Currently, due to the economic slowdown and deepening political crisis, more and more companies in Ukraine trying to reduce their costs consider the option of business reorganization. Companies either move into a new line of business, or, in the worst case, even stop operations. In any case business reorganization means that certain positions will be eliminated and some employees will be dismissed. Such market trends have resulted in a significant increase in employment and labor disputes related to staff redundancy. Recent court practice confirmed the statutory obligations of the employer in the course of redundancy proceedings and proposed a more complete interpretation of certain obligations of employers, a summary of which is provided below. The employer must notify employees about their upcoming redundancy and offer any vacant positions in the same company. In its most recent Orders the Supreme Court of Ukraine (the “Court”) confirmed that the employer is obliged to notify employees personally about their forthcoming redundancy not later than two months before the targeted redundancy date and offer them any vacant positions in the same company1 regardless of the department in which the relevant employees work.2 Such vacant positions must be offered throughout the notice period (i.e., from the date when the redundancy notice was served until the date the employment agreements of such employees are terminated).3 The Court found that the employer will be deemed compliant with its obligation if it has offered the employee all vacant positions that (1) exist in the company from the date on which the redundancy notice was served; (2) exist as of the termination date; and (3) correspond to the qualifications or experience of the relevant employee, or any other work that the employee can perform given his/her education, qualifications, experience, etc.4 In other words, the safest option for the employer is to offer any vacant positions even if such positions require lower qualifications and less experience compared to the eliminated position of the employee. The employer must obtain the trade union’s consent to dismiss an employee (if necessary). In an order dated 1 July 2015 the Court found that if the trade union refuses to give its consent to the employee’s dismissal, the decision of the trade union must be substantiated with evidence that the employer violated the employee’s rights in terminating the employment agreement.5 If the decision contains no justification why the relevant consent was not given to the employer, the employer is entitled to dismiss such employee without the trade union’s consent.6 The employer must make all payments and return the labor book to the employee on the termination date. In recent cases the Court confirmed that failure of the employer to provide a full settlement can trigger liability under the applicable law.7 By way of reminder, the employer must pay all employment-related payments for the period ending with the last day of employment inclusive. Otherwise, this will trigger the employer’s obligation to pay the employee’s average salary for the entire period of the delay in payment of the correct amounts to the employee. The Court also confirmed that in order to calculate the final settlement, a special formula must be used pursuant to which all payments made for all working days of such employee for the last two full calendar months before termination should be taken into account.8 1 See Order of the Supreme Court of Ukraine in case No. 6-491цс15 dated 1 July 2015; Order of the Supreme Court of Ukraine in case No. 6-40цс15 dated 1 April 2015; Order of the Supreme Court of Ukraine in case No. 21-52а15 dated 10 March 2015; 2 See Order of the Supreme Court of Ukraine in case No. 6-40цс15 dated 1 April 2015; 3 See Order of the Supreme Court of Ukraine in case No. 6-40цс15 dated 1 April 2015 4 See Order of the Supreme Court of Ukraine in case No. 6-491цс15 dated 1 July 2015; Order of the Supreme Court of Ukraine in case No. 6-40цс15 dated 1 April 2015; 5 See Order of the Supreme Court of Ukraine in case No. 6-703цс15 dated 1 July 2015; 6 See Order of the Supreme Court of Ukraine in case No. 21-107а15 dated 19 May 2015; 7 See Order of the Supreme Court of Ukraine in case No. 6-195цс14 dated 21 January 2015; 8 See Order of the Supreme Court of Ukraine in case No. 6-195цс14 dated 21 January 2015.
Lina Nemchenko is partner in Baker McKenzie's Real Estate Practice Group in Kyiv. She also advises clients on natural resources and M&A law. Ms. Nemchenko has been recommended by PLC Which Lawyer? 2009 for her prominent advises in the field of real estate and construction, and has been acknowledged as one of the top advisers for land law by Ukrainian Law Firms: A Handbook for Foreign Clients. She has likewise been cited by Chambers Europe in its 2008-2009 editions for her “deep experience in handling the peculiarities of Ukranian law.” Chambers Global has also ranked Ms. Nemchenko as a leading individual in the her area of practice for three consecutive years.
Mariana Marchuk is a counsel in Baker McKenzie's Kyiv office. She has over 17 years of practical experience in the areas of corporate law, M&A, reorganizations, labor and employment, as well as compliance and anti-corruption. Prior to joining the Kyiv office of Baker McKenzie in 1997 as an associate, Ms. Marchuk worked as a legal adviser for one of the Big Six consulting firms. From 1999 up to 2004, she worked in Moscow as an associate for a major Wall Street law firm and subsequently for Baker McKenzie. In 2004, she returned to the Kyiv office of the Firm and in 2010 she was made a counsel.