A legislative initiative (Bill No. 14402 dated January 26, 2026) has been registered with the Verkhovna Rada of Ukraine that could significantly alter the balance of power in labor relations between employees and employers. This is the draft Law of Ukraine “On Amendments to Certain Legislative Acts Regarding the Prohibition on Employers Unilaterally Changing the Terms of Remuneration Specified in an Employment Contract,” initiated by People’s Deputy Valerii Gnatenko. At first glance, the document appears to be a logical step toward protecting workers’ rights; however, a detailed legal analysis of the draft law and accompanying documents reveals a number of pitfalls that could create serious conflicts for businesses and the public sector.

The Essence of the Legislative Changes: The Primacy of the Contract Over the Law

The key provision of the bill is the amendment of Article 22 of the Labor Code of Ukraine (LCU) and Article 22 of the Law of Ukraine “On Wages.” The legislature proposes to establish a mandatory rule: a business owner or authorized body shall not have the right to unilaterally make decisions that worsen the terms of remuneration established by an employment contract.

Furthermore, the bill introduces a safeguard against legislative changes imposed “from outside.” It is proposed to stipulate that amendments to legislation that worsen remuneration conditions cannot serve as grounds for failing to pay wages in the amounts previously specified in the employment contract. Legally, this means that the terms of an individual employment agreement (or contract) take precedence over current legislative changes if the latter are aimed at reducing payments, unless the parties voluntarily amend the agreement itself.

A Supreme Court Precedent as a Foundation

According to the explanatory note, the impetus for drafting this document was judicial practice, specifically the Supreme Court’s ruling of May 5, 2025, in Case No. 757/36687/21. The court held that even the adoption of a law that worsens terms of compensation (for example, restrictions on payments in the public sector or during martial law) does not relieve the employer of the obligation to pay the amount specified in the contract until that contract is amended. The draft law, in essence, seeks to codify this judicial precedent by transforming it into a direct provision of law.

Risks for Businesses and Employers: A Lawyer’s Analysis

Despite its social orientation, this bill poses significant risks for employers that could lead to financial instability for businesses and protracted litigation.

First, there is a risk of the payroll fund being “frozen.” In dynamic economic conditions, especially during martial law, businesses are often forced to optimize costs. Current legislation (specifically Article 103 of the Labor Code) allows for changes to terms of compensation provided the employee is notified two months in advance (or through other simplified procedures during martial law). However, the proposed provision prohibiting “unilateral decision-making” could be interpreted by the courts as blocking the procedure for changing material terms of employment without the employee’s explicit consent. This effectively deprives the employer of flexibility: if an employee refuses to sign a supplementary agreement reducing their salary, the employer finds itself in a dead end, even if the company is on the verge of bankruptcy.

Second, a conflict arises between the concepts of “contract” and “employment contract.” The title of the bill uses the term “employment contract” (which is a specific type of agreement), but the text of the proposed amendments to the laws uses the general term “employment agreement.” This significantly broadens the scope of the law. While case law has traditionally addressed specific contracts (where terms are often more strictly defined), the bill extends this protection to all employees. This means that any change to a company’s bonus or salary system that has not been agreed upon in writing with each individual employee may be deemed unlawful.

Third, there is a risk for the public sector and enterprises with state ownership. The government often sets upper limits on salaries at state-owned companies through Cabinet of Ministers resolutions or laws (as was the case, for example, during the COVID-19 pandemic or at the start of the invasion). The proposed provision explicitly states: even if the Verkhovna Rada passes a law limiting the salaries of officials or managers of state-owned enterprises, the employer is still obligated to pay the old (higher) amount until the contract is amended. And since amending a contract is a two-way process, an employee can simply refuse to sign the amendments, and the state will be forced to accumulate debt owed to that employee.

Conclusion

The bill aims to protect employees’ wallets from employer arbitrariness and unpredictable legislative “cuts” to salaries. This is a positive signal for the stability of labor relations. However, from a business and legal technical standpoint, the document is too categorical. It ignores the realities of crisis management, where a rapid unilateral reduction in expenses (in compliance with the notice procedure) is the only way to save the company and preserve jobs.

Adopting the law in its current form could lead to a paradoxical situation: employers, unable to legally reduce wages unilaterally due to economic hardship, will be forced to resort to mass layoffs, which will ultimately harm the very employees the law is intended to protect.