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“The team was recently visible advising on a number of pharmaceutical cases. Sources agree that the team is “moving in the right direction” and are particularly impressed by its work in the pharmaceutical sector”.

 

“Mobilization” Amendments in Labor Legislation

15.08.2014

Leonid O. Gilevych, lawyer at Ilyashev & Partners
Source: Lawyer & Law

The Law of Ukraine “On introduction of amendments into certain legislative acts of Ukraine concerning improvement of the defense and mobilization issues during the mobilization process” No. 1275-VII, adopted on May 20, 2014, is another regulation intended, inter alia, to settle a number of labor issues related to mobilization and provide additional protection and rights to the mobilized citizens.

The first steps in this regard were made within the framework of the Law of Ukraine “On introduction of amendments into some legislative acts of Ukraine concerning the conduct of mobilization” No. 1169-VII as of March 27, 2014. The law stipulates that the employees called up for military service during mobilization for a special period, but for not more than one year, shall receive guarantees of preservation of their employment, job positions and average amount of income. In addition, the law established specific features of dismissal due to changes in the organization of production and labor in connection with activities during mobilization for a special period; guaranteed payment of pensions to retired military personnel called up for military service during mobilization; envisaged some other guarantees to the citizens related to mobilization.

The said law No. 1169-VII was mainly criticized by the individuals who were dismissed because of being called up for military service for the period of mobilization prior to its entry into force. It is obvious that such category of citizens turned to be less secure as compared to the employees called up for service after adoption of the law No. 1169-VII. This, as well as some other pressing issues, contributed to the adoption of the law No. 1275-VII.

The main thing is that the citizens of Ukraine, who since March 18, 2014 have been called up for military service on the basis of the Decree of the President of Ukraine “On the partial mobilization” No. 303 as of March 17, 2014, were granted guarantees of retention of their jobs and average earnings (for no more than one year), preservation of the state registration of business activities of individual entrepreneurs, as well as payment of pensions to retired military personnel called up for military service during mobilization.

In this regard, on June 17, 2014, the State Inspectorate of Ukraine on Labor matters provided explanations stating that all the employees who were dismissed from their jobs under Article 36(3) of the Labor Code of Ukraine in connection with being called for military service during mobilization must be reinstated by the employer in their jobs in connection with entry into force of the law No. 1275-VII. Reinstatement is carried out through the abolition of the dismissal order, introduction of the relevant entry into the employment record book (if it is kept at the enterprise, institution, organization) and personal record file (personal card) of the employee. The employer is obliged to notify the employee about cancellation of the dismissal order by sending him a corresponding notice to the place of his registration (actual place of residence) with a copy of the order attached. From the date of dismissal the employer is obliged to accrue an average salary to the employee without charging taxes and single social contribution. The Inspectorate noted that refusal of the employer to cancel the dismissal order and/or fail to pay the average wage constitutes a violation of labor law and entails liability under the legislation (criminal, administrative and disciplinary), as in the case of illegal dismissal. The Inspectorate pointed out that in case of receipt of complaints filed by employees dismissed on the basis of Article 36(3) of the Labor Code of Ukraine during the mobilization, the territorial state labor inspectorates shall conduct unscheduled inspections and in case of violations – take measures within their competence and authorities to eliminate violations and prosecute the guilty officials.

In addition, the legislator introduced more precise and detailed formulations into the already approved part three of Article 119 of the Labor Code of Ukraine (which establishes the right of retention of work position and average earnings of mobilized persons). At present part three of Article 119 sets forth that average earnings of the mobilized employees must be compensated from the State budget of Ukraine as set forth by the Cabinet of Ministers of Ukraine. Appropriate procedures have not been approved yet.

Pursuant to clause 3 of Article 36(1) of the Labor Code of Ukraine calling up or enrollment of an individual person – owner to military service or sending him to alternative (non-military) service shall constitute an additional ground for termination of the employment contract. Pursuant to clause 10 of Article 40(1) of the Labor Code of Ukraine, calling up or mobilization of the owner – individual during a special period shall serve as a ground for termination of the employment contract by the owner (without consent of the trade union). The said rules are of notably discriminatory nature towards employees of an individual entrepreneur as compared to other employees. In addition, according to new Article 47(3) of the Labor Code of Ukraine, if mobilized, an individual person – owner is obliged to make dismissal payment and transfer an employment record book to such employee within a month after his demobilization without suffering any sanctions and fines. Thus, an employee may be left without work, money, and his employment record book for a long period of time.

Important amendments have been introduced into the tax legislation. Thus, in accordance with amendments to sub-section 10 of Section XX “Transitional Provisions” of the Tax Code of Ukraine, mobilized self-employed persons, who either have or do not have hired employees, during the period of military service are exempted from an obligation to accrue and settle an income tax and unified tax, as well as from the obligation to file obligatory reporting. If a mobilized self-employed person has employees, he may authorize another person to pay salary and/or other income to the employees for a period of his military service. It shall be emphasized that the said exemption from tax accrual and settlement, as well as from filing reports is not assumed – an appropriate application in this regard should be filed to the tax inspection.

The legislator excluded the monetary aid (also in-kind), which is provided to individuals or their family members (children, spouse, parents), military men called for military service during mobilization in accordance with the Law of Ukraine “On social and legal protection of servicemen and their families” and/or compensation payments from the budget within the average earnings of employees called up for military service during mobilization, for a special period (subparagraph 165.1.1 of the Tax Code of Ukraine) from the total monthly (annual) taxable income of the taxpayer. However, the question whether to adjust the amounts already paid continues to be relevant. Apparently, we should expect an appropriate clarification from the competent authorities.

Further, the law No. 1275-VII introduced amendments to the Laws of Ukraine “On the collection and accounting of a single social contribution for obligatory state social insurance”, “On mobilization preparation and mobilization”, “On military duty and military service”, “On the principles of prevention and combating corruption”, and the Code of Administrative Offences. Thus, it is crucial for the mobilized citizens to receive additional protection against the banks in terms of loan repayment for the period of mobilization. Pursuant to amendments to Article 14 of the Law of Ukraine “On social and legal protection of servicemen and their families”, penalties, a fine for failure to perform obligations towards enterprises, institutions and organizations of all forms of ownership, including banks and individuals, as well as interest on loan shall not be charged onto the servicemen from the beginning to the end of the special period, and reservists and persons liable for military service – from the moment of call-up during mobilization and until the end of the special period. It is obvious that in order to exercise this right, the person subject to mobilization must notify the lender (bank) about such mobilization and provide relevant supporting documents (possibly through his authorised representatives).

 

 

 
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