Wage arrears during the war in Ukraine

Because of the war, some entrepreneurs and businesses in Ukraine had wage debts. The reasons for their emergence were different: the trade stopped, no money in the accounts, or a lack of communication with the employee. But now businesses have gradually adapted to the new working conditions and begin to pay debts.

Can debts be written off?

Some employees worry whether a business can write off wage arrears. No, debt cannot be written off despite the statute of limitations.
The statute of limitations has no effect on the need to pay wage arrears. According to Art. 233 para. 2 of the Labor Code of Ukraine, an employee can apply to the court to recover wage arrears whenever he/she wants and without any time limits.

Responsibility for non-payment of wages

If the employer delays the payment of salary for more than a month, then the employer faces a fine of three times the minimum wage. The official person responsible for the payment of wages will also be fined from 510 to 1700 UAH.
If the wage debt arose due to the war in Ukraine, Article 10 of Law № 2136 provides for exemption of employers and officials from penalties for late payment of wages. For exemption from liability, you will need to prove that you had force majeure circumstances and the violation occurred specifically as a result of hostilities.

Article 265 of the Labor Code notes that if the wage arrears are paid to the employee before the inspection by the supervisory authorities, there should be no penalty for violating the deadlines for paying wages.
If the payment of wages is delayed for more than a month, then, in addition to wages, the employer will also have to pay the employee compensation for the loss of part of the wages caused by the delay in the payment of salaries.

How is compensation calculated?

The calculation of compensation is governed by the Compensation Act and Regulation № 159 from 21.02.2001.
Compensation must be calculated if three conditions are met (at the same time):

• Wage debt is not the employee's fault. If the employee is at fault for the late payment of salary, there will be no compensation accrued.
• Delayed payment of wages is more than one calendar month. Counting starts from the first day of the month in which payment was supposed to be paid. That is, if wages for March were not paid in April, the right to compensation begins on May 1.
• In the month of payment, the consumer price index is more than 100% cumulatively. If the consumer price index is less than 100%, no compensation is accrued and only the debt is paid.

Wages and sick pay (the first five days paid by the employer) fall under compensation.
To calculate compensation, take the wages minus taxes, the so-called net wages. If the debt is accrued in several months, then compensation must be calculated for each month separately.
For example, if the net salary for April is 6000 hryvnia, and the consumer price index for the same month is 110.6%, the compensation is calculated:
(6000 * 10.6) / 100 = 636 UAH.
And, it will be necessary to pay 6636 UAH (net wage + compensation) to the employee.