Remuneration During the War : A Lawyer's Explanation 

June, 2022 - Inesa Letych

Military action has made adjustments to the activities of the vast majority of companies in Ukraine. Unfortunately, for many employers, the issue of revising the terms of remuneration of staff in the direction of reduction has become relevant.

The Law of Ukraine “On the Organization of Labor Relations in Martial Law”  (the Law), which entered into force on March 24, reminded of the restriction of the constitutional right to work for the period of martial law. This right includes, inter alia, the right to a salary not lower than the established minimum and to receive timely remuneration. However, the restrictions are far from absolute, and the optimal plan of action for employers will depend on many factors, from the place of business to the actual situation of the business.

Unilateral change in wage conditions

Even companies operating today, as a rule, experience a very significant reduction in activity and the number of projects. In turn, this leads to a reduction in the actual workload and a decrease in profits.

A logical way out of the situation for many would be a unilateral change in the working conditions of staff to match the actual state of affairs. For example, the transfer of part-time employees with a proportional change in salary. If in normal times such an action would seem very risky in terms of compliance with labor laws, in today's situation, such a step may be quite justified. Objective data and evidence of reduced activity are easy to find in almost any company.

This mechanism is made attractive by Article 3 of the Law, which provides for non-compliance with Art. 32  of the Labor Code of Ukraine  (Labor Code) and other laws on notification of changes in significant working conditions. That is, new working conditions unilaterally during martial law can be introduced at least from the next day.

Everything would be fine here, but another very important norm of labor legislation remains in force today. Namely, Article 103 of the Labor Code, which indicates the obligation of the employer to notify of new or changed in the direction of deterioration of wages for two months. The law bypassed this norm, because the concept of essential working conditions is much broader than the concept of working conditions.

The existence of the problem is further confirmed by the new  Bill 7251  of April 5 (Draft), which proposes to amend the Law and directly provide for the non-application of Article 103 of the Labor Code.

In other words, the current logic of legislation makes unilateral changes in pay conditions quite risky for employers. The safest way is either to comply with the two-month notification deadline or to wait for the adoption of the Project, which is already actively undergoing all the necessary approval procedures.

Impossibility to pay wages

Reduction or even complete termination of the enterprise is not a reason for non-payment of wages. The law stipulates that an employer is released from liability for delays in settling accounts with employees only if it proves that such delays are caused by hostilities or other force majeure circumstances. In the future, all debts will have to be covered in any case.

That is, employers who are experiencing financial difficulties, it is still better to work out other options for optimizing labor costs.

Vacation "at own expense"

This option has often remained a way for employers to get out of problematic situations in times of crisis. Today, this is no exception, as the law gives the right to take leave "at one's own expense" for the entire period of martial law. The main rule that must be followed - the consent of the employee to such leave is required.

Suspension of the employment contract

The new mechanism provided by the Law provides for the possibility of temporary suspension of employment, during which the employee does not perform labor functions and does not receive wages. In this case, the dismissal does not occur, and after the termination period, the parties return to employment on previously agreed terms.

It should be borne in mind that this mechanism is not suitable for everyone, but only for those employers who are not actually able to act due to hostilities. Namely, the law calls the exclusion of the possibility of providing and simultaneously performing work a condition for the possibility of suspending an employment contract. That is, the absence of projects, if employees can actually perform labor functions, will not be considered a sufficient basis.

It should also be mentioned that the Project intends to make the rules of suspension of the employment contract even stricter. Namely, it is proposed to provide for mandatory approval of the suspension of employment contracts by military-civil administrations of the relevant territorial unit.

Introduction of downtime

The classic option for saving the payroll is to announce a simple. This option is provided by Article 113 of the Labor Code and has not changed for the period of martial law.

As the State Labor Service of Ukraine (State Labor Service) has repeatedly  mentioned  on its website, pay during martial law is paid at the rate of 2/3 of the employee's salary. At the same time it is necessary to remember that simple is not reduction of loading of the worker, and it should be entered only at complete absence of work.

No employees

With the beginning of the armed aggression, many workers left their place of residence or even the territory of the country. Situations can be different: from the lack of communication with an employee who is in the combat zone, to the banal reluctance of the employee to do something or get in touch even with the possibility of remote work.

The approaches of regulators in this case are very consistent and logical. Namely, it is proposed to take into account such employees as absent for unknown reasons without payment of wages. However, until the situation is clarified and the employee is given formal explanations, it is highly recommended not to attempt dismissal for absenteeism.

Preferential categories

It should also be remembered that any of the above options do not apply to the categories of employees for whom the job and average earnings are retained. Such categories currently include persons who have enlisted in the military and are serving in the Territorial Defense. According to Article 57-1 of the Law of Ukraine "On Education", the same benefit is currently available to employees of educational institutions. The legislation does not provide for the possibility, for example, of introducing downtime for such employees, and the guarantee of maintaining their earnings remains valid regardless of the scope of the enterprise.

And finally - the risks

Any decision to change the conditions of remuneration during martial law must be considered and considered in terms of compliance with labor legislation. This argument is supported by Article 233 of the Labor Code, according to which the statute of limitations does not apply to disputes over remuneration. That is, an employee or even a former employee has the right to recall the employer's violation even, for example, after five years.

In addition, it should be noted that the possibility of strengthening control over compliance with the remuneration of the State Labor Service is quite probable. Thus, today the Project proposes to allow the State Labor Office unscheduled measures to control employers' compliance with the Law, as well as on issues of undocumented employees. That is, war is war, and the observance of labor rights should be treated with caution.




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