with employees or comply with minimum wage and other salary requirements:

  • UAH 417,300 (EUR 13,160) – for creating obstacles to perform a state labour inspection aimed at revealing off-the-books employees and shadow wages;
  • UAH 125,190 (EUR 3,950) – for every employee who:
    • works without an employment agreement in place;
    • works full-time, but with an employment agreement for a part-time position;
    • receives a shadow wage;
    • is not paid in a timely manner with delays exceeding one month; and
    • is not paid a salary or a mandatory payment in full.
  • UAH 41,730 (EUR 1,315) – for every employee not provided with employment benefits and compensation entitlements (i.e. not paid for night or overtime work);
  • UAH 12,519 (EUR 395) – for failure to pay salaries or other due payments in a timely manner (i.e. a delay of one month), or for failure to pay such payments in full; also for creating obstacles to perform a state labour inspection (other than inspections for off-the-book employees and payments of “envelope” salaries); and
  • UAH 4,173 (EUR 132) – for other breaches of employment law (i.e. failure to notify the state authority of hire of a new employee).
  • Payment of these financial penalties, however, will not release employers from possible administrative and criminal liability for breaches of employment law.
  • Furthermore, given the recent tendency for an increase in minimum wage, analysts predict that in the coming years financial penalties for violations will grow in step with wages.
  • If you have further questions or would like more detailed information regarding compliance with Ukrainian employment legislation, please contact the authors of this publication.

Authors:

Olexander Martinenko,  Senior Partner, olexander.martinenko@cms-cmno.com

Nataliya Nakonechna, Senior Associate, nataliya.nakonechna@cms-cmno.com

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