CHALLENGES OF ADOPTING THE LABOUR CODE

Draft Labour code № 1658 is being prepared for the second reading (it was voted in first reading on 5 November 2015).

This draft contains a number of provisions that substantially narrow the rights of workers and trade unions:

• The code contains a vague grant of unilateral authority to employers to formulate workplace regulations that may conflict with current laws and protections.  The Constitution of Ukraine governs labour relations in Ukraine, followed by international treaties, the code of labour laws, other laws of Ukraine, acts of President of Ukraine and the Cabinet of Ministers of Ukraine. Article 12 of the draft LC allows the employer to adopt regulations independently (by this act the employer may, for example, set a six-day working week (article 136). And only in cases provided by law, collective agreements or contracts, such regulations shall be adopted by the employer considering the proposals or by approval of the elected body of primary trade union (trade union representative). Attention is drawn to the provisions of p. 3 art. 12 of the draft LC, according to which “If the collective agreement is not concluded, the issues, subject to requirements thereof, shall be governed by employer regulations….” The current language may incentivize employers to act unilaterally issuing their own regulations and not in constructive and mutualistic processes of negotiation and collective bargaining.  Given the weakness of likely court interpretation of such language, employers may cite it in overreaching efforts to avoid bargaining.  It cannot be over-emphasized that in practice when vague or ambiguous language is used in law, it will yield way to the more powerful party.

• Workplace privacy concerns. The draft code appears to weaken workplace privacy protections.  Under the code, the employer has the right to monitor the performance of the employees job duties, including the use of technical means (e.g., video surveillance), due to the peculiarities of production, but the concept of “peculiarities of production” is not specified (article 30).   Again, unclear language is an entry point for abuse.

• Overbroad permissiveness in the initial employment contract.  Article 31 of the draft LC stipulates that the employment contract shall be the grounds for the emergence of labour relations. Except for mandatory conditions, the employment contract can include additional conditions, in particular, labour conditions, probation, warnings as to non-disclosure of commercial secrets and other information protected by law, occupational training, re-training and advance training of employee and so forth (p.3 article 33). The proposed mechanism can have negative consequences for the employee, because the employer will have the opportunity to prepare adhesion (severely biased where one party has no real chance to negotiate) employment contracts.  Again the language is both vague and overbroad.  It will likely result in unilateral inclusion of clauses in the initial labour contract that will put the employee in a vulnerable and dependent position.

• Assignment of additional duties.  Under the draft code the employer is provided with the power of assigning the worker to perform additional duties, if the volume of work by employment function does not ensure full employment. And if “additional function” is lower paid than the main, no extra payments will be carried out (article 37).  Again, it is unclear how this relates to any collective bargaining, or interacts with industrial relations considerations.

• Expands the definition of allowable fixed term contracts excessively. Article 60 of the draft LC provides an extended range of grounds for the conclusion of fixed-term labour contracts, in particular, during the execution of a specific amount or type of work, a deadline which cannot be defined by a specific date; to perform work associated with the temporary (up to one year) expansion of production or volume of services provided by the relevant employer; as well as with teaching staff, appointment to which is made on the results of the competition for a specified period, which, as rightly mentioned by the main scientific and expert Department, does not automatically specify the limited nature of their work.  The likely result in practice is an increase in work assigned indefinitely to fixed term contracts rather than full employment.

• Expanded rights to transfer employees to other employers. Under the draft code, the employer has the right in case of downtime and by agreement with another employer to temporarily transfer an employee given his/her consent to work for another employer. However, such transfer in practice will be forced, because the employee may consent under pressure or in fear of losing his/her job. In addition, the period of such transfer is not settled (article 68).

• Expanded, poorly defined, and unilateral grounds for dismissal. The draft code creates a greatly expanded range of opportunities for dismissal on the initiative of the employer, including:

1. Staff reduction caused by economic, technological, structural, organizational conditions and by formal basis like merger, division, transformation, and conversion.  This clause in particular does not include real business need as the criterion for the reasonableness of a dismissal, as generally required by international standards, particularly ILO Convention 158 (ratified by Ukraine). In addition, small business entities must inform employees on dismissal in connection with staff reduction only one month before (article 88), a reduction in time from the current law.
2. Disclosure of commercial secrets, which in accordance with the article 505 of the Civil code can be information of technical, organizational, commercial, industrial and other nature (p. 2 p. 2 art. 92). This is a sweeping and poorly defined category that could result in employers asserting a right to dismiss a worker for example, for revealing their own salary rate.
3. Insufficient qualification of employees can be confirmed by results of attestation, or other evidence (art. 93). This clause provides an unclear standard, open to manipulation. It may allow employers to conduct attestation, in particular, for dismissal of undesirable employees, where the impartiality of attestations is unchallengeable. Moreover, the concept of “other evidence” in the section is not defined, which in practice can let an employer confirm or deny the qualifications of an employee for wholly arbitrary and subjective reasons.

• Inadequate protections from unlawful dismissal. Article 110 of the draft LC provides opportunities to the employee for protection against unlawful dismissal, by providing the possibility to present proofs of qualification level, performance, commitment to work, legality of their actions or omissions, to give explanations on violations if any or improper performance of employment duties. However, this procedure in practice does not allow the employee to avoid dismissal, because there is no mechanism of consideration of such explanations. 

• Unilateral assignment of overtime work. Under the draft code the assignment of overtime work does not require any process of industrial relations or engagement. According to the draft LC, the consent of the employee is required, and the representative trade union is only notified (article 150).   This is another example where the draft code interferes with collective bargaining in favour of one-on-one relations between the employer and employee.  Again, this in effect makes decisions unilateral as individual employees have no real negotiating power absent collective bargaining.  This is a fundamental principle of industrial relations and collective bargaining.  In the case of engaging employees to work on their days-off, public, and religious holidays, the approval of the union is not required at all.  A copy of the order of assignment is transmitted to the union the next day after signing it (articles 159 and 161).   This type of change may on the surface seem to streamline a procedure, but in reality it creates incentives for informal conflict and removes the conflict resolution value and predicatability of clear industrial relations. 

• Work assignment on days-off unilaterally and without consent. The draft provides the engagement of workers to work on days-off (p. 2 article 159), in particular, to meet urgent, unforeseen work in advance, on which depends the immediate implementation of continued normal operation of the legal entity as a whole or its individual units. A fairly broad interpretation will enable employers to engage workers on their days-off on “first business need.” Moreover, engagement of employees to work on days-off shall be done by written order of the employer and the consent of the employee is not required. And according to the p. 3 art. 309 draft LC engaging employees to work on the days of public and religious holidays, on days when work is not generally done (article 160 of the Code) shall be allowed if provided by an employment agreement.  Again, this refers to the individual employment contract, and does not leave such issues to collective bargaining.

• Unpaid leave terms subject to abuse. Article 199 of the draft LC assumes that for family reasons and other grounds, the employee, at his request may be granted leave without pay for up to three months. However, establishing such a long leave without pay contains risks of violation by employers, as it actually provides the ability to use such long terms and the “consent” of the employee to resolve other issues of activity of the enterprise, institution, or organization, without the payment of wages to the employee. With current labor law, employers successfully use the opportunity to issue employees a leave without pay and extend its period, despite the fact that according to art. 84 such leave shall not exceed 15 calendar days in a year.  Protections from such abuse are necessary, including fair engagement with workers’ representatives.

• Inappropriate inclusion of overbroad employee property damage liability in draft code. Article 367 of the draft LC includes overbroad grounds for employees’ liability in the full amount of direct actual property damage. In addition, according to p.1 of this article, provision of employees’ liability in the full amount can be initially included in the employment agreement. Also, the draft envisages a controversial definition that “Direct actual property damage shall be deemed to be caused by actions (inaction) of the employee if in case of absence of such actions (inaction) the damage would not have been suffered” (p. 3 article 365). According to the Main Scientific Expert Department, with this formulation, liability is considered without guilt and taking into account the circumstances mitigating the liability of an employee and this is contrary to specific principles of liability in general. This regulation eliminates the requirement of part 4 of this article regarding mandatory guilt of the employee. In addition, the employee is liable to pay the full amount for causing direct actual property damage in case of disclosure of commercial secrets and other information protected by law.  

• Weakening or removal of negotiations and industrial relations role in dismissals. According to the draft code, approval of worker representatives is required to dismiss workers only in case of staff reduction (article 86), health status of employee confirmed by corresponding medical conclusion, and insufficient qualification of employee confirmed by results of attestation, other evidences  (p. 1,2 p.1 article 93). On all other grounds provided by articles 92-97 of draft LC such as “non-fulfilment or improper fulfilment of employment duties by the employee”, on the basis of “employee’s irresponsibility”, “temporary incapacity to labour”, “disclosure of commercial information” etc. This would significantly weaken the rights of workers to fair representation and provides peremptory power to the employer and deprives the employees from possibilities to negotiate an agreeable outcome with the employer.  Such clauses can be destabilizing to industrial relations and provoke costly and time consuming conflict.  The role of negotiations and industrial relations as a workplace conflict resolution mechanism is essential as not just a mechamism for freedom of association but to create a predictable labor and investiment climate.

• Reduced educational leave options. The draft LC narrows the rights of employees to take leave in connection with education. Part 9, article 190 of the draft LC stipulates that employees with higher education who intend to obtain the next higher education level are granted additional paid leave only in the case of referral to training by the employer. Also, the draft LC does not contain leave in connection with trade union training or activities envisaged by the Law of Ukraine “On leave.”  This is an infringement on a basic guarantee of freedom of association, that workers are allowed to engage in activities necessary to maintain fair and effective negotiations with employers.

• Changes in employer obligations in cases of wage arrears. According to the draft LC Article 264, in case of violation of the terms of salaries or wages the employer shall pay the employee a penalty (compensation)  double the interest rate of the National Bank per year for each day of delay and pay all amount of wage arrears indexed by inflation for the whole period of delays as well as interest rate for the arrears amount. However, there is no provision for the current labor law, which provides that in case of delay in issuing a labor record book due to the owners’ fault, the employee is paid the average salary for the period of forced absence (article 235 of the current labour code).

• Weakened protections for women with children.

1. Article 108 draft LC, broadens the circumstances under which it is permitted to dismiss single mothers having children aged under 15 on the general grounds provided in articles 93, 95, 97 of the Code, such as “health status of employee confirmed by corresponding medical conclusion”; “insufficient qualification of employee confirmed by results of attestation, other evidences”; “in connection with return to work of employee, who was previously employed for this work”; “employee’s mismatching the position”.
2. According to the draft code, article 291 allows women who have children to the age of fourteen or a disabled child to be assigned to night work, overtime work and work weekends, days of public and religious holidays, or other time when work is not done, with their written consent.  With the current labor law it is strictly prohibited for women with children under three years of age.

Almost all provisions of the current Code of labour laws of Ukraine and the laws governing trade Union relations are not included in the draft Labour code of Ukraine. This puts employee in a discriminatory and dependent position, violates article 22 of the Constitution of Ukraine which determines that the adoption of new laws or amendments to existing cannot narrow the content and scope of existing rights and freedoms.

The draft Labour code of Ukraine will lead to a narrowing of the rights of workers in Ukraine. Therefore, this draft deserves the strongest protest against its adoption.