New HR administration obligations for representative offices of non-residents

Decree No. 513-r issued by the Cabinet of Ministers of Ukraine entered into force on July 27, 2018. This decree abolishes the obligation to keep the employment record books of people working in representative offices of non-residents:  in Kyiv, the Directorate-General of Kyiv City Council for Foreign Representative Offices had to fulfill this obligation, while elsewhere, certain divisions of local authorities/enterprises had to take on this duty.

These organizations used to register in employment record books when employees of foreign representative offices were hired and dismissed as any entry in employment record books made by a foreign representative office was deemed invalid.

Resolution No. 571 issued by the Cabinet of Ministers of Ukraine dated July 18, 2018 (further “Resolution 571”) provides instead for the safekeeping of employment record books in foreign representative offices. Resolution 571 entered into force on July 24, 2018.

It should be noted that Resolution 571 also provides that the heads of representative offices are responsible for coordinating recordkeeping, safekeeping and  handover of employment record books. Any violation of the procedure for recordkeeping, safekeeping and  handover of employment record books entails disciplinary actions as well as other liability in cases provided by law. In particular, Article 41 of the Code of Ukraine of Administrative Offenses sets out that any violation of labor law requirements entails the imposition of a fine from UAH 510 (about EUR 17) to UAH 1 700 (about EUR 55) on the head of foreign representative office and, in case of repeated offense  within the same year, a fine from UAH 1 700 (about EUR 55) to UAH 5 100 (about EUR 163) is imposed. Moreover, Article 265 of the Labor Code of Ukraine sets out that a fine in the amount of the minimum wage, i.e. UAH 3 723 (EUR 120), may be imposed on the representative office of non-resident for the same violation. In addition, in the event of delay in  handover of employment record book through the fault of the employer, average wage shall be paid to the employee for the entire period of delay.

So, on the one hand, the aforementioned changes promote the principle of equality among all business entities and their employees and also allow the representative offices of non-residents to fulfill their obligations under labor law promptly. On the other hand, the representative offices of non-residents are required to take additional steps as to ensure compliance with the new requirements, they need to:

• Obtain their employees’ employment record book from the aforementioned organizations;
• Coordinate the safekeeping of employment record books;
• Maintain registration books of employment record book forms and their inserts and registration books  of movement of employment record books and their inserts;
• Ensure timely and correct recording of  entries in employment record books and ensure their  handover to employees upon dismissal.

Drawing from their extensive experience in HR administration and labor law, our specialists are always happy to provide individual advice and services to help navigate through the changes outlined above.