What are the peculiarities of termination of an employment agreement in connection with a reduction in the number of employees during martial law?

Pursuant to Article 64(3) of the Commercial Code of Ukraine, a company is entitled to determine its organizational structure, set the number of employees and staffing levels.

Pursuant to Article 40(1)(1) of the Labor Code of Ukraine (the “Labor Code”), an employment agreement concluded for an indefinite period of time, as well as a fixed-term employment agreement before its expiration, may be terminated by the owner or his/her authorized body only in the event of changes in the organization of production and labor, including liquidation, reorganization, bankruptcy or re-profiling of an enterprise, institution, organization, reduction in the number or staff.

Part two of Article 40 of the Labor Code of Ukraine provides that dismissal on the grounds specified in paragraphs 1, 2 and 6 of this Article is permitted if it is impossible to transfer an employee, with his or her consent, to another job.

Pursuant to Article 43(1) of the Labor Code of Ukraine, termination of an employment agreement on the grounds provided for in paragraphs 1 (except in the case of liquidation of an enterprise, institution or organization), 2-5, 7 of Article 40 and paragraphs 2 and 3 of Article 41 of this Code may be carried out only with the prior consent of the elected body (trade union representative), primary trade union organization of which the employee is a member.

Pursuant to Article 5(2) of the Law of Ukraine “On Organization of Labor Relations under Martial Law”, during the period of martial law, the provisions of Article 43 of the Labor Code of Ukraine do not apply, except in cases of dismissal of employees of enterprises, institutions or organizations elected to trade union bodies.

Article 492 of the Labor Code of Ukraine stipulates that employees must be personally notified of their upcoming dismissal no later than two months in advance.

When dismissing employees in cases of changes in the organization of production and labor, the preemptive right to remain in employment provided for by law is taken into account.

Simultaneously with the notice of dismissal due to changes in the organization of production and labor, the owner or his authorized body shall offer the employee another job at the same enterprise, institution, or organization. In the absence of work in the relevant profession or specialty, as well as in the event that the employee refuses to be transferred to another job at the same enterprise, institution or organization, the employee, at his/her own discretion, applies for assistance to the state employment service or finds employment on his/her own. If the dismissal is massive in accordance with Article 48 of the Law of Ukraine “On Employment of the Population”, the owner or his authorized body, an individual who uses hired labor, shall notify the state employment service of the planned dismissal of employees.

Pursuant to Article 44 of the Labor Code of Ukraine, upon termination of an employment agreement for the reasons specified in Article 36(6) and Article 40(1), (2) and (6), and Article 41(6) of the Code, an employee shall be paid severance pay in the amount of not less than his or her average monthly salary.

Pursuant to part one of Article 47 of the Labor Code of Ukraine, on the day of dismissal, the employer is obliged to give the employee a copy of the dismissal order (instruction), a written notice of the amounts accrued and paid to the employee upon dismissal (Article 116) and to settle the account within the time limits specified in Article 116 of this Code, as well as, at the employee's request, to make the appropriate entries on dismissal in the employment record book kept by the employee.

Article 48 of the Labor Code of Ukraine provides that an employee's work activity is recorded electronically in the register of insured persons of the State Register of Compulsory State Social Insurance in accordance with the procedure established by the Law of Ukraine “On Collection and Accounting of the Single Contribution to Compulsory State Social Insurance”.

At the request of the employee, the employer is obliged to make entries in the employment record book kept by the employee about hiring, transfer and dismissal, incentives and rewards for performance.

The procedure for keeping employment records is determined by the Cabinet of Ministers of Ukraine.

In accordance with the requirements of Article 116 of the Labor Code of Ukraine, when an employee is dismissed, all amounts due to him or her from the enterprise, institution or organization are paid on the day of dismissal. If the employee did not work on the day of dismissal, the said amounts must be paid no later than the next day after the dismissed employee submits a claim for payment. The employer must notify the employee in writing of the amounts accrued and paid to the employee upon dismissal, specifying each type of payment separately (basic and additional wages, incentive and compensation payments, other payments to which the employee is entitled under the terms of the employment agreement and in accordance with the law, including upon dismissal) on the day of payment.