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UNFIXED WORKING HOURS VS. ZERO-HOUR CONTRACTS: DRAFT LAW #5161

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Inna Kudinska, George Sandul

At the end of February, the government of Ukraine approved and submitted to the parliament a draft law Reg. No.5161 “On Amendments to Certain Legislative Acts on Regulation of Non-standard Forms of Employment.”

According to its developers from the Ministry of Economy, the draft aims to regulate non-standard forms of employment for casual workers (or temporary workers), including freelancers, to provide flexibility in choosing the organization of labor relations to increase employees` mobility in exercising the right to work.

Deputy Minister for Digital Development, Digital Transformation and Digitalisation said, “Currently the registration of work in such cases occurs mainly under civil law contracts, and the persons performing such work are deprived of the rights and guarantees established by labor legislation. In particular, the proposed bill creates a convenient mechanism to legalize the work of freelancers, which will enhance their social and labor protection and preserve the mobility of workers.” 

Thus, the draft introduces a new category – an employment contract with unfixed working time. The terms of this employment contract do not pre-set a specific time for the work’s performance; the worker’s obligation to perform shall arise solely given that the employer provides the work stipulated by the contract without any guarantee that the work will be provided permanently.

The employer shall independently determine the need and time for engaging the worker in work and the work scope and shall agree upon with the worker, within a time limit stipulated by the employment contract, the working schedule and duration of the working time necessary to perform the respective work. In addition to that, the legislative requirements concerning the working time and rest time must be complied with.

The government of Ukraine has already tried to implement the idea of contracts with unfixed working time (“zero-hour contracts”) with more regressive provisions in the withdrawn draft Labor Code No.2708. 

However, the current proposal is somewhat amended and incorporates some European standards.

Among other provisions of the draft are the following:

  • The number of employment contracts with unfixed working time shall not exceed 10 percent of the total number of employment contracts under which an employer is a party
  • If the employer has less than 10 workers that he is entitled to conclude only one employment contract with unfixed working time
  • The Ministry of Economy shall elaborate the model form of the employment contract with unfixed working time.
  • Essential terms and conditions of the contract:

§ the way of, and the minimum time limit for notifying the worker of commencement of the work;

§ the form of, and the maximum time limit for, the worker’s notifying of his/her availability to work or refusing to perform it;

§ intervals in which the worker may be required to work (reference hours and days).

  • An employee is entitled to refuse to perform a job if he or she has been informed of work availability in violation of the terms specified in the employment contract with an unfixed work schedule or if the employer requires the performance of work outside reference days and hours
  • The worker’s refusal to perform work in reference days and hours shall be a ground for disciplinary proceedings except when the refusal was due to illness or with the performance of state or public duties, as well as with notification of the worker by the employer in violation of the minimum time limits specified by the employment contract with unfixed working time.
  • Wage shall be paid for hours actually worked.
  • All taxes are levied, and social contribution is also paid by the employer.  
  • Minimum working time under an employment contract with unfixed working time shall be 32 hours per month. If the worker performed work for less than 32 hours per month, he/she shall be paid for no less than 32 hours of working time according to the labor remuneration terms specified by the contract.
  • An employer may not prohibit or interfere with an employee who performs work under an employment contract with an unfixed work schedule, to perform work under another employment contract with another employer.
  • Performance of work under the employment contract with unfixed working time shall not entail any restrictions of the scope of workers’ labor rights.
  • The labor agreement with non-fixed working time may establish additional grounds for its termination.

To sum up, employment contracts with unfixed working time are commonly referred to as “zero-hour contracts” or “on-call work.” They are also known as “casual employment” in some industrialized countries. In general, on-call work is characterized by variable and unpredictable hours, short advance notice of schedules, significant fluctuations in working hours, and little or no input into work timing. Workers in on-call employment and casual arrangements typically have limited control over when they work, with implications for work–life balance and income security, given that pay is uncertain.

Some experts in Ukraine have already stated that “non-standard forms of employment” is an unclear definition. However, ILO experts (position of which is supported by Labor Initiatives lawyers) emphasize that there are often blurred boundaries between forms of non-standard forms of employment, and they should not be understood as watertight legal categories. As such, some work arrangements may very well sit at the intersection of two or more different forms of non-standard work, as is undoubtedly the case with on-call contracts, which present many features in common with casual work and marginal part-time.

As was mentioned above, the government plans to stimulate official employment by promoting employment contracts with unfixed working time. Labor Initiatives lawyers deem that such changes in the legislation could be helpful for the part of the population that provides services / performs work under civil law contracts (repair services, translation, domestic workers, etc.). In case of transition to employment contracts with unfixed working hours, the employee will receive more protection and social guarantees than under the civil contract (the amount of taxes and fees will be the same).

However, to avoid abuse, in our opinion, it is necessary to identify specific areas where the contracts with unfixed working hours can be applied (for instance, photographers, designers, cleaning services, etc.). The potential danger is the possibility of abuse and projection of “zero contracts” on traditional areas of employment, as well as exceeding the allowed 10% of the number of employees with whom such a contract can be concluded. As if we imagine a company employing 10,000 people, in case of labor inspection 10,000 employment contracts need to be checked in order to determine whether the employer exceeded the “zero contracts” threshold.

Besides, many issues remain uncertain in the new legislative amendments – establishing a trial period, the reduction procedure, the payment of severance pay and sick leave, etc.

Moreover, as ILO experts highlighted in its technical recommendations to this draft law, the provision foreseeing that the “employment contract with unfixed working time may establish additional grounds for its termination” should be deleted because these provisions contradict the International (ILO Convention No.158) and European best practices and with the spirit of the Directive 2019/1152. In fact, instead of providing special protection to this particularly vulnerable group of workers (with no guaranteed working time and with unpredictable employment relationship) these provisions negatively discriminate these workers, allowing the establishment of additional grounds in the employment contract (other than the ones specifically foreseen in the law) for the termination of the employment relationship.

Labor Initiatives states that the legislation of Ukraine already provides for the possibility of part-time work/week for those employees whom the employer cannot offer work permanently or at the request of the employee (Article 56 of the Labor Code). Usage of this form of employment contract could be an alternative to zero-hour contracts. Such arrangements aimed at achieving “flexible working” (fixed-term or part-time contracts) are widespread in Europe and guarantee better workers’ protection.