Important Changes in the Ukrainian Labour, Data Protection and Anti-Corruption Legislation in 2014

Labour & Employment

2014 again did not become the year of adoption of the long-awaited new Labour Code. In general, this year did not result in any significant legislation in the labour law area.

The most notable act enacted in 2014 is the Law on Amending Certain Legislative Acts of Ukraine Regarding Protecting Investors Rights. This Law, which came into force on 1 June 2014, allows to fire top managers of Ukrainian companies for no cause (i.e. decision of the company's highest governing body will be sufficient), as well as increases liability of the companies' management.

In the spring of 2014, the Ukrainian parliament passed several acts introducing changes into certain laws of Ukraine with respect to mobilisation aimed at ensuring that employees called for military duty in the course of mobilisation keep their job, position and average salary (for up to one year) in respective Ukrainian employing companies.

The Ukrainian parliament made some changes into the anti-discrimination legislation by passing the Law No. 1263-VII dated 13 May 2014. In particular, the new wording of 'discrimination' and some other key notions was introduced.

On 19 June 2014, the Law on Amending the Law on the Legal Status of Foreigners and Stateless Individuals was enacted. The amendments introduced by this Law are related to the documents to be filed for obtaining a temporary residence certificate for foreign employees for them to legally stay in Ukraine.

Various state agencies have passed a number of regulations and official interpretations of the Ukrainian legislation concerning regulation of data protection, working time, employee dismissal, business trips, social protection, collective bargaining agreements, engaging foreign labour, vacation, labour safety, and other important employment law issues.

Privacy & Data Protection

On 1 January 2014, the Law No. 383-VII on Amending Certain Laws on Improving the System of Personal Data Protection came into force. This Law introduced the important changes into the data protection legislation, including transferring the functions of the central state body in the data protection area from the Ukrainian State Personal Data Protection Service to the Ombudsman.

As of 1 January 2014, controllers are no longer required to register their databases containing personal data. If processing of the personal data creates a risk to the rights of the data subjects (the "Risk Data"), the controller will have to notify the Ombudsman of such processing within 30 business days of the date of the processing. The types of the Risk Data are established by the Ombudsman. The Risk Data includes, but is not limited to, sensitive data (e.g. trade union membership, criminal prosecution, medical records, etc.)

Anti-Corruption & Anti-Bribery

For many Ukrainian companies (and not only those affected by the FCPA/UKBA) the year of 2014 will be marked as a point of no return in their compliance efforts undertaken so far. On 14 October 2014, the Ukrainian parliament enacted a number of the new anti-corruption laws. One of them, the Law of Ukraine No. 1700-VII on Preventing Corruption (the "New Anti-Corruption Law"), will significantly reshape the Ukrainian legal regulation and enforcement in the anti-corruption area. The New Anti-Corruption Law will start to apply as of 26 April 2015 (the Law came into force on 26 October 2014, but it will be put in execution on 26 April 2015).

The entire Section X of the New Anti-Corruption Law deals with preventing corruption in legal entities and, therefore, requires special attention of the companies. This Section X provides, in particular, for the following:

  • Obligation of the legal entities to ensure developing and implementing adequate measures for preventing and fighting corruption in their activities;
  • Responsibility of the companies' CEOs to ensure regular evaluation of the companies' corruption risks and taking appropriate anti-corruption measures;
  • Possibility to engage independent experts to assist companies in detecting and eliminating corruption risks in their activities, as well as to conduct anti-corruption due diligence;
  • Definition and duties of the anti-corruption compliance officer; and
  • Requirements to the anti-corruption compliance programs.

In addition to the above important legal novelties, the New Anti-Corruption Law:

  • Defines the notion of ' gift', but rather broadly, making it difficult to establish a clear test for distinguishing between the gift and the unjustified benefit;
  • Regulates protection of whistle-blowers, including from retaliation by their employers;
  • Provides for an algorithm for preventing acceptance of unjustified benefits and gifts, and for dealing with them when provided;
  • Enables the competent Ukrainian agencies to give to/receive from the relevant foreign agencies information (including restricted data) related to preventing and fighting corruption;
  • Supplements Article 36 of the Labour Code with a new ground for employment termination, namely concluding an employment agreement (contract) contrary to the requirements of the anti-corruption legislation; and
  • Introduces certain changes related to liability for corruption and corruption related offences to the Criminal Code and the Administrative Offences Code.

Importantly, the new anticorruption legislation preserved the earlier established serious criminal liability (of up to approximately EUR 77,000) of the companies for the actions of their authorised persons performed on their behalf and in their interests.

2015 Outlook

The most prominent trends relating to the labour and compliance issues in the upcoming year seem to be the following:

  • Enacting a new Labour Code;
  • Introducing further amendments to the military service and mobilisation laws affecting the employment relationships;
  • Amending the legislation concerning foreigners' employment and residence in Ukraine;
  • Enacting legislation affecting the employment relationships between the companies registered in the Republic of Crimea (the occupied territory) and their employees;
  • Adopting subordinate data protection legislation (e.g. approval by the Cabinet of Ministers of Ukraine of the list of countries providing adequate protection of personal data, etc.); and
  • Substantial amending/implementing new anti-corruption compliance programmes and practices by the employers due to coming into force on 26 April 2015 of the New Anti-Corruption Law.

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.