Effects of Martial Law Regime on Employers in Ukraine

Baker&McKenzie, Kyiv, Ukraine,
 Mon, Sep 7, 2015

On 22 July 2015, the Cabinet ofMinisters of Ukraine adopted Resolution No. 544 "On Approval of the Planto Introduce and Enforce Martial Law in Ukraine or in its CertainTerritories" (hereinafter - the "Plan").  Under Ukrainian law,martial law can be established by a Decree of the President of Ukraine whichmust be approved by the Verkhovna Rada of Ukraine.  The establishment ofmartial law is grounds for temporary restrictions of the constitutional rightsof individuals and legal entities.

The Plan, in particular, establishes measures that concern employmentrelations, and therefore may significantly affect the normal businessactivities of companies.

Labour duty

Labour duty can be established by a separate military command obliging personsthat are capable of work who are (1) not already engaged in work in the defenceor the public infrastructure maintenance fields and (2) not reserved  byenterprises  for the period of martial law regime. The procedure toengage  persons into such operations under martial law is determined byResolution No. 753 of the Cabinet of Ministers of Ukraine "On Approval ofthe Procedure to Recruit Persons that Are Capable of Work to Socially UsefulWork under Martial Law Conditions", dated 13 July 2011.

Labour duty consists of performing (1) work of a defensive nature, (2) workconnected with emergencies, or (3) social work that meets the needs of theArmed Forces of Ukraine and other military units, law enforcement authorities,civil defence forces, etc.

If an employee is engaged in labour duties during the period of martial lawoutside his/her work place, the company must preserve his/her current position.

Use of capacity and labourresources of a company

The Plan also provides for the possibility to use the capacity and manpower ofenterprises of all forms of ownership for defence purposes and the right tochange their mode of work or make other changes to production activities andwork conditions during the period of martial law.

Restrictions on freedom ofmovement and changing residence (incl. temporary)

If martial law is introduced, the Plan provides for a special regime of entryand exit, and for certain restrictions on freedom of movement of persons andvehicles. Also, citizens who are registered in the relevant militarycommissariats will not be allowed to change their place of residence (or theplace of temporary stay) without permission from the military commissariat orthe head of the competent unit of security or intelligence service. Note thatduring wartime reservists are prohibited by law to leave their place ofresidence without permission from the relevant military commissariat. 

Dismissal of companymanagers

Under the Plan, the CEO (Director) of any company can be removed  fromduty for improper performance of their duties established by martial law, andreplaced with acting managers. Current laws do not specifically describe the duties of the Directors  and stipulate only that companies must assistthe activities of the military command and military administration with regardto the establishment and implementation of martial law measures. Therefore,there is a possibility that if martial law is established, the military commandcan dismiss any Director  of any company. 

Internment of foreigncitizens

The Plan provides the Ukrainian government with the right to place citizens offoreign states into internment (compulsory settlement) if such state threatensthe uses force or carries out an act of aggression against Ukraine. Therefore,the company may lose foreign employees that are citizens of states thatthreaten the  use of force or carry out aggression against Ukraine. 
 

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.