As part of the ongoing reform of Ukrainian employment law and in response to the urgent needs of Ukrainian businesses affected by the full-scale russian military aggression against Ukraine, the Parliament of Ukraine adopted the Law “On Introduction of Changes to Certain Laws Regarding Simplification of Employment Relations Regulation for Small and Medium Business and Decrease of Administrative Burden on Business” on 19 July 2022 (the “Law”), which may be a game-changer in the area of employment in Ukraine.
The key change is the introduction of the concept of ‘freedom of contract’ into employment relations based on the so-called contractual regime of employment (the “Contractual Regime”). Prior to this, the majority of employment agreements in Ukraine were based on a regular employment agreement, which allowed few deviations from the rigid rules of the Labour Code that was adopted in Soviet times and hence does not address the needs of modern businesses. The problem became especially noticeable during the challenging times of the martial law regime.
In short, the Contractual Regime allows parties to the employment agreement to mutually agree on most employment relations aspects (e.g. remuneration, vacation, termination) in the agreement, thus deviating from many outdated rules of the Labour Code applicable to regular employment relations.
Only private law companies are allowed to benefit from the Contractual Regime (i.e. state authorities and public law companies cannot use...
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