New Labour Code: what will change for employees and employers

The draft new Labour Code proposes a substantial overhaul of labour market rules, from clear criteria for employment relationships and new contract types to digitalisation of HR procedures and a revised approach to the minimum wage. The proposed changes aim to expand flexibility for businesses while increasing formalisation and transparency of working conditions for employees.​

1. Clear signs of “official” employment
   The draft codifies eight criteria of an employment relationship to distinguish an employment contract from civil‑law contracts or “freelance” arrangements and requires that all relationships that actually meet these criteria be treated as employment.​
   For businesses this means more certainty and less risk of reclassification with additional taxes and penalties, while for employees it offers a way out of the shadow economy, with official service record and social protection instead of “cash‑in‑envelope” pay.​
2. More types of employment contracts
   The number of employment contract types increases from six to nine, with separate regulation of remote work, home‑based work, variable working hours, apprenticeship contracts and so on. Different formats can be combined, for example a main contract with an additional remote‑work agreement or a floating schedule.​
   For employers this is a convenient toolkit for various business models such as seasonal work, project teams and part‑time employment. For employees it creates an opportunity to formalise flexible arrangements that already exist de facto but often remain undocumented.​
3. Written or electronic contract instead of “verbal agreement”
   The Code requires employment contracts to be concluded in written or electronic form, equating electronic documents with paper ones and moving away from the practice of working “on a handshake”.​
   For both parties this is about transparency: all key terms must be fixed and accessible, while digital tools allow contracts to be signed remotely, which is convenient for mass recruitment and distributed teams.​
4. New rules for fixed‑term contracts
   The draft tightens requirements for fixed‑term contracts and limits “ever‑green” extensions that disguise permanent work.​
   Employers will have to clearly justify a fixed‑term format (project work, replacement, seasonal work), and employees gain more stability and less risk of dismissal merely because “the contract has expired”.​
5. Legalisation of remote and flexible work
   The draft expressly recognises and regulates remote and home‑based work, flexible and variable working time, and grants employees with family responsibilities the right to request flexible schedules or working from home. It also expands the possibilities for both parents to take childcare leave, making employment more family‑oriented.​
   For businesses flexible regimes help attract workers from regions, veterans, people with disabilities or those unable to work full‑time in an office, while the Code still requires proper time recording, overtime pay and rest periods to prevent exploitation.​
6. Digitalisation of labour relations
   A separate block of changes concerns digitalisation: phasing out paper employment books, introducing electronic registers and broader use of e‑services. Electronic formats for contracts, orders and HR documents are intended to simplify paperwork and reduce administrative burden.​
   Employees will be able to obtain certificates, service record confirmations and information about their employment history faster, which matters for both hiring and pension rights. For employers this means automated HR processes, fewer errors and reliable digital evidence in case of disputes.​
7. A new approach to the minimum wage
   The draft introduces a transparent mechanism for setting the minimum wage, both monthly and hourly, linked to a percentage of the average wage and aligned with EU standards. This should reduce political fluctuations where the minimum wage is raised ad hoc without a predictable formula.​
   For employees an hourly minimum offers better protection in part‑time, side jobs and variable work. For businesses a clear formula enables multi‑year planning of labour costs.​
8. Strengthening the labour inspectorate
   Oversight reform introduces a risk‑based approach to inspections, focusing more on employers with higher violation risks and relying on analytical tools rather than purely formal checks.​
   For compliant businesses this means fewer routine visits and more focus on clear rules, while employees get extra assurance that issues such as envelope wages, undeclared work or unpaid salaries will not be ignored by the state.​
9. New opportunities for youth and apprenticeship contracts
   The Code introduces apprenticeship employment contracts to combine education with a first job. Young people will be able to work officially while studying, subject to special safeguards and limitations so that work does not replace education.​
   For employers this is a way to grow their own staff by investing in training and gradual adaptation of young workers to real tasks. For young employees it means first work experience, official income and practical skills without compromising on safe working conditions.​
10. Balancing interests and new challenges
    Overall, the draft seeks to make labour relations more flexible yet more formalised: fewer “grey” schemes, more contract types and digital tools, while experts warn about risks of simplified dismissal, employer access to work correspondence and excessive control.​
    The Code is intended to align Ukrainian labour law with EU standards, but the real balance between business interests and employee protection will depend on the final wording and court practice, so both employers and employees should already start analysing the changes and adapting internal policies, contracts and HR procedures.​
    If you have questions or issues related to applying the draft Labour Code in practice or to preparing employment contracts, internal regulations or HR documents, obtaining professional legal support in advance can help minimise the risks of disputes and penalties.​
    Author – Svitlana Krutorohova, attorney at the law firm “Winner Legal Company”.​