The new Labour Code is entering the home stretch: the government is pushing ahead with labour market reform

This was stated by Oleksiy Sobolev, Minister of Economy, Environment and Agriculture, during the ‘Forum: Labour Market for the Economy of the Future’ as part of the presentation of the reform.

“This is not the end of the discussion, but a transition to substantive parliamentary refinement between the first and second readings. Ukraine cannot delay the modernisation of labour legislation any longer; we need to support the bill at first reading and continue the technical work on the final version,” he emphasised.

Employment flexibility and clear rules

According to the minister, the new code is intended to establish modern labour market rules that simultaneously ensure protection for workers and predictability for businesses. This involves a comprehensive shift in approaches – from the digitalisation of processes to the legalisation of new forms of employment.

Key innovations include:

• the digitalisation of labour relations
• new forms of work (remote, home-based, seasonal, flexible hours)
• expansion of employment contracts
• clear criteria for employment relationships
• implementation of over 30 EU directives

Sobolev emphasised that flexible working arrangements must move from the ‘grey’ area into the legal framework: ‘Remote or home-based work often exists today as an informal arrangement. Our task is to make this a fully-fledged legal regime with clear guarantees and understandable rules for both parties’.

Impact on business: less uncertainty and ‘shadow economy’

In his speech, the Minister emphasised that the current legal uncertainty harms both employees and employers, as it creates a breeding ground for disputes and informal practices.

He explained that the new Code is intended to introduce predictable procedures for hiring and dismissal, simplify HR processes through electronic document management, and allow for the legal formalisation of employment formats that already exist in practice.

“When the rules are unclear, the risk of disputes increases; this leads to court cases and hampers economic development. It also encourages informal practices and unfair competition,” noted Sobolev.

He also highlighted apprenticeship contracts as a tool for integrating young people into the labour market and for workforce development.

For employees: more guarantees and rights

According to the minister, the key aim of the reform is to provide employees with clear working conditions and real protection.

This includes, in particular:

• a clear definition of working conditions and working hours;
• electronic employment documents;
• protection against discrimination, pressure and bullying;
• the right to disconnect whilst working remotely;
• expansion of social safeguards.

Sobolev emphasised that the reform must ensure ‘flexibility without compromising protection’, where new forms of employment are combined with full employment rights.

Why this is needed: staff shortages and an outdated Labour Code

The Minister stressed that the current Labour Code, adopted back in 1971, no longer reflects the realities of the modern economy.

He drew attention to structural problems in the labour market: a significant labour shortage and, at the same time, a large number of people outside the workforce. According to him, around 75% of Ukrainian companies are already experiencing staff shortages, whilst a significant portion of the population is not engaged in the labour market due to barriers, informal employment or the lack of modern working arrangements.

“The Code is needed not as a formal reform. It is needed to make work more accessible, legal and predictable for people and businesses,” explained Sobolev.

Economic impact and European integration

The Minister also emphasised that the new Code has not only social but also economic benefits. Legalising employment and increasing people’s participation in the labour market should boost budget revenues and strengthen the economy.

It is estimated that the reform could create:

• up to 302,000 new formalised jobs;
• up to 43.4 billion UAH in fiscal impact per year;
• UAH 9–19 billion in additional revenue from the reduction of the informal economy.

At the same time, the document is part of the European integration process: it implements over 30 EU directives in the field of labour.

Sobolev noted that the government’s task is to ensure the final version of the Code is fully compliant with European law and international standards, by involving partners in the finalisation process between readings.

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