July 18, 2019

Strengthening control over the employer. Predictiont from Sergey Silchenko

 Instead of promoting legal use of hired labor in Ukraine and adopting a new Labor Code, the state only tightened control. This is one of the key trends in this area in 2018. The inspections are aimed at identifying unregistered employees, violations of payroll deadlines and failure to comply with wage-related state guarantees.

The system business usually uses personnel in accordance with the law, which is why the inspections target medium-sized businesses and businessmen, who find it difficult to use labor as prescribed by the law. There are several reasons for this: optimization of the tax burden on business, inability or unwillingness to keep personnel records and the archaic labor legislation that has been in effect since the early 1970s.

Violation of labor law results in large fines, with Ukrainian employers having received over $100 million in 2018. Most of it is currently being disputed by business in courts. This is what external legal consultants worked on last year - representing employers in court in disputes with regulatory bodies and antagonistic or problem employees. Speaking about labor consulting, just like other lawyers, we have been hard at work to develop safe and flexible models of personnel management.

As an alternative to employment contracts, civil contracts on the provision of services are already widely used in many areas of business, such as trade, public catering, IT and agriculture. This does not reduce the taxation of hired labor; businesses and employees pay the same taxes as in labor relations. However, the employer gets other benefits by establishing flexible terms of employment that ignore the guarantees granted by law to employees: vacation, sick leave or labor safety.

Until Ukraine’s presidential and parliamentary elections are held, it is unlikely that there will be significant changes in labor legislation in 2019.