The motivation of a person to be employed might be various, it has to take into account needs and values that people want to achieve through the results of their work. The tactics of meeting the interests and motivation of employees to fully realise their work potential are the tasks of stimulation.
There are but a few things that nowadays can stimulate employees better than the salary timely paid. Therefore, we’d like to discuss the organization of labour relations in NGOs.
We will touch upon the following topics:
- Hiring employees (officially)
- Basic personnel documentation for NGOs
Procedure and practice of official employment, including during martial law: what should be taken into account
Under martial law, labour legislation has undergone many changes, for example, it is forbidden to make any personal demands on the candidate in the job advertisement, such as gender, age, colour of skin, etc. (Article 11 of the Labour Code of Ukraine “On Employment of the Population). At the same time, measures to assist certain categories of citizens, who have additional guarantees in employment, in finding official work are not considered to be discrimination.
The current official employment procedure on the part of an employee:
- Submission of an application indicating the selected position and terms of employment (specifying whether it is a full-time or part-time job)
- Submission of the following documents:
- An identity document that confirms Ukrainian citizenship (passport, ID-card, E-passport in mobile application)
- Employment record book (if there is any)
- Registration number of the tax payer’s account card
- The document on education (specialty or qualifications)
- Health certificate (MSEK certificate if there is any)
- Military registration document
- Other documents (certifying eligibility for benefits).
The current official employment procedure on the part of an employer:
– drawing up an order of hiring an employee for the selected position (with the employee familiarized with its text under signature). In case the probation period is preconditioned, it is specified in the order as well
- submission of a notice (announcement) of hiring an employee (BEFORE! Actual admission of an employee to work)
- filling in the employment record book (or its first registration, at the employee’s request)
- medical check-up (for the workers engaged in difficult jobs with harmful and dangerous working conditions – Article 169 of the Labor Code of Ukraine)
- admission of an employee to work
Special attention should be paid to hiring foreigners – they have the right to work due to the permit issued by territorial bodies of the central body of executive power, which implements state policy in the sphere of population employment and labor migration (Article 42 of the Law of Ukraine “On Employment of the Population”).
As for the conclusion of the employment contract, it may be concluded in written or oral form. An employee’s application for employment and an order of the employer about hiring should be considered an oral form. But Article 24 of the Labor Code of Ukraine defines the mandatory conditions for concluding a written employment contract.
On whether it is possible to register the head of an NGO on a voluntary basis and whether the head on an NGO can provide services as Individual Entrepreneur (FOP) to the NGO which he is registered on as the head
Let’s analyse the case when the head of an NGO fulfills his/her duties on a voluntary basis but is registered as Individual Entrepreneur (FOP) of 3-rd group and provides, let’s say, accounting services (or organizes project management) to the same NGO. The relations between NGOs and Individual Entrepreneurs (FOPs) have been described in detail in the following article (article 2).
Providing services of accounting or organizing as well as project management to NGOs as Individual Entrepreneur (FOP) is not prohibited by law. However, there may both arise many violations of the Labor Legislation of Ukraine and the status of the NGO may be questioned.
The head is an official (an employee of the NGO) and acts on the basis of the protocol and employment contract. According to Part 1 of Article 21 of the Labor Code of Ukraine: Employment contract is an agreement between an employee and an organization or its authorized body, according to which the employee is obliged to perform the work defined by this agreement, and the owner is obliged to pay the employee a salary.
Regarding the fulfillment of the head’s duties on a voluntary basis, we consider it to be quite possible. However, some specific features are to be taken into account, as in practice this is allowed for elected positions and collegial bodies performing their functions periodically, whereas the position of NGO’s head involves constant management of current operational activities of the NGO.
In Article 43 of the Constitution of Ukraine it is stated that everyone has the right to a salary not lower than that determined by law and this right is inalienable. Article 95 of the Labor Code of Ukraine complements the main law and states that the salary must be at least the same as the minimum wages, therefore, the head of the NGO has no right to issue an order and to pay a salary to him-/herself or to assign 0,00 (zero) HUA. Moreover, such actions are defined by law as non-compliance with minimum wage guarantees and entail the following fines provided for in Art. 265 of the Labor Code of Ukraine:
- non-compliance with minimum wage guarantees – the fine in the amount of 2 minimum wages for each employee against whom a violation has been committed (in 2023 it was 13,400 UAH).
- admitting an employee to work without signing an employment contract – 10 minimum wages (in 2023 it was 67,000 UAH, repeat offence – 30 minimum wages).
There is no statute of limitations on these fines. It means that the employer (owner) can be prosecuted even after 10 years or more. Moreover, according to Article 41 of the Code of Ukraine on Administrative Offences, there is an administrative fine as well from 510 to 1,700 UAH. It is imposed on the official who committed such an offense, namely, on the head of an NGO.
During martial law, fines for violation of labor legislation (Art. 265 of the Labor Code of Ukraine) do not apply (Part 3 of Article 16 of the Law of Ukraine “On the organization of labor relations under martial law” No. 2136) under the conditions of implementation in full and within the established time limits of the controlling authorities instructions on the detected violations elimination.
If the activity of the NGO’s head is treated as being carried out on a voluntary basis /volunteering, i.e. as voluntary non-profit socially oriented activity by providing volunteer assistance (free works and services), it is necessary to be very careful and meticulous while registering such relations
As the position of Head (director) is registered in the Register of Enterprises and Organizations of Ukraine, his/her powers are defined in the statutory documents. In case the regularity and volume of performed functions are significant and the organization is not in a state of termination or liquidation, it is probable that during control measures or pre-verification analysis, work on a voluntary basis can be defined as hidden labor relations.
Regarding involvement of volunteers and other persons involved in the activities of the organization voluntarily and free of charge, it might be acceptable under the condition that it is not mandatory to keep to:
- work schedule
- availability of a workplace
- paid sick leave
- rest guaranteed
- accrual of pensionable service
To conclude, current legislation does not directly prohibit NGOs from using volunteer assistance and certain works on a voluntary basis in their activities, but it mustn’t be done on the regular basis, such relations mustn’t become regular and long-term, so that there is no reason to consider the specified activity as hidden employment.
To sum up, if the company (NGO) makes a decision to involve volunteers and other people on a voluntary basis, it is advisable to consult experts, who can help to document such types of involvement taking into account the specifics of each NGO.
Keeping personnel records, including during hostilities
So, let’s speak about ideal personnel documentation of an organization:
- a staffing schedule indicating required positions (their classifiers) in the organization, the number of staff units and their salaries
- internal labour regulations
- job descriptions
- regulations on remuneration and bonuses
- templates of orders and statements
- employment contract as a separate document or collective agreement
- Employment record books (if there are any). If so, Book of accounting for the movement of employment record books
- P-2 personal card and personal file (+ attached copies of the documents submitted with the application form, personal data from which are entered into the personal card)
- timesheets
- forms of documentation in the case of piecework payment system (route sheets, production report, warrants – they are used in production processes)
- vacation schedule
- Paychecks and salary statements, payroll statements.
But there is not always an urgent need for a small company to maintain all the documents from the list. Some of them will certainly be analysed, as it is impossible to organize keeping personnel records properly and, consequently, correct payroll process without them.
As for keeping employment record books
It should be mentioned that according to Article 48 of the Labor Code of Ukraine, accounting of the employee’s labor activity is carried out in electronic form. Therefore, from June 10, 2021 it is not mandatory for employers to keep employment record books, they can give them out to employees under signature. However, an employee has the right to demand from the employer to keep an employment record book (especially when employment contract is concluded for the first time).
Besides, taking into account some peculiarities of implementation of the digitization process of employment record books (time, qualifications of an HR employee, examination of the employment record book for the correctness of its filling, especially before 2004), we would recommend keeping work with paper employment record books, especially for those workers who started their career long before Ukraine gained independence. The following video will help make it out in detail how to keep employment record books.
Collective agreement (or labor regulations, as a simplified version)
Collective agreement establishes forms and systems of payment, determines labour standards, rates, tariff grids, prices, salary schemes. It also determines the conditions of introduction and the amounts of allowances, surcharges, bonuses, rewards and other incentive, compensation and guarantee payments. If the NGO does not have a large number of personnel, it will be expedient to publish an order defining the basic working conditions.
Job Instructions
Job instructions determine the main rights and duties of employees and their organizational and legal status. They mainly comprise the following chapters:
- General provisions
- Tasks and responsibilities (duties)
- Rights
- Accountability (responsibility)
- Must know
- Qualification requirements
- Relationships (connections) by profession, position.
There is a unified form of job instructions – Collection (Set) of unified forms of organizational and administrative documents approved by the Protocol of the Methodological Commission of the State Committee of Archives of June 20, 2006 No 3
Staff Schedule
Staff schedule is a document in which the organizational structure is formed, as well as a list of positions in the organization with an indication of the required number of employees who hold such positions and the amount of salaries. Generally, the typical template exists only for budgeting and budgetary institutions and organizations, other organisations elaborate them due to their needs. This document should comprise the following information:
- names of structural subdivisions
- a list of positions (professions)
- the number of full-time employees of the relevant position (profession) involved
- amounts of official salaries (tariff rates) for each position
- monthly salary fund for employees of the corresponding position (profession) and for an NGO in general.
Generally, the staff schedule is approved at the beginning of the year and is valid during the year.
Work Time Sheet
Work time sheet is a document mandatory for all legal entities, regardless of the number of employees. It is necessary for recording the use of working time of all categories of employees, controlling whether it complies with the established working hours regime, obtaining data about the time worked, calculation of wages and subsequent formation of the settlement statement, it will also be useful for compiling statistical reports on labor.
The standard form of work time sheet No П-5 approved by Order No 489 contains the necessary data for statistical observations and is of a recommendatory nature. If needed, you can supplement the form with your own indicators depending on the specifics. To keep record of work time, the employee must be assigned a report card number.
Payroll Statement
Payroll statement is a primary document formed on the basis of the time sheet. It contains generalizing data on:
- amount of accrued wages (including rates (salaries), accrued bonuses, additional salary, vacation, sick leave, etc.)
- withholding from wages
- calculation of Unified Social Tax (SSC) to the salary fund.
Payroll statement is of an approved form (see forms No П-6, П-7 in Order No 489), but it is quite outdated, so it is worth elaborating it for yourself taking into account your needs, or you may choose software elaborated already (the peculiarities of choosing it are described here – Article 3).
Under martial law, the Law of Ukraine “On the organization of labor relations under martial law” entered into force,No 2136-IX of March 15, 2022 (henceforth – Law No. 2136), according to which the following points were adopted:
- protection against unfair dismissal
- the salary is not lower than the minimum wages
- timely receipt of all the wages and bonuses
- the employer can also warn the employee about changes in essential working conditions immediately before their implementation (Part 2 of Article 3 of Law No 2136)
- may suspend certain provisions of the collective agreement (Article 11 of Law No. 2136).
It should be noted that during martial law, Law No. 2136 has precedence over the provisions of the Labor Code and other regulatory acts.
So, the major documents for payroll are Staff schedule and Work time sheet. The document confirming labor costs is the settlement and payment statement.
References and abbreviations
- The Law of Ukraine “On employment of the population” No 5067-VI of July 07, 2012
- The Labor Code of Ukraine
- The Law of Ukraine “On the Organization of Labor Relations in the Conditions of Martial Law” No 2136-IX of March 15, 2022
- The Order on the approval of standard forms of primary accounting documentation on labor statistics No 489 of December 05, 2008.
- The Code of Ukraine on Administrative Offenses
- NGO – non-governmental or non-profitable organization, Public Associations (CPOs), or Charitable organizations (BOs), or public formations (GFs),
- MSEK – Medical and Social Expert Commission
