Date of publication: 5 January 2018
Leonid Gilevich, Lawyer
Source: Economichna Pravda
The increase in a number of vacancies, unemployment and migration abroad are the three pillars the labor market leans on. How will the new Labor Code affect it?
The passing year was quite checkered for the Ukrainian labor market.
On the one hand, there was an increase in a number of vacancies in various professional fields, and a significant number of companies included the increase in a number of personnel into their budgets for 2017.
On the other hand, the Ukraine’s level of unemployment still remains high, and the problem of labor migration to more prosperous countries significantly influences and, apparently, will continue to influence the market.
Encouragingly, many employers continue to improve the quality of personnel management and, accordingly, the working conditions for their employees.
The world’s best practices are being extensively used. However, Ukrainian employers introduce fascinating ideas on their own as well.
At long last, in the middle of the year, a hope has emerged that a new fundamental labor regulating document – the Labor Code – will soon be adopted, and the old Soviet Code of Labor Laws will be finally forgotten.
Code of Labor Laws is dead, long live the Labor Code!
The new Labor Code should be a significant step forward in the development of the labor legislation in Ukraine. The innovations include the introduction of such concept as ‘suspension of a labor contract’, the provision of new grounds for dismissal, for example, for reasons beyond the reasonable control of the parties, control over workers with a help of technical means, and working from home.
However, in its current form the draft code is far from ideal. It does not take into account the diversity of modern labor relations and lags behind the best samples of present-day labor laws of the developed countries.
Especially noticeable are the weaknesses in regulation of the processing of personal data provided by the employees and candidates for vacant posts.
While the EU adopts a new regulation on personal data protection, which takes into account the modern security challenges, Ukraine contents itself with the outdated Law on Protection of Personal Data and a passing reference to personal data in the draft Labor Code.
The legislator neglected the so-called non-traditional recruitment forms, which are quite common in the labor market. This poses unnecessary obstacles to different types of labor relations.
It would be quite appropriate to arrange them in a separate chapter. Thus, it would be possible to list the types of non-traditional labor relations and set forth clear and understandable rules related thereto for all market participants.
Perhaps, some problem issues will be resolved before the second reading. In this regard it is important that the legislator carefully considers the needs of the market and does not establish the unnecessary excessive regulation.
Remote work and outstaffing
The non-traditional recruitment forms include personnel outsourcing, leasing, outstaffing and distance work. There is one more convenient and popular form – the freelancing – but it is not covered by the labor relations.
The most regulated out of the above-mentioned list is the outsourcing – the term can even be found in the effective legislation. The issues of distance work and work from home are covered in a number of articles of the draft Labor Code.
The outstaffing and personnel leasing are less fortunate, but the outsourcing, leasing and outstaffing relationships between the business entities are typically regulated by service contracts. Often there is a confusion between the concepts of ‘outstaffing’ and ‘personnel leasing’.
The outstaffing means that employees working for one employer are on a payroll of the other. The latter is called the provider.
The provider takes care of all the formal procedures associated with the employment for the respective fee from the customer. Very often an employee does not even drop in the office of his/her formal employer for the whole period of the employment.
The personnel leasing occurs when employees of one employer are ‘leased’ by another for a certain period of time to implement a certain project. In Ukraine it is the case of IT sector, where a team from outside is often involved in a project on a one-time-only basis.
Freelance is not a form of labor relations, but tend to be a substitution thereof. It has significant advantages for the employer, who turns into a customer and, in addition to a number of tax advantages, gets an opportunity to disregard a number of guarantees provided for by the labor law.
In return, the employee receives greater freedom in his/her activities.
Although the law allows for the freelancing, there is a danger of its qualification as labor relationships with negative consequences for the employer. In particular, it is the case where the relationships have all attributes of labor relations, and are technically presented as civil law relations.