Dismissing Employees during the COVID-19 Pandemic

05/ 05/ 2020

Katerina Lysechko. Head of Legal Department of Accountor Ukraine On March 12, a nationwide quarantine was announced throughout Ukraine to prevent the emergence and spread of COVID-19. The introduction of restrictions has had a significant impact on business entities. Businesses have to change the organization of their work process and revise their financial plans. This, unfortunately, results in the need to reduce workforce and dismiss some employees. No laws regarding the grounds for dismissing employees were changed for the period of quarantine measures to prevent the emergence and spread of COVID-19. The Labor Code of Ukraine does not entitle the employer to dismiss employees on their own initiative on the basis of quarantine or restrictive measures. The employer has the right to dismiss the employee only on the grounds clearly defined by the Labor Code of Ukraine (hereinafter - LC). Thus, according to Art. 40 of the LC, employment contracts concluded for an indefinite period, as well as fixed-term employment contracts before their expiration may be terminated by the owners or their authorized body only in cases of: 1) changes in the organization of production and labor, including the elimination, reorganization, bankruptcy or re-profiling of a company/institution/organization, reduction of the number or employees or workforce reduction; 2) detection of the employee’s inconsistency with the position or work due to lack of qualification or due to health condition which hinders continuation of this job; 3) refusal to grant admission to state secrets or revocation of admission to state secrets, if the performance of the duties entrusted to the person requires access to state secrets; 4) systematic failure of the employee to perform the obligations imposed on them by the employment contract or the rules of internal employment regulations without a good cause, if the employee has previously been subjected to disciplinary or public enforcement measures; 5) absenteeism (including absence from work for more than three hours during the working day) without a good cause; 6) absence from work for more than four consecutive months as a result of temporary disability, with the exception of maternity leave, unless the laws prescribe a longer period of job (position) preservation for a certain illness. For workers who have lost their ability to work due to work injury or occupational disease, their job (position) is preserved until they are able to return to work, until their disability is documented; 7) reinstatement of the employee who had performed this work before the current employee; 8) arriving at work in the state of alcohol, drug or substance intoxication; 9) committing theft (including petty theft) of the owner’s property at workplace, if the fact of theft has been confirmed by a court verdict which has entered into force, or by a resolution of a body competent to impose administrative punishment or public influence measures; 10) the owner’s recruitment by the military forces or the owner’s mobilization during a special period if the owner is a natural person; 11) detection of the employee’s inconsistency with the job. Besides, the employer may not coerce or encourage the employee to resign. The employee and the employer may, by mutual agreement, agree on the conditions and grounds for dismissal. However, it should be noted that it is the employees right to voluntarily apply for dismissal by agreement of the parties or for willful resignation. If no agreement is reached as to the grounds for dismissal, the employee may apply to the court to overrule the dismissal. If the dismissal is unlawful, the employer will be fined for gross violation of labor law, the employee will be reinstated at work, and the employer will be obliged to pay to the employee an average wage for the period of forced absenteeism, but not more than for one year (Art. 235 LC). For unlawful dismissal of an employee due to personal reasons, the employer must either pay a fine of 2000 to 3000 non-taxable minimal incomes (34 000 to 51 000 UAH), or be deprived of the right to occupy certain positions or engage in certain activities for up to 3 years, or be sentenced to community service for up to 2 years (Article 172 of the Criminal Code). E.g.: a dismissal is deemed lawful if it happened at the employees initiative or by the “agreement of the parties” based on the employees voluntarily submitted resignation letter (§ 1 of Article 36, Articles 38, 39 LC); or if the dismissal happened at the initiative of the employer on the basis of duly executed documents and in compliance with the established terms (Articles 40, 41 LC). Thus, during quarantine, employers may dismiss employees with no risk of violating labor laws, provided that they comply with the causes and procedures established by law, as well as avoid any form of pressure on employees or any form of encouragement to resign. If you have any questions or if you require any further clarification, please seek professional help. The Accountor team will help you to act within the legal framework while safeguarding the legitimate interests of both employers and employees. Feel free to contact us!

Katerina Lysechko

Head of Legal Department
of Accountor Ukraine

On March 12, a nationwide quarantine was announced throughout Ukraine to prevent the emergence and spread of COVID-19. The introduction of restrictions has had a significant impact on business entities. Businesses have to change the organization of their work process and revise their financial plans. This, unfortunately, results in the need to reduce workforce and dismiss some employees.

No laws regarding the grounds for dismissing employees were changed for the period of quarantine measures to prevent the emergence and spread of COVID-19. The Labor Code of Ukraine does not entitle the employer to dismiss employees on their own initiative on the basis of quarantine or restrictive measures.

The employer has the right to dismiss the employee only on the grounds clearly defined by the Labor Code of Ukraine (hereinafter – LC).

Thus, according to Art. 40 of the LC, employment contracts concluded for an indefinite period, as well as fixed-term employment contracts before their expiration may be terminated by the owners or their authorized body only in cases of:

1) changes in the organization of production and labor, including the elimination, reorganization, bankruptcy or re-profiling of a company/institution/organization, reduction of the number or employees or workforce reduction;

2) detection of the employee’s inconsistency with the position or work due to lack of qualification or due to health condition which hinders continuation of this job;

3) refusal to grant admission to state secrets or revocation of admission to state secrets, if the performance of the duties entrusted to the person requires access to state secrets;

4) systematic failure of the employee to perform the obligations imposed on them by the employment contract or the rules of internal employment regulations without a good cause, if the employee has previously been subjected to disciplinary or public enforcement measures;

5) absenteeism (including absence from work for more than three hours during the working day) without a good cause;

6) absence from work for more than four consecutive months as a result of temporary disability, with the exception of maternity leave, unless the laws prescribe a longer period of job (position) preservation for a certain illness. For workers who have lost their ability to work due to work injury or occupational disease, their job (position) is preserved until they are able to return to work, until their disability is documented;

7) reinstatement of the employee who had performed this work before the current employee;

8) arriving at work in the state of alcohol, drug or substance intoxication;

9) committing theft (including petty theft) of the owner’s property at workplace, if the fact of theft has been confirmed by a court verdict which has entered into force, or by a resolution of a body competent to impose administrative punishment or public influence measures;

10) the owner’s recruitment by the military forces or the owner’s mobilization during a special period if the owner is a natural person;

11) detection of the employee’s inconsistency with the job.

Besides, the employer may not coerce or encourage the employee to resign.

The employee and the employer may, by mutual agreement, agree on the conditions and grounds for dismissal. However, it should be noted that it is the employee’s right to voluntarily apply for dismissal by agreement of the parties or for willful resignation.

If no agreement is reached as to the grounds for dismissal, the employee may apply to the court to overrule the dismissal. If the dismissal is unlawful, the employer will be fined for gross violation of labor law, the employee will be reinstated at work, and the employer will be obliged to pay to the employee an average wage for the period of forced absenteeism, but not more than for one year (Art. 235 LC).

For unlawful dismissal of an employee due to personal reasons, the employer must either pay a fine of 2000 to 3000 non-taxable minimal incomes (34 000 to 51 000 UAH), or be deprived of the right to occupy certain positions or engage in certain activities for up to 3 years, or be sentenced to community service for up to 2 years (Article 172 of the Criminal Code).

E.g.: a dismissal is deemed lawful if it happened at the employee’s initiative or by the “agreement of the parties” based on the employee’s voluntarily submitted resignation letter (§ 1 of Article 36, Articles 38, 39 LC); or if the dismissal happened at the initiative of the employer on the basis of duly executed documents and in compliance with the established terms (Articles 40, 41 LC).

Thus, during quarantine, employers may dismiss employees with no risk of violating labor laws, provided that they comply with the causes and procedures established by law, as well as avoid any form of pressure on employees or any form of encouragement to resign.

If you have any questions or if you require any further clarification, please seek professional help. The Accountor team will help you to act within the legal framework while safeguarding the legitimate interests of both employers and employees. Feel free to contact us!