What changes have occurred in labour relations in 2021?
Authors: Illya KOSTIN, Attorney-at-law, Partner at Legal Alliance Company, Victoria MALYNIAK, Junior Associate at Legal Alliance Company
The year 2021 introduced certain changes in the regulation of labour relations in Ukraine. This is reflected both in laws and by-laws and in bills that are likely to be enacted in the near future. The shifts in the updating of labour legislation show the authorities’ willingness to reform the existing legal framework and confirm the existence of a request for change by the parties to such a relationship.
In the article, we would like to present a brief overview of these laws and bills, showing key trends in the updating of labour legislation.
2021 is year of digitalization
In the wake of the general trend towards the digitalization of various sectors, a law on registering an employee’s labour activities in electronic form and Health Ministry’s Order No.1066 of June 1, 2021 have been approved.
The law introduced a transition to electronic employment record books or, in other words, a new procedure for recording information on the employee’s working career through the register of mandatory state social insurance.
The transition from paper to electronic form is expected to take place over the next five years. It is now possible to use both paper copies of employment record books and electronic records of working career. The required information from paper is expected to be digitized with the help of employers and employees over this period.
The law’s primary purpose is to simplify the procedure for recording employment, to automatically assign pensions and solve the problem of loss of paper proof of work experience.
As of June 10, 2021, new employees may not provide an employment record book to the employer when hiring. Meanwhile, the latter will be obliged to issue a paper version of the first employment record books to the employee upon request. However, the employer does not have a duty to keep the employment record books of new employees.
The law also stipulates the possibility of submitting the relevant data independently through the portal of the Pension Fund of Ukraine (access by electronic signature or written application to the fund).
With the end of the five-year transition period and the conversion of the records into electronic form, paper employment record books will be returned to the employees. To date, there are no legal acts or clarifications explaining the procedure to be followed. In addition, not all procedural issues are clearly addressed in the existing acts, such as revision of the employment register and the confirmation of the work experience prior to 2004.
It is expected that in due course, the authorized agencies will provide relevant clarifications and amendments to the appropriate legal acts.
In early October 2021, the transitional period for the use of paper medical reports and sick leave certificates for the formation of such documents in a special register in the e-health system also ended. These changes were made by Health Ministry’s Order No.1066 of June 1, 2021.
Due to the simplification of the procedure for obtaining data on sick leave certificates, sick leave e-certificate became available in the insurer’s account on the web portal of the Pension Fund of Ukraine. Accordingly, proper functioning of this instrument is linked to the availability of correct information about the insured person in the Pension Fund of Ukraine.
Although the law facilitates some collaboration on sick leave certificates, in practice problems have arisen in terms of unstable functioning of the system and the lack of technical support for hospitals.
Off-site work as labour safety tool
Another significant development in 2021 was the remote work regulation in labour legislation.
Thus, the Code of Labour Laws of Ukraine was supplemented by Articles 60-1 and 60-2, establishing such forms of work organization as home-based and remote. The articles stipulate the performance by the employee of own official duties outside the workplace, different conditions for the application to the employee of internal regulations, mode of working, and others.
The possibility of transferring employees to remote or home-based work without entering into agreement for this form of work in the event of the threat of an epidemic, pandemic or self-isolation has become relevant. In this case, the transfer takes place on the basis of the employer’s order and on condition that the employee is informed of it within two days from the date of its adoption, but before the establishment of special mode of working.
In the second half of 2021, the authorities started to impose restrictions on certain categories of public sector employees without mandatory COVID-19 vaccinations. Meanwhile, private businesses still lack an adequate and legally correct way of protecting against those who risk the work of the entire team.
On these terms, the possibility of introducing a special mode of working may be an effective deterrent to employees refusing vaccination or PCR testing.
Actually, changing the mode of working will be an alternative way for the employer to ensure safe working conditions. In any case, the transition to the special mode of working requires appropriate local regulation, compliance with anti-discrimination standards, along with the provisions of personal data law, and is not limited solely to the preparation of an order on changing mode of working.
Fixed-term employment contract: expected updates
In September 2021, Bill No.5388 seeks to deregulate labour relations in Ukraine has been passed. The authors’ aim is to end the maintenance of irrelevant documentation and to simplify the enforcement of labour legislation.
This document proposes to amend the urgency of employment contracts, limiting them for a period of no more than five years, and to update the grounds for their conclusion by increasing them to 13 non-exclusive clauses (a significant part is related to the public sector). In particular, the list may be extended by the following grounds:
- replacement of the temporarily absent employee who retains the workplace;
- performance of work related to the expansion of production or the scope of its services;
- temporary transfer of an employee to another employer/position;
- concluding an agreement with creative employees in the media, theaters, concert organizations, professional athletes;
Moreover, the project proposes to reduce the role of trade unions in coordinating individual labour issues, particularly:
- removing the liability to agree on the postponement of annual leave at the employer’s initiative;
- removing the liability to agree on breach of an employment contract on the initiative of the employer and the employee participating in the trade union.
Thus, the legislator aims at imposing restrictions on the duration of a fixed-term employment contract, detailing the grounds, and limiting the powers of trade unions to liberalize and simplify labour procedures.
New labour regime – new risks
The Verkhovna Rada of Ukraine has passed at first reading Bill No.5161 on the regulation of non-standard forms of employment. This document introduces a new mode of working with non-fixed working time.
An employment contract with non-fixed working time differs from others in that there is no specific time for the job and no guarantees that the job will be provided permanently. Typical for such a mode of work should be the performance of work that is of irregular, but repetitive nature with a mandatory element of control over the performance of work by the employer.
It would be advisable to conclude the contract, for instance, with IT specialists, accountants, translators who periodically perform work in response to the employer’s situation (installation and repair of equipment, preparation of specialized financial documentation, translation of documents).
The employment contract for non-fixed working time is aimed at optimizing the work process and making efficient use of working time, facilitating the formal employment of employees whose services are not required on a permanent basis. In fact, the legislator is thus trying to transform subscriber service contracts into labour regulation.
However, it is planned that the number of employees with non-fixed working time may not exceed 10% of all available employment contracts. This rule will not apply to sole proprietorship with less than 10 employees.
The number of hours the employee may work in non-fixed time may not exceed 40 hours per week and 6 days per week.
So far, we are skeptical about such a legislative initiative and believe that it will not achieve the legislator’s objectives, the transfer of a certain category of civil contracts to labour regulation. However, the bill adoption may lead the State Employment Service to start work towards the recognition (according to some criteria) of these civil-law contracts in substance corresponding to contracts with non-fixed working time.
Prohibition of discrimination against employees: expansion of responsibilities
The Verkhovna Rada of Ukraine has also passed at first reading Bill No.5266 on strengthening the protection of employees’ rights.
This draft document provides for a number of amendments to labour legislation, including the possibility of concluding collective agreements not only by legal entities, but also by sole proprietorship.
An important part in this document is the updated provisions on non-discrimination in employment in accordance with European legislation establishing equal treatment in employment, namely Council Directive 2000/43/EC of June 29, 2000 and Council Directive 2000/78/EC of November 27, 2000.
Thus, it is proposed to expand the grounds on which discrimination against employees is prohibited and to establish the obligation of providing a written answer on the grounds of refusal of employment upon the request of a person who has been refused in hiring.
There are now serious doubts as to the feasibility of such a mechanism in combating discriminatory behavior by potential employers. It is expected that this right to demand explanations may become an instrument of abuse by persons who have been refused employment.
We recall that the restriction of the rights of persons on discriminatory grounds established by law is punishable by civil (material and moral damage), administrative and criminal liability.
Is it realistic to regulate labour relations in near future?
Finally, we have left behind one of the most interesting, in our opinion, bills, which, unlike all of the above, should give a real impetus to the liberalization of labour relations and their transfer to the contractual plane.
This is Bill No.5371, which simplifies labour regulation and reduces the administrative burden on businesses.
Unfortunately, the elaboration of this document has been halted after receiving the findings of the Verkhovna Rada committees due to individual shortcomings and approaches in writing it related to the distribution of employees into categories depending on the business entity.
Thus, the bill supplements the Labour Code of Ukraine with an additional chapter, providing for the employment contract to take precedence over other sources regulating labour relations. The legislator intended to call this approach a contractual labour law regime.
This regime must provide for the establishment of individual working conditions for the employee, in particular, the conditions for the emergence and termination of labour relations; the amount and conditions of remuneration; working and rest time standards, and the period of notice of termination of the employment contract; the amount of compensation paid; the procedure for the exchange of information; the procedure and time-limits for changing substantive working conditions; the settlement of conflicts of interest; the procedure for overtime and weekend work, and others.
Surely, as with any bill to liberalize labour laws in favour of the employer, it has met with a great deal of criticism and controversy from workers’ organizations and trade unions. It could be agreed that it had enough gaps and, in certain aspects, could create a conflict with other legal instruments.
However, such issues should be resolved through dialogue and amendments to the bill, rather than blocking its further consideration.
Despite the fact that there are no similar provisions in the current legislation of Ukraine, in practice we have repeatedly managed to implement a system of contractual regulation of labour relations in line with the legislation in force. The adoption of the bill would greatly enhance the possibilities for such regulation and would create a transparent and understandable mechanism for cooperation between employer and employee in labour matters or disputes.
To date, much of the labour legislation has become outdated and does not adequately regulate labour market relations, contributing to abuses by both employers and employees.
Every year we hear loud statements by representatives of the executive and legislative authorities about the start of work on updating Ukraine’s labour legislation and adapting it to contemporary trends. Each time, however such initiatives met with considerable criticism were accompanied by inadequate legislative drafting techniques, which prevent consideration of the relevant projects. A similar situation has occurred with the “new” Labour Code on several occasions.
It should also be considered that labour law reform always has a political dimension. Not all law-makers were ready to vote in favour of the bill, which, in the opinion of some groups of the population, may worsen the status of employees. Particularly, if such updates are considered on the eve of electoral processes in Ukraine.
However, comparing the work done by the legislator to update the labour legislation in 2021 with previous periods, there is evidence of more active actions in this direction.
Thus, a large part of the laws and bills of 2021 were aimed at modernizing, improving and simplifying labour processes. Such actions by the standard-setter may be considered a step in the right direction, but they are not sufficient, given the realities of labour law.
A comprehensive and professional approach to labour regulation is needed in order to achieve a full-fledged reboot, involving dialogue between the official representatives (organizations) of the two parties, employers and employees.
This is what we expect legislators to do in the future. Perhaps this will happen even in 2022.