• According to the Pension Fund of Ukraine, the level of shadow employment is about 25%, and according to the announcement of the Acting Deputy Head of the DFS, 8 million Ukrainian workers receive wages in envelopes, which is almost half of all.

    I would like to draw attention not to the huge fines for business violations of labor legislation, but to the possible legal consequences of the actions of dishonest workers after the termination of their labor relations. As an example, a situation where such an employee has decided not only to take out commercial clients, but also requires money for “silent” about the fact of receiving most of the salary in cash. At the same time, the documents relating to the acceptance and dismissal of work are duly executed and the employer, acting as a tax agent of the employee, was properly kept and transferred to the appropriate funds from the official salary – the only social contribution (ECU), the income tax of individuals and military fee


    In most cases, termination of labor relations in the private sector occurs with the wording of the grounds – by agreement of the parties, that is, Art. 36 Labor Code. The entrepreneur or the head of a legal entity is obliged, on the day of dismissal, to issue the employee with a properly completed work book and to make a final calculation with him. We draw attention to the need to take into account the number of days of unused annual leave, as well as additional leave of an employee who has children or an adult child with disability from birth. As a general rule, the annual main holiday is 24 calendar days a year.

    The accrued amounts due to the employee at the time of dismissal, the owner or authorized body must inform the employee in writing before payment of the amounts indicated. Moreover, there is no time limit for the coincidence of which the notification should be made, therefore we consider it expedient to receive a receipt about acquaintance at least one week before the date of release. Please note that this notice does not apply to the salary bill or payroll information provided with each salary payment to the employee twice a month. The day of release is the last day of work.

    For employees who start work for the first time, the labor book is issued no later than five days after the hiring. In case of necessity, the director issues to the employee, at his request, a certified statement of employment record of the work. A workbooks of workers who work under the terms of an employment contract from individuals – entrepreneurs are kept by the employees themselves.

    Practically all business entities use electronic reporting on the use of a digital signature, and therefore it is worth reminding of the obligation to inform the employee about the work to the territorial office of the DPS at the place of registration before the actual work of the worker.

    The enterprise needs to pay a great deal of attention to the correct execution of orders for the adoption of workers for work, since a possible fine of 11,1690 UAH is threatened by the possible recognition of an invalid order. Requirements for the form of orders, timetables and payroll information, etc., are set in standard forms. If the order is executed incorrectly, but the enterprise timely informed the fiscal service about the acceptance of an employee to work, then such a violation will cost the company UAH 3,723.


    During the last year of 2018, officials of the State Labor Laboratory imposed fines on entrepreneurs for a total amount of UAH 1.6 billion, and voluntarily paid only 3-5%. We conclude that the other or disagreeable and will appeal the decisions in court or simply do not have the financial capacity, applies to entrepreneurs with a small turnover.


    The work of one unregistered worker in Ukraine now stands at UAH 125,000 – the same is imposed on entrepreneurs by the State Labor Service, which last year launched an active campaign to counteract illegal employment. If the inspectors prove payment of a part of the wages in cash, then the fine will be applied in the same amount as it sounds strange.

    Fines are imposed in the course of scheduled and unscheduled inspections of the State Labor Organization and the fiscal service on the basis of consolidated acts. As a result, an official considers the case no later than ten days and makes a decision on imposing a fine. We would like to draw attention to the fact that during this period a lawyer or a business lawyer can provide additional evidence proving the lack of guilt of the employer. And in case of a substantiated petition, for example, a medical doctor’s certificate about the illness of the head of the enterprise, there are grounds for postponing the consideration of the administrative case for an additional ten days. From the practice of appealing the decisions of the officials in the courts, we draw attention to the fact that the improper communication both in form (in writing, by means of postal correspondence) and in terms of content (not later than 5 days before the day of consideration from the moment of notification) is the basis for the abolition of the decision imposing fine

    The decision on the imposition of a fine is made in two copies in a concrete form, one of which remains with the official who considered the case, the second – sent within three days to the economic entity or the employer. The time limit for appeals in court is thirty days, jurisdiction at the place of registration of the complainant or official, and from the payment of court fees, plaintiffs are released.

    An important point is that the list of measures for planned inspections is placed on the official website of regional departments by the first of December for the following year. The list is compiled according to the degree of risk at the enterprise, indicating the start date and the duration of the inspection. The degree of risk from economic activity is determined by a separate methodology and is divided: high, medium and low. According to the norm of the specialized law, which establishes the basic principles of inspections, it is indicated that changes to the approved plan are not allowed. Failure to post information on the official web site about planned measures in a specific time limit may be a reason for not allowing verification.

    Business executives have the legal right not to allow auditors to carry out a planned action in case of failure to receive a verification report 10 days prior to the day it was conducted.


    Returning to our fantasy, when a dishonest, already ex-employee, sent a written complaint and appeal through the official website with information calling into question the compliance of the employer or the company with the law on wages and employment. Can such actions be the basis for an unscheduled inspection?

    Under such conditions, an unscheduled inspection may take place, but only with the approval of the officials of the territorial offices of the DFS and the State Labor Organization regarding its holding with the central body. In such a case, before the start of the inspection, officials are obliged to present a copy of the approval of the head office to the manager or the individual entrepreneur. Failure to provide the specified document is a unambiguous reason for not admitting. In the case of a sudden appearance of auditors at the place of business, we advise you to call a qualified lawyer with experience of challenging the illegal actions of the fiscal service, the State Labor Organization. After all, for non-admission of checking without motives – a fine of 12519 UAH can be applied.

    In case of unscheduled verification in the direction, specific questions should be specified that are to be clarified and became the basis for its implementation. In other words, officials must verify the facts set out in the complaint and provide a copy of the certificate to the audit.

    What happens in practice, when before the «nose» of inspectors shut the door and physically do not allow the economic activity (warehouse, shop, office, etc.) to enter the territory. Occasionally, employees themselves simply leave their jobs using an official exit. Officers call the police, record the fact of no admission, make the appropriate act. Then they bring the owners or managers to their territorial office. If they do not appear to impose a fine, if they appear and report the objective reasons for their absence on the spot – the test is delayed.


    Given that the employer has been provided with the necessary copies of documents that meet the requirements of the current labor legislation and refute the fact that the main part of the «wages in an envelope» is paid, and the only means of proof are written explanations of the dishonest employee, there are no prospects for the application of fines. And even if the examiner surprisingly came to the conclusion that it is necessary to issue a ruling, she will be successfully challenged by a lawyer in court.

    We emphasize that individuals who have filed an unfounded application for violation of the requirements of the legislation by the economic operator are liable under the law. And repeated verification of the same fact as indicated in the complaint – is prohibited.

    Even more so, if such slander is not confirmed by a check, responsibility will first be borne by the employee who did not pay taxes. We do not exclude the prospect of appealing to a former employee with claims for compensation for damages related to unscheduled inspections, which caused loss in production processes and compensation for non-pecuniary damage caused to the head of the enterprise.

    The only unconditional proof that will confirm payment of salary «in the envelope» can be documented the fact of its transfer to the employee. However, it is impossible to carry out such procedures in a procedural manner to the inspectors of the fiscal service and the State Labor Organization. Of course, we do not consider cases where the employer provided or dismissed the employee «borrowed» by the «black bookkeeping» of the enterprise with signatures of the parties in obtaining significant sums as a salary.


    It is controversial and absurd not to distinguish between the employer’s responsibility for an unformed employee, that is, the calculation with him is entirely exclusively cash from liability for employees who work on a «minimum», and in fact receive an additional payment for their work. The article is written in such a way that both the first and the second can be brought to administrative responsibility. According to our belief, such an approach in the legislation is unfair and contradicts the fundamental principles of administrative liability, namely the expediency and relevance of guilt to punishment. Compliance with the guilt and punishment requires that when choosing a specific amount of a fine, the entrepreneur takes into account all the circumstances of the offense committed.

    In the narrow circles of inspectors and auditors, the situation described above is called «hybrid employment». That is, properly written internal labor documents, when a person works for a «minimum», and receives the bulk of the salary in an envelope.

    When drawing up plans of inspections, officials argue in this way – we can investigate the company for the correspondence of wages, that is, it can not be that people work in complex chemical industries for a minimum wage. Or, when the company according to the staffing schedule has people in different positions, with different requirements for education, training, unequal property liability and physical activity, but all get the same – «minimal» (this year is 4173 UAH). Thoughts are right, but not more than that, because the duty to prove the guilt and the composition of the offense in the actions of the entrepreneur or the head of the company is solely inspectors. We do not support the payment of minimum wages, but we know that imposing a fine only after gathering a convincing evidence base. Today, the primary task for the fiscal – the fight against shadow employment, for objective reasons, «hybrid» is practically not engaged.


    Existing judicial practice is rather scanty, because the lion’s share of penalties in this area is applied in connection with the non-registration of the employee in general. Half of the cases won by employers in substantiating the provision of services by a person on the basis of civil-law contracts and the absence of a labor relationship in its pure form.

    There are only a few penalties for the facts of the cash supplement to the minimum. Inspectors received an evidence base in the form of written explanations of other employer employees, in which they recognized the fact of systematic surcharges to pay wages in cash. We draw attention to the fact that such explanations are not procedural as during the interrogation of a witness. And in case of refusal to provide an explanation, including with reference to the right enshrined in the Constitution or providing inaccurate information, criminal liability for giving false testimony can not take place. As the status of an employee in checking the inspector of labor legislation and is not closely related to the status of a witness in a criminal proceeding.


    In the case of outright blackmail by a former employee, which may be complicated by a biased or incompetent attitude towards the duties of an official in conducting an audit of compliance with labor law, we recommend using the services of a lawyer and prove the illegality of the fines applied, as a consequence of the next step – to apply with the requirements to dishonest worker.