COMPREHENSIVE ANALYSIS: DRAFT LABOR CODE OF UKRAINE (2026) vs. CURRENT LABOR CODE (1971)

Prepared for: Legal Review
Date: January 2026
Analysis Type: Comparative Legal Analysis of Draft Trудовий Кодекс України
Language: English (Based on Ukrainian Law Sources)

EXECUTIVE SUMMARY

The Draft Labor Code of Ukraine (hereinafter “Draft Code” or “New Code”), submitted to the Verkhovna Rada on January 15, 2026, represents a comprehensive modernization of Ukrainian labor law. The current legislation is based on the Soviet Code of Labor Laws (Кодекс законів про працю України) adopted in 1971, which the Draft aims to replace entirely.

Key Strategic Changes:

• De-communization of labor legislation and removal of Soviet-era paternalistic state regulation

• Implementation of EU directives and ILO (International Labour Organization) standards

• Shift from employer-protective to balanced regulation

• Legalization and formalization of informal employment

• Risk-based occupational health and safety management system

Risk Assessment for Employers: MODERATE TO HIGH

The Draft introduces significant procedural and substantive changes that require immediate strategic compliance planning.

I. COMPARISON TABLE: CORE PROVISIONS

A. EMPLOYMENT CONTRACT FRAMEWORK

B. WORKING TIME REGULATION

C. LEAVE AND VACATION

D. WAGES AND REMUNERATION

E. TERMINATION OF EMPLOYMENT

F. OCCUPATIONAL HEALTH AND SAFETY

G. COLLECTIVE LABOR RELATIONS

H. DISCRIMINATION AND EQUAL TREATMENT

II. DETAILED RISK ASSESSMENT FOR EMPLOYERS

HIGH-RISK PROVISIONS (Immediate Action Required)

1. Mandatory Written Employment Contracts

• Current State: Verbal contracts common; difficult to prove employment status in disputes

• New Requirement: ALL employment must be in writing

• Employer Risk:

  • Current informal arrangements become non-compliant

  • Every relationship requires documented contract

  • Disputes over contract terms easier to resolve (but must be documented correctly)

• Mitigation Strategies:

  • Develop comprehensive contract templates for each employment type

  • Implement new hire procedure with mandatory written contract

  • Digitize contract management system

  • Conduct audit of current informal employment relationships

2. Increased Annual Leave Entitlement (20 working days minimum)

• Current State: 15 calendar days

• New Requirement: 20 working days (~28 calendar days) minimum

• Employer Risk:

  • Approximately 40-50% increase in annual leave liability

  • Higher accrual rates impact balance sheet

  • Staff scheduling complexity increases

• Financial Impact Example:

  • Employee salary: 40,000 UAH/month = 480,000 UAH/year

  • Daily rate: 480,000 ÷ 248 working days = 1,935 UAH/day

  • Current: 15 days × 1,935 = 29,025 UAH

  • New: 20 days × 1,935 = 38,700 UAH (+33% cost increase per employee)

• Mitigation Strategies:

  • Review and adjust annual compensation budgets

  • Evaluate leave scheduling software

  • Model multi-year accrual liability

  • Consider phased implementation for sector-specific adjustments

3. Enhanced Occupational Health & Safety (Risk-Based System)

• Current State: Reactive, prescriptive regulations; limited risk assessment

• New Requirement: Proactive hazard identification, assessment, and management; documentation required

• Employer Risk:

  • Requires fundamental shift in OHS management approach

  • Regular risk assessments with documentation needed

  • Non-compliance with risk management = presumption of negligence

  • Personal liability of employer/managers for serious violations

• Compliance Burden:

  • Hire or train OHS specialists

  • Conduct comprehensive risk assessments

  • Document control measures

  • Implement monitoring/review system

• Mitigation Strategies:

  • Engage external OHS consultants for baseline assessment

  • Implement ISO 45001 or similar system

  • Document all hazard assessments and corrective actions

  • Train management on new OHS obligations

  • Budget for OHS infrastructure improvements

4. Termination for Cause with Expanded Grounds but Stricter Procedures

• Current State: 10 defined grounds; limited procedural requirements; quick dismissal possible

• New Requirement: Expanded grounds BUT with mandatory investigation, documentation, right to response

• Employer Risk:

  • Cannot dismiss without proper procedure

  • Wrongful dismissal claims easier to succeed if procedure flawed

  • Back wages + moral damages award potential

  • Retaliation claims possible if discharge perceived as retaliation

• Specific Procedures Required:

  • Written notification of violation

  • Opportunity for employee response/explanation (period not specified; likely 3-10 days)

  • Investigation documentation

  • Disciplinary decision in writing with grounds

  • Notice period (7 days for some cases)

• Mitigation Strategies:

  • Develop documented investigation procedures

  • Create templates for disciplinary letters

  • Train HR personnel on proper termination procedure

  • Document all performance issues contemporaneously

  • Consider progressive discipline approach

5. Wage Payment Deadlines and Schedule Requirements

• Current State: “Regular” payment required; no specific schedule mandated

• New Requirement: Exact payment dates must be specified in contract; deviation creates liability

• Employer Risk:

  • Must have consistent, documented payment schedule

  • Delayed payment triggers automatic interest charges

  • Worker can claim breach even for 1-day delay

• Mitigation Strategies:

  • Specify exact payment dates in all contracts

  • Implement accounting system to ensure on-time payment

  • Document any delays with explanations

  • Plan for payroll timing well in advance

6. Enhanced Strike and Collective Action Rights

• Current State: Strikes permitted but limited; minimal procedures

• New Requirement: Clearer strike procedures; mediation/arbitration requirements; broader participation rights

• Employer Risk:

  • Potential for more frequent labor actions

  • Mediation required before formal labor arbitration

  • Government arbitration outcome binding

  • Retaliation against strikers is strictly prohibited

• Mitigation Strategies:

  • Establish labor relations department

  • Develop communication protocol with unions

  • Understand mediation/arbitration procedures

  • Document all labor relations interactions

  • Avoid any action that could be perceived as retaliation

MEDIUM-RISK PROVISIONS (Planning Required)

1. Expanded Maternity/Paternity Leave Structure

• Risk: Gender discrimination claims if paternity leave not properly offered

• Action: Update HR policies to address gender-neutral parental leave

2. Working Time Flexibility and “Unfixed Schedule” Regulation

• Risk: Must provide 2-week notice for schedule changes; compensation required for short-notice changes

• Action: Evaluate current scheduling practices; plan for transition

3. Sick Leave Payment (First 6 Days by Employer)

• Risk: Increased sick leave costs; requires documentation

• Action: Budget for increased sick leave liability; implement medical certification process

4. Collective Agreement Extension to Non-Union Workers

• Risk: Sectoral agreements may apply broadly; employers not party to negotiation

• Action: Monitor sector-level collective agreement developments

5. Discrimination Claims with Shifted Burden of Proof

• Risk: Once employee shows prima facie case, employer must prove non-discrimination

• Action: Document all employment decisions; maintain objective criteria records

III. UNCLEAR/AMBIGUOUS PROVISIONS REQUIRING CLARIFICATION

1. Definition of “Work of Equal Value” for Gender Pay Equity

• Current Text: States “equal pay for work of equal value” but does not define methodology

• Problem: Different calculation methods produce different results

• Guidance Needed:

  • What factors constitute “equal value”?

  • Can employers use job evaluation systems?

  • What documentation satisfies the requirement?

• Recommendation: Await implementing regulations from Ministry of Economy

2. Aggregated Working Time Accounting Period Parameters

• Current Text: References accounting periods but exact rules unclear

• Problem: Can exceed daily/weekly limits within month? Quarter? Year?

• Guidance Needed:

  • Clear maximum accounting periods

  • Compensation rules for exceeding limits

  • Dispute resolution for calculation disagreements

• Recommendation: Seek clarification in implementing regulations

3. Unfixed Work Schedule (Нефіксований Робочий Час) Definition

• Current Text: References “nonfixed work schedule” but definition sparse

• Problem: Not clear which industries/positions qualify

• Guidance Needed:

  • Criteria for “unfixed” designation

  • Distinction from part-time or flexible scheduling

  • Compensation formulas

• Recommendation: Wait for ministerial guidance; consult sector agreements

4. Protected Categories in Discrimination Definition

• Current Text: Lists 10+ protected characteristics but some vague (e.g., “other grounds”)

• Problem: “Other grounds” creates uncertainty about what’s protected

• Guidance Needed:

  • What qualifies as “other grounds”?

  • Case law development needed

• Recommendation: Adopt broadest interpretation; review case law as Code implemented

5. Collective Dismissal Threshold and Notification

• Current Text: References collective dismissal but threshold may be modified from 10 workers/30 days

• Problem: Exact threshold not clear in Draft excerpts

• Guidance Needed:

  • Is 10+/30 days maintained?

  • What authorities must be notified?

  • State approval needed?

• Recommendation: Clarify with Ministry before implementing mass layoffs

6. Relationship Between Collective Agreements and Individual Contracts

• Current Text: States agreements can extend to non-party workers if “broadly applicable”

• Problem: “Broadly applicable” undefined; creates exposure for non-union employers

• Guidance Needed:

  • Percentage of workforce coverage threshold?

  • Can employers opt out of sectoral agreements?

  • Government authority to extend agreements?

• Recommendation: Monitor government decisions on sectoral agreement extension

7. Hazard/Risk Categories for Enhanced Leave and Protections

• Current Text: References “hazardous work,” “special conditions,” etc. but categories undefined

• Problem: Existing lists (e.g., 1997 Cabinet Decision No. 1290) may not align with new Code

• Guidance Needed:

  • Which occupations/industries get additional leave?

  • How are new categories added?

  • Retroactive application to existing employees?

• Recommendation: Request Ministry guidance; review industry-specific regulations

8. Night Work Premium Rates for Different Sectors

• Current Text: Minimum 25% but suggests “higher rates for hazardous night work”

• Problem: No definition of which sectors get higher rates

• Guidance Needed:

  • Specific percentages for hazardous industries

  • Determination process

• Recommendation: Baseline at 25%; adjust based on sector guidance

9. Mediation Procedure Timelines and Binding Effect

• Current Text: References mandatory mediation but procedures sparse

• Problem: Not clear if mediation recommendation binding; timelines vague

• Guidance Needed:

  • Mandatory vs. recommended mediation

  • Mediator qualifications

  • Timeline for mediation before arbitration

  • Effect of “agreement” in mediation

• Recommendation: Await detailed implementing regulations

10. Interim Provisions and Transition Rules

• Current Text: References “transitional provisions” but scope unclear

• Problem: Not certain how existing contracts/agreements transition

• Guidance Needed:

  • Do existing contracts auto-convert to new framework?

  • Phase-in periods for compliance

  • Treatment of ongoing disputes under old Code

• Recommendation: Carefully track final version of transitional provisions

IV. POTENTIAL COMPLIANCE GAPS AND RISKS

Gap 1: Technology and Data Privacy

• Issue: Draft addresses remote work but does not reference data privacy regulations (GDPR-equivalent)

• Risk: Monitoring remote workers may violate privacy rights

• Recommendation: Review compliance with Ukrainian data protection laws

Gap 2: Interaction with Collective Security/Wartime Provisions

• Issue: Ukraine is in active conflict; military mobilization/service leave requirements unclear

• Risk: Potential conflict between demobilization and new labor code

• Recommendation: Await clarification on interaction between defense laws and Labor Code

Gap 3: Apprenticeship and Training Wage Framework

• Issue: Training wages mentioned but detailed framework sparse

• Risk: Disputes over classification as “training” vs. regular employment

• Recommendation: Develop clear apprenticeship program documentation

Gap 4: Applicability to Special Employment Categories

• Issue: Civil servants, military, public utilities workers may have separate rules

• Risk: Unclear which provisions apply to all employers vs. private sector only

• Recommendation: Clarify with Ministry whether special categories fully covered

V. IMPLEMENTATION TIMELINE AND RECOMMENDATIONS

Phase 1: IMMEDIATE (Now – February 2026)

1. Conduct Legal Audit

   • Review all employment contracts against new requirements

   • Identify non-compliant arrangements (verbal contracts, foreign-only contracts)

   • List all informal employees

2. Prepare Policy Updates

   • Contract templates (all types)

   • Leave calculation procedures

   • Wage payment schedule documentation

   • Termination procedures

   • OHS risk assessment methodology

3. Budget Planning

   • Quantify increased leave liability

   • Model increased sick leave costs

   • Plan for compliance infrastructure

Phase 2: PRE-ENACTMENT (February – Expected Passage Q2-Q3 2026)

1. Stakeholder Engagement

   • Monitor Verkhovna Rada committee discussions

   • Participate in public consultations if available

   • Join employer associations to coordinate advocacy

2. Technical Compliance Preparation

   • Implement payroll system updates for payment deadlines

   • Develop leave tracking software

   • Plan OHS assessment methodology

3. Training

   • HR staff training on new procedures

   • Management training on disciplinary process

   • OHS coordinator training on risk assessment

Phase 3: POST-ENACTMENT (Upon passage; likely 6-month transition)

1. Immediate Conversion

   • Convert all contracts to written form

   • Update existing contracts to comply with new requirements

   • File written evidence of agreements

2. System Implementation

   • Launch new payroll procedures

   • Activate leave management system

   • Begin OHS risk assessments

3. Compliance Monitoring

   • Quarterly audits of compliance

   • Track labor inspectorate guidance and case law

   • Update policies as clarifications emerge

VI. RECOMMENDATIONS FOR EMPLOYERS

1. Strategic Recommendations

• Engage external legal counsel specializing in Ukrainian labor law for specific guidance

• Join employer associations for collective advocacy and guidance

• Conduct gap analysis against Draft provisions now, before enactment

• Plan financial impacts separately by functional area (HR, payroll, OHS)

2. Immediate HR Policy Updates Needed

• Written contract requirement (all new hires immediately)

• Leave calculation methodology (new 20-day minimum)

• Payment schedule documentation (specify exact dates)

• Termination procedure with investigation and documentation

• Anti-discrimination policy with expanded protected categories

• Occupational health and safety risk assessment procedure

3. Documentation and Record-Keeping

• Maintain detailed employment records

• Document all employment decisions with reasoning

• Create investigation files for disciplinary actions

• Track leave accrual and usage carefully

• Maintain hazard assessment and OHS control records

4. Sectoral Considerations

• 24/7 Operations (Security, Healthcare, Hospitality): Prepare for night work premiums and aggregated time accounting

• Hazardous Industries: Early implementation of risk-based OHS system

• Unionized Workforces: Prepare for expanded collective agreement obligations

• Remote/Flexible Work Organizations: Develop explicit schedule policies

• Sector with High Turnover: Prepare for increased severance/exit costs

5. Risk Mitigation Priorities (in order of implementation)

1. Convert all informal employment to written contracts

2. Update termination procedures to include documentation and investigation

3. Implement leave tracking and recalculation system

4. Establish occupational health and safety risk assessment program

5. Conduct wage audit for gender pay equity

6. Update discrimination and anti-harassment policies

7. Modify payment schedule to specify exact dates

8. Prepare for collective bargaining under new framework

VII. CONCLUSION

The Draft Labor Code of Ukraine represents a fundamental modernization of Ukrainian labor law, moving from Soviet-era paternalistic state regulation to a balanced framework emphasizing worker protections while enabling business flexibility. For employers, the changes are substantial and require immediate planning.

Overall Assessment:

• Compliance Complexity: MEDIUM-HIGH

• Financial Impact: HIGH (primarily due to increased leave entitlement)

• Operational Impact: MEDIUM-HIGH (new procedures required)

• Timeline to Full Compliance: 6-12 months post-enactment

The most significant challenges will be:

1. Increased leave liability (40-50% increase in minimum annual leave)

2. Shift to proactive occupational health and safety management

3. Enhanced procedural requirements for termination

4. New documentation and record-keeping obligations

Critical Success Factor: Proactive engagement with legal counsel and sector peers to develop transitional implementation strategy before the Code takes effect.

APPENDICES (Recommended for separate research)

1. Current Labor Code Articles (1971) – key provisions

2. Draft Code Articles (2026) – comparative sections

3. Implementing Regulations – issued by Ministry of Economy

4. EU Directives referenced in Draft – comparative text

5. ILO Conventions – summary of obligations

6. Case Law – Ukrainian Supreme Court decisions on key issues

7. Collective Agreement Templates – sector-specific examples

8. OHS Risk Assessment Methodologies – EU/ILO standards

9. Sample Contracts – new code-compliant templates

10. Financial Impact Model – template for cost calculation

Document Prepared By: Ukrainian Labor Law Analysis Team
Verification Status: Based on Draft Code as of January 15, 2026
Caveat: This analysis is based on the Draft Code as submitted. Final enacted version may differ. Legal counsel should review final enacted text.