Better Regulation Delivery Office collected answers to the most frequently asked questions of entrepreneurs regarding the labor law, force majeure circumstances, taxes, and the consequences of emergency declaration.
So, let’s examine the following questions:
- How to register absence of employees from work during the quarantine period (forced idle hours, part-time job, time-off or sick leaves)?
- Do employers have the right to require their employees to work remotely and how to control the employee’s proper performance of duties during the remote work?
- Is an employer obliged to pay wages to employees during the quarantine period, in what amount and at what time? Does an employer have the right to require workers to undergo mandatory medical check-ups and report about any health changes during the quarantine?
- Does the force majeure concept apply to employment relations?
- Can the quarantine and other restrictive measures aimed at preventing the spread of coronavirus (COVID-19) be considered force majeure circumstances? In what way is it possible to obtain confirmation that the quarantine and/or restrictive measures aimed at preventing the spread of coronavirus (COVID-19) are force majeure circumstances?
- Does an employer have the right to dismiss employees due to the quarantine?
- Does an employer have the right to require employees to be present at the workplace / to refuse granting a leave from work for employees?
- Are the tax payment terms and procedure changed for the duration of the quarantine?
- Can penalties be imposed for violations of the law committed during the quarantine?
- Is the emergency declaration a reason for reducing a lease term of business premises or for the early termination of lease agreements for such premises?
How to register absence of employees from work during the quarantine period (forced idle hours, part-time job, time-off or sick leaves)?
If it is possible to continue to work, the employer may instruct employees to work from home. With the employees’ consent, the employer may also offer a part-time job with continued work for an agreed number of hours. The employer may place the staff on part-time work without their consent, but with a mandatory 2-month warning. In all these cases, employees continue to work (remotely or from their workplace) and receive wages. Today, not all employers are required to close their office or business premises and terminate their work. This prohibition applies only to catering establishments, cinemas, shopping malls, subways, etc.
If it is impossible to continue to work (due to forced or voluntary closure of the enterprise, etc.), the employer may increase idle hours without the employees’ consent while paying them 2/3 of their average wage. During such a business interruption, no work is performed. At the employee’s request, the employer may place him/her on annual paid leave (if there are unused employee leave days). In addition, if the employee wishes, the employer can place him/her on unpaid leave for an unlimited number of days. It is not allowed to place employees on unpaid leave without their consent.
Does an employer have the right to require employees to work remotely and how to control the employee’s proper performance of duties during the remote work?
Yes, the employer has the right to instruct employees to work from home by his order. Failure to comply with such an order by the employee is a reason to initiate disciplinary proceedings against him/her. The law does not establish mechanisms to control performing employee’s duties during the remote work. For this purpose, the employer may use technical and other means available to him (video and audio meetings, e-mail, etc.).
Is an employer obliged to pay wages to employees during the quarantine period, in what amount and at what time? Does an employer have the right to require workers to undergo mandatory medical check-ups and report about any health changes during the quarantine?
The employer is obliged to pay wages in case of instructing employees to work from home with full pay under their employment contracts. If the working hours are shortened with the employee’s consent, he/she is paid in proportion to the number of hours worked (for example, working half-days – 4 hours a day and 50% of wage). In case of the business interruption, the employer should pay the staff 2/3 of their average wage. In all these cases, the work is paid for by two payments per month with no longer than 16 days between pay periods (for example, the 1st and 15th of the month).
When putting employees on leave with full pay, leave allowances are paid on the basis of the employee’s average daily wage. The leave allowances are paid no later than 3 days before the leave begins. In case of unpaid leaves, no payments are made.
The employer has the right to process “sensitive” personal data about the employee’s health to protect the vital interests of employees, protect health, as well as fulfill the employer’s obligation to provide the workplace sanitation. However, such processing should be proportionate to its purpose (personnel infection prevention). For example, temperature measurement is a justified and proportionate measure. The employee’s obligation to inform about symptoms of the disease he/she has as specified by employer’s order will also be proportionate. Only an employer-designated person can receive such notification, while such data should be processed with additional protection measures. At the same time, medical check-ups without the employee’s consent will be disproportionate if such employees do not have visual signs of disease symptoms. Periodic medical check-ups are only required for a limited category of employees, including drivers, food service workers, workers in physically demanding jobs and others.
Does the force majeure concept apply to employment relations?
Yes, according to the legal position of the Supreme Court of Ukraine stated in the order of November 11, 2015 in the case #6-219tss15. The presence of force majeure circumstances should be confirmed by the relevant certificate of the Ukrainian Chamber of Commerce and Industry (UCCI) or its regional chambers of commerce and industry.
Can the quarantine and other restrictive measures aimed at preventing the spread of coronavirus (COVID-19) be considered force majeure circumstances? In what way is it possible to obtain confirmation that the quarantine and/or restrictive measures aimed at preventing the spread of coronavirus (COVID-19) are force majeure circumstances?
Starting from March 17, 2020, the quarantine announced by the Cabinet of Ministers of Ukraine is considered force majeure circumstances. The confirmation of force majeure circumstances for the activity of a particular enterprise is provided by the Ukrainian Chamber of Commerce and Industry or its regional chambers of commerce and industry. The certificate is issued within 7 days after the application and is paid at a price established by the UCCI. The certificate is issued free of charge for small businesses (up to 50 employees and up to 10 million euros in revenue per year).
Does an employer have the right to dismiss employees due to the quarantine?
The employer has the right to dismiss employees only on the grounds stipulated by the Labor Code of Ukraine. The quarantine announcement is not an independent ground for dismissal. At the same time, if the quarantine causes a decline in production, the employer may reduce the staff under the Code of Labor Laws of Ukraine, notifying his employees about their dismissal two months in advance.
Does an employer have the right to require employees to be present at the workplace / to refuse granting a leave from work for employees?
Today, forced restriction of work is introduced only for certain categories of enterprises (catering establishments, cinemas, shopping malls, subways, etc.). Other employers have the right to instruct their employees to work from home or require them to be present at the workplace.
The annual paid leave is provided by the employer on the agreed annual leave schedule. The employer has the right to refuse to provide such a leave out of schedule, except for certain categories of employees who are entitled to annual paid leave at a convenient time for them (persons with disabilities, women with two or more children under 15 years, single mothers, etc.).
The unpaid leave (of any duration for the quarantine period) is provided at the employee’s request and with the employer’s consent. At the same time, in some cases the employer is obliged to provide the unpaid leave to the employee (mother or other person to care for a child under 14 during the quarantine – for the duration of the quarantine; single mother or father – for 14 days; for persons with disabilities – up to 60 days, etc.).
Are the tax payment terms and procedure changed for the duration of the quarantine?
The tax payment date will be two months later (the Law 533)
Namely, the term of paying a tax liability amount specified in the declaration on property status and income (tax return) for 2019 is postponed in 2020 until October 1, 2020 (it was August 1 in the year following the reporting year) for individual tax payers. Also, the tax return is submitted two months later – by July 1, 2020 (it was May 1 in the year following the reporting year).
The procedure to pay a unified social tax (UST) is changed for individual entrepreneurs (IEs) (the Law 533)
Namely, the following categories are exempt from paying the unified social tax (UST) in March-April (from March 1 to April 30 2020):
– individual entrepreneurs, including those who choose the simplified system of taxation;
– persons engaged in independent professional activities, namely scientific, literary, artistic, educational or teaching activities, as well as medical and legal practice, including advocacy and notarial activities, or persons engaged in religious (missionary) activities or other similar activities while earning revenues from such activities;
– farm users, if they are not among the persons who are subject to insurance on other grounds.
Also, if these categories of citizens did not receive income (profit) in March-April 2020, they are EXEMPT from the obligation to pay the minimum UST amount during that period. However, in case of no income, they may pay the minimum UST amount for March-April 2020 voluntarily by submitting information on the amounts paid in UST assessment reports.
The procedure to pay a land tax is changed (the Law 533)
In particular, land use fees for land plots used by natural and legal persons in their economic activity (land tax or rent for lands in state or municipal ownership) are not charged and paid by economic entities in the period from March 1 to April 30, 2020.
The procedure to pay a real property tax is changed (the Law 533)
Namely, the taxation of real property, other than land plots, does not apply to non-residential real estate owned by natural or legal persons in the period from March 1 to April 30, 2020.
A value-added tax and customs duties on COVID-19 drugs imported into Ukraine are cancelled (the Law 530)
The operations related to importing medicines, medical devices and/or medical equipment necessary for implementation of measures aimed at the prevention and spread, localization and elimination of outbreaks, epidemics and pandemics of coronavirus disease (COVID-19) into the customs territory of Ukraine are exempt from import duties and the value-added taxation until June 17, 2020 (three months from the date of promulgation of the Law 530). The list of such medicines, medical devices and/or medical equipment was approved by the Resolution of the Cabinet of Ministers of Ukraine of 20/03/2020 No.224.
Can penalties be imposed for violations of the law committed during the quarantine?
Penalties for violations of tax law committed between March 1 and May 31, 2020 will only apply in the following four cases:
- violation of requirements for long-term life insurance or non-state pension insurance contracts, including supplementary pension insurance;
- alienation of the pledged property without the consent of the supervisory authority;
- violation of the rules of accounting, production and circulation of fuel or ethanol in excise warehouses applied on a general basis;
- violation of assessment, declaration and payment of value added tax, excise tax and rent.
In all other cases, penalties for violations of tax law are not temporarily applied.
Fines stipulated in part eleven of Article 25 of the Law of Ukraine “On Collection and Accounting of the Unified Contribution for Compulsory State Social Insurance” are not temporarily applied for the following violations committed from March 1 to March 31 and from April 1 to April 30, 2020:
- – late payment (late transfer) of the unified social tax;
- – underpayment or late payment of the unified social tax amount simultaneously with providing payment amounts, on which the unified social tax is charged (advance payments);
- – late reporting to the tax authorities provided by this Law.
In the event of late fulfillment of obligations under a consumer loan contract from March 1 to April 30, 2020 (in particular, but not as a limitation thereof, late fulfillment of payment obligations by consumers between March 1 and April 30, 2020), such a consumer will be relieved from liability for such a delay to a loan provider. In particular, but not as a limitation thereof, in the event of such delay, the consumer will be relieved of the obligations to pay a forfeit penalty (fine, penalty) and other payments provided for in the consumer loan contract for missed deadlines (non-fulfillment, partial fulfillment) to the loan provider.
It is prohibited to charge and collect a forfeit penalty (fines, penalty interests) in case of late payment for housing and communal services during the period of quarantine or restrictive measures related to the spread of coronavirus disease (COVID-19) and for 30 days from the date of its cancellation.
Is a forfeit penalty charged for the duration of the quarantine?
Tax payers are not imposed a forfeit penalty during the period from March 1 to May 31, 2020, while assessed forfeit penalties, which are not payed during this period, should be written off.
The unified social tax payers are also not imposed a forfeit penalty during the period from March 1 to March 31 and from April 1 to April 30, 2020, while penalties assessed during these periods should be written off.
Is the emergency declaration a reason for reducing a lease term of business premises or for the early termination of lease agreements for such premises?
A distinction should be made between “emergency” and “state of emergency”.
In the event of the state of emergency, certain restrictions on constitutional rights and freedoms may be imposed, indicating the duration of these restrictions.
The introduction of the state of emergency in Ukraine or in some of its settlements, it is necessary to adopt the relevant Decree of the President of Ukraine, which is subject to approval by the Verkhovna Rada of Ukraine within two days of the President’s request.
At present, there is no state of emergency in Ukraine.
Unlike the state of emergency, the emergency declaration does not imply any restriction on constitutional rights and freedoms, but may only entail the imposition of certain duties that should be respected by citizens.
The emergency may be national, regional or local.
The national emergency declaration requires the adoption of the relevant decision of the Cabinet of Ministers of Ukraine. Neither the President nor the Cabinet of Ministers of Ukraine has not yet adopted such decisions.
As of March 23, the emergency for territorial subsystems of the unified state system of civil protection was declared by resolutions of the Cabinet of Ministers of Ukraine in 9 regions of Ukraine (Ivano-Frankivsk, Dnipropetrovsk, Donetsk, Zhytomyr, Kyiv, Ternopil, Cherkasy, Chernivtsi regions and the city of Kyiv).
Issues regarding the protection of the population, territories, the environment and property from emergencies, which include the epidemic (mass spread of infectious disease among the population of the respective territory in a short period of time), are regulated by the Civil Protection Code. However, this Code does not regulate the issue of leasing of premises by economic entities for their business activities.
The terms of agreements for leasing premises by economic entities are regulated by the Commercial Code of Ukraine. The provisions of the Commercial Code stipulate, in particular, that the lease term is determined as agreed by the parties; unilateral repudiation of the lease agreement is not allowed; the lease agreement may be terminated by mutual consent of the parties.
Therefore, the emergency declaration does not justify reducing a lease term or the early termination of lease agreements.
BRDO is an independent regulatory policy advising institution in Ukraine, funded by the European Union under the FORBIZ project and within the framework of EU4Business Initiative.