Suspension of an employment contract: how the innovation works in times of war

Головна сторінка News Suspension of an employment contract: how the innovation works in times of war

Due to the war, many Ukrainians lost their jobs and the physical ability to work as usual. Therefore, the Parliament has created a new tool to adapt labor legislation to wartime conditions—the suspension of labor relations. What is meant by “suspension” and how does it differ from the termination of an employment contract?

Who will compensate employees for wages lost due to the war? These questions were answered by lawyer Oleksandr Nioradze for the Ukrainian Legal Aid Foundation.

What the law says

The Law of Ukraine No. 2136-IX “On Organization of Labor Relations under Martial Law” (the “Law”) provides, among other innovations, for the possibility of “suspension of an employment contract” between an employee and an employer.

Thus, according to the provisions of Article 13 of the Law, the suspension of an employment contract is a temporary cessation of the employer’s provision of employment to the employee and a temporary cessation of the employee’s performance of work under the concluded employment contract.

In other words, the employer is relieved of the obligation to provide working conditions for the performance of work, and the employee is relieved of the obligation to perform work under the employment contract.

Suspension of an employment contract must be justified

The possibility of suspension of an employment agreement is linked to military aggression against Ukraine, which excludes the possibility of providing and performing work.

This wording means that an employment agreement may be suspended if the employer’s business activities are impeded due to the war. In other words, such suspension must be justified.

“The main condition for suspension of an employment contract is the absolute impossibility of the employer providing the relevant work and the employee performing it,” the Ministry of Economy of Ukraine said in a commentary.

How can an employer and an employee prove the impossibility of providing and performing work?

Obviously, the situation with the inability to perform and provide work is possible not only in the region where hostilities have been or are ongoing.

Therefore, the question remains open and somewhat controversial: what should be considered the inability to provide and perform work, and how can this fact be proved?

First, the Ministry of Reintegration of the Temporarily Occupied Territories issued the Order “On Approval of the List of Territorial Communities Located in the Area of Military (Combat) Operations or Under Temporary Occupation, Surrounding (Blocking) as of April 30, 2022”.

This list is updated, so you should check the inclusion of a particular territory in the list within a certain period of time.

Second, the Letter of the Ukrainian Chamber of Commerce and Industry confirming that the introduction of martial law in Ukraine is force majeure until its official termination and is an objective circumstance for the impossibility of fulfilling contractual or other obligations within the established timeframe will be useful.

The difference between suspension of an employment contract and dismissal

Suspension of an employment agreement does not entail termination of the employment relationship, unlike, for example, dismissal.

Therefore, the employer must continue to keep records in terms of determining and recording the amounts of wages and compensation payments that would have been due to the employee if such a suspension had not occurred.

Thus, the government suggests that employers continue to keep records of accrued but unpaid wages.

At the same time, the same commentary states that “since the employer will not pay wages during the suspension of the employment contract, there is no basis for accrual of the USC (Unified Social Contribution), and accordingly, the USC is not paid”.

In other words, for the period of martial law, employers are exempt from liability for non-payment/violation of the UST payment procedure, and no penalty is charged (Clauses 921,922 of Section 8 of the Law of Ukraine “On Collection and Accounting of the Single Contribution for Obligatory State Social Insurance”). This means that the payment of the unified social contribution is entirely the responsibility of the employer.

How to suspend an employment contract?

The Law does not contain any requirements regarding the procedure for suspending an employment contract. Thus, Article 13 of the Law provides that in case of suspension of the employment agreement, the employer and the employee shall notify each other by any available means, if possible.

Of course, the best option for notification is to send a valuable letter with a description of the attachment to the registered address of the employer/place of registration or residence of the employee.

However, it is obvious that in times of war, this method of notification may not be available to everyone.

Therefore, notifications should be made literally by any available means. For example, to a corporate and/or personal email address.

I advise you to duplicate the message through several communication channels, not neglecting, for example, messengers.

Be sure to keep proof of sending the message (if you communicate via messenger, take a screenshot of the dialog box).

The letter/message should contain the following information:

  • Your last name, first name, patronymic and position;
  • To whom you are addressing the message (manager or subordinate);
  • From what date you propose to suspend the employment contract;
  • Reasons why you cannot perform work or provide work;
  • Your contact information.

Such a letter (especially if it is sent by e-mail and/or messenger) should identify you and your addressee as much as possible, as well as confirm that the addressee has received your notice of suspension of the employment contract.

russia will compensate employees for lost wages

The law provides that the reimbursement of wages, guarantee and compensation payments to employees during the suspension of their employment contracts is fully borne by the state that is carrying out military aggression against Ukraine.

In other words, the Russian Federation, as the aggressor state, will have to pay wages and other compensation payments to Ukrainian employees whose employment contracts have been suspended. However, it is too early to talk about the timing and procedure of such compensation.