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Ukraine – New labour law presents new risks for suppliers and buyers

04 January 2013

A new law which came into force on 1 January 2013 has introduced many changes to modernise employment in the Ukraine. The law on Employment (Law No. 5067-VI) comes as part of a far-ranging reform programme implemented by Prime Minister, Mykola Azarov seeing 52 new laws and 36 new regulations introduced in the New Year affecting issues such as medical care, public associations and urban planning.

According to Azarov, these new laws present the continuation of reforms aimed at deregulation and the creation of a business friendly environment while also ensuring the rights of citizens.

Employment (Law No. 5067-VI) prohibits ‘undocumented’ employment and introduces important provisions related to the mass layoffs. The new law establishes key principles for engaging foreign labour; in particular it lists instances when a foreigner must obtain a working permit to work in Ukraine.

The new law introduces regulations on the activity of recruitment firms, preventing them from charging workers for services. Now, such recruitment fees will be paid exclusively by employers. The law also imposes significant restrictions regarding the contents of job advertisements such as specifying an age bracket or a gender for suitable candidates; or asking applicants to provide information on their personal life.

The new law also introduces quotas for the proportion of companies’ workforce belonging to certain categories such as mothers with young children or single parents, or parents of a disabled child. By law, there should be at least 5% of employees who belong to these categories in a company with a staff of over 20 people. Any non-compliant employers expose themselves to fines equivalent to twice the amount of the minimum wage.

In addition, the new law envisages initial benefits for young employees who agree to work in rural areas.

Workers aged over 45 who have pensionable service of at least 15 years have the right, before they reach the retirement age, to get a one-time voucher to maintain their competitiveness through retraining, specialization and the raising of their skills for professions and specialities for priority economic activities.

The state will also undertake to motivate enterprises to employ jobless persons. It promises that those who hire people from the state labour exchange will get monthly compensation within a year amounting to a single contribution to obligatory state social insurance. One condition is that the unemployed person will have to be employed at the company for at least two years.

Earlier, the Presidential Administration predicted that the entry into force of this far reaching employment legislation would reduce unemployment in the Ukraine by 2015 from 8.6% to 6.5%.

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