Is it possible to fine employees?

Can employees be fined: what is allowed for the employer and what is not

An employer cannot establish "fines" for employees for being late, mistakes, unfulfilled plans, violation of service standards, shortages without proper documentation, or other disciplinary offenses if it strictly concerns deductions from the salary. Current labor legislation provides other mechanisms for violating labor discipline: a reprimand or dismissal. Salary deductions are permissible only in cases explicitly defined by law. (Legislation of Ukraine)

If an employee has actually caused damage to the enterprise, the employer can hold them materially liable rather than "fining" them — but only according to the rules of the Labor Code: there must be direct actual damage, the employee's fault, proper documentary registration, correct calculation of the amount, and adherence to the deduction procedure or an appeal to the court. Incorrect salary deductions create a risk for the business of a dispute with the employee, an order from the labor inspectorate, and financial sanctions for incomplete salary payment. (Legislation of Ukraine)

Salary fines for labor violations are illegal

The Labor Code explicitly states that only one disciplinary measure can be applied to an employee for violating labor discipline: a reprimand or dismissal. Any local company rules, job descriptions, personnel regulations, or internal rules cannot add another type of disciplinary sanction in the form of a "fine" to this list. At the same time, the law on remuneration prohibits the employer from unilaterally worsening the conditions of remuneration, and allows salary deductions only in cases provided by law. (Legislation of Ukraine)

Therefore, formulations like "a 500 UAH fine for being late", "a fine for a receipt mistake", "a fine for a customer complaint", "a fine for non-compliance with store standards", or "a fine for not attending an inventory" do not create a legal basis for withholding these amounts from the employee's salary. In labor relations, this does not work even if the employee has signed the company's internal regulations. (Legislation of Ukraine)

What the employer can legally apply

1. Reprimand

A reprimand is a basic disciplinary sanction. It is applied for violating labor discipline if the employer followed the procedure: requested written explanations from the employee, chose only one penalty for one violation, formalized the decision with an order, and notified the employee against signature. The penalty must be applied no later than one month from the day the misconduct was discovered and no later than six months from the day it was committed. (Legislation of Ukraine)

Within a year from the day the reprimand was imposed, the employee is considered to have a disciplinary sanction, unless it was lifted earlier. During this period, incentive measures are not applied to them. This is an important legal tool of influence for the employer, which is not associated with illegal salary deductions. (Legislation of Ukraine)

2. Dismissal

Dismissal is also a disciplinary sanction, but it is not a universal response to any violation. It can be applied only when there is a legal basis for it and the disciplinary sanction procedure is followed. A reprimand and a dismissal cannot be simultaneously imposed for one violation. (Legislation of Ukraine)

3. Non-accrual or reduction of bonuses — only according to the remuneration system rules

Bonuses related to the performance of production tasks and functions are part of the structure of additional wages. At the same time, the conditions and sizes of bonuses are established by the enterprise in a collective agreement or, if there is no collective agreement, in an agreed local act. The employer is also obliged to inform the employee about the conditions of remuneration and the grounds for possible deductions, and at each payment — about the structure of the salary and the grounds for deductions. (Legislation of Ukraine)

In practice, this means the following. The employer cannot simply call the non-payment of an already accrued salary amount a "fine". But they can determine clear conditions in advance, through bonus regulations or a collective agreement, under which a bonus for a certain period is not accrued or is accrued in a smaller amount. Such conditions must be transparent, identical for comparable situations, and cannot contradict the law. The employer has no right to unilaterally worsen the already established remuneration conditions. (Legislation of Ukraine)

When salary deductions can be made

Salary deductions are permitted only in cases explicitly provided by law. The Labor Code specifies, in particular, the following cases: return of an advance payment, return of amounts overpaid due to counting errors, repayment of an unspent and unreturned advance for a business trip or household needs, deduction for unworked vacation days upon dismissal, and compensation for damage caused to the enterprise by the employee's fault — according to the rules of Article 136 of the Labor Code. (Legislation of Ukraine)

As a general rule, with each salary payment, the total amount of all deductions cannot exceed 20% of the amount due for payment, and in cases explicitly provided by law — 50%. For certain categories of penalties, including child support for minor children, the limit can be up to 70%. Deductions are not allowed from severance pay, compensatory and other payments that cannot be subject to collection. (Legislation of Ukraine)

Material liability of the employee: when is it possible

Material liability is not a fine or a way to "educate" an employee. It is a mechanism precisely for compensating the damage that an employee caused to the enterprise due to a violation of labor duties. The law requires that it must be direct actual damage caused by the culpable unlawful actions or inaction of the employee. Typically, liability is limited to a certain part of the employee's earnings and should not exceed the full amount of the damage, except in cases expressly provided by law. Importantly, material liability can be imposed regardless of whether the employee was also held disciplinary, administratively, or criminally liable. (Legislation of Ukraine)

As a general rule, an employee is liable within the limits of direct actual damage, but no more than their average monthly earnings. Full material liability is an exception, not a rule. It is possible only in cases specified in the law. (Legislation of Ukraine)

When full material liability is possible

Separate conditions are required for collective material liability: joint performance of work with valuables, the impossibility of distinguishing the liability of each employee, a written contract with all members of the collective, and application only to works defined in the approved list. (Legislation of Ukraine)

How to properly document a disciplinary sanction

For a reprimand to be lawful, the employer should act according to the following algorithm:

For a business, the most dangerous thing is not the employee's violation itself, but a weak evidence base. If the employer cannot prove the fact of the violation, deadlines, a causal link, and adherence to the procedure, the disciplinary sanction is easily appealed. (Legislation of Ukraine)

How to properly document damage compensation

To legally demand compensation from an employee, the employer needs a package of evidence, not general suspicions. Minimally, this is:

The amount of damage is determined by actual losses based on accounting data, starting from the balance sheet value or cost price, taking depreciation into account. The law establishes special valuation rules for theft, shortage, intentional destruction, or intentional spoilage of certain material assets. (Legislation of Ukraine)

If the damage amount does not exceed the employee's average monthly earnings, it can be collected by order of the employer through a salary deduction. But such an order must be issued no later than two weeks from the date the damage is discovered and executed no earlier than seven days after notifying the employee. If the employee disagrees or the amount is greater, the employer will have to go to court. (Legislation of Ukraine)

What internal documents an employer should have

For the legal management of discipline and company financial issues, it is advisable to have:

For retail business, this is especially important. In stores, warehouses, checkout areas, and pick-up points, conflicts most often arise not from the fact of the shortage itself, but from the lack of documents about who, when, and under what conditions was responsible for the goods, money, or equipment. (Legislation of Ukraine)

What threatens the employer for illegal fines

If an employer unreasonably withholds money from a salary, it can be qualified as incomplete payment of wages. For such a violation, Article 265 of the Labor Code provides for a fine of three times the minimum wage established at the time the violation was discovered. As of April 12, 2026, the minimum wage is 8,647 UAH, so such a fine is 25,941 UAH. Separately, administrative sanctions against officials are possible under Article 41 of the Code of Administrative Offenses. (Legislation of Ukraine)

Martial law must be considered separately. Article 265 of the Labor Code itself states that during martial law, fines under this article are not applied if the employer fully and within the established time frame complies with the order to eliminate the violations discovered during an unscheduled state supervision event. But this does not legalize the illegal deductions themselves: the salary will still have to be additionally accrued and paid, and the labor dispute can go to court. (Legislation of Ukraine)

Practical example

An illustrative example was published by the Supreme Court in March 2026 in the review of the current practice of the Cassation Civil Court. The court noted that withholding funds from an employee's salary at their voluntary request to support the Armed Forces of Ukraine and humanitarian aid is lawful if there is no evidence of psychological or economic pressure. For business, the conclusion is simple: the legality of the deduction depends not on the internal name of the payment, but on the presence of a direct legal basis or a truly voluntary expression of the employee's will. (Judicial System of Ukraine)

Official sources

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