May 12, 2023 - Ukraine

The New Law "On Collective Agreements and Contracts": Top Innovations
  by Inessa Letych

On February 23, 2023, the Parliament adopted a new  Law of Ukraine "On Collective Agreements and Contracts"  (hereinafter - the " Law" ). Most of the provisions of the Law enter into force 6 months after the termination or cancellation of martial law, but we can understand what new this act offers now.   

New types of collective agreements 

The law is designed to facilitate collective contractual regulation of labor relations in those situations where this was technically not possible under the previously applicable legislation. In particular, for this purpose, the mentioned act provides for the possibility of concluding collective agreements in certain cases when there are no representative subjects of the parties of the corresponding level. Thus, the Law introduces the concept of sectoral agreements of limited effect, which can be concluded in those sectors in which there are no representative subjects of both or one of the parties at the sectoral level.  

In addition, it is possible to conclude territorial agreements in a separate industry. Such agreements can be concluded at the territorial level in industries in which decisions of local executive bodies or local self-government bodies regulate pay and other working conditions.   

Priority of collective agreements 

The law determined the ratio of the effect of collective agreements, which simultaneously apply to the employer and the employee. In particular, if there are several sectoral (inter-sectoral) agreements, the agreement concluded with the participation of the central bodies of executive power and representative subjects of the parties to the social dialogue shall be applicable. When a sectoral (inter-sectoral) and territorial agreement is issued at the same time, only the sectoral agreement applies. However, in any case, the provisions of another sectoral or territorial agreement must be applied in the part that provides a higher level of guarantees and benefits to employees.  

Scope of the collective agreement 

According to the current legislation, the provisions of the collective agreement apply to all employees of the enterprise, regardless of whether they are members of a trade union, and are binding both for the employer and for all such employees of the enterprise. 

The law somewhat changes this approach and establishes a new mechanism for extending collective agreements to non-union employees. Only the provisions of the collective agreement on issues that are regulated by collective agreements in accordance with the legislation and are binding on the parties to collective agreements necessarily apply to such employees. Other provisions of the collective agreement are not automatically binding for them. Instead, the terms of application of such other provisions of the collective agreement are determined by this collective agreement.  

Content of the collective agreement 

The new Law envisages a rather flexible approach to the mandatory content of a collective agreement. Yes, the contract must specify the term of its validity, the procedure for joining the party to the contract employees, monitoring the implementation of its provisions, protecting information in accordance with the law (if necessary), the conditions and procedure for suspending certain provisions of the contract for a certain period of time, a list of force majeure circumstances (circumstances of force majeure), in the event of which the effect of individual provisions of the contract is suspended. Also, the collective agreement is indicated in the collective agreement, the scope of which the parties are in and the terms of which are taken into account in the agreement (if such an agreement exists).  

Instead, provisions regarding the organization of production and work, prevention of mass layoffs, rationing and payment of labor, guarantees for the activities of trade union organizations and a number of other provisions that were previously mandatory in collective agreements can now be stipulated in a collective agreement at the discretion of the parties and are not mandatory mandatory for inclusion in the contract.  

Suspension and termination of provisions of the collective agreement 

An amendment to the Law is the possibility of suspending and stopping the provisions of collective agreements. Thus, the parties to a collective agreement may, by mutual agreement, decide to suspend the effect of certain provisions of the collective agreement for a period determined by them. Cases and procedure of suspension should be determined by the contract itself.  

On the other hand, the suspension of the effect of certain provisions of the collective agreement does not require a separate decision of both its parties. Such suspension occurs in case of occurrence of force majeure circumstances (circumstances of force majeure) at the request of the party for whom these circumstances occurred. The list of these circumstances must be specified in the collective agreement itself. 

About the decision of the parties to suspend the collective agreement or to suspend/renew the effect of certain provisions of the collective agreement as a result of the occurrence/termination of force majeure circumstances, it is necessary to inform the employees to whom the provisions of this agreement apply and the body that carried out its notification registration within a week.   

Interpretation of the collective agreement 

The law also touched on such a problematic issue as the interpretation and clarification of the content of the collective agreement. The specified normative act determines that the subjects of the parties to the collective agreement have the right to provide interpretation of the provisions of the agreement, clarification of their content, scope and application. Disputed issues arising from the interpretation of the provisions of the collective agreement are resolved in the manner established by its parties.  

Collective negotiations 

Under the new Law, the procedure for conducting collective negotiations regarding the conclusion of collective agreements will undergo certain changes.  

In particular, the changes affected the possible composition of the participants in the negotiation process. Yes, state collegial bodies can be involved in negotiations, if working conditions are regulated by their decisions. Public associations whose purpose and directions of statutory activity correspond to the subject of consultations may also be involved in consultations regarding the conclusion of collective agreements. In addition, the primary trade union organization may involve representatives of the higher-status elected body of its trade union to conduct collective negotiations. 

In contrast to the current legislation, the Law regulates in more detail the procedure for the joint work commission, which is formed to conduct collective negotiations. The number of representatives of the parties to the composition of such a commission is determined by the parties, as a rule, on a parity basis. The parties also determine their coordinators as part of this commission. 

Instead, the Law repeals provisions related to the procedure for conducting conciliation procedures and the formation of a conciliation commission to resolve disagreements during collective bargaining. 

Provisions regarding guarantees to participants in collective negotiations have also undergone changes. Namely, the Law took a more pragmatic approach to the solution of this issue and provided that the relevant employees are relieved of their duties at the main place of work with the preservation of earnings only for the time of their participation in the meetings of the joint work committee and the time determined by the parties for the preparation of the draft collective agreement or contract, making changes and additions to them and monitoring their implementation.  

Approval of the collective agreement 

As at present, it is assumed that the draft collective agreement prepared as a result of collective negotiations will be submitted by the parties to the general meeting (conference) of employees for discussion and decision-making on its signing.  

At the same time, the Law details the procedural aspects of such approval. Namely, it is stipulated that general meetings of employees are valid if more than half of the employer's employees participate in them, and a conference - if at least two-thirds of the delegated persons participate. Decisions of general meetings (conferences) are made by closed (secret) or open voting by the majority of the participants. 

The Law also establishes that general meetings (conferences) can be held online using technical means of communication.

Joining the workers side of the collective agreement 

The law provided for the possibility to join the workers' side of the collective agreement. This can be done by trade unions that have the status of primary, represent the interests of the employees of this employer and are legalized (registered) already after the conclusion of the contract. 

Providing trade unions of the enterprise with material and technical values 

As in accordance with the current legislation, according to the Law the employer is obliged to contribute to the creation of appropriate conditions for the activities of the primary trade union organizations operating at the enterprise, and to provide them with premises and other material and technical means in the order and under the conditions stipulated by the collective agreement. 

At the same time, the Law clarifies the procedure in the situation when the employer has several primary trade union organizations. So, if trade unions have formed a joint representative body for conducting collective negotiations, premises, other material and technical means are provided only for their joint use. In the absence of a collective agreement at the enterprise or the failure to establish a joint representative body of trade unions, provision of primary trade union organizations with premises and other material and technical means is carried out by providing them for joint use by primary trade union organizations in the order and on the conditions determined by separate written agreements concluded between the primary trade union organizations and the employer agreements  

0.3 percent from the wage fund 

The changes also affected the provisions regarding the deduction of a percentage of the wage fund to trade unions. Thus, the size of the mentioned deductions has not undergone any changes and, as at present, will amount to no less than 0.3 percent of the wage fund. However, the Law expands the purpose of these deductions - they will be used to implement any measures provided for by collective agreements and agreements. Currently, the legislation limits the assignment of these deductions exclusively to cultural and mass, physical education and health work, which creates a number of practical misunderstandings.  

Importantly, the Law also addresses the situation with deductions in the event of the existence of several primary trade union organizations at the enterprise. In this case, the funds are deducted in proportion to the number of their members from the number of employees who are in labor relations with this employer, unless otherwise stipulated by the collective agreement.