It is no secret that Ukraine is striving to become a fully-fledged member of the international business community. Attainment of that goal is the first priority in the country's list of foreign policy priorities. And it is due to this fact that questions of access of foreign investment capital to the Ukrainian market, attractiveness of the national economy to investors and simple and comprehensible rules of conducting business are problem issues at present. And due to the same fact, the following questions, all of which are well-known to any foreign investor in Ukraine are raised: what are the rules on the Ukrainian labor market; what are the specifics of labor law in Ukraine; is it permissible to use the labor legislation of other countries in Ukraine at the hiring stage?
In this article we will try to provide answers to some of the most topical questions related to labor relations with foreign elements.
Choice of Legislation Applied to Labor Relations
Legal regulations on the use of wage labor are quite particular in any country. That is why the wish of potential employers, entering into labor relations with employees in Ukraine, should be guided by rules and regulations to which they are accustomed to is not surprising. However, legal regulation of labor relations in our country is, first and foremost, based on the principle of labor regulations according to the laws of the country where those relations take place. Article 52 of the On International Private Law Act of Ukraine from 23 June 2005 states that labor relations are subject to the laws of the state in which the work is being carried out, if otherwise not provided for by legislation or a treaty to which Ukraine is a party. Existence of such a provision can be explained by the presence of public interest and, therefore the interest of the government to protect the labor rights of an employee as the weaker subject in labor relations.
In some instances Ukrainian legislation leaves no choice to employers regarding opportunities to use national labor laws. According to Article 18 of the On Concessions Act of Ukraine from 16 July 1999, the obligations of a concessioner include entering into employment agreements (contracts), usually with employees who are Ukrainian citizens, in accordance with labor legislation. However, one cannot totally exclude the possibilities of application of the laws of another country to labor relations in Ukraine, but under certain conditions.
Firstly, it may be provided by a separate legislative act of Ukraine or by an international agreement. For example, according to the Agreement of 7 March 1997 between the Government of Ukraine and the Government of the Slovak Republic on mutual employment of citizens of these countries, labor relations of employees, hired to execute business agreements for Ukraine and trade agreements for Slovak Republic, concluded between entrepreneurs of both countries, for a period of time not exceeding two years, shall be regulated by the legislation of the state in which an employer has a permanent location.
Secondly, in accordance with Article 54 of the On
International Private Law Act of Ukraine, labor relations of
foreign citizens and stateless persons, who are employed in
Ukraine, shall not be regulated by laws of Ukraine in the following
1) if foreign citizens and stateless persons work for diplomatic missions of other countries or offices of international organizations in Ukraine, if not otherwise provided by a treaty to which Ukraine is a party;
2) if foreign citizens and stateless persons concluded employment agreements with foreign employers or foreign companies outside of Ukraine to carry out works in Ukraine, if not otherwise provided by agreements or a treaty to which Ukraine is a party.
Correlation between Labor Legislation and Employer Corporate Acts
The Labor Code of Ukraine adopted on 10 December 1971 is the main act regulating labor relations in Ukraine. One of the most fundamental regulations that it provides is the assertion of the vast sphere of legislative influence. According to Article 3 of the Labor Code of Ukraine, labor legislation regulates labor relations of employees of all types of enterprises, institutions, organizations, regardless of the forms of ownership, types of activities and business area, as well as persons employed by other persons in accordance with a labor agreement. Thus, the possibility to apply the regulations of the Civil Code of Ukraine (more favorable for employers) on labor relations is actually ruled out.
However, the Labor Code of Ukraine does not exclude the possibility of establishing special features of legal regulation by the foundation documents of an enterprise. Such a possibility, along with a number of others, is also provided for enterprises with foreign investments, the business activities of which are regulated by the On Foreign Investment Regime Act of Ukraine of 19 March 1996. In addition, the guarantees provided by the Labor Code of Ukraine regarding employment, labor protection, female workers, young workers and disabled persons, cannot be lowered. Nevertheless, this law does not provide regulations on labor for enterprises with foreign investments and there are no limitations for establishing special terms of employment for such enterprises by their founding documents.
Methods of Establishing Rights and Obligations in Labor Relations
Over the last 15 years methods of legal regulation of labor relations in Ukrainian labor legislation has changed significantly.
Changes to labor law are aimed at decentralization of regulation where the majority of regulation of labor relations is provided by local (internal) enterprises' acts. These acts regulate numerous aspects of the use of wage labor. If we sum up the analysis of the correlation of the main methods of establishing rights and obligations of the subjections of labor relations, the following conclusions can be presented:
1. Through laws and different legislative acts the government provides equal regulation of labor relations for all employees, minimum guarantees of labor rights, establishes rules for local (internal) legislative activity, grounds, terms, types of liability of parties participating in labor agreements, regulates issues of labor protection and the order for settling labor disputes.
2. Some of the most important questions of wage labor use at any enterprise, in particular, internal work regulations, use of working hours, salary, compensations and benefits for employees and so on, should be regulated by local (internal) regulations. Collective employment agreements, agreements on terms, conditions and salary and internal work regulations are just a few examples of such acts.
3. The terms of individual employment, rights and obligations for any given employee are defined by a labor agreement that should be concluded in writing. However, regulation of labor relations by means of an individual agreement is not common in Ukraine.
On the Extent of Liberty of an Agreement in Ukrainian Labor Legislation
As is well-known, the value of an agreement, as a regulator of public relations, is a democratic method of finding a compromise between the interests of parties that allows variances to be '
interests that allows variances to be avoided. However, there have always been conflicts between labor and capital. That is why in modern Ukrainian labor law a tendency can be seen for liberalization of agreement regulations. It is regarded that an employee may voluntarily waive certain rights in exchange for an opportunity to become a manager, for a salary rise and improved benefits and social guarantees. Still, the Labor Code of Ukraine retains a provision (Article 9 of the Code) in accordance with which, terms of employment that diminish employees' positions in comparison to the terms established by Ukrainian legislation are to be treated as invalid. In practice Article 9 of the Code does not allow additional grounds for termination of labor agreements to be negotiated, the payment of a salary which is less than the minimum wage established by law or to pay a salary less than two times a month, to provide full pecuniary responsibility in cases not provided by law, to apply fines, as measures of disciplinary action, and etc. It is common for parties to a labor agreement to make concessions to each other. However, legislation the law still prohibits employees from assuming duties not provided by legislation and to waive rights provided under the law in exchange for additional
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