On July 19, a group of MPs registered in the Parliament the draft law №9510 “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:
• In case of more than a month of wage arrears, the employer must inform the central governmental body in charge of labor monitoring and control (currently, it is the State Labor Service of Ukraine) about such a situation.
• If the delay in payment of wages is more than 15 days, an employee will be entitled to suspend his/her work duties temporarily until debt repayment. However, an employee should notify in writting the employer about it (no later than two days in advance). The employee is released from work duties and could be absent from work during the suspension period. Then, work suspension cannot be considered truancy or a ground for disciplinary proceedings or dismissal.
• Following employee`s notification about work suspension, the employer should issue an order to secure the working process and to prevent a threat to the life and health of people, the environment, liquidation of accidents, catastrophes, epidemics, and epizootics, or the elimination of their consequences.
• Next day after making all necessary payments in full by an employer, an employee should resume working.
• Time of work suspension because of late payment of wages should be compensated in amount according to the collective bargaining agreement but not less than minimum wage in proportion to the length of work suspension.
• Moreover, an employer will be obliged to pay a penalty for every day of late payment in the amount established in the employment contract or collective bargaining agreement but not less than the official discount rate (as of now – 22%).
• Also, employers should pay the inflation losses to the employees.
So, in the case of delay in payment of wages, the employer will pay compensation for suspended work, penalty, inflation losses, and the full amount of wage arrears to the employee.
In addition, the draft law guarantees payment of compensation to the employee in case of the employer’s insolvency. It will be in the amount of three average monthly wages for the twelve months preceding the month of official insolvency, or the employment contract was terminated if the employee was dismissed before the bankruptcy. At the same time, the maximum amount of compensation cannot exceed twelve minimum wages.
Labor Initiatives lawyers believe that this piece of legislation is a progressive initiative. Its necessity has been discussed for more than 15 years in Ukraine. A pretty similar draft law was elaborated by the Ministry of Social Policy in 2018. The union partners also praise draft law No. 9510 and hope it will increase the level of economic protection of workers.
If adopted, the law will enter into force in 2025.
