The main idea behind the new Labor Code is to make the rules of the game clear to everyone (who qualifies as an employee, how to formalize employment, how to pay wages and protect workers’ rights, and so on). It combines European standards, the digitization of document management, and enhanced social protection.
The Ukrainian labor market is changing rapidly, while the laws governing it remain static. Today, many people work remotely, often juggling multiple jobs, and employers are forced to adapt to economic and military challenges. The current Labor Code is largely out of step with reality. It was designed for a planned economy and did not account for modern forms of employment. As a result, workers were often left without protections, and it was difficult for businesses to legally organize their work processes.
One of the key provisions of the draft Labor Code (No. 14386) is the definition of an employment relationship. If a person performs work under the employer’s direction, has a set schedule, receives regular pay, and uses the company’s resources, these relations are recognized as an employment relationship even without an employment contract. This is important because, previously, many freelancers and those working under civil contracts formally had no protections. Now, however, a court can confirm their status and, through its ruling, ensure they receive social benefits, vacation time, sick leave, and wages.
The Code offers several types of employment contracts to formally regulate various forms of work. You can work on a permanent or temporary basis, combine study and work, take on seasonal work, or work from home. For individuals, this means
legal protection and the opportunity to earn official income. For employers, it means clear rules and transparent conditions for organizing work to avoid problems.
But there are nuances.
When an employee works only as needed by the company, their work and income may be unstable. Pay will depend on the number of tasks completed, and sick leave and vacation pay will be calculated proportionally to the hours actually worked. This is convenient for those who plan their own schedule, but risky for those who need stability.
The reform proposes allowing employers to terminate employees for economic reasons (a simplified procedure) or at the employer’s initiative without providing a reason, but with the payment of substantial compensation. Previously, it was much more difficult to dismiss an employee. At the same time, employees retain the right to challenge their dismissal in court; they may be reinstated and awarded back pay
for up to 12 months—which is less than what is provided for under current rules. Given that it will be difficult to prove the illegality of the dismissal in court, the reform weakens employee protections.
The Code proposes a standard workweek of 40 hours; overtime is paid at double the regular rate, and if work exceeds the established limit, the employee will be paid even more. Vacation time is increased to 28 days, and the minimum wage is tied to the economy-wide average. For employees, this means greater social protection and fair pay. For employers, payroll costs will rise.
Special attention is given to people with disabilities. The law requires employers to either create jobs for such employees or pay a contribution. For employees, this is a real opportunity to find work that matches their skills. For businesses, it represents an additional organizational and financial burden.
Remote work and electronic contracts also carry their own risks. All documents are stored electronically and can be used as evidence in court in the event of a dispute. While this is convenient, it creates the risk of information being lost, concealed, or misinterpreted.
Employees who work part-time or on an on-call basis at the employer’s request risk being left without a stable income. Working from home or remotely can deprive employees of social support if the company does not follow the rules.
Legal disputes over dismissals or discrimination can be lengthy, and the outcome is not always predictable. Therefore, even with these new rights, employees will need to carefully review the agreements (contracts) they sign and the working conditions offered to them.
The new rules can be beneficial for both businesses and employees. However, it is important to remember that not only the parties to the employment relationship but also the judicial system must adapt to the new realities, as judges will now have to develop case law for this category of cases.
The new Labor Code establishes modern rules that expand employees’ rights and provide businesses with flexibility, but require both parties to exercise caution and responsibility. The success of the reform will depend on how the government oversees the process and how quickly businesses and employees adapt to the new rules.
Author: RUSLAN GUTSOL, Attorney at Law, Barristers, LLC
Source: https://zib.com.ua/ua/170823.html