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Forms of labor agreement. Which one is preferable?

Ukrainian law distinguishes between a “labour agreement” and a “labour contract”. A “labour contract” is a specific form of written “labour agreement”. In a labour contract, the resolution of certain issues, including the term of the contract and the grounds for the termination of the employment relationship, are determined by the parties and are not subject to the requirements of the Labour Code. Article 9 of the Labour Code, however, provides that the provisions of an employment contract may not deprive an employee of the rights and benefits, which are guaranteed by the labour laws of Ukraine. Furthermore, a labour contract may be used only if it is expressly authorized by law, and it must always be executed in writing.

Although it is usual for a written labour agreement to be concluded by the parties, the absence of such an agreement does not prevent an employment relationship from being established. In such a situation, the parties are bound by an assumed labour agreement, and the relevant provisions of the Labour Code strictly regulate the employment relationship.

Conceptually, legal entities, both local and foreign, may contract the services of individuals in Ukraine pursuant to either: (i) labour agreements or labour contracts concluded in accordance with the Labour Code; or (ii) so-called “civil law contracts” concluded in accordance with the Civil Code of Ukraine.

As a rule, labour agreements are concluded for an unlimited period. However, the Labour Code allows for a labour agreement to be concluded for:

(1) a limited period agreed upon by the parties; or

(2) a period required in order to complete a given amount of work.

Article 23 of the Labour Code provides that a labour agreement may be concluded for a specific term only if the nature of the employee’s work or “the employee’s interests” makes it impossible to establish an employment relationship for an unlimited term. However, this provision affects only a labour agreement and not a labour contract. Pursuant to Article 21 of the Labour Code, the parties to a labour contract are afforded discretionary powers to determine the term of such contract. Other provisions, which the parties may agree upon in a labour contract, include:

(1) rights, obligations, and liabilities of the parties, including the terms of their material liability;

(2) remuneration and organization of the employee’s labour; and

(3) grounds for termination, including early termination.

Thus, the principal advantage of a labour contract, as compared with a labour agreement, is the discretion which the parties to a labour contract may exercise in respect of the terms and conditions of the employment and the grounds for termination, in contrast with the rigid requirements of the Labour Code. On the other hand, the principal disadvantage is that a labour contract, unlike a labour agreement, may be concluded only if it is expressly authorized by law and it must always be in writing.


Date: 2016-01-14; view: 845


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