L&M Finance Group

Changes in legislation for January 2024 during martial law

On January 5, the Ministry of Economy prepared a draft of the new edition of the Code of Labor Laws .

At the moment, labor relations in Ukraine are still regulated by the outdated Labor Code from 1971. Despite numerous changes, the code is already legally outdated and is such that it inhibits economic development in Ukraine, including the labor market.

According to the project of the new version of the code, it is planned to legalize various forms of employment, including remote work, home work and non-fixed working hours. It is also envisaged to digitize the collection of information about employees and to abandon paper work books.

In comparison with the current Labor Code, the new edition has added regulations on issues related to :

1. concluding a mandatory written employment contract and various types of fixed-term employment contracts;

2. determination of signs of labor relations, in the presence of the specified signs :

  • performance by a person of work with a certain profession, specialty, qualification or position;

  • performing work on behalf of and under the control of another party for the benefit of the latter;

  • regulation of the work process, which involves constant participation, but not a specific result for a certain period of time;

  • performance of work at the workplace designated by the other party, in whose interests the work is performed, taking into account their internal rules;

  • organization of working conditions, including the provision of means of production by the person in whose interests the work is performed;

  • systematic payment of remuneration to the person performing the work, in monetary form;

  • establishing the duration of working hours and rest time by the person in whose interests the work is performed;

  • compensation of expenses related to the performance of the work by the person in whose interests the work is performed.

3. reforming the working time accounting system for domestic workers;

4. improving the conditions for granting paid annual leave, in particular, increasing the duration of leave for employees (up to 28 calendar days) and persons under the age of 18 (up to 31 calendar days);

5. improving the procedures for granting social leave taking into account the principle of gender equality, in particular, granting parents (upon agreement with the employer, such leave can be granted to parents at the same time or in any other way, at their discretion) leave to take care of a child up to 3 years old without saving wages ;

6. introduction of new approaches to the settlement of labor disputes using mediation procedures;

7. expanding the scope of norms of collective agreements and agreements;

8. strengthening control over compliance with labor legislation and determining the procedure for conducting inspection visits.

Also, the project proposes a new national system for the prevention of industrial risks, based on the principles of risk assessment, risk control and management, which are generally accepted for similar systems in the countries of Europe and the world.

In particular, the project envisages the definition of principles, legal and organizational principles for regulating the order and methods of resolving collective labor disputes in Ukraine, the introduction of a modern mechanism for resolving such disputes using conciliation procedures and labor arbitration, the development of the institute of labor mediation, the realization of the right of employees and employers to collective action in in cases of conflicts of interests, improvement of the procedure and procedures for conducting strikes, balancing the institution of responsibility and interests of employees and employers for violations of legislation on collective labor disputes, etc.

Today, this project is under consideration.

On January 10, the Verkhovna Rada of Ukraine adopted the draft law on lobbying in the first reading .

The legalization of the lobbying market in Ukraine is one of the main requirements upon joining the EU, provided for by bringing national legislation into line with EU standards.

In general, the project defines a number of certain terms related to lobbying, in particular :

  • Advocacy - actions of advocacy subjects , which are carried out with the aim of influencing the adoption or refraining from adoption of decisions on issues that belong to the competence of state authorities, local self-government bodies, legal entities under public law, endowed with powerful powers, which are aimed at defending public interests and are carried out without the purpose of making a profit.

  • The subject of advocacy is citizens of Ukraine, foreigners and stateless persons who are in Ukraine on legal grounds, non-entrepreneurial societies, which according to the law are non-profit organizations, public organizations that do not have the status of a legal entity.

  • Beneficiary - a natural person or legal entity (group of persons), in whose interests the client concludes an agreement on the provision of lobbying services.

  • An agreement on the provision of lobbying services is a transaction made in writing, according to which the lobbying subject carries out lobbying at the request of the client regarding the subject of lobbying.

  • A client is a natural or legal entity that has entered into an agreement on the provision of lobbying services with a lobbying entity in its own interests or in the interests of a beneficiary .

  • Conflict of interests during lobbying – a conflict between the interests of the clients of the subject of lobbying regarding the subject of lobbying, the personal interests or rights of the subject of lobbying and his obligations, including obligations under the contract for the provision of lobbying services, the presence of which may affect on the objectivity or impartiality of the subject of lobbying during lobbying.

  • Lobbying – the influence of the subject of lobbying on the object of lobbying, which is carried out using the methods specified in Article 8 of this Law.

  • The object of lobbying is the subject of law-making activity and/or the subject of law-making initiative, which is influenced.

  • The subject of lobbying is a normative legal act regarding the planning of development, development and/or adoption (issuance), introduction of changes, loss of validity (cancellation) of which the subject of lobbying exerts influence on the object of lobbying.

  • he subject of lobbying is a natural or legal entity, its employees, who carry out lobbying in the interests of the client on the basis of a contract on the provision of lobbying services or in their own interests, information about which is entered in the Transparency Register in accordance with the procedure established by law.

Based on these definitions, the following can be concluded :

1. The draft law delimits the concept of subject advocacy and the subject of lobbying , it is noted that advocacy , as well as activities limited to the exercise of the right to peaceful assembly, participation in public consultations, etc., will not be considered lobbying. Advocacy differs from lobbying in that it can be engaged in only by individuals, public associations and non-profit organizations, while the activity is carried out without the goal of making a profit, while lobbying is essentially a paid activity .

2. The effect of the draft law will not extend to the representation of foreign policy interests by diplomatic institutions, to the activities of the media, as well as political parties.

3. Creation of a public register (Transparency Register) for lobbying entities, information about which will be fully accessible and regulated by the National Agency for the Prevention of Corruption (NACP). The register contains the following data on the subject of lobbying: personal data of a person (individual), data on a legal entity (name, information on the manager, participant, beneficiary ), source of funding, subject of lobbying (if available).

The law does not allow lobbying in cases where the subject of lobbying is:

- court decision;
- decision and conclusion of the Constitutional Court of Ukraine;
- the act of announcing the mobilization;
- act on the introduction of martial law and state of emergency;
- declaration of a state of war and conclusion of peace at the request of the President;
- use of the Armed Forces of Ukraine and other military formations;
- declaration of zones of emergency ecological situation;
- individual act.
The provisions of this Law do not apply to the people's initiative in the all-Ukrainian referendum and the initiative in local referendums.

According to the term, lobbying subjects do not include :

1) Personnel of state bodies, deputies at all levels, heads of village and city councils, civil servants, officials of local self-government, military personnel, judges, employees of the prosecutor's office and other specialized bodies, members of the CEC, police officers and other officials;

2) Former officials who are prohibited from holding a certain position for two years after their dismissal;

3) Persons with an outstanding or unexpunged criminal record;

4) Persons who have been prosecuted for corruption crimes (or related to corruption);

5) Persons who have been recognized as incompetent or have limited legal capacity, as well as persons who have not reached the age of 18;

6) Citizens or residents of Russia ;

7) Legal entities under public law (state bodies and others);

8) Persons and companies included in the list of persons associated with terrorist activities or subject to international and/or national sanctions;

9) Companies that:
  • related to Russia and/or a country included in the FATF list;
  • have participants (founders, shareholders) and/or beneficial owners included in the list of persons associated with terrorist activities, or on whom international and/or national sanctions have been imposed;

10) Companies whose beneficiary or founder (participant) are, in particular, officials;

11) Subjects of law-making activity, which include persons who perform tasks of scientific, legal, expert, advisory, technical and other types of provision of the law-making process;

12) Companies against which criminal-legal measures were applied.

The functions of lobbying entities include :

- protection of the client's interests;
- participate in the process of developing a project of a normative legal act ;
- representation of the client before administrative bodies during lobbying;
- participate in meetings to consider lobbying issues;
- to have the status of the author of a normative legal act ;
- conducting public events and information campaigns.

The draft law also establishes types of offenses and fines for their commission :

1. Lobbying activities without registration - a fine in the amount of UAH 860 to 1,700. Repeatedly during the year - a fine from UAH 8,500 to UAH 17,000.

2. For non-submission or late submission of the report on lobbying, which is submitted twice a year - a fine in the amount of UAH 860 to 1,700. Repeatedly during the year - fine from UAH 5,100 to UAH 6,800.

3. Providing knowingly false information in the Transparency Register - a fine in the amount of UAH 1,700 to UAH 5,100. Repeatedly during the year - fine from UAH 5,100 to UAH 6,800.

4. Non-submission or untimely submission of applications to the NAC to stop lobbying activities - a fine in the amount of UAH 1,700 to UAH 5,100.

5. Lobbying activities in the interests of a person who cannot be either a client or a beneficiary in accordance with the law - a fine in the amount of UAH 17,000 to 34,000, along with a ban on providing lobbying services for one year.

6. Taking actions or making decisions in conditions of conflict of interests during lobbying entails the imposition of a fine in the amount of UAH 5,100 to UAH 8,500. Repeatedly during the year - a fine from UAH 8,500 to UAH 17,000. or a ban on providing lobbying services for one year.

The Law shall enter into force on the day following its publication and shall be enforced from the day of operation of the transparency register, but no later than 4 months after the date of entry into force of this Law.

On January 12, the project of the law on peculiarities of regulation of entrepreneurial activity was adopted as a basis .

This draft law is based on the main goals of consolidation, codification and systematization, through improvement, of the organizational and legal forms of legal entities, their legal regulation and corporate governance, defining the Economic Code of Ukraine as invalid.

The draft law also provides for the following :

- the introduction of a seven-year transition period for the gradual termination of "enterprises" and their transformation into business partnerships in compliance with the principle of proportionate and predictable interference with the rights of the founders of such legal entities without placing an excessive burden on them to comply with the provisions of the Law;

- implementation of the best practices of corporate governance into the current legislation of Ukraine, in particular in terms of determining the duties of officials of legal entities;

- replacement of quasi-material rights "right of economic management" and "right of operational management" with clear and predictable private law constructions of use (lease) and management of other people's property;

- implementation into the current civil legislation of Ukraine of effective and market mechanisms of control over ownership and management of objects of state and communal ownership by newly formed companies and institutions.

Back in February 2023, the National Association of Lawyers of Ukraine (NAAU) sent a document to the Verkhovna Rada about its proposals and comments on this draft law . In its document, NAAU opposes the adoption of the relevant draft law in the proposed version, as there are currently no reasonable grounds for repealing the Economic Code. Moreover, the loss of the peculiarities of the national legal system in the form of a separate codified act in the field of economic (commercial) legislation, which corresponds to the legal tradition of EU member states, may be perceived by international partners as a significant change in the European integration course in general and a violation of the terms of the Association Agreement between Ukraine and by the EU and their member states, the National Academy of Advocacy reports. According to NAAU, the cancellation of the Economic Code will lead to the loss of the normative definition of economic activity, economic competition, bankruptcy and other specialized legal categories, which may cause problems with the determination of judicial jurisdiction and call into question the existence of specialized courts of economic jurisdiction.

At the moment, the window project is about to be withdrawn The Economic Code is being prepared for the second reading .

On January 12, the changes to the Rules of Conduct came into effect monitoring controlled operations .

In accordance with the order of the Ministry of Finance dated November 15, 2023 No. 631, changes to the Procedure for Monitoring Controlled Operations were approved. The specified changes were developed in accordance with paragraphs 39.4.10 of the Tax Code of Ukraine (hereinafter - Tax Code) and the Law of March 20, 2023 No. 2970-IX "On Amendments to the Tax Code of Ukraine and other legislative acts of Ukraine regarding the implementation of the international standard of automatic exchange of information on financial accounts" regarding the improvement of control over compliance with the conditions of controlled operations based on the "arm's length" principle, namely:

• sending a request for the provision of documents (information) regarding the controlled operation to other taxpayers in accordance with paragraphs . 73.3.1 PKU in the presence of at least one of the grounds specified in paragraphs . 73.3.1 PKU;
• fulfillment of the requirements of paragraphs 39.4.11-1 of the PKU in case of receiving such reports from companies - residents of Ukraine;
• automatic exchange of reports across countries.

Among the main changes to the Procedure are the following:
1. Expansion of the list of grounds for the initiation of DPS documentary checks of taxpayers.
2. Clarification of the procedure for forming and sending a preliminary list of taxpayers whose business transactions fall under the criteria of controlled and/or which are part of an international group of companies.
3. Determination of the procedure for sending a request to the taxpayer to provide the master file and additional information in case of detection of violations.

The specified order enters into force from the day of publication in the "Official Gazette", namely, from January 12, the specified changes came into effect.

On January 16, the law was adopted which proposes to make changes to the normative acts regarding the improvement of the procedure for processing and using data in state registers for military accounting.

Among the important changes in the part of military accounting, the following can be singled out :

1. The improvement of the register of conscripts, conscripts and reservists is foreseen, in particular, regarding the establishment of interaction between registers, the use of data on military records, etc., by using the general system "Oberig".

2. The possibility of creating and using a digital military registration document instead of paper versions has been introduced.

3. It is planned to create a register of servicemen of the Armed Forces of Ukraine and the State Service of Special Transport, which will allow providing online services to servicemen.

4. The creation of a portal of electronic services for military personnel and conscripts is foreseen. (it will be possible to provide the status of UBD online, offline and automatically if the necessary data is available in the system, the possibility of creating one's own electronic cabinet of a conscript).

This law will enter into force on the day following its publication.

January 23, the law on simplifying the procedure for importing, accounting and distributing humanitarian aid entered into force .

The law provides for a number of important norms regulating the importation and accounting of humanitarian aid, in particular :

- the simplification of the procedure for the importation, accounting and distribution of humanitarian aid is legislated (through the introduction of an electronic registry-system of accounting for humanitarian aid);

- the need to use the electronic humanitarian aid accounting system is introduced (starting from January 2024, the system will be working normally, to register participants, you need to go to the link https://human-aid.ioc.gov.ua/ );

- the list of recipients of humanitarian aid has been expanded (including foreign charitable organizations whose representative offices are accredited in Ukraine, as well as non-profit state and communal institutions, local self-government bodies and social service providers);

- provided for possibility transfer humanitarian help under the guise of a vehicle not only military units , as well as military personnel , as individuals ( acquirers );

- the issue of recognition of goods as humanitarian aid is regulated (goods purchased by charitable organizations abroad, which when imported into Ukraine are declared as humanitarian aid, must be distributed free of charge to recipients within 90 days from the date of crossing the customs border).

Among other things, the law also provides for the following :

1. The law establishes that during a state of war or a state of emergency, as well as within three months after its termination or cancellation, the Cabinet of Ministers of Ukraine has the right to:

  • establish a simplified procedure for recognition as a declarative principle of humanitarian aid without the adoption of a corresponding decision by a specially authorized state body for humanitarian aid;

  • consider and make decisions on expanding the list of recipients of humanitarian aid.

2. Recipients of humanitarian aid have the right to distribute or redistribute humanitarian aid among recipients in compliance with the intended purpose without additional coordination with the donor. Recipients of humanitarian aid - legal entities specified in subparagraphs "a", "b", "c", "d", "d", "d", "e", "e" of clause 5 of article 1 of this Law, have the right to transfer received from the recipient of humanitarian aid to other recipients in accordance with the agreement with the recipient of such aid, provided in accordance with the procedure established by the Cabinet of Ministers of Ukraine, in compliance with its intended purpose.

3. Changing the recipient of humanitarian aid is possible only with the written consent of the donor of such aid, unless such agreement was given by the donor at the time of his offer to provide humanitarian aid or is provided for by the right to provide humanitarian aid.