Employment relations in Ukraine are generally governed by the Labour Code. The Constitution of Ukraine and the Labour Code both preclude discrimination based on colour of skin, race, ethnic and social origin, religious, political and other beliefs, sex, property status, place of residence, linguistic or other characteristics.
Labour Agreement and Labour Contract
Ukrainian foreign investment law allows enterprises with foreign investment to hire Ukrainian employees and enter into collective agreements or individual labour agreements. The terms of those agreements may not be worse than conditions guaranteed under the Labour Code. Also, according to the relevant provisions of the Code a Ukrainian employee can conclude only one employment agreement with the same employer.
The difference between Labour Agreement and Labor Contract
A Labor Agreement may be concluded for an indefinite period of time, a specific term which is settled through mutual consent of the parties, or for the amount of time necessary to perform the work. The written forms of agreements are not essential to bind a business. (Sometimes happens that employees may insist on the written form.) The agreement is considered to be in force from the moment the employee starts performing his/her job.
A Labour Contract is a version of a Labour Agreement but with some differences. The Contract is executed for a certain term and applicable for the certain termed employees. Also, the contract is always made in the written form.
Note: Under Ukrainian law, all business documentation in Ukraine is required to be made in the Ukrainian language. So, it is recommended to prepare employment agreements/contracts both in English and Ukrainian. This is especially important taking into account the fact that all disputes under these agreements are envisaged to be settled in the Ukrainian courts.
Ukrainian labour legislation requires a labour book to be kept for each employee working with an enterprise longer than five days. The labour book is the basic document concerning the activities of the employee, reasons for dismissal, etc. All legal entities are generally required to sign, stamp and hold such labour books for their employees. So, when hiring a Ukrainian citizen, an employer should receive from an employee his labour book and passport.
Termination of employment
An employee working under Labour Agreement concluded for an indefinite period of time may terminate the employment relationship at any time by giving two weeks’ notice in writing. In case of working under fixed term contract, an employee may terminate employment only because of sickness or if disability prevents performance of work under the agreement or the management violates labour legislation, the collective agreement or labour agreement.
An employer may terminate employment relationships for such reasons as failure of employees to perform their duties, reorganization, loss of trust in employees involved in financial matters, theft; absence without good reason, absence from work for more than four months as a result of a temporary disablement (not including maternity leave), unless a longer period of time for retaining the position is established by applicable legislation in the case of a specific illness, etc. In those cases, the statutory period for termination notice is two months. Dismissals cannot be arbitrary (e.g., for pregnancy or personal reasons unrelated to employment).
In practice, employment is commonly terminated by mutual agreement.
Salaries and wages
Wages and other payments to Ukrainian employees should be paid in national currency (UAH). Minimum wage levels are prescribed in the annual budget law. Wages and other payments to foreign employees may be paid in foreign currency credited on a monthly basis.
Social security system
The social security system in Ukraine covers pensioners, workers and their dependants for work-related accidents, illness, retirement, death and disability benefits, sickness and maternity benefits, medical care, severance benefit, and for child and family allowances. Obligatory contributions to Ukrainian social security and pension funds only apply if salary is paid through the payroll of a Ukrainian entity or the Ukraine representative office of a foreign entity.
Note: Ukrainian law requires that companies with eight or more employees must also employ a minimum number of invalids – 4% of their total employees but no less than one working place. If employers don’t do this, they are obliged to make a payment to the Fund for the Social Protection of Invalids equivalent to the enterprise’s annual average salary (50% for companies with eight to 15 employees) for each working place that is not properly occupied by an invalid.
In general, the length of a working week is restricted to 40 hours per week. Usually, it is a five-day working week, but employer may introduce a six-day working week. In that case employers may not work more than seven hours per day. The day before a national holiday is one hour shorter as like as night shift.
Overtime may not exceed 2 hours per day in any two-day period or 120 hours per year. The law also requires overtime to be paid at double rates. In practice, many employees of foreign firms work more or less than the normal working week depending on their individual agreements with the employer.
After the Labour Code some categories of employees are entitled to work shorter weeks. For employees performing work under harmful work conditions the working week is limited to 36 hours. Employees must also, if requested, grant a short workday or workweek on proportional pay to a pregnant woman or to a woman having a child under 14, a disabled child, or for those who take care for a sick family member based on a medical recommendation.
Annual holiday. In general, an employee’s minimum annual holiday is counted to 24 calendar days. Some employees, such as those involved in pedagogics, research or investigation may be entitled to more than 24 day’s annual leave. For employees under the age of 18, paid leave increases to 31 calendar days. When counting the length of a vacation, weekends during the vacation period are counted as vacation days but public holidays are excluded.
Sick leave. Employees are generally entitled to sick leave benefits. Such benefits are based on the employee’s wages and vary between 60% and 100%.
Maternity leave. Women are entitled to paid maternity leave for the 70 days prior to and 56 (sometimes 70) days after childbirth. A woman is entitled to partially paid leave until the child reaches the age of three.