Ukraine

    1.1 In what circumstances does the employee transfer law apply?

    The employee transfer law applies in the following circumstances:

    • change of the business owner (e.g. sale of shares, sale of assets or privatisation);
    • reorganisation of the business, including mergers, consolidation, split-ups, spin-offs and transformations.

    The law protects employees in all these cases.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

    1.2 Does the employee transfer law apply to (a) a sale of a business or (b) outsourcing?

    (a) Sale of a business

    The law protects employees from all kind of transfers by providing that they must not influence employment relations. The fact that a transfer (i.e. a sale, reorganisation, merger, consolidation, split-up, spin-off or transformation) is taking place may not serve as legal grounds for employment termination.

    The transferee may carry out a staff reduction, provided it is justified by a ‘business reason’. If the transfer occurs because of a privatisation, the transferee may not dismiss the employees within six months of the transfer, except for disciplinary reasons.

    (2) Outsourcing

    The employee transfer law does not directly apply to outsourcing. However, the law prohibits outsourcing within one year of the last staff reduction.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

    1.3 In outline, what are the implications of the employee transfer law?

    If the employee transfer rules apply:

    • The mere fact of the transfer does not serve as grounds for termination of employment or changes to the employment terms. The law guarantees that the employment contracts remain effective after the transfer. The employees’ terms of employment may not be influenced by the transfer alone.
    • A collective bargaining agreement remains effective for up to one year after the transfer. The transferee and the employees will need to negotiate within this year to reach a new agreement or to extend the previous one.
    • There are no trade union consultation arrangements under Ukrainian law. Trade unions only have the right to participate in privatisation processes.
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    Author: Vasil Kisil & Partners

    Date: January 2017 

    2.1 Who transfers?

    The law protects all kinds of employees in relation to a transfer. The terms of their employment may not be changed solely by reason of the transfer. The transferee may reduce staff after the transfer, provided this is justified by a ‘business reason’. The same could be done by the transferor. The fact of the transfer does not serve as grounds for dismissal. The general rules on dismissals apply before, during and after a transfer.

    Where only part of a business or business function transfers but the legal entity that acts as the employer does not transfer for employees involved in the business, the employees will stay with their original employer. However, the transfer of the business function may serve as a ‘business reason’ to terminate employees who used to perform services for the transferring business function.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

    2.2 Can employees object to transferring?

    Generally, the employees do not participate in the process of transfer and therefore, they may not object to it. However, if, after the transfer, the transferee introduces changes to their terms of employment, they have the right to resign with one month’s severance pay.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

    2.3 What happens to terms of employment contracts?

    The terms of the employment contracts and all rights and obligations under them transfer to the transferee. Therefore, a transfer has no effect on the employment contracts. However, the terms and conditions may be changed if this is justified by a ‘business reason’.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

    2.4 What about other employee benefits?

    All statutory minimum benefits are mandatory by law and may not be withdrawn by the transferee. Any additional benefits are provided for as follows:

    • Individual benefits which constitute material terms of the employment, either in the employment contracts or by internal policies may only be changed if justified by a ‘business reason’.
    • All benefits provided by a collective agreement remain in force for one year after the transfer. 

    The employees’ length of service calculation remains uninterrupted.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

    2.5 What happens to pension rights?

    Employees’ pension rights remain in force. The transferee continues to pay the unified social contribution for each employee and the employee’s length of service continues to accrue for the purposes of pension. The transferee remains free to introduce additional pension benefits, such as participation in its private pension scheme.

    Note that if the transferor has a private pension scheme, the transferee may terminate it by giving six months’ notice to employees and to the regulatory authorities.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

    2.6 What liabilities transfer?

    In principle, all liabilities transfer to the transferee. However, note that this includes criminal liability relating to the transferor as a legal entity, but not criminal liability of corporate executives (i.e. the CEO and CFO) whose contracts have ended by the time of the transfer. If the transfer occurs as a result of the privatisation of a state-owned enterprise, the transferee may not dismiss the employees within six months of the transfer, except for disciplinary reasons.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

    2.7 Do collective agreements transfer?

    Generally, collective agreements transfer, but only remain in force for up to one year after the transfer. However, in the case of a reorganisation such as a merger, a collective agreement remains in force until it expires. In the case of the sale of a business, the transferee and the employees must begin bargaining within one year following the transfer to try to reach a new agreement or to extend the existing one.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

    2.8 How does the transferee obtain information on transferring employees?

    The transferee usually conducts an employment due diligence to ascertain, for example, the number of employees transferring, the conditions of their employment, their benefits under the collective agreement and internal policies and the details of the internal HR records. However, there are no statutory rules on the provision of information.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

    3.1 Can employers make changes to employment contracts?

    There are no rules about changing the terms of employment upon a transfer and therefore the general rules for amending employment contracts apply. This means that the transferee may change the employment contracts unilaterally if the changes are justified by a ‘business reason’. The parties are free to make changes to the employment contract if they both agree.

    If the transferee decides to implement a unilateral change justified by a business reason, the employer must notify the employee in writing of the change and the business reason for it two months in advance. If the employee agrees to the change, he or she will continue to work under the new employment terms from two months of the notification. If the employee objects to the change, the employer will have the right to dismiss the employee.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

    3.2 When can employers safely dismiss employees before or after a transfer?

    In most cases, the fact a transfer has taken place has no impact on the conditions for dismissal. Employers may safely dismiss employees either before or after the transfer, only if they have solid grounds to do so.

    In the case of privatisation, it is generally safer to dismiss employees before a transfer because there is a statutory prohibition against dismissals within six months of a privatisation.

    Note that corporate officers (e.g. directors, chief executive officers and member of the board) can be dismissed at any time without notice. The only requirements for this are a decision of the shareholders and a severance payment of at least six months’ salary.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

    4.1 Who must employers consult?

    The law does not require the transferor or transferee to consult either with employees or the state authorities about a business transfer. However, there may be such an obligation in the collective bargaining agreement.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

    4.2	What information must they provide?

    As there is no statutory obligation to consult, there are no statutory requirements about information to be provided.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

    4.3	What does consultation involve?

    As there is no obligation to consult, there are no requirements about what a consultation should involve.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

    4.4	How long does consultation last?

    As there is no statutory obligation to consult, there are no statutory requirements on how long the consultation should last.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

    4.5	What happens if an employer fails properly to inform or consult?

    If there is an obligation to consult in the collective bargaining agreement, a breach may lead to a collective dispute and even a strike. If an individual dismissal is carried out in breach of a collective bargaining agreement, this may be recognised by the court as unlawful and the employee may be reinstated and compensated for the time off work.

    However, even if an employer breaches these obligations, this does not enable employees to stop a transfer from going ahead. During consultations employees may only advise and make requests, but do not have decision-making powers in relation to transfers.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

    5.1	Identify up to three issues in this country of which employers should be aware?

    Currently Ukrainian labour law is virtually silent about transfers of businesses. However, the Ukraine-EU Association Agreement requires Ukraine to implement the EU Acquired Rights Directive into the national legislation. The Ministry of Labour and Social Policy of Ukraine is responsible for doing this. It plans to draft a law amending current law and providing an obligation on the transferor to inform and consult with employees about any proposed transfer. Failure to do so may result in claims by employees for reinstatement.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

    5.2	Would the employee transfer law apply on a cross-border transfer into or out of this country?

    Employee transfer law would not apply either to transfers into Ukraine or out of it. However, this situation may change, as Ukraine will soon be adopting a law implementing the EU Acquired Rights Directive.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

    6.1	What are the main national laws protecting employees upon transfers of businesses?

    The rules relating to transfers are contained in the Labour Code of Ukraine, the Law on Collective Bargaining Agreements and the Law on Privatisation of State-Owned Property.

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    Author: Vasil Kisil & Partners

    Date: January 2017 

     

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