Positions of the new Supreme Court regarding labour disputes

The new Supreme Court (hereinafter referred to as “the SC”), which is a cassation instance in the consideration of judicial disputes, has been already operating for more than three months. During this time, we have been closely following the SC’s legal positions, including those related to labour disputes. Let’s analyse decisions in labour disputes in which the Supreme Court:

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• Changes in the employer’s organisation of production and work cannot be grounds for abuse and illegal dismissal of employees (Decision of the SC of January 31, 2018 in the case No. 824/3229/14-а)

The District State Administration (DSA) liquidated its Department of Urban Development, Architecture, and Housing and Utilities and established the Department of Urban Development, Architecture, Housing and Utilities, and Infrastructure instead. Also, the DSA announced a competition to fill the vacancy of the head of the newly established department.

The former head of the liquidated department applied for his appointment as the head of the newly established department, however, his application was refused and the DSA dismissed him on the basis of Clause 1 of Part 1 of Article 40 of the Labour Code of Ukraine.

When appealing against his dismissal, the employee filed a lawsuit against the DSA on the reinstatement in his job and the recovery of his earnings for the period of his enforced absenteeism.

The court of appeal upheld the claim and reinstated the plaintiff in his job. By upholding the decision of the court of appeal, the SC noted the following.

Firstly, the SC considered that there was a minor expansion of the department’s activities with additional tasks allotted, but not the change in the organisation of production and work, as no new forms of work organisation were introduced and no advanced methods or technologies were implemented.

Secondly, the Court found that the plaintiff fully met the requirements established for candidates for the newly established position of the head of the department, and that the current legislation allowed appointing civil servants who occupied corresponding positions in the liquidated bodies to positions in the newly established executive and local self-government bodies, without any competitive selection.

The SC emphasised that making changes in the organisation of production and work, including the liquidation, reorganisation, or conversion of an enterprise, institution, or organisation, as well as staff redundancy is the employer’s right, but this should not be used as the ground for abuse and illegal dismissal of employees.

• An employer can not dismiss an employee, if these is a justified refusal of the labour union (Decision of the SC of January 25, 2018 in the case No. 569/18201/14ц)

A teacher, assistant professor, was dismissed from the university, where he had been working since 1979, on the basis of Clause 1 of Part 1 of Article 40 of the Labour Code of Ukraine.

The first instance and appellate courts dismissed the employee’s claim on his reinstatement in his job and the recovery of his earnings for the period of his enforced absenteeism.

By reversing the decisions of courts of previous instances and upholding the claim, the SC noted that the defendant’s labour union committee reasonably refused to give consent to the termination of employment agreement with the plaintiff on the basis of Clause 1 of Part 1 of Article 40 of the Labour Code of Ukraine.

The Court indicated that the union’s refusal to give consent to the termination of employment agreement has to be substantiated and contain reference to the legal reasoning of the illegality of the employee’s dismissal, or a reference to the employer’s failure to take into account the actual circumstances, in which the termination of an employment agreement with the employee violates his/her statutory rights. A court can conclude about the validity or invalidity of the labour union’s decision to refuse to give consent to the employee’s dismissal only after verifying the conformity of such decision with the norms of labour legislation, the factual circumstances and grounds for the employee’s dismissal, his/her business and professional qualities.

The SC emphasized that in this case, the decision of the labour union was motivated by the fact that the defendant was not properly assessed in the process of determining his preemptive right to remain at work in view of his qualifications and labour productivity, and that the plaintiff’s advanced training was not taken into account.

In these circumstances, the SC came to the conclusion that the decision of the labour union was valid and that there were no grounds for the plaintiff’s dismissal. In addition to the plaintiff’s reinstatement in his job and the recovery of his earnings for the period of his enforced absenteeism, the SC also recovered UAH 5,000 in favour of the plaintiff as a compensation for his non-pecuniary damage.

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• An employer has the right to terminate the powers of the director as an official at any time (Decision of the SC of February 5, 2018 in the case No. 711/5711/16)

Based on the decision of the company members’ general meeting, it was decided to terminate the powers of the company’s Director General. Five days after the above decision was made, the Director General was dismissed due to the termination of her powers in accordance with Clause 5 of Article 41 of the Labour Code of Ukraine.

Disagreeing with her dismissal, the former Director General appealed to the court noting that under her employment agreement, the agreement could be early terminated by the employer’s unilateral decision, provided that the employee is notified at least 2 months prior to such termination. Despite this, the defendant dismissed her from work, without such a notification.

By reversing the decisions of courts of previous instances on the plaintiff’s reinstatement in her job, the SC noted the following.

Interpretation of Clause 5 of Part 1 of Article 41 of the Labour Code of Ukraine and Part 3 of Article 99 of the Civil Code of Ukraine testifies that termination of powers of a member of the executive body can take place at any time and for any reason. Herewith, the termination of powers of a member of the executive body is guaranteed by the norms of civil law for terminating or preventing negative influence on the company’s management activities.

The fact that members of the company’s collegial executive body or its sole head have labour relations with the company does not establish the priority of labour regulation over the civil one, since the “employer-employee” model, which is inherent in labour relations, cannot be applied to these relations. The legal status of members of the company’s collegial executive body or its sole head significantly differs from the status of other employees, which is determined by the specifics of its labour activities that consist in executing the company management.

Thus, as the basis for the termination of an employment agreement, the termination of powers of an official does not provide for the prior notification about the dismissal, clarification of the employee’s fault, the appropriateness and reasons for dismissal, taking into account previous work and other positive results. At the same time, when dismissing an employee because of the termination of powers of an official, the employer has to comply with the legislative requirements for the payment of severance benefit to the employee in the amount not less than six-month average earnings.

• Employee’s appearing at work in a drunken state can be confirmed not only by a medical certificate (Decision of the SC of January 23, 2018 in the case No. 640/17224/15-ц)

The head of the security department was dismissed from his position on the basis of Clause 7 of Article 40 of the Labour Code of Ukraine because of his appearance at work in a drunken state.

The dismissed employee appealed to the court with a claim on his reinstatement in his job, referring to the fact that his dismissal was related to the management’s biased attitude towards him; he stated that he was not in the state of alcohol intoxication at his workplace, and there was no medical certificate confirming his drunken state.

By upholding the decision of courts of previous instances on dismissing the claim, the SC noted that the applicant’s presence in the state of alcohol intoxication at his workplace was confirmed by an act drawn up and signed by three defendant’s officials, as well as explanations of witnesses interrogated at the court hearing. The plaintiff refused to pass the medical examination at the regional narcological dispensary for identifying his state of intoxication at the direction by the defendant’s assignment, which was also documented by the defendant’s act. Herewith, the plaintiff also failed to pass the corresponding medical examination independently.

The Court concluded that the defendant documented the fact of the plaintiff’s presence at the workplace in a drunken state in the manner prescribed by the law, and the plaintiff did not provide evidence to refute the abovementioned; therefore, the plaintiff’s dismissal was conducted in accordance with the requirements of the labour legislation.

Thus, the practice of the Supreme Court is at the stage of its formation. As it is known, there is no equality of parties in labour disputes, and the law protects the employee in the first place. That is why the task of the highest judicial body in labour disputes is to establish a fair balance in the “employer-employee” relations at the level of judicial practice.