In the 30 years since Ukraine declared independence from the Soviet Union, the country has developed a market economy while continuing to regulate labour relations according to its Soviet-era Labour Code. Almost 10 million Ukrainians are employed with contracts entitling them to a 40-hour workweek and protection from unjustified dismissal. Trade unions still have broad powers, a fact that allows them to attract new members, but due to insufficient oversight by labour inspectorates, violations of workers’ rights are widespread and more than 3 million people work in the informal sector.
Vitaliy Dudin is the chairperson of the Ukrainian NGO Social Movement.
Business lobbyists insist that Ukraine’s current Labour Code is not suited to the conditions of a capitalist economy. They campaign either for its complete repeal or the removal of certain protective provisions from it in hopes of reducing labour costs—despite the fact that Ukraine already has the lowest salaries in Europe. Employers are interested in bolstering forms of employment that will relieve them of obligations to provide permanent employment and simplify the firing of employees. However, trade union mobilizations and a lack of consensus in the Ukrainian parliament, the Verkhovna Rada, have hampered large-scale neoliberal reforms so far.
Since the early 2000s, virtually every government has emphasized the need for more flexible labour laws that benefit employers, yet new drafts of the Labour Code have never been approved. President Volodymyr Zelenskyi’s party, which currently commands a majority in parliament, has already sought approval for dangerous deregulation initiatives. Thus, in 2019, sanctions against employers who violate labour rights were relaxed. The so-called Draft Law of Ukraine “On Labour” #2708 constituted the most radical initiative so far, but was not approved due to the resignation of Oleksiy Honcharuk’s government in the spring of 2020. Current attempts to reform labour laws have been accompanied by public concern about the disregard for the principles of social dialogue, along with a general political consolidation of the Ukrainian ruling class and the absence of left-wing political forces in the parliament.
On 21 September 2021, the Ukrainian parliament took a step towards meeting employers’ expectations by adopting a package consisting of three government bills:
- “On Amendments to Certain Legislative Acts of Ukraine Concerning the Regulation of Certain Non-Standard Forms of Employment” (#5161)
- “Draft Law on Amendments to Certain Legislative Acts of Ukraine Concerning Strengthening the Protection of Workers’ Rights” (#5266)
- “On Amendments to Certain Legislative Acts of Ukraine Concerning the Deregulation of Labour Relations” (#5388)
The Federation of Trade Unions of Ukraine (FPU) believes that these bills will give employers dictatorial powers, enabling them to abuse the principle of freedom of contract. All three bills aim to reduce legal guarantees protecting the rights of workers and restrict trade unions’ ability to counteract the arbitrary actions of employers.
The Draft Law on “Non-Standard Forms of Employment”
The first bill introduces so-called “zero-hour contracts”, according to which employees receive work only if the employer needs them. Up to 10 percent of a company’s workers could be employed under such an agreement. Given that about 10 million people work under employment contracts in Ukraine, this would mean that about 1 million people could find themselves in a precarious situation.
Lack of minimum wage and social security guarantees: If an employee is not given any work for a month, the employer must pay them a salary calculated as remuneration for 32 hours of work. Therefore, the employee has no guarantee of receiving a minimum wage, which could lead to the violation of Article 48 of the Constitution of Ukraine, which states that everyone has a right to a sufficient standard of living for themselves and their family. The right to social protection guaranteed by Article 46 would also come under threat, as it is implemented through the social insurance mechanism. Should insurance contributions per month be calculated on the basis of a salary smaller than the minimum wage, they would not be counted towards the employee’s pension.
The unpredictable nature of the employees’ situation: When called upon by employers, employees would be obliged to show up for work within a period of time not specified by law but established instead by each individual employment contract. Employees could be forced to show up for work within hours of being called to work, or risk dismissal.
More extensive grounds for dismissal: The draft law stipulates that employers may dismiss employees on additional grounds established in the employment contract. This poses the risk that employment contracts could be terminated on grounds determined by the employer based on their agreement with the employee. For the sake of employment, workers would be forced to consent to unfavourable terms.
The joint representative body of representative all-Ukrainian trade union associations successfully introduced a number of recommendations concerning draft law #5161. However, the Federation of Trade Unions is still convinced that this draft law will make it possible to worsen the employees’ position on a case-by-case basis.
The Draft Law on “Strengthening the Protection of Workers’ Rights”
Limitations on the duration of collective agreements: Amendments to Article 17 of the Labour Code stipulate that if a legal entity is reorganized, the terms of the collective agreement are valid for a period not exceeding one year. This would lead to a situation in which, as a result of reorganization, collective agreements favourable to employees would expire after one year while the employer delayed signing a new one. Today, by contrast, the previous collective agreement remains in force until a new agreement is signed.
No definite term during which the collective agreement must be drafted: Currently, Article 17 of the Labour Code stipulates that when a new enterprise is established, a collective agreement must be signed at the initiative of one of the parties within three months after the enterprise is registered. The bill removes this deadline, meaning that in the future, the process could take years, whereas the current legislation at least incentivizes business owner to initiate negotiations.
Employers would be partially released from obligations to inform the workforce of adverse changes: Currently, according to Article 49-4 of the Labour Code, liquidation, reorganization of enterprises, change of ownership, or partial cessation of production entailing a reduction in the number of workers, staff redundancy, or deterioration of working conditions can be carried out only on condition that trade unions receive advance notice. The draft law qualifies this, stipulating that the grounds for providing information are limited to cases of mass dismissal, and that instead of being addressed to all trade unions, such information will be communicated to the joint representative body of trade unions or only to the committee of the trade union which unites the majority of employees at the enterprise. The latter provision contradicts Article 36 of the Constitution of Ukraine, according to which all trade unions have equal rights.
Bill #5266 contains some innovations that could promote collective bargaining. In particular, it introduces the possibility of entering into collective agreements with individual employers. The joint representative body of trade unions approved the draft law without raising objections. At the same time, certain norms contained in the draft law may impact newly formed and small unions negatively.
The Draft Law on the “Deregulation of Labour Relations”
This third bill affects the interests of about 6.5 million people—the number of people in Ukraine who belong to trade unions and are able to rely on their protection.
Eroding the role of trade unions: Employers are granted the right to bypass unions while resolving individual issues. Specifically, employers will not be obliged to receive the approval of trade union bodies before dismissing trade union members or obtain their consent regarding overtime work and work on days off. Abolishing these guarantees turns Article 36 of the Constitution of Ukraine, which states that “citizens have the right to participate in trade unions in order to protect their labour and socio-economic rights and interests”, into a purely declarative provision.
In addition, employers will no longer be obliged to get unions’ approval when determining the length of the working day and drawing up vacation schedules. Employers will be able to regulate these and other aspects through individual employment contracts with employees. Currently, Ukrainian law defines the circumstances under which employees can work overtime and on days off. The new draft law’s proposal to determine this through employment contracts comes with a significant risk of abuse.
The spread of precarious forms of employment: Article 23-1 of the Draft Law provides a list of 13 grounds for signing fixed-term employment contracts, such as a temporary expansion of production, working for the duration of time necessary to complete a certain amount of work, or an individual employee’s initiative. It is also permissible to sign fixed-term contracts with creative workers. Furthermore, fixed-term employment contracts may contain additional grounds for dismissal. While, on the positive side, the duration of a fixed-term employment contract is limited to five years, the number of such contracts is unlimited.
The draft law also expands the range of workers who, upon being hired, have to go through a probationary period. Amendments to Article 26 of the Labour Code lift the ban on probationary periods for graduates of educational institutions and internally displaced persons. Therefore, employers will be able to fire these individuals during the probationary period without valid grounds for dismissal.
Increasing employees’ liability for losses: Currently, employees usually bear pecuniary responsibility in the amount not exceeding their average monthly salary. The bill proposes expanding the list of cases in which an employee can be held fully liable financially. Employers would have the right to sign a full financial liability agreement with each employee whose work involves interaction with certain tangible assets. The current law allows employers to sign such agreements only with certain categories of employees.
Another innovation concerns employers’ ability to recover direct actual material damage if caused by the disclosure of trade secrets and other types of legally protected information. Additionally, employers would have the right to determine the amount of direct actual damage.
Virtually all Ukrainian trade unions view Draft Law #5388 as unacceptable, as it would essentially allow to replace the legislation with individual agreements between employees and employers.
The Draft Laws Undercut International Legal Agreements
The new Ukrainian labour reforms contradict the following articles of the Association Agreement between Ukraine and the EU:
- Article 291 (parties recognize full and productive employment and decent work for all as key elements for trade in the context of globalization)
- Article 296 (neither party shall weaken or reduce the level of labour protection afforded by its laws to encourage trade or investment)
- Article 419 (the parties shall strengthen dialogue and cooperation on decent work, employment policy, health and safety at work, social dialogue, social protection, social inclusion, gender equality, and non-discrimination)
- Article 420 (increasing the number and improving the quality of jobs with decent working conditions)
The aforementioned draft laws adopted as the basis of the law would undermine social dialogue and increase the number of precarious jobs. Characteristically, the Verkhovna Rada’s Committee on Ukraine’s Integration into the European Union only assessed Draft Law #5161, the law on zero-hour contracts. The committee concluded that the draft did not essentially contradict Ukraine’s commitments under the Association Agreement, but needed revisions in order to more fully take into account and properly implement the provisions of EU and ILO acts.
That said, this uncritical position appears inconsistent, as the Committee’s representatives also acknowledged that the provisions of Draft Law #5161 contradict international legal acts. Thus, Draft Laws #5161 and #5388 provide for the establishment of additional grounds for dismissal in the employment contract. This violates Article 4 of the ILO Termination of Employment Convention #158, adopted in 1982, which states that employment can be terminated only on the grounds specified by law.
Reforms for Workers, Not for Capitalists
The current labour reforms are aimed at curtailing important safeguards protecting workers’ rights in Ukraine. Politically, the adoption of these draft laws will strengthen the oligarchs, as all decisions at the enterprise level will be made by employers, with no contribution from trade unions. From a socio-economic standpoint, the reform will lead to more emigration among the Ukrainian workforce.
To prevent the adoption of provisions unacceptable for workers, the largest Ukrainian trade unions have announced mass protests. However, defeating the reforms will not be easy, as the authorities are clearly determined to use the COVID-19 crisis as a pretext to release employers from their social obligations, and there are currently no left-wing political forces in the Verkhovna Rada.
A left-wing response to neoliberal reforms ought to consist of the following demands: increasing the number of socially protected jobs in the public sector, boosting state oversight over compliance with labour legislation according to ILO standards, and bringing wages closer to the level of wages in EU countries. These measures, as opposed to the reforms being proposed by the current government, would reform labour laws to the benefit of workers, rather than their bosses.