New Labor Code 2024: what will change dramatically in labor relations?

The Ministry of Economy of Ukraine has drafted a new Labor Code. The document is to replace the outdated Labor Code of 1971, whose provisions have long been out of step with the requirements of the modern economy.

What will change in the labor market and what will the new reform bring us?

Why is it necessary to change the Labor Code?

Due to the fact that the current Labor Code of Ukraine was developed with the Soviet economy in mind, most of its provisions do not meet the requirements of the modern labor market. Therefore, the Ministry of Economy decided to rewrite the document, remove Soviet norms from it, and make the changes that are needed to regulate labor relations today.

The new draft, which is ready for discussion by the legislative committee, is quite voluminous. The amended Labor Code of Ukraine includes 6 books, 264 articles, transitional and final provisions.

Among the long-awaited changes are the introduction of new forms of employment and the transition to electronic labor records..

What principles did the Ministry of Economy take into account when developing the project?

The project is based on the following goals:

• make the employment contract the main document that will regulate labor relations;

• reduce government interference in the relationship between an entrepreneur and his or her employees;

• to separate individual and collective bargaining relations;

• to remove bureaucracy from labor relations and expand the independence of enterprises;

• simplify the process of signing and terminating an employment contract;

• take into account the recommendations of the ILO (International Labor Organization) and the EU in the new laws;

• ensure that employees are protected from discrimination.

Additional issues were considered:

• types and forms of fixed-term employment contracts;

• signs of labor relations;

• accounting for the working day and defining domestic work.

New forms and types of employment contracts 2024

The new draft emphasizes that the employment contract should be recognized as the main document that will regulate individual labor relations. Thus, the state will not be able to influence the relationship between an entrepreneur and his or her employees. One of the advantages of such a decision is the absence of fines for non-compliance with the law.

The procedure for concluding an employment contract is simplified. For convenience, you can create a document in electronic and written form. And when applying for a job, it is no longer necessary to provide an employment record book or social insurance certificate.

The legislator focuses on legalizing forms of employment and introduces various types of contracts for this purpose:

• apprenticeship labor,

• fixed-term labor contract,

• with non-fixed working hours,

• indefinite employment contract,

• about seasonal work,

• about working from home,

• about remote work,

• with a domestic worker.

These changes are covered in Articles 44-45 of the draft TC.

Separation of remote from home work, according to the project

At first glance, there are few differences between remote and home-based work. However, the draft code clearly distinguishes between them.

Thus, home-based work involves fulfilling labor obligations at the employee's place of residence, while remote work can be performed anywhere at the employee's discretion, except for the employer's office.

The draft Labor Law also provides for situations when an employee may request a transfer to remote work for up to 2 months. Such circumstances include a confirmed fact of discrimination in the workplace, as well as emergencies (natural disaster, fire, catastrophe, pandemic, etc.), threat of armed aggression, etc.

Types of vacations and their duration

According to the draft law, annual paid vacation lasts 28 calendar days. This is the main type of leave granted to employees and is accrued from the first day of official employment. In the current version of the Code, paid vacation is 24 days.

Article 94 of the draft law describes the types of leave:

• without pay,

• in connection with education,

• in connection with pregnancy and childbirth,

• of the child's enhancement,

• childcare,

• at the birth of a child, etc.

The new Labor Code of Ukraine also provides that other types of leave may be stipulated in an employment agreement by agreement of the parties. At the same time, the legislation removes leave for participation in competitions or sabbaticals.

Entrepreneur's liability for failure to meet the deadline for payment to an employee

The new Labor Code includes a provision that defines the employer's liability for late payment of wages to employees. Thus, an entrepreneur must pay a penalty of 0.05% of the debt for each day of delay.

If the employer fails to pay the employee's salary within 15 calendar days after dismissal, the employer will have to pay a penalty of 0.5% of the debt for each day of delay from the date of official termination of the employment contract.

Labor dispute resolution and mediation

The Code clearly defines the parties to a labor dispute, the bodies that resolve such disputes, the procedure for establishing grievance commissions, and the procedure for resolving conflicts through mediation, a method of negotiation involving an independent mediator.

This section is also in the current version of the Code. However, in the new draft, it is supplemented, structured, and provides specifics on the procedure for concluding and terminating employment relationships, and proposes to resolve conflicts through mediation. This changes the traditional approach to labor relations in general, making them closer to international standards.

Modernization of the State Employment Service (SES)

The new draft law provides for a number of changes to the SES. The main purpose of this decision is to update the labor market. This means paying more attention to human capital development and developing programs to support the population, especially socially vulnerable categories.

An important step in this direction is the digitalization of all processes. This will make it much easier for companies to recruit employees, establish contacts with partners, find investors, etc.

Training and business grants

The project envisages the development of various state programs for the development and support of entrepreneurship in Ukraine. It is expected that about 100,000 citizens will be able to receive training and get jobs.

For example, the company plans to launch the eRobota program, which will allow entrepreneurs to receive 15,000 grants. The money can be used to start their own business, for processing plants, etc.

What is a lockout?

The new draft law includes the concept of a lockout. This means the ability to suspend the company's operations and payroll for a while. This right will be granted to companies where employees have organized a strike and only if the employer is unable to meet their demands.

Guarantees for employees with children

All guarantees and benefits established by the current legislation will be preserved for such employees. For example, the project does not allow for the dismissal of pregnant women, men, and women with children under the age of 1.5 years. However, these rules do not apply to the situation of liquidation of the enterprise.

Grounds for termination of an employment contract

The draft lists situations where an employee does not actually fulfill his or her employment obligations, and the employer does not dismiss him or her, but only suspends the employment contract. These cases include:

• suspension of an employee from work;

• performance of civil or public duties by a person;

• absence of an employee from the workplace without objective reasons for more than three days.

At the same time, the entrepreneur will accrue and pay wages only in accordance with the law.

What should Ukrainians expect from the new code?

Overall, the proposed project aims to change labor relations in line with the current requirements of the economy. This is another step towards international standards and the modernization of the labor sphere.