How to Properly Terminate an Employee: Employer-Initiated

What to consider when dismissing an employee

If, for one reason or another, you need to terminate an employment contract with an employee, i.e., dismiss an employee, we advise you to do so in accordance with the law.

Dismissing an employee without following the procedure can lead to:

• their reinstatement through court
• payment of average earnings for the period of "forced absenteeism"
• penalties for violating labor legislation
• court costs
• a possible inspection by the State Labor Service if the employee complains about you.

What can be the grounds for terminating an employment contract

An employment contract can be terminated at the employer's initiative only if there are legal grounds for it. The list of such grounds is enshrined in:

• Article 40 of the Labor Code of Ukraine - "Termination of an employment contract at the initiative of the owner or an authorized body," which contains general grounds for dismissal
• Article 41 of the Labor Code of Ukraine - "Additional grounds for termination of an employment contract at the initiative of the owner or an authorized body with certain categories of employees under specific conditions," which contains grounds for dismissal provided for special subjects.

What are the most common grounds for dismissal

• termination of an employment contract in case of changes in the organization of production and labor, including liquidation, reorganization, or bankruptcy of the enterprise
• due to the employee's unsuitability for the position held
• in case of systematic non-performance of duties by the employee without valid reasons
• absenteeism (including absence from work for more than three hours during a working day) without valid reasons
• failure to appear at work for more than 4 consecutive months due to temporary incapacity for work
• appearing at work in an intoxicated state, under the influence of narcotics or toxic substances.

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What is the procedure for dismissing an employee

1. 1. Determine the grounds for dismissal from the list in Articles 40-41 of the Labor Code of Ukraine.
   2. Gather evidence to support the grounds for dismissal:
      • insufficient qualification for the position held - evidence will be the conclusion of the attestation commission
      • health condition that prevents the performance of official duties - evidence will be a medical conclusion on the presence of contraindications
      • the fact of an employee committing a disciplinary offense - evidence may be a memorandum from the employee's direct supervisor addressed to the head of the enterprise and an act signed by a commission consisting of at least 3 persons
      • absenteeism - a memorandum from the direct supervisor addressed to the head of the enterprise and an act of the employee's absence from the workplace, signed by a commission consisting of at least 3 persons.
   3. Issue an order for dismissal, specifying the grounds for termination of the employment contract in strict accordance with the wording of labor legislation, and indicating the evidence supporting such grounds for dismissal, as listed above.
   4. Familiarize the employee with the dismissal order against their signature.
   5. Perform calculations with the employee on the day of dismissal, including payment of salary for the month of dismissal, compensation for unused vacation days, and severance pay in cases of termination of an employment contract on the grounds specified in paragraph 6 of Article 36 and paragraphs 1, 2, 6 of part one of Article 40 of the Labor Code of Ukraine (due to reasons beyond the employee's control) in an amount not less than the average monthly earnings.
   6. Make an entry in the labor book and, on the day of dismissal, issue the labor book to the employee against their signature in the personal card and the labor book accounting register.
   7. Provide the employee with a copy of the dismissal order, as required by Article 47 of the Labor Code of Ukraine.

However, there is also an indicative procedure for dismissal for each of the grounds, which is enshrined in the Clarification of the Ministry of Justice of Ukraine dated 01.02.2011 "Procedure for terminating an employment contract at the initiative of the owner or an authorized body," which employers often use in practice to formalize the termination of employment relations with an employee at their own initiative.

Is it possible to dismiss an employee without their consent

The Constitution of Ukraine guarantees that everyone has the right to work, which includes the opportunity to earn a living through work that they freely choose or to which they freely agree; furthermore, every citizen is guaranteed protection from unlawful dismissal (Art. 43).
Dismissal of an employee is possible only on grounds provided by law. Additionally, an employee may be dismissed by agreement of the parties (para. 1, Art. 36 of the Labor Code of Ukraine), and the initiator of the dismissal can be either the employee or the employer.

Is dismissal possible while an employee is on "sick leave"

As a general rule, current legislation prohibits dismissing an employee during illness at the employer's initiative, but there are two exceptions to this rule:

1. Paragraph 5 of Article 40 of the Labor Code of Ukraine provides for failure to appear at work for more than 4 consecutive months due to temporary incapacity for work, not counting maternity leave, if a longer period for retaining the job (position) for a specific illness is not established by law. In this case, for employees who have lost their capacity for work due to an industrial injury or occupational disease, the job (position) is retained until the restoration of their capacity for work or the establishment of disability.
2. In the event of complete liquidation of an enterprise, institution, or organization.

If an employee is on sick leave for less than 4 consecutive months, if a longer period is not established by law, and the illness is not caused by harmful working conditions or an industrial injury, then you cannot dismiss such an employee during the period of "sick leave" at your own initiative, while adhering to the employee dismissal procedure outlined above.

Who cannot be dismissed from work

Dismissal of an employee at the owner's initiative is not permitted in the following cases:

• during their period of temporary incapacity for work (except for failure to appear at work for more than 4 consecutive months due to temporary incapacity for work, not counting maternity leave, if a longer period for retaining the job (position) for a specific illness is not established by law)
• during the employee's vacation period. This rule does not apply to the case of complete liquidation of the enterprise (Part 3, Art. 40 of the Labor Code of Ukraine).

According to the provisions of Part 2 of Article 40 of the Labor Code of Ukraine, dismissal on the grounds specified in paragraphs 1, 2, and 6 of this article is permitted if it is impossible to transfer the employee to another job with their consent. Namely:

• changes in the organization of production and labor, including liquidation, reorganization, bankruptcy, or re-profiling of the enterprise, reduction of staff or personnel
• identified unsuitability of the employee for the position held or work performed due to insufficient qualifications or health condition that prevents the continuation of the given work
• reinstatement of an employee who previously performed this work.

According to the requirements of Part 3 of Article 184 of the Labor Code of Ukraine, dismissal at the employer's initiative is not permitted for

• pregnant women
• women with children under three years of age (under six years of age - Part 6, Art. 179)
• single mothers with a child under fourteen years of age or a child with a disability.

Except in cases of complete liquidation of an enterprise, institution, or organization, when dismissal with mandatory employment is permitted. During the period of employment, they retain their average earnings, but for no more than three months from the date of termination of the fixed-term employment contract.

How to dismiss a director

In practice, there are frequent cases when it is necessary to dismiss the head of an enterprise. Such a question does not arise when the initiative for dismissal comes from the director themselves (Art. 38 of the Labor Code of Ukraine) or dismissal by agreement of the parties (para. 1, Art. 36 of the Labor Code of Ukraine), and it is not important who initiated such dismissal: the director themselves or the owner of the enterprise.

It should be noted that labor relations with a director as an employee are regulated by the Labor Code of Ukraine, and attention should be paid to such grounds as paragraph 5 of Article 41 of the Labor Code of Ukraine — termination of powers of officials.

According to Part One of Article 42 of the Law of Ukraine "On Limited and Additional Liability Companies" dated February 6, 2018, No. 2275-VIII, officials of the company are members of the executive body, supervisory board, as well as other persons provided for by the company's charter, meaning that the director primarily belongs to the category of officials.

Regarding the grounds for applying dismissal under paragraph 5 of Article 41 of the Labor Code of Ukraine, with its introduction, owners gained the opportunity to dismiss officials of their enterprises without specifying the reason for dismissal. Therefore, it is sufficient for the owners of the enterprise to make a decision to dismiss the employee - director, and simultaneously with the termination of the director's powers, the owners are obliged to pay them severance pay in an amount not less than six months' average earnings in accordance with Article 44 of the Labor Code of Ukraine.

How to draw up a dismissal order – sample

In case of termination of employment relations with an employee, the employer issues a dismissal order. Such an order must contain the grounds for dismissal with references to the paragraph and article of the Labor Code of Ukraine. The order can be drawn up in an arbitrary form or using the standard form No. P-4, approved by order of the State Statistics Committee dated 05.12.2008 No. 489. The employer is obliged to familiarize the employee with such an order against their personal signature and provide a copy of the order.

We offer you a sample dismissal order based on paragraph 5 of Article 40 of the Labor Code of Ukraine - failure to appear at work for more than 4 consecutive months due to temporary incapacity for work.
Remember that the issuance of such an order must be preceded by a decision-making procedure by the manager based on documents recording the employee's absence, including entries in the timesheet, sick leave certificates, and a memorandum from the employee's direct supervisor.

After evaluating all documents and establishing the fact of the employee's absence from work for more than 4 months, the manager may issue an order for the employee's dismissal, with mandatory familiarization of the latter and issuance of a copy of the dismissal order to them.

Judicial practice on employee dismissal issues

Finally, we would like to add several court decisions regarding the courts' positions on the grounds for dismissal at the employer's initiative:

1. Regarding the termination of an employment contract in case of systematic non-performance of duties by an employee without valid reasons - Resolution of the Supreme Court dated 30.05.2018 in case 524/7159/16-ц.
2. Unsuitability of an employee for the position held or work performed due to insufficient qualifications - Resolution of the Supreme Court dated 30.05.2018 in case No. 297/3092/15-ц.
3. If the work is contraindicated for the employee due to health reasons - Resolution of the Supreme Court dated 29.10.2018 in case No. 751/8418/15-ц.
4. Absenteeism as a ground for dismissal - Resolution of the Supreme Court dated 26.09.2018 in case No. 289/51/16-ц.

In conclusion, we would like to note that the dismissal of an employee at the employer's initiative is a sequence of actions provided for by legislation and practice. When dismissing employees at the employer's initiative, we recommend carefully documenting the grounds for dismissal to avoid

• possible labor disputes
• undesirable financial payments to employees by court decision
• inspections by regulatory bodies for compliance with labor legislation.

Contact our lawyers and attorneys if you need consultation on labor law issues.