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Vocational Training of Employees: Forms, Documentation and Taxation

09.08.2018

Leonid Gilevich, Lawyer

Source: magazine “Kadrovyk”

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 The availability of qualified personnel is one of the prerequisites for successful economic activity. And although legislation provides for the obligation to periodically retrain and upgrade qualifications for only certain categories of employees, the number of employers sending their employees for training is not limited to these compulsory requirements, and a large number of employers are interested in raising the professional level of their employees.

Forms of the employees’ vocational training

Article 6(2) of the Law of Ukraine on Professional Development of Employees No. 4312-VI dated January 12, 2012 (as subsequently amended) provides that the organization of vocational training of employees shall be carried out by employers having due regard to the needs of their own economic or any other activities as consistent with the law. The vocational training of employees is carried out directly with the employer, and with the vocational and higher educational institutions, enterprises, institutions or organizations on a contractual basis.

The employers may conduct formal and informal vocational training of their employees. The formal vocational training of employees for the job includes primary vocational training, retraining and continuing professional development of the employees, and may be carried out directly with the employer or organized on contractual terms in vocational schools, enterprises, institutions, and organizations; and for the employees classified as belonging to managers, professionals and specialists – retraining, internship, specialization and continuing professional development, and may be organized on contractual terms in higher educational institutions. Based on the results of formal vocational training the employee is given a qualification document as per standard form.

The informal vocational training of employees is carried out with their consent directly with the employer in accordance with the employer’s decision and at the employer’s expense, having due regard to the needs of his own economic or any other activities.

Paragraph 2.1 of Regulation on Vocational Training of Employees in the Workplace, approved by the Order of the Ministry of Labor and Social Policy of Ukraine No. 127/151 dated March 26, 2001, provides that based on the results of formal vocational training of employees such employees are given the documents certifying the training undertaken, the standard form of which is approved by the Resolutions of the Cabinet of Ministers of Ukraine No. 645 “On Documents on the General Secondary and Vocational Education Approved by the State and Addendums thereto” dated July 22, 2015 and No. 193 “On Documents on Higher Education (Academic Degrees) Approved by the State” dated March 31, 2015.

Based on the results of informal training, a certificate is issued with indication of profession (specialty), the qualifications obtained, the field of continuing professional development, and the period of training. The results of informal training in trade professions are confirmed according to procedure approved by Resolution of the Cabinet of Ministers of Ukraine No. 340 “On Approving the Procedure for Confirming the Results of Informal Vocational Training of Individuals in Trade Professions” dated May 15, 2013. The list of trade professions, for which the results of informal vocational training of individuals are confirmed, is approved by the Order of the Ministry of Social Policy No. 886 dated December 23, 2013.

Based on the results of informal vocational training a person who has confirmed his/her qualification is given a qualification (qualification upgrade) certificate in trade professions. 

Pursuant to Article 7 of the Law No. 4312-VI the vocational training of employees is carried out in form of full-time attendance and part-time (in shifts) attendance, in-person and remote classes, external form, on-the-job or in the classroom, and based on individual curricula. The vocational training of employees in trade professions is provided by:

– course training, which envisages the formation of training groups and is carried out in classrooms (laboratories);

– individual training, which envisages on-the-job training supervised by the qualified employees, namely, by the on-the-job training instructors.

Article 11 of the Law No. 4312-VI provides that the employers may conduct the employees’ formal evaluation. The categories of employees subject to evaluation and the frequency of its conduct are determined by the collective agreement. At the same time, certain categories of employees (in particular, those employees who have been working in position less than one year, pregnant women, single mothers or single parents, children under fourteen, etc.) are not subject to evaluation.

Handling the formalities of the employees’ vocational training

In order to send an employee for training the employer issues an appropriate order.

In addition, in order to send an employee for training at the educational institution or training enterprise, institution and organization the employer shall enter into agreement with the relevant training entity. The Order of the Ministry of Labor and Social Policy of Ukraine No. 232 of August 10, 2010 approves the Suggested procedure for conclusion by business entities of agreements for training, retraining and continuing professional development of the employees.

According to paragraph 2 of the aforementioned Suggested procedure, the essential terms and conditions of such agreement shall be, in particular, the number of persons sent for training, the name of profession (field, specialty), the form of training, the period of study, the cost of training and the procedure for settlements between the parties. The model form of the agreement is approved by the Suggested procedure.

The agreement shall be supplemented with the cost estimate, determining the costs for vocational training; the curriculum and programs approved and agreed pursuant to the established procedure; the schedule for sending employees to training; the financing schedule for the employees’ training.

The training at the educational institution, training enterprise, institution or organization is conducted under the relevant referral issued to the employee by the employer. An educational institution, training enterprise, institution or organization shall, within 5 days from the beginning of the educational process, send the employer a confirmation of the employee’s admission to training (a detachable stub of the referral) and a copy of the order on his/her enrollment for training.

Article 34 of the Law of Ukraine on Employment of July 5, 2012 No. 5067-VI (as subsequently amended) establishes that the employer has the right to enter with the employees or other persons not employed by the employer, with their consent, into agreements for sending them to educational institutions for professional training, retraining and continuous professional education. The specified agreement may envisage the obligation of employee or another person sent for study to work out the qualification he/she received from such an employer after completion of such training within the period agreed by the parties that should be relatively similar with the obligations undertaken by the employer for the payment and terms of training, but not more than three years.

The model form of such agreement is also approved by the Suggested procedure.

Where the employee or another person refuses to work with the employee within the period agreed upon or where he/she is dismissed from work before the expiration of such period, the employee or another person is obliged to reimburse the employer for the costs associated with the payment for training, or part thereof in proportion to the period he/she worked pursuant to the terms determined by agreement. The employee or other person is not obliged to reimburse the employer for the costs associated with training, if they have not started to work or were dismissed from work on the grounds as follows: 1) disability diagnosis; 2) dismissal at the employer’s initiative, which is not connected with the employee’s committing illegal actions; 3) call to military duty or referral to alternative (non-military) service; 4) at his/her own initiative because of violation by the employer of labor legislation, collective agreements, collective or labor contract; 5) caring for a child with a disability and/or a person with a group I disability (regardless of the cause of the disability).

For the purpose of informal vocational training the employer shall only issue an appropriate order for its conduct. The employees who are affected by such an order shall sign the order upon familiarization therewith.

However, the employees’ participation in workshops, seminars and other informal courses is not usually documented as ‘training’ in the meaning referred to above, but rather as information and consulting services provided by the organizers of the relevant workshops, seminars or courses, as provided for in the relevant agreement concluded with the employer, in which the specific employees are not identified.

Taxation

Pursuant to Article 197.1.2 of the Tax Code of Ukraine the provision of services for obtaining higher, secondary, vocational and preschool education by educational institutions, including the training of postgraduate and doctoral students by educational institutions licensed to provide such services, shall be exempted from value added tax. At the same time, VAT is levied on information and consulting services (for conducting workshops, seminars, other courses), but the accrued taxes may be attributed to a tax credit.

In accordance with paragraph 9 of the List of payments to be made at the expense of employers, from which no unified contribution for compulsory state social insurance is paid, approved by the Resolution of the Cabinet of Ministers of Ukraine No. 1170 dated December 22, 2010, this unified social contribution is not levied on training and retraining costs (except for the amount of wage that is retained at the employees’ main place of work during their training off-the-job within a system of continuous professional development and retraining of personnel).

In case the amount paid by the employer for the benefit of the national higher and vocational schools for education, training or retraining of an employee does not exceed three times the minimum wage established by law as of January 1 of the reporting (tax) year for each full-time or part-time month of study, training or retraining of such an employee, according to Article 165.1.21 of the Tax Code of Ukraine, this amount shall not be subject to personal income tax and military levy. In addition, these taxes are not levied on the amount of employer’s expenses related to the taxpayer’s qualification upgrading (retraining) in accordance with the law (as stipulated in Article 165.1.37 of the Tax Code of Ukraine). In other cases, the relevant cost of training is subject to personal income tax and military levy.

Finally, for the purposes of corporate income tax, the amounts spent on training may be included in the expenses of the reporting period in which such expenses were actually incurred.

 
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