Statement of the American Chamber of Commerce in Ukraine on Labor Law

The American Chamber of Commerce in Ukraine (the Chamber) has been actively involved in the process of discussing changes to the labor law from the outset, providing comments and suggestions, and sharing the views of member companies' experts. The Chamber Human Capital Committee regularly organizes meetings with representatives from political parties, government agencies, and institutions to discuss changes to the labor law. Also, the Chamber member companies' experts are involved in activities of the working group of the Parliamentary Committee on Social Policy and Veterans' Rights.

The Chamber members believe that the current labor legislation should be reformed, as the Labor Code, which is the main legislative act governing labor relations, was adopted in 1971. The Chamber has been actively working on the Draft Law #2708 that was recently withdrawn. It had to be revised, but at the same time, it could liberalize the excessively regulated labor law and make labor relations more flexible. Labor law reform will give businesses much more flexibility to retain current employees and quickly hire new employees.

The most relevant changes that need to be introduced to the legislation identified by the Chamber member companies' experts include:

1. Reducing the state pressure and creating opportunities for employers and employees to decide the conditions of employment independently;
2. Introduction of electronic form of employment contract followed by the cancellation of employment records;
3. Regulating the types of involvement of third-party employees - outstaffing and outsourcing at the legislative level;
4. Updating regulations on material liability to meet the present-day demands;
5. Settlement of labor disputes;
6. Regulation of employment terms and conditions in the situation of country-wide lockdowns or other forms of restrictions that significantly influence business activity.

The situation with COVID-19 pandemic has also revealed gaps in the existing regulation that need to be addressed urgently to contain the spread of the virus and, at the same time, to keep the business working safely and effectively. The new flexible and distant ways of working shall be recognized and established on a legislative level. We now see that the digitalization of processes is not only a good initiative but a critical need nowadays.

Experts of the Chamber member companies are convinced that the liberalization of the labor legislation will help to create equal rules on the labor market as it will balance the interests of employees and employers. It will also provide incentives for business development, simplify entry-exit from labor relations in combination with effective mechanisms of protection against sudden loss of work, looking for a new job, and reducing unemployment. All these things will contribute to the development of the Ukrainian economy at large, increase investment inflow and business competitiveness.