The contractual regime for regulating labor relations: simplification for employers, reduction for employees

The people's deputies decided to modernize the outdated Labor Code by introducing a new (contractual) regime for regulating labor relations. Its rules are proposed to be written out in a separate chapter III-B of the code.

In the Verkhovna Rada, the text of the draft Law dated April 13, 2021 No. 5371 "On Amendments to Certain Legislative Acts Concerning the Simplification of Regulation of Labor Relations in the Sphere of Small and Medium-Sized Businesses and Reducing the Administrative Load on Entrepreneurial Activity" appeared.

According to the authors of the legislative initiative, the contractual regime for regulating labor relations can be applied to labor relations arising from:

- between an employee and an employer who is a small or medium-sized business entity in accordance with the law with the number of employees for the reporting period (calendar year) no more than 250 people;

- between an employer and an employee whose monthly salary is more than eight times the minimum wage established by law.

A feature of this regime is the ability to directly determine the individual working conditions of the employee by the employment contract. The parties to the employment contract are given the right, at their discretion, by mutual agreement, to settle their relations in terms of:

- the emergence and termination of labor relations;

- payment system and labor standards;

- the amount of wages, taking into account the legal limit of the minimum amount, allowances, additional payments, bonuses, remuneration and other incentive, compensation and guarantee payments;

- norms of working hours and rest in compliance with the norms of the total duration of the working week, the duration of weekly rest;

- other rights and guarantees provided by the Labor Code.

It can hardly be said that such a regime will benefit workers. For the existence of general rules of the Labor Code restrained a certain minimum level of social guarantees.

But according to the updated rules, a person, wanting to get a job, will face a choice: either agree to the terms proposed by the manager in the contract "as is", or look for another place. At the same time, an agreement with individual conditions may provide for reduced labor guarantees, for example, the payment of wages, not twice, but only once a month, or the dismissal of an employee unilaterally without agreement with the trade union.