Relevant labour issues: grounds for collective dismissal
Key issues:
- Termination of an employment contract
- Changes in the organisation of production and labour
- Collective dismissal.
Main thesis
Ukraine’s Labour Code (the “Code”), enacted in 1973, is a legacy from the Ukrainian Soviet Socialist Republic. In 2020 Ukraine still applies the Code (albeit with numerous amendments).
On the 28th of December 2019 the draft law “On labour” was registered in Parliament. The Bill has not yet had any readings in Parliament and is not in the agenda currently.
Below we look at the existing Code in advance of our upcoming Alert regarding changes that will govern labour relations.
Ukrainian employment law requirements and procedure for termination of an employment contract by an employer:
Issues regarding termination of employment contracts on the employer’s initiative are governed in accordance with the provisions of the Code.
Pursuant to Paragraph 1 of Article 40 of the Code a labour contract concluded for a fixed or indefinite period of time may be terminated before the expiration date of the contract by the employer in the following cases:
– changes in the organisation of production and labour (including liquidation, reorganisation, bankruptcy, re-profiling of an enterprise, redundancy of several employees or the redundancy of a list of members of staff);
– poor performance of an employee due to lack of qualifications or health condition;
– systematic failure of an employee to perform the duties assigned to him or her by an employment contract without good reason, if the employee has previously been subjected to disciplinary action;
– absenteeism (including absence from work for more than three hours during the working day) without good reason;
– absence from work for more than four consecutive months due to temporary disability;
– re-hiring of an employee who previously performed this job;
– drunkenness or drug intoxication during working hours;
– committing theft (including petty) of the owner’s property at the place of work;
– failure to pass the probation period.
The Code envisages that merely one reason for termination of employment contracts may be applied collectively to all employees if there is a change in the organisation of production and labour. Moreover, if the employer is not going to liquidate or re-profile the enterprise, such a change may be pursued by the redundancy of several employees or the redundancy of a list of members of staff.
The redundancy of multiple employees or a list of members of staff may be conducted by the owner for the purposes of improving production, combining professions, reducing production or re-profiling the enterprise.
The redundancy of several employees and the redundancy of a list of members of staff are somewhat different concepts:
– the redundancy of several employees envisages layoffs of employees;
– whereas the redundancy of a list of members of staff supposes the reduction of the quantity or liquidation of certain positions, specializations and professions. At the same time, other positions, specializations and professions may be introduced and therefore the number of employees may not decrease, and in some cases even increase.
Therefore, if an employer decides to change the organisation of production and labour, the following steps must be taken:
– the employer must, at least three months in advance (before the changes), provide to the trade union of the organisation or the elected employees’ representative information about the change of organisation of production and labour including reasons for dismissals, the number and category of employees that will be dismissed, and respective deadlines;
– the employer must issue an order addressing changes in the organisation of production and labour, which should include a description of the changes. Moreover, this order should establish internal commissions that conduct the whole process;
– the employer must conclude and approve the new list of members of staff;
– the employer must issue an order to empower the HR department (or other authorised body) to conduct appropriate measures connected to employees’ dismissals including the signing of an acknowledgement form and receiving a written notice of dismissal.
Do not forget – an employee has certain rights
The employer:
– is obliged to prepare a written notice about a possible layoff of employees;
– must, at least two months in advance of a dismissal, personally notify each employee about the change of organisation of production and labour by way of the employee’s signing of the acknowledgement form and receiving the written notice of dismissal (the ‘Redundancy Notice’);
– at the same time as the Redundancy Notice, may make an offer to the employee to transfer to a different position in the same organisation;
– may change essential conditions of work such as salary, working hours, position etc. In this case, the employer must receive from an employee written consent about such changes and a stated intention to continue work after these changes become effective for him/her.
Upon the dismissal of an employee, payment of all amounts owed to him by the employer shall be made on the day of dismissal. If the employee is not at work on the day of dismissal, all amounts shall be paid not later than the next day after the dismissed employee submits a request for payment. The employer must provide a written notice to the employee regarding the amounts to be paid upon dismissal.
Upon termination of the employment contract on the grounds of changes of organisation of production and labour, the employee shall be paid severance pay of not less than one average monthly salary.
Moreover, during the change of organisation of production and labour, employees have a wide scope of rights and guarantees:
– an employee may withdraw his/her consent to continue to work after the change of organisation of production and labour or withdraw his/her refusal to work after the change;
– an employee may not be dismissed involuntarily during the two month period after the Redundancy Notice;
– however, an employee may decide to be dismissed earlier than the end of the two month period and the employer must then dismiss such an employee earlier;
– an employee who received a Redundancy Notice without an offer of a different job with the employer will continue to work and to get a salary for two months after the date of the Notice;
– during the change, the employer must take into account the predominant right of certain employees to remain hired. Such rights are held by employees with higher qualifications and productivity.
However, if all employees have the same qualifications and productivity, there are categories of employees who are protected by the law and have a predominant right of an employee to remain hired based on their circumstances:
– a married employee with two or more dependents;
– an employee who does not have other employed members in his/her family;
– an employee with a long and uninterrupted employment record with the employer;
– an employee who studies part-time in a higher or secondary specialized educational institution;
– military personnel and disabled veterans (according to the Law of Ukraine On the Status of Veterans and Guarantees of their Social Protection);
– authors of inventions and useful models;
– an employee who has suffered a work injury or a professional disease during their working hours with the employer;
– employees who returned following illegal deportation from Ukraine (applicable for 5 years from their return to permanent residence in Ukraine);
– employees who are former military personnel and persons who have served alternative (non-military) service (applicable for 2 years from their resignation from the service).
Moreover, the Code has additional restrictions over the employer’s ability to dismiss the following categories of people:
– pregnant women and women who have children under the age of three (up to six years old if a child requires home care);
– single mothers who have a child under 14 or a disabled child;
– fathers raising children without a mother (including in the case of the mother’s hospitalization), as well as guardians and foster parents;
– the dismissal of employees under the age of 18 is allowed only with the consent of the district children’s welfare authorities.
In the case of a collective dismissal, the employer must inform the State Employment Service of Ukraine about upcoming dismissals of employees indicating their profession, specialization, qualifications and amount of remuneration.
Conclusion
To summarise, an employer may terminate a contract with an employee, but only in certain circumstances. Moreover, grounds for collective dismissal are even more limited than for single cases. The Code in its current state is one of the most protectionist legislative acts in the world. It defends employee’s labour rights and interests firmly. An employer must comply with all stages of a comprehensive procedure for the termination of an employment contract. Otherwise, any breaches of procedure become grounds for court proceedings and successful claims by employees.
Look out for our Alert regarding upcoming changes to the Code.