Is non-payment of salary allowed due to force majeure during the war?

22 April 2022 - Publication

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The Ukrainian Chamber of Commerce and Industry (hereinafter – CCI of Ukraine) has officially evidenced that the military aggression of the russian federation against Ukraine from February 24, 2022, until its official ending is force majeure circumstances (force majeure). As a general rule, a force majeure is a ground for exemption from liability for non-performance. But does this rule apply to the salary payments?

According to the labour legislation, the employers must pay the employees their salary regularly, at least twice a month. The employer can be fined or brought to administrative or criminal responsibility for violation of the established terms of payment of salary.

Nevertheless, nowadays a lot of companies do not function due to active hostilities. So such enterprises are not profitable and often do not have the funds to pay salaries. However in this case the employers do not have a possibility to pay salaries through no fault of their own, but due to objective, independent of them circumstances of a force majeure.

The Supreme Court of Ukraine has confirmed the possibility of applying a force majeure in labour relations in its decision as of November 11, 2015, in the case No. 6-2159цс15. In this case the court concluded that the delay in the payment of salary was caused not through the fault of the employer, but due to the force majeure in the anti-terrorist operation zone, which was confirmed by the conclusion of the Chamber of Commerce and Industry.

Herewith it is important that the mere fact that the CCI of Ukraine has certified a force majeure does not automatically exempt the employer from liability for non-payment of salaries.

Thus on March 24, 2022, the Law of Ukraine “On the organization of labor relations in martial law” came into force. The law defines that the employer will be exempted from liability for violation of the terms of payment of salary only if the employer proves that such violation occurred as a result of hostilities or other force majeure circumstances.

In the event of an inspection or a lawsuit, the employer will have to prove that it was the force majeure that caused such a delay in salaries payment.

At the same time, we emphasize that a force majeure exempts only from liability for non-performance but not from the obligation to pay the salary. That is, on the first occasion, as soon as the company resumes its activities, the employer must pay employees all the amounts of unpaid salaries on time.

Therefore if the employer does not have an objective possibility to pay salaries to employees due to the war on time, such employer will not be brought to the responsibility. Herewith non-payment of salaries is not allowed, such payment may be only delayed.