The Kyiv office of Baker & McKenzie's Employment andMigration practice reviews the most recent opinions of the Supreme Court ofUkraine and other court practice related to staff redundancy

Currently, due to the economic slowdown and deepening political crisis, moreand more companies in Ukraine trying to reduce their costs consider the optionof business reorganization.  Companies either move into a new line ofbusiness, or, in the worst case, even stop operations.  In any casebusiness reorganization means that certain positions will be eliminated andsome employees will be dismissed.  Such market trends have resulted in asignificant increase in employment and labor disputes related to staffredundancy.

Recent court practice confirmed the statutory obligations of the employer inthe course of redundancy proceedings and proposed a more completeinterpretation of certain obligations of employers, a summary of which isprovided below. 

The employer must notifyemployees about their upcoming redundancy and offer any vacant positions in thesame company.

In its most recent Orders the Supreme Court of Ukraine (the "Court")confirmed that the employer is obliged to notify employees personally abouttheir forthcoming redundancy not later than two months before the targetedredundancy 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., fromthe date when the redundancy notice was served until the date the employmentagreements of such employees are terminated).³

The Court found that the employer will be deemed compliant with its obligationif it has offered the employee all vacant positions that (1) exist in thecompany from the date on which the redundancy notice was served; (2) exist asof the termination date; and (3) correspond to the qualifications or experienceof the relevant employee, or any other work that the employee can perform givenhis/her education, qualifications, experience, etc.⁴ In otherwords, the safest option for the employer is to offer any vacant positions evenif such positions require lower qualifications and less experience compared tothe eliminated position of the employee. 

The employer must obtainthe 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 refusesto give its consent to the employee's dismissal, the decision of the tradeunion must be substantiated with evidence that the employer violated theemployee's rights in terminating the employment agreement.⁵ Ifthe decision contains no justification why the relevant consent was not givento the employer, the employer is entitled to dismiss such employee without thetrade union's consent.⁶

The employer must make allpayments 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 afull settlement can trigger liability under the applicable law.⁷ Byway of reminder, the employer must pay all employment-related payments for theperiod ending with the last day of employment inclusive.  Otherwise, thiswill trigger the employer's obligation to pay the employee's average salary forthe entire period of the delay in payment of the correct amounts to theemployee.

The Court also confirmed that in order to calculate the final settlement, aspecial formula must be used pursuant to which all payments made for allworking days of such employee for the last two full calendar months beforetermination should be taken into account.⁸
 

1 See Order of the Supreme Courtof Ukraine in case No. 6-491цс15 dated 1 July 2015; Order of the Supreme Courtof Ukraine in case No. 6-40цс15 dated 1 April 2015; Order of the Supreme Courtof 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 April2015;
3 See Order of the Supreme Court of Ukraine in case No. 6-40цс15 dated 1 April2015
4 See Order of the Supreme Court of Ukraine in case No. 6-491цс15 dated 1 July2015; Order of the Supreme Court of Ukraine in case No. 6-40цс15 dated 1 April2015;
5 See Order of the Supreme Court of Ukraine in case No. 6-703цс15 dated 1 July2015;
6 See Order of the Supreme Court of Ukraine in case No. 21-107а15 dated 19 May2015;
7 See Order of the Supreme Court of Ukraine in case No. 6-195цс14 dated 21January 2015;
8 See Order of the Supreme Court of Ukraine in case No.  6-195цс14 dated21 January 2015.

Additional notes

ThisLEGAL ALERT is issued to inform Baker & McKenzie clients and otherinterested parties of legal developments that may affect or otherwise be ofinterest to them. The comments above do not constitute legal or other adviceand should not be regarded as a substitute for specific advice in individualcases.