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Legislative changes

Civil proceedings

Remote work and working from home

The concepts of “remote work” and “working from home” have been included in the current Labor Code for the first time in the history of labor legislation of Ukraine. Flexible working hours have also been regulated at the legislative level.

Remote work and working from home are two separate forms of labor organization, the key difference between which is the approach to determining the place of work.

In remote work, an employee independently determines his/her workplace outside the employer’s office. At the same time, the Labor Code of Ukraine puts no restrictions on the employee in choosing the workplace — it can be a café, co-working space, park or any other place where the employee can perform work using information and communication technologies.

The place of working from home is the place of residence of an employee or other premises, which have everything required for performing the work (workspace, technical means, etc.). The crucial feature of working from home is that the workplace is fixed and may not be changed without the consent of the employer.

It should be noted that during the quarantine period an employer may unilaterally establish a mandatory regime for employees to work remotely or from home.

Read more about the adopted changes at link.

Land reform

Since July 1, 2021, a moratorium on the sale of agricultural land has been lifted in Ukraine. This means that every citizen of Ukraine has been enabled to buy and sell agricultural land freely.

The basic conditions for acquiring title to agricultural lands include:

  • until January 1, 2024, only individuals who are citizens of Ukraine will be able to buy land, yet no more than 100 hectares per person;
  • starting from 2024, Ukrainian legal entities will also be able to buy land, yet no more than 10,000 hectares per entity;
  • access to the land market for foreign citizens to be determined by referendum;
  • sale of state and municipal land is prohibited;
  • payment for land will be made only in a non-cash form with verification of the origin of funds;
  • the minimum price for the land plot has been fixed: not lower than the standard monetary valuation.

In July 2021, the Law on sale of land through electronic auctions also came into force. Currently, in order to eliminate corruption risks, the sale of state-owned and municipal non-agricultural land plots and acquisition of rights thereto, such as lease rights, are carried out on a competitive basis (at land auctions) in the form of e-auction.

At the same time, the sale of private land plots and transfer thereof into use may be carried out at land auctions only on the initiative of landowners.

For more details on the topic of land reform in Ukraine please go to link.

Paperless mode

Important steps have been taken in 2021 in the national legislation to introduce a paperless mode, namely the introduction of sick leave e-certificates, electronic employment record books, and to regulate the procedure for providing public e-services.

Sick leave e-certificates

All healthcare institutions of Ukraine switched to the registration of sick leave e-certificates from October 1, 2021.

However, it will still be possible to issue paper sick leave certificates until February 1, 2022, yet only in exceptional cases determined by legislation, for example, if one needs to extend or close a paper sick note issued before October 1, 2021.

In order to issue a sick leave certificate to an employee, the doctor creates a medical e-certificate of temporary incapacity for work. Based on the specified certificate, a sick leave e-certificate is formed in the Electronic register of Sick Notes. On the date of formation, the formed sick leave e-certificate becomes available for reviewing in the account of an employee/employer on the e-services web portal of the Pension Fund of Ukraine (hereinafter referred to as the “PFU”). It means that from now on, employees do not need to bring paper sick leave certificates to work.

Electronic employment record books

Electronic employment record books have been introduced starting from June 10, 2021, which will display all available information about the work experience, records on employment, transfer and dismissal of an employee.

The process of digitization of employment record books must be carried out within 5 years. After transferring information from such books into the Register of Insured Persons of the State Register of Compulsory State Social Insurance (hereinafter referred to as the “State Register”), a paper version of the employment record book will become optional. However, at the employee’s request, the employer will have to keep a paper employment record book concurrently with the electronic version thereof.

Information on the employee’s employment history (from paper employment record books, certificates, etc.) may be entered into the e-services web portal of the PFU by the employees themselves and/or their employers. In this case, scanned or digitized copies of documents must be signed with a qualified electronic signature.

The final version of the electronic record book will be formed after the PFU verifies the data and enters it into the State Register, and will be available for reviewing in the account on the e-services web portal of the PFU.

E-services

The concept of “public e-service” has been introduced into the legislation and the procedure for providing it has been regulated in detail. It includes, inter alia, the administrative or other public services provided to a citizen or legal entity in electronic form. Thus, from now on the option of obtaining various documents and services online without leaving home has been regulated at the legislative level. For example, it is possible to register an individual entrepreneur, obtain a certificate of income, pensioner’s identity document, unemployment benefits, etc. In fact, the law equated e-procedures with paper ones.

E-services will be provided using the information and telecommunication systems following an application submitted in electronic form, or in certain cases without such an application (the list of such cases will be determined by the Cabinet of Ministers of Ukraine).

In order to receive a public e-service, one should specify the data in the application required for the provision thereof. From now on, there is no obligation to attach to the application all documents and information determined by legislation, if they are already contained in state registers, or if there is confirmation from the authorized body that such documents have been issued or that the information is reliable, which was obtained at the request of the public service entity.

In this case, if the above authority provides no response to the above request within five business days, the principle of providing public service by default (“tacito consensu”) will apply, i.e. without obtaining confirmation that the documents have been issued or that the information is reliable. However, the law also provides for cases where this principle does not apply, for example, in case of state registration of property rights to immovable property, encumbrances over such rights, state registration of civil status of citizens, etc.

Tax amnesty

A law has been enacted in Ukraine in July making it possible for individuals, from September 1, 2021 to September 1, 2022, to legalize (declare) their assets (immovable property, currency, securities, etc.), which had been obtained from shadow (tax-free) income. Instead, the state guarantees release from liability for tax evasion under the law. However, those who acquired assets through crime will not be released from liability.

Such declaration is voluntary, one-off and may be filed only for those assets that were acquired before January 1, 2021.

The tax rates proposed by law are much lower than those stipulated by the current tax legislation. Thus, for example, the rate of 5% is set for the assets located in Ukraine and deposited in Ukrainian banks, and 9% — for those abroad. The lowest rate of 2.5% applies to persons who have domestic government bonds purchased from September 1, 2021 to August 31, 2022.

More details on the topic of tax amnesty in Ukraine and potential pitfalls in this procedure are available at link.

Providing services in Ukrainian

From January 2021, under the new Law, all service providers, regardless of the form of ownership, must provide services to consumers and provide information about goods and services in the official language. The exception is the client’s request to provide services to him/her personally in another language acceptable to the parties.

It should be added that the obligation to provide information in the official language applies not only to trade, but also to educational, healthcare, social services, etc. Information of the price tags, instructions, labeling, tickets, menu, technical specifications of goods must also be provided in Ukrainian. At the same time, all this information may be duplicated in other languages, but in all cases along with the Ukrainian version.

In case of infringement of the rights to receive information and services in Ukrainian, the Commissioner for the Protection of the State Language (hereinafter referred to as the “Commissioner”) or his-her representative shall draw up a report on the control results, issue a warning to a violator and a requirement to eliminate the violation. For repeated violations during the year, the Commissioner will impose a penalty on violators in the amount of 300 to 400 tax-exempt minimum incomes of citizens (as of 2021 UAH 5,100 to UAH 6,800).

Deoligarchization

Adoption of the law on deoligarchization was one of the most high-profile events in the legislative sphere. The law sets the legal boundaries between large business and politics and aims at preventing the use of political power to increase equity.

The law contains criteria for identifying oligarchs and requires transparency in the contacts of politicians and officers with oligarchs or their representatives.

In particular, an oligarch will be deemed an individual who simultaneously meets at least three of the following criteria:

  • 1) participates in political life;
  • 2) has a significant influence on the media;
  • 3) is the ultimate beneficial owner of a business entity, which is a subject of natural monopolies or holds a monopoly position on the market, and maintains or strengthens such a position for one consecutive year;
  • 4) the confirmed value of assets of the person and business entities of which it is a beneficial owner exceeds 1 million minimum subsistence levels set for able-bodied persons on January 1 of a relevant year (as of 2021 it is UAH 2,270,000,000).

The oligarchs will be determined by the National Security and Defense Council following a submission from the authorized bodies, which will lead to their inclusion in the Register of Oligarchs. The status of an oligarch will be subject to legal restrictions, including a prohibition on financing any political campaign, providing financial support to political parties, etc.

The law further provides for an obligation to file a declaration of contacts with oligarchs or their representatives for the officers whose decisions have a crucial role on society or government decisions.

Digital economy

One of the important steps to attract investment and create favorable conditions for innovative business in Ukraine was the adoption of the Law on stimulating the development of the digital economy in Ukraine.

To this end, the law introduces the “Diia City” legal regime providing for a number of incentives for the development of the IT industry in Ukraine. In particular, the law provides for special conditions of taxation of companies, which are residents of “Diia City”. Amendments to the Tax Code of Ukraine have been defined by a separate law.

Moreover, a new special form of hiring IT specialists under gig contracts has been introduced, which are civil law contracts by their nature entered into in written (electronic) form. According to gig contracts, gig specialists are not admitted as full-time employees, yet are invited to specific projects, where they solve the tasks set by the resident of “Diia City” in a timely manner. However, no other forms of relations, including employment contracts, are prohibited.

An IT company registered in Ukraine may become a resident of “Diia City”, and it must meet a number of legislative requirements (for example, the average monthly remuneration for employees and gig specialists must be equivalent to at least EUR 1,200 at the official UAH/EUR exchange rate).

The adopted law is expected to help increase the competitiveness of Ukraine’s digital economy.

Automatic transfer of the right to land

For the first time, the principle of a single legal share of a land plot and immovable property object located thereon has been enshrined at the legislative level. In particular, it is the automatic transfer of the right to use a land plot in case of acquiring the title to a building or structure located thereon from the land user to the new owner of property.

In this regard, the documents confirming the acquisition of title to immovable property are the grounds for state registration of transfer of title or right to use the land plot to the acquirer.

In case of entering into an agreement in respect of an immovable property object, the cadastral number of the land plot on which such object is located is an essential (mandatory) condition of the agreement. At the same time, if it provides for the transfer of rights to the part of the land plot on which the property is located, an agreement shall be entered into in respect of such an object only after the allocation of such part into a separate land plot and assigning a cadastral number to it.

Debt collection

Debt collection activities will be regulated at the legislative level for the first time in 2021. Primarily, it is a result of the fact that the lack of legal restrictions on the activities of debt collectors and control over their activities often allowed them to use illegal, uncivilized methods of ensuring debt collection.

From now on, the legislation introduces clear rules of conduct for both lenders and collectors when settling distressed debts. Mandatory condition for debt collection is inclusion in the register of debt collection companies kept by the National Bank of Ukraine (hereinafter referred to as the “NBU”).

The following requirements are set by the law to lenders and debt collection companies:

  • to comply with the requirements set by law for interaction with a consumer (requirements for ethical conduct),
  • to inform a consumer in case of involvement of a debt collection company or assignment of debt to a new lender
  • to enter into agreements only with companies included in the register of debt collection companies.

Failure to comply with the specified requirements will result in penalties ranging from UAH 5,100 to UAH 136,000 as of 2021 depending on the type of violation.

Furthermore, according to the law the NBU will monitor compliance with the rights of consumers of financial services by banks, other financial institutions and debt collection companies.

Restructuring of foreign currency loans

In April 2021, the Parliament adopted a package of laws introducing new procedures for settling the mortgage debts of individuals. The strongest reaction in the business community was caused by the law, which introduced mandatory restructuring of mortgage loans to individuals in foreign currency, the debt under which arose before January 1, 2014 and still outstanding.

Restructuring is in fact a reduction in the amount of debt by converting it into national currency at a reduced rate. In this case, the basis for restructuring is a relevant application of a debtor.

The deadline for applying to a lender with an application for restructuring set by law expired on July 23, 2021, but there are cases in which this deadline is calculated differently. For example, in case of litigation over loan or mortgage agreements, the relevant application may be filed no later than two months after the court decision in such a case becomes effective.

The specified legislative changes are important for the financial services market, as they aim at clearing banks and financial institutions of non-performing loans, as well as repayment of debts to lenders in the recalculated amount.

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