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Ukraine: Changes to succession in labor relations

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In brief

On 15 May 2024, Law of Ukraine No. 3677-IX “On Amendments to the Labor Code of Ukraine on Labor Relations in the Course of Transfer of a Business Entity” dated 25 April 2024 (“Law“) came into force, regulating succession in labor relations in the event of a change of company ownership, among others.

Key changes

  • The Law introduces the term “transfer of a business entity”, which means, in particular, a company’s change of ownership or its reorganization (merger, acquisition, division, transformation).
  • The Law introduces a new rule stating that in a business entity transfer, the employment relationships “continue with the transferee”, which also receives the rights and obligations under the employment agreements between the employees and the seller. 
  • The Law establishes the obligation of the employer and the transferee to notify employees or their elected representatives (in paper or electronic form) of the forthcoming transfer of a business entity at least ten business days prior to such transfer and to provide the following information:
    • The (estimated) date and reasons for the transfer of a business entity
    • The legal, economic, and social consequences to employees of such transfer
    • The planned actions affecting the employees
  • Employees’ representatives are given the opportunity to initiate consultations with the employer and/or the transferee on the reasons for the decision to transfer the business entity and its consequences for the employees, as well as on measures to avoid or mitigate the consequences, within five business days of receiving such information.
  • The Law requires that employees be notified at least two months in advance of changes in essential employment terms caused by the transfer of the business entity.

Recommendations

We recommend that employers in Ukraine consider the above legislative changes in their business activities, particularly in connection with acquisitions or reorganizations of their companies.

To have more information, click here to access related content.

Click here to read the Ukranian version.

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Author

Lina Nemchenko is partner in Baker McKenzie's Real Estate Practice Group in Kyiv and she is head of the Employment & Migration practice. Lina was named "Best in Real Estate" by European Women in Business Law Awards, and she is the only Ukrainian lawyer to ever receive this accolade.

Author

Mariana Marchuk has about 20 years of practical experience in the areas of labor and migration, compliance and anti-corruption, commercial and international trade law, M&A and pharmaceutical regulation. Ms. Marchuk joined Baker McKenzie’s Kyiv office in 1997 as an associate. From 1999 to 2004 she worked in Moscow, as an associate for a major Wall Street law firm and subsequently for Baker McKenzie. In 2004, she returned to the Firm’s Kyiv office and in 2010 she became a counsel.

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