Featured Galleries USUBC COLLECTION OF OVER 160 UKRAINE HISTORIC NEWS PHOTOGRAPHS 1918-1997
Holodomor Posters
Court practice on dismissal of corporate officers
Baker&McKenzie, Kyiv, UkraineWed, June 3, 2015
The Kyiv office of Baker & McKenzie'sEmployment and Migration practice reviews the most significant court decisionsin employment and labor disputes in 2014-2015
Article 41 of the LaborCode of Ukraine does not restrict the corporate officers to whom it applies.1
An employee, the head of the human resources and documentary department of apublic company, was dismissed from office under para. 5 ch. 1 Article 41 of theLabor Code of Ukraine (the "Labor Code").
According to the employee, his dismissal was illegal because the provisions ofpara. 5 ch. 1 of Article 41 of the Labor Code apply only to legal relationsarising during the termination of employment contracts between an employer anda corporate officer of a business entity to protect the interests of therelevant investors.
The court found that the dismissal of the employee was lawful given the factthat the provisions of para. 5 of Article 41 of the Labor Code do not containany restrictions with regard to the categories of corporate officers whoseemployment contracts may be terminated pursuant to these grounds.
Removal from office of acorporate officer must be done by the authorized body and it must bereasonable.2
An employee holding the post of head of the board was dismissed in 2010pursuant to para. 4. of Article 36 of the Labor Code. The court foundthat such dismissal was illegal and ordered the employer to reinstate theemployee. In 2014, on the day of his reinstatement, the employee wasdismissed in connection with removal from office under para. 5 ch. 1 of Article41 of the Labor Code.
The employee considered that his dismissal under para. 5 ch. 1 of Article 41 ofthe Labor Code was illegal due to the fact that his powers under the employmentcontract (that had not yet expired) had not terminated. Moreover, he wasdismissed on the day of his reinstatement by the supervisory board, a body thatwas not authorized to effect his dismissal.
The court found that the dismissal of the employee was illegal because theemployer had no grounds for removal from office of the head of the board asunder the contract the powers of the employee had not expired. Bydismissing the employee on the day of his reinstatement, the employer actedcontrary to the Labor Code, as the employee was not notified about his first dayof work. Moreover, he was dismissed by the supervisory board, whichdid not have the authority to adopt a decision on dismissal of the head of theboard (as was confirmed by the charter of the company).
An employer can dismiss anemployee on the basis of para. 5 ch. 1 of Article 41 of the Labor Code, even ifat the time of recruitment such grounds for termination did not exist.3
An employee held the post of managing director with powers granted until theend of November 2014. In July 2014, the general meeting of the companydecided to terminate his powers under para. 5 ch. 1 of Article 41 of the LaborCode.
The employee considered that during his dismissal the labor law was violated,in particular as at the time when his employment started the grounds fortermination provided for in para. 5 ch. 1 of Article 41 of the Labor Code didnot exist.
The court came to the conclusion that the employer was entitled to apply para.5 ch. 1 of Article 41 of the Labor Code as the law or other legal act in forcewhen the relevant events took place should apply.4
An employer has the rightnot to specify the reason for dismissal of a corporate officer whose powers areterminated due to expiry of the contract.5
An employee holding the post of physician in chief was dismissed under para. 5ch. 1 of Article 41 of the Labor Code. Among other things, the employeeconsidered that when deciding on his dismissal as physician in chief theproper procedure was violated as no explanation was given of his guilt or theappropriateness of his dismissal, and his previous employment was not takeninto account.
The court noted that removal from office may be effected without indication ofthe reasons as under para. 5 ch. 1 of Article 41 of the Labor Code the owner orthe authorized body of a company in entitled not to specify the reasons fordismissal of an officer whose powers are terminated due to expiry of thecontract.
_____________________________
[1] Decision in case No.2-1032/15, dated 4 March 2015, of Solomyanskyi Court in Kyiv City; Decision incase No. 341/2195/14-ц, dated 18 December 2014, of the Court of Appeal inIvano-Frankivsk Region.
[2] Decision in case No. 753/11315/14-ц, dated 24 July 2014, of DarnytskyiDistrict Court in Kyiv City; Order in case No. 22-ц/796/11157/2014, dated 29September 2014, of the Court of Appeal of Kyiv City.
[3] Decision in case No. 147/1111/14-ц, dated 3 February 2015, of the Court ofAppeal of Vinnytsa Region.
[4] Decision in case No. 1-рп/99, dated 9 February 1999, of the ConstitutionalCourt of Ukraine.
[5] Decision in case No. 341/2195/14-ц, dated 18 December 2014, of the Court ofAppeal of Ivano-Frankivsk Region.
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.
