The new Employment Law adopted on 5 July 2012 (the "Law") will come into effect on 1 January 2013. It abrogates the previous law bearing the same name and contains a number of new and improved rules as compared to the legislation currently in force.

Regulation. The Law covers the sphere of employment assistance services. Such services include not only job search and assistance in job placement in Ukraine and abroad for job seekers, but also search for employees as requested by companies. Services of an intermediary in job placement abroad will still require a license, as it does now. The Law also regulates temporary staff agencies and employee leasing operations (defined in the Law as "employment of individuals for their further work for other employers"). The latter will require a special permit.

The new Law provides for certain measures to stimulate employment, such as:

1. partial compensation of social insurance fees for companies creating new jobs and for those hiring young unemployed specialists, persons close to retirement;
2. advice for those who wish to start their own business;
3. initial assistance for unemployed persons who wish to start their own business;
4. accommodation and initial money assistance for college graduates going to work in rural areas;
5. internship for students aimed at obtaining work experience, which requires inscription regarding such internships in the employment record books. The Law provisions on remuneration for such internship are, however, rather vague and it is unclear whether such internships can be unpaid.

Liability. Certain financial sanctions may be imposed by the State Labour Inspection for violation of employment rules. Such sanctions include:

1. fine of 20 minimum salaries for engaging in job placement abroad without a license or employment of individuals for their further work for other employers without a permit;
2. fine of 10 minimum salaries for the violation of rules regarding intermediary services in job placement;
3. fine of 2 minimum salaries for provision of incorrect information or failure to provide information regarding employed persons by an intermediary in job placement, as well as sanctions for violation of quotas for employment of certain categories of people, use of foreign citizens' or stateless persons' labour without a permit, failure to provide information on mass dismissal.

The Law may become a good tool of saving money for companies which permanently increase and develop their staff. Employment agencies and outstaffing companies will need to adjust their current operations to the new rules. It is to be hoped that the Law will stimulate job creation, job placement of the less competitive categories of specialists and improvement of employment situation in general.

For further information please contact partner Oleksandr Padalka
and senior associate Illya Onyschenko