Ukraine Changes Some Rules Regulating Labour Relations with Foreign Element
26 July, 2010
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Ukraine remains one of the biggest suppliers of seafarers to the global maritime fleet. The estimated number of Ukraine’s seafarers is not less than 75 000, and according to some unofficial reports they are engaged on about 20% of the world fleet.
The country having sound educational base and traditions, comparatively cheap labor market will obviously be able to further compete in this sphere increasing its portion in the world pie. This tendency is proven by the growing number of crewing agencies all over the country. There are more than 150 crewing offices in Odessa only.
Employment Law of Ukraine is based on the Constitution (1996) and the Labor Code of Ukraine (1971), the late, based on the socialist legal doctrine of the former Soviet Union, being mostly oriented towards protection of employee’s rights. The main principle of the said act may be explained as follows: rights and liabilities of an employee set out by an employment contract may not deteriorate the employee’s position as compared with that stipulated by Law.
Till not long ago Ukrainian labor legislation preserved controversial norm which allowed Ukrainian courts to refer the major part of Ukrainian seafarers claims to jurisdiction of Ukrainian courts. The previous wording of the Article 8 of the Labor Code stated that labor relations of Ukrainian citizens working outside Ukraine… should be regulated by laws of the State where job placement (employment) of an employee took place. As most of Ukrainian seafarers sign employment contracts in offices of Ukrainian crewing agencies Ukrainian court without further ado took the seafarer’s claims to its forum, disregarding terms and provisions of respective employment contracts, collective agreements incorporated to them, international court practice and critical position of bona fide Ukrainian lawyers.
Such practice was quite in favor of a claiming seaman granting him certain advantages such as choice of the court at his place of dwelling, relief from the sate duties, involving local Trade Unions and lawyers. Taking into consideration that such lawyers as a rule received great knowledge and experience in Local P&I Correspondents’ offices, success fee used by them and well spread corruption in the court system, the Owners would pay considerable compensations to claimants, including moral damages. It goes without saying that the ship arrest practice aggravated by inconsistency of local laws on this issue would increase the Owners losses. According to official Ukrainian court statistics about 80% of labor disputes are decided in favor of employees.
The Law of Ukraine No. 1837-VI “On amendments to Certain Legislative Acts in respect of Regulating International Private Law Issues” (the Act No. 1837/ the Act) became effective on February 16, 2010. The Act inter alia introduced some changes to rules regulating labor relations with so called foreign element. Thus, the ill-famed article 8 of the Labor Code of Ukraine has been changed to the effect that now labor relations of Ukrainian citizens working outside Ukraine… are regulated in accordance with the Law of Ukraine “On International Private Law” (the Act 2709).
According to the Chapter VIII, Collision Norms with regard to Labor Relations (art. 52-54) of the Act 2709, labor relations are regulated by the Law of the State where work is done, unless otherwise stipulated by Law or International Treaty of Ukraine. Labor relations of Ukrainian citizens working outside Ukraine are regulated by the laws of Ukraine in cases when: 1) citizens of Ukraine work in foreign diplomatic services of Ukraine; 2) citizens of Ukraine have entered employment agreement with employers – natural or legal entities of Ukraine subject to work to be performed abroad, including same to be done in foreign offices, if it is not contradicting to the laws of the state where such work is done; 3) it is stipulated by the Law or International Treaty of Ukraine.
That means that since February 16, 2010 Ukrainian courts may not unconditionally take claims of Ukrainian seafarers against foreign ship owners to their forum as it would contradict not only to the common rules used in most jurisdictions regulating collective agreements & employment contracts, but to Ukrainian Law as well. And Owners would be able to dismiss such claims on grounds of jurisdiction.
The novation has been already used by International Law Offices in practices on advising P&I Clubs and their members on protecting against seafarers ungrounded claims. We also strongly believe that positive changes of relevant court practice are not far off.
