Ukraine’s la­bor code dates to 1971: What’s the hurry in chang­ing it?

Kyiv Post Legal Quarterly - - News - By

Apro­posed 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.

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.

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