Illegal dismissal of an employee: what should an entrepreneur do?

When an employer fires an employee, they hope to never have to deal with them again. However, if the dismissal was unlawful, the former employee may go to court to seek redress. Such situations are quite rare, and courts often side with the employee and order the employer to reinstate the employee. Read this article to find out how to reinstate an employee, how to reflect it in your reporting, and what to do about absenteeism.

How to reinstate a dismissed employee by court order?

Art. 235(7) of the Labor Code obliges the employer to immediately reinstate an unlawfully dismissed employee by court order. It does not matter whether you agree with such a decision or appeal it. First, you need to reinstate the employee, and then proceed with the lawsuit. The date of reinstatement will be the date the court announces its decision, not the date the decision comes into force.

The court's decision to reinstate an employee will be considered enforceable if three conditions are met:

1. The employer issued an Order to reinstate the employee, and the employee read it and signed it.
2. The employee is allowed to perform his/her duties.
3. A record of reinstatement was made in the employment record book.

Please note! According to the documents, the date of employee reinstatement will be the date of dismissal, not the date of the court decision. For example, an employee was dismissed on May 3, 2021, the court ruled on illegal dismissal and ordered the employee to be reinstated on June 10, 2021. The employee's reinstatement date will be May 3, 2021.

What to write in the reinstatement order?

The order for reinstatement must specify the same position from which the employee was dismissed. In addition, the average salary must be paid for the period of forced absenteeism.

An example of the order text:
"Restore:
Peter Mikhailovich Ivanov as a salesperson from May 3, 2021, with payment of the average salary for the period of forced absenteeism in the amount of UAH 5,000.
Grounds: resolution of the court (name of the court) No. 1 dated 10.06.2021. "

The employee must familiarize himself with the order against signature.

You do not need to sign a new employment agreement, as the court decision to reinstate the employee cancels the dismissal order. For the same reason, you do not need to notify the tax authorities of the hiring of a new employee, since your working relationship with such an employee continues.

How to make an entry in the employment record book?

Since the court found the dismissal to be illegal, the entry in the employment record about the dismissal is considered invalid. There is no need to cross out such an entry.

In column 3, write the full name of the employer. In the next line in the column:

• 1 - the next sequential number;
• 2 - the date of reinstatement (in our example, May 3, 2021);
• 3 - write "Record No. (number of the record that the court recognized as illegal) is invalid. Restored to previous job";
• 4 - Order on reinstatement of employment No. ... dated ...

What to write in the personal card?

There are two ways to make changes to an employee's personal card:
Cross out the record of dismissal and write: "The record is invalid. The employee has been reinstated on the basis of Order No. ... dated ... "
Create a new personal card and attach the old card to it.

What to write in the time sheet?

For an employee who has been reinstated, you need to create a separate corrective time sheet for the entire period of forced absence. Mark "IN" or "22" on the timesheet.

What about the average salary?

The average salary for the period of forced absence is paid for the entire period of such absence, but not more than for a year.

To calculate the average salary, the last two calendar months of work before dismissal are taken. The calculation procedure is set out in Resolution No. 100. The amount ordered by the court to be paid to the employee is indicated without taking into account taxes and fees, i.e. personal income tax (18%) and social security (1.5%) must be withheld from this amount and unified social tax (22%) must be charged. Only then can it be paid to the employee.
When calculating the unified social contribution, you need to check the minimum and maximum values. If the unified social contribution for a month is below the minimum value, then you will need to make an additional payment.

The paid amounts will need to be shown in the combined reporting, namely in the D1 and 4DF annexes.

Do I need to return severance pay?

If an employee was paid severance pay upon dismissal, for example, due to staff reductions, such severance pay need not be returned upon reinstatement.

Is the reinstated employee entitled to vacation?

Despite the fact that the employee has not worked for some time, the period of forced absenteeism is included in the length of service and entitles the reinstated employee to vacation. In other words, after being reinstated, an employee can use his or her basic annual leave, but is not entitled to annual additional leave.

If compensation for unused vacation was paid when an employee was dismissed, then when he or she is reinstated, the right to annual leave is considered used.

What if another employee is hired to replace the dismissed employee?

If another person is hired to take the place of the dismissed employee, he or she should be dismissed on the basis of Article 40(6) of the Labor Code. In this case, the employer must first offer the new employee another position. If the new employee refuses the job offer, then he or she may be dismissed. If the employer does not offer another position, but immediately dismisses the employee, then such dismissal will be considered illegal.

How to dismiss a reinstated employee?

As we wrote above, the employer is obliged to reinstate the employee upon a court decision immediately. However, there is no prohibition on continuing litigation and the employer has the right to appeal the court's decision to the court of appeal.

If the appellate court finds that the dismissal was lawful, the employer has the right to dismiss the reinstated employee. To do so, the employer must issue an Order to cancel the order reinstating the employee and make an entry in the employment record.

The average salary paid to a reinstated and newly dismissed employee during the period of forced absenteeism remains with the employee.

What does the employer face if it does not reinstate the dismissed employee?

If an employer fails to reinstate an employee based on a court decision, it faces a fine of UAH 3,400 to UAH 5,100, with a new deadline for bringing the court decision into force.

If the employer fails to reinstate the employee after a second court decision, the employer is issued a double fine and a criminal case is initiated.