On April 30, two years after its submission, the parliament of Ukraine adopted draft law №9510 in the first reading, titled “On Amendments to Certain Legislation of Ukraine regarding the Strengthening of the Protection of Employees’ Claims on Wage Arrears Payment, including in the Case of the Employer’s Insolvency.”
The draft law introduces a number of new provisions in the national legislation:
• If wage arrears exceed one month, the employer is required to notify the State Labor Service of Ukraine (Labor Inspectorate) about this situation.
• If the delay in payment of wages exceeds 15 days, an employee is entitled to temporarily suspend his or her work duties until the debt is settled. However, the employee must notify the employer in writing at least two days in advance. The employee is released from work duties and may be absent during suspension. Consequently, the work suspension cannot be deemed truancy or a basis for disciplinary action or dismissal.
• Following an employee`s notification about work suspension, the employer should issue an order to secure the work process and prevent threats to people’s lives and health, the environment, and to address accidents, catastrophes, epidemics, and epizootics, or to eliminate their consequences.
• The employee should return to work the day after the employer has made all required payments in full.
• Suspension of work due to delayed wage payments should be compensated according to the collective bargaining agreement, at no less than the minimum wage proportional to the length of the suspension.
• Moreover, an employer will be required to pay a penalty for each day of late payment in the amount specified in the employment contract or collective bargaining agreement, but not less than the key interest rate (currently 15,5%).
• Additionally, employers should compensate employees for inflation losses.
So, in the case of wage delay, the employer will pay the employee compensation for suspended work, penalty, inflation losses, and the full amount of wage arrears.
In addition, the draft law guarantees compensation payments to the employee in case of the employer’s insolvency. This will be equivalent to three average monthly wages for the twelve months preceding the official insolvency month, or the termination of the employment contract if the employee was dismissed prior to the bankruptcy. Moreover, the maximum compensation amount cannot exceed twelve minimum wages.
Labor Initiatives lawyers view this legislation as a progressive step forward. The need for such reforms has been discussed in Ukraine for over 15 years. Union partners also commend draft law No. 9510 and are optimistic it will enhance workers’ economic protection.
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