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Problematic draft law ‘on labor’ is back

Problematic draft law ‘on labor’ is back

According to the information published on the official web-site of the Joint Representative Body of Trade Unions, social dialogue partners received from Ministry of Economy of Ukraine a new version of the draft Law on Labor (updated). The text and all related documents to the draft law are also published on this web-site.

The draft law is almost identical in structure and content to the infamous “98 articles” of the previous government of Oleksiy Honcharuk, which was automatically withdrawn after the resignation of the Cabinet of Ministers. The new government of Denys Shmygal made certain amendments, in particular mentioning trade unions as representatives of employees, changes in duration of annual leave, some other procedural labor related issues. However, Labor Initiatives lawyers believe that it is impossible to call such amendments cardinal and positive as the draft law still restricts labor rights and inevitably harms the interests of employees in Ukraine thus impeding the development of Ukraine.

According to Labor Initiatives lawyers the draft contradicts both the Constitution of Ukraine, because it violates Article 22 which forbids diminishing the content and scope of the existing rights and freedoms by an adoption of new laws or by introducing amendments to the effective laws, and a number of ILO Conventions ratified by Ukraine. The draft law aimed to regulate one of the most important spheres of public life – the sphere of labor, contains unsystematic and mosaic nature, which also indicates a lack of legal techniques within its drafting.

After acquaintance of social dialogue partners with the draft law, it should be considered at the governmental committee. In case of positive decision, the government will submit a draft law to the parliament.

However, it is worth to recall that four draft Labor Codes and Laws on Labor have been already registered at the parliament. Submission of a new draft law regulating similar labor relations would contradict with the Rules of Procedure of the parliament in terms of alternative draft laws submission. According to p.2 art.100 of the Rules of Procedure the alternative law draft may be registered within 14 days from the date when initial draft was submitted. And according to p.2 art.92 the alternative law draft submitted with violation of timeframes of submission should be refused in registration.

Termination of an Employment Contract on the Initiative of the Employer (Article 35)

1. The employer has the right, on his or her own initiative, to terminate the employment contract with the employee in case of refusal of acceptance of changing essential labor conditions and in case of economical, technical, structural or similar reasons.

2. The employer shall notify the employee in writing or by means of electronic communication specified in the contract of employment about the decision to terminate the employment contract on the grounds provided for in paragraph 1 of this Article:

1) not less than 15 days – if the amount of periods of work of the employee at such enterprise is not more than 6 months.

2) not less than 30 days – if the amount of periods of work of the employee at such enterprise is more than 6 months;

3) not less than 60 days – if the amount of periods of work of the employee at such enterprise is more than five years;

4) not less than 90 days – if the amount of periods of work of the employee at such enterprise is more than 10 years.

3. By agreement of the parties, notification periods referred to in paragraph 2 of this Article may be replaced by monetary compensation in the amount stipulated by the employment contract, but not less than the double average daily wage of the employee for each working day of reducing the notification period.

4. The employer has the right, without the consent of the employee, to replace the notification period provided for in paragraph 2 of this Article with a monetary compensation in the amount determined by the employment contract, but not less than triple average daily wage per each working day of reducing the notification period.

The procedure of calculating an average daily wage is determined by the Cabinet of Ministers of Ukraine.

5. In case of refusal of the employee to sign an additional agreement providing for termination of the employment contract on this basis, the employment contract is unilaterally terminated by providing the employee in the manner specified by the employment contract or by registered mail with notice of information about contract`s termination.

6. Disputes, related to the absence of consent of the employee to terminate the employment contract on this basis, shall be settled under the procedure provided for the resolution of individual labor disputes.

Labor Initiatives lawyers comment

Taking this into account, we believe that such norm on dismissal of an employee with such unclear ground as “economical, technical, structural or similar reasons” will nullify any guarantees of labor rights in Ukraine, prevents effective trade union work (as trade unionists, especially active ones, or whistleblowers among them can be dismissed without any problems and just causes) and anti-discrimination efforts in the workplace.

ILO Convention 158 states that the grounds for dismissal should be based on the employees performance or caused by economic need of enterprise. However the category “economical, technical, structural or similar reasons” attributed to the field of the sole arbitrary decision of employer.

Zero-hour contracts

Article 22. An employment contract with unfixed work schedule

1. An employment contract with unfixed work schedule is a special form of employment contract under which the obligation of the employee to perform the work arises solely when the employer gives the accessible work without guaranteeing that such work will be provided on a permanent basis.

2. The number of employment contracts with unfixed work schedule shall not exceed 10% of the total number of employment contracts under which an employer is a party. These restrictions apply to employers – legal entities and private entrepreneurs.

3. In addition to the mandatory conditions of an employment contract established by this Law, an employment contract with unfixed work schedule shall also include a manner of notifying the employee on the availability of work and a manner of notifying the employee on his or her willingness to start work.

4. The employer unilaterally determines the scope of work and, within a reasonable time, agrees with the employee the mode of work and working time duration required to perform the relevant work.

5. An employee is entitled to refuse from performing a job if he or she has been informed of the availability of work in violation of the terms specified in the employment contract with unfixed work schedule.

6. Wages shall be paid for the actual hours worked to those employees who perform work under an employment contract with unfixed work schedule.

Minimum working time under employment contract with unfixed work schedule shall be 8 hours per month. If an employee has worked less than 8 hours during a month, he or she must be paid for eight hours’ work time.

7. An employer may not prohibit or interfere with an employee who performs work under employment contract with unfixed work schedule, to perform work under another employment contract with another employer.

Labor Initiatives lawyers comment

Notwithstanding the provision of 10% of such contracts for one employer, we think that even mentioning of such norm in labor legislation and legal opportunity of their usage is a negative practice because of official employment illusion. Zero-hour contracts are profitable for an employer as it bears no obligations, do not provide any social guarantees for employees whereas employees will become more vulnerable.

According to the draft law “On labor” employment contract should be concluded only in the written form.

Par. 2 part 5 of Art. 12 of the draft obliges the parties of the employment contract to inform within the time limits specified by them of any circumstances that may affect the conclusion, performance, termination of the employment contract.

Taken this into account, Labor Initiatives lawyers arise question what liability will be imposed, for example, for not informing about pregnancy as this could certainly affect the performance of the employment contract, but at the same time it will be a violation of the employee’s private life.

• Part 8 of Article 28 of the draft law stipulates that the parties to the employment contract have the right to offer each other to change its essential terms (systems and amount of remuneration, labor standards and mode of work), in particular on the economical, technical, structural or similar reasons. If the employer insists on changing the essential terms of the employment contract with which the employee does not agree, the employment contract shall be terminated on the basis of Article 35 of this Law.

Labor Initiatives lawyers believe that such provision deteriorates current employees` rights as notification period on essential terms will depend on the employee’s seniority. Thus, such wording means violation of Article 22 of the Constitution of Ukraine which forbids diminishing the content and scope of the existing rights and freedoms by an adoption of new laws or by introducing amendments to the effective laws.

Types of employment contracts

Article 17 defines 7 types of employment contracts: open-ended, fixed-term up to 5 years, short-term contract up to 2 months, seasonal, contract with unfixed work schedule (zero-hour contract), employment contract with students and with domestic workers.

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A fixed-term contract may be concluded for a fixed term or for the duration of certain work, but not more than 5 years. In addition, there is a big list of cases when a fixed-term employment contract should be definitely concluded – replacement of a temporarily absent employee, with the head of a legal entity, employees of theaters, circuses, athletes, etc.

Labor Initiatives lawyers express their concern on such ground of concluding a fixed-term contract as “under the consent of the parties to the employment contract” (par.14 Art.18 of the draft). We believe that employer is the stronger party in the employment relationship and therefore he often dictates its conditions, and the employee, as the weaker party, who needs work, will have to agree to the conclusion of the fixed-term employment contract.

Moreover, Labor Initiatives lawyers believe that fixed-term contracts may have a very negative impact on a person’s motivation to expose corruption, if an employee is “on the hook” of a short-term contract and is aware that next year he or she may not be renewed. It will undermine any attempt to create a culture of whistleblowers in Ukraine.

5. Article 24 enshrines conditions of employment contract with domestic workers. In general, it is a positive step as currently domestic workers in Ukraine work unofficially.

However, Labor Initiatives lawyers are concerned regarding note to this article which highlights that domestic work less than 80 hours per month is not considered as domestic work.

For instance, nanny who works for 3-4 hours per weekdays. It will be less than 80 hours per month. Thus it is questioned whether such an employee should be protected as a domestic worker and whether an employment contract should be concluded with her. Labor Initiatives lawyers believe that “yes”.

Part 2 and 3 of Article 71 of the draft law enshrine that payment for work on weekends, holidays or non-working days, overtime shall be carried out at a higher rate stipulated by the employment contract and/or collective agreement. This rate should be at least 20 percent higher than the standard wages of an employee. Thus, if the current Labor Code establishes double payment for overtime and work on weekends, the draft law – only 20% increase. Moreover, it is a direct violation of ILO Hours of Work (Industry) Convention #1 which establishes that the rate of pay for overtime shall not be less than one and one-quarter times the regular rate (i.d. 25%).

Night work for women – Article 50

Part 7 of Article 50 of the draft Labor Law prohibits the involvement of pregnant women in night work, but this prohibition does not apply to women who have recently given birth and are breastfeeding a baby. It should be noted that under Article 3 of the ILO Convention № 183 and Article 7 of Council Directive 92/85/EEC of 19 October 1992 on the introduction of measures to encourage improvements in the safety and health at work of pregnant workers and workers who have recently given birth or are breastfeeding, pregnant workers, workers who have recently given birth or are breastfeeding, are not obliged to work at night and are entitled to transfer to day work.

Collective agreements

The draft law does not determine the possibility of regulating labor relations by collective agreements (sectoral, general agreement, etc) and accordingly does not establish the relationship of these acts with the acts of labor legislation.

Invalidity or a major violation of labor law?

In accordance with Part 4 of Article 16 of the draft, the inclusion in the employment contract of conditions that are discriminatory or worsen the position of the employee compared to labor law is a gross violation of labor law.

The current Labor Code in Article 9 establishes much more effective protection for employees, namely: the terms of employment contracts, which worsen the position of employees compared to the labor legislation of Ukraine, are invalid.

Probably, in view of this, amendments were made to the new version of the draft Law on Labor. Part 10 of Article 5 indicates that “the terms of employment contracts, which worsen the position of employees compared to the acts of labor legislation, are invalid.”

Such provisions have already indicated a collision in one document and the emergence of many disputes in the future.

Conclusion

Despite some positive norms that exists in the text of the draft law (obligatory written form of labor contract, increased time of absence at workplace which is not considered as truancy, definition of labor relations, extended duration of vacation), they lose any sense without proper balance of power between employer and employee, guarantees of trade union activity and stable employment. For example any anti-discrimination measures and anti-bullying norms will not work in case of at will employment, and open-ended labor contracts will not be concluded if an employer has an option to conclude zero-hour contracts.

Labor Initiatives lawyers believe that in case of this law draft adoption it will undermine all the system of labor rights and protections as well as ruin the legal grounds of trade unions functioning in Ukraine. The draft will prevent any democratic processes in the workplace and thus it will be harmful for the Ukrainian economy in general.