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Another Law concerning Coronavirus disease (COVID-19). What’s new in the labor aspect?

07 April, 2020 Newsletters

On March 30, 2020 the Verkhovna Rada of Ukraine has adopted the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine Aimed at Providing Extra Social and Economic Guarantees due to Spread of Coronavirus Disease (COVID-19)” (the “Law”). This Law has been disparagingly nicknamed “anti-crisis law” since it is intended to mitigate the negative implications of quarantine. The major changes referred to the labor relations are represented in this newsletter.

Bonuses

The Law stipulates new salary bonuses for certain categories of employees (find information on previously implemented bonuses in our newsletter “What does the law on preventing COVID-19 change in the field of labor relations?”). Under the Law the amount of salary bonuses for healthcare workers shall be increased from 200% up to 300% of the salary, as well new bonuses for social protection workers shall be implemented in amount of 100% of the salary.

However, the Law does not specify the procedure for making such payments, but the duty on implementation and execution of these legal provisions shall be imposed on the Cabinet of Ministers of Ukraine.

Changes regarding employment agreement

Several amendments have been introduced to the Labor Code of Ukraine (the “Labor Code).  In particular, the Law stipulates the following:

“Observance of a written form shall be required … while executing an employment agreement on remote work regime”.

Please note, that a written form of the employment agreement shall be observed in case of execution of the “new” employment agreement. If the switch to the remote work regime is performed urgently and/or temporarily, e.g. in case of the epidemic spread, such a switch may be performed without signing the employment agreement but by issuing a respective order in the company.

Thus, the definition of the employment agreement has been changed. Under the Law the employment agreement shall be deprived of such a feature as employee’s compliance with the internal labor regulations. Obviously, that within remote work regime the employee may not comply with all rules implemented in the company (e.g. come to the office and leave it at a fixed time). However, it would be more rational to point out only those categories of employees who shall be freed from compliance with internal labor regulations, since the internal labor regulations will be anyway applied to major employees.

The exclusion of this feature will create essential risks with regard to disputes arising between employers and controlling authorities (the State Labor Service of Ukraine, the State Fiscal Service of Ukraine), matter of which is re-qualification of civil-law relations into labor.

Compliance with the internal labor regulations has always been a determinative feature of labor relations. Absence of this feature in the Labor Code may hand a blank check to controlling authorities and result in increasing of unlawful penalties and additional accruals imposed for “hidden labor relations” (for more details on re-qualification of civil-law relations into labor please find our newsletter “Days of War of State Labour Service. The Supreme Court confirmed the 1.3 million fine imposed on entrepreneur for unreported employment” and “The hidden labor relations”).

Shutdown

In our previous newsletter we have already discussed the possibility of implementing a shutdown for the period of quarantine that comes with a payment of 2/3 of the salary rate to the employees. Following introduction of the Law now this possibility has been directly stipulated by the legislation since article of the Labor Code, which provides payment for the shutdown, has been added as follows:

“…including the quarantine period implemented by the Cabinet of Ministers of Ukraine”.

Therefore, any doubts on possibility of implementing a shutdown for the quarantine period were eliminated by this amendment.

Flexible working hours and remote work regime

Article 60 of the Labor Сode on dividing the working hours into parts has been substituted by article on flexible working hours, which includes provisions on remote work regime as well.

Thus, the Law has implemented flexible working hours and remote work regime, that may be introduced when hiring and afterwards, and may last temporarily and for an indefinite term.

At the same time, by the employer’s decision the company’s standard work regime may be applied to the employees working under flexible working hours. This option may be applied as a temporary measure (for up to one month during the calendar year) and only in case of industrial and technical need and/or for performing urgent or contingent tasks. Given changes shall not be considered as change of essential working conditions or changes in production and labor organization.

Besides, the amended article stipulates certain exceptions when flexible working hours shall not be applied. They are as follows:

  • in constantly operating enterprises, institutions, organizations, as well as in case of multiple shift operation of the company;
  • if performance of the employee’s labor duties requires presence of such an employee within working hours clearly defined by the internal labor regulations (trade, consumer services, cargo handling, transport services etc.);
  • if such a regime is incompatible with the requirements for safe working conditions.

Flexible working hours regime provides compliance with established daily, weekly or other reporting period norms of duration of working hours. Implementation of flexible working hours does not entail changes in labor rating and renumeration and does not affect the volume of employee’s labor rights.

The obligation of working hours recording while working under flexible working hours shall be imposed on the employer. However, the Law does not contain any references to working hours recording within remote work regime.

The Law contains a currently topical provision, which stipulates that switch to flexible working hours and remote work regime may be performed under an internal order in the company without execution of an employment agreement in writing in case of threat of epidemic and pandemic spread and (or) military, industrial, natural or other threat. However, the Law does not include references to any legal regulation specifying the circumstances mentioned above. Accordingly, the employer is entitled to determine at his sole discretion the existence and sufficiency of grounds for changing a work regime and specify them in the respective order.

As regards to working hours the Law includes the following provision as well:

“In case of business trip, the working hours of those enterprise (institution, organization) to which the employee is placed, shall be applied to such an employee.”

We may conclude that the Law has been significantly focused on flexible working hours, while remote work regime has remained unaddressed despite its current applicability.

Time limits for applying to the court

The Transitional provisions of the Law stipulate the following:

“During the quarantine period implemented by the Cabinet of Ministers of Ukraine for preventing the spread of Coronavirus Disease (COVID-19) the time limits determined by Article 233 of this Code shall be renewed for duration of quarantine”.

Article 233 of the Labor Code determines the time limits for applying to the court with a claim on labor matter. Under the Law mentioned time limits shall be renewed for the quarantine period starting from March 12, 2020 until April 24, 2020 (if quarantine is not extended). Therefore, if during the quarantine period a labor dispute arises, the time limits for filing a lawsuit to the court shall be extended for the duration of the quarantine.

Unemployment allowances

Article 47 of the Law of Ukraine “On Employment of Population”, which regulates the issue of partial unemployment allowances, has been added with one more ground for receiving allowance, which is as follows: “the employer shall take measures to prevent the spread of the epidemic pursuant to the respective decision of the local state administration”. Apart from that, the Law introduces a new article providing “partial unemployment allowances paid within the period of taking measures aimed at preventing the occurrence and spread of the Coronavirus Disease (COVID-19), as provided by the quarantine being introduced by the Cabinet of Ministers of Ukraine”.

Though partial unemployment allowances are to be paid to the employees, the burden of settlements shall be placed on the employer. The employer is the one who may apply (but not obliged) to respective authorities for receiving unemployment allowances for his employees.

Partial unemployment allowances shall be paid only to the employers of small and medium-sized business entities. The allowances shall not be paid if the employer has wage arrears or arrearage in the Unified Social Contribution. Therefore, those employees whose employers have mentioned arrearages shall not receive any allowances from the state.

Partial unemployment allowances shall be paid upon condition that the employers take measures aimed at preventing the spread of the epidemics pursuant to the respective decisions of the local or regional state administrations. It means, that in order to receive allowance the employer should take certain measures, which are not listed and specified in the Law, and these measures should be taken pursuant to the decisions of state executive authorities. It’s not entirely clear what measures are under consideration and whether such an ambiguous wording will be used for refusal in payment of partial unemployment allowances in the future.

The amount of allowance shall be calculated per each hour by which working hours were shortened. However, this amount shall be calculated at 2/3 of the salary rate. Also, the Law provides that the amount of allowance shall not exceed the amount of minimum salary. Therefore, the maximum amount of partial unemployment allowance constitutes UAH 4 723 per month.

The allowance shall be paid within the term of suspension (reduction) of production but within up to the measures aimed at preventing the occurrence and spread of the Coronavirus Disease are completed. Therefore, if the company’s work was suspended before the quarantine implementation or if the suspension will be extended over the quarantine period, the allowance shall not be paid within this time period.

In order to receive allowance, the employer shall apply to the territorial body of the central executive authority implementing state policy in the sphere of employment of population and labor migration at the place where the employer is registered as taxpayer of the Unified Social Contribution and shall file set of documents as provided by the law. The term of application for receiving partial unemployment allowance is limited and constitutes 30 calendar days from the date of suspension (reduction) of production.

The above commentary presents the general statement for information purposes only and as such may not be practically used in specific cases without professional advice.

Kind regards,

© WTS Consulting LLC, 2020

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