On 1 January 2017, the Law of Ukraine "On Amendments to
Certain Ukrainian Laws" of 6 December 2016
No. 1774-VIІI became effective (the
The Law has introduced, amongst others, the following amendments
to Ukrainian law concerning labor remuneration and employer
1. The Law has amended the assessment, structure, and
application procedure with regard to the statutory minimum
The statutory minimum salary now
contemplates a minimum level of payment for a monthly (hourly) work
time standard that is performed by an employee. Previously, the law
provided that the statutory minimum salary was to be regarded as a
minimum payment guarantee for simple, unskilled labor;
Fewer types of payments are now to be
excluded while assessing an employee's salary as to its
compliance with the statutory minimum salary benchmark. As of now,
the list of such excluded payments comprises only supplemental
payments for adverse and dangerous working conditions, payments for
night work, overtimes, and mobile working conditions, bonuses for
holidays and anniversaries. Previously, any supplemental payments,
increments, bonuses, and compensations were to be disregarded for
the purpose of assessing compliance with the minimum statutory
The Law requires an employer to pay a
relevant extra amount to an employee if his/her salary payable for
fully performed work time standard is below the statutory minimum
Notably, pursuant to the Law of Ukraine "On the State
Budget of Ukraine for 2017'' the statutory minimum salary
for 2017 amounts to UAH 3,200 (approx. USD 120) at a monthly rate
and UAH 19.34 (approx. USD 0.7) at an hourly rate.
2. The Law has introduced new rules regarding implementation of
an employee compensation plan:
In order to implement any
employee compensation plan, other than the so-called
"tariff system" (where the amount of salary depends on
the relevant employee's category in the wage scale effective
within a company), the employer shall comply with certain
requirements. Specifically, it is necessary to provide for
such an employee compensation plan in the collective bargaining
agreement or, in its absence, in a document approved by the
employer following consultations with a trade union or employee
The minimum base salary (tariff)
under the tariff system of salaries, as a general rule, shall not
be below the statutory minimum cost of living applicable to
working-age persons as of 1 January of a current calendar year (as
of 1 January 2017, such a statutory minimum cost of living equals
UAH 1,600 (approx. USD 60)).
3. The Law has provided for additional types of fines that may
apply for labor law violations:
For failing to admit competent
officers to hold a labor law audit or impeding such an audit
– a fine in the amount of three statutory minimum salaries as
at the time of violation (currently UAH 9,600 (approx. USD
If such a violation is committed in
the course of a labor law audit intended to check due formalizing
of employment or payment of salaries – a fine in the amount
of 100 statutory minimum salaries as at the time of violation
(currently UAH 320,000 (approx. USD 12,000)).
4. More state agencies are now in charge of controlling
compliance with labor law requirements:
Executive bodies of city councils
(for capital cities of administrative regions and united municipal
communities) are now empowered to control compliance with labor law
requirements within relevant territories. The powers of such bodies
include holding labor law audits, imposing financial penalties on
violating entities, as well as issuing reports on administrative
violations with regard to officers of violating entities.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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