Employment contract: case law

Labor Law
18.02.2022
Law Services - Employment contract: case law

The Basic Law of Ukraine provides for the right of everyone to work, which includes the opportunity to earn a living by work that he freely chooses or freely agrees to.
One of the guarantees of every person who has the right to work is, of course, the conclusion of an employment contract on terms determined by mutual consent of both the employee and the owner of the enterprise, institution, or organization (employer).
Unfortunately, as practice shows, every second person who concludes an employment contract, in a pandemic and fear of losing earnings, does not even read the contract signed with the employer, but immediately agrees to all conditions (and not always beneficial to the person), just to have work and income.
In the future, such agreements (with all the shortcomings and, so to speak, bondage terms) of contracts have consequences during the termination of employment or in case of conflict with the employer.
Therefore, let’s focus on the latest case law on labor relations and analyze the findings of the Supreme Court, which will be useful to both employees and employers.
The Supreme Court in the decision of 02.06.2021 in the case № 521/1267/18 reached the following conclusions on the invalidation of the terms of the employment contract to determine the term of its validity and the recognition of the employment contract is concluded indefinitely.
Yes, the person was fired due to the expiration of a three-month contract. The plaintiff considered that the provisions of the concluded employment contract contradict the norms of the current legislation of Ukraine and violate the rights of the employee. The statement of claim was motivated by the fact that, contrary to the requirements of the current legislation of Ukraine, he was not notified of his dismissal in advance, in particular two months, and the dismissal took place without the consent of the trade union organization.
According to Art. 23 of the Labor Code, an employment contract may be concluded for a specified period, established by agreement of the parties.
A fixed-term contract is concluded in cases when the employment relationship cannot be established for an indefinite period, taking into account the nature of work, the conditions of its performance, or the interests of the employee, and in other cases provided by law.
By paragraph 2 of Part 1 of Art. 36 of the Labor Code, the grounds for termination of the employment contract is the expiration of the term (paragraphs 2 and 3 of Article 23 of the Labor Code), except in cases where the employment relationship continues and none of the parties demanded their termination. The current labor legislation of Ukraine does not provide for the obligation of the owner to notify the employee of the expiration of a fixed-term employment contract.
The expiration of the employment contract (contract) terminates the employment relationship when the request for dismissal was filed by one of the parties to the employment contract – the employee or owner or his authorized body. In the event of such a will on the part of one of the parties, the other party may not prevent the termination of the employment relationship.
Refusing to satisfy the claims, the court concluded that the employer, dismissing the plaintiff in connection with the expiration of the employment contract, acted within and by labor law, and the plaintiff did not prove the defendant’s violation of the law during his dismissal.
The Supreme Court, in particular, concluded that the plaintiff’s allegations in the cassation appeal that in his application for employment he did not indicate the duration of the employment relationship with the employer, and therefore he was hired on an indefinite basis, are unfounded, as the latter, at his own will, entered into an employment contract with the defendant with a fixed term of the contract, signing it.
In addition, it is worth paying attention to the conclusions of the Supreme Court set out in the decision of 26.05.2021 in case № 457/295/20, on the recognition of an employment contract concluded for an indefinite period, cancellation of the dismissal order, reinstatement and recovery of average earnings during the forced absence.
In this case, the Supreme Court expressed this position. An employment contract can be:
indefinite – which is concluded for an indefinite period;
for a specified period, agreed by the parties;
such that is concluded at the time of performance of certain work (Article 23 of the Labor Code).
A fixed-term employment contract is concluded in cases when the employment relationship cannot be established for an indefinite period, taking into account the nature of subsequent work, the conditions of its performance, or the interests of the employee, and in other cases provided by law.
In the case of a fixed-term employment contract, this period is set by agreement of the parties, and it can be determined both by a specific date and time of occurrence of a certain event (for example, return to work on maternity leave and care). a person who resigned in connection with a call-up for active military or alternative service, election to the People’s Deputy, or an elected position (or performance of a certain amount of work)).
Therefore, a fixed-term employment contract can be concluded only if the employment relationship cannot be established for an indefinite period.
Thus, the conditions for concluding a fixed-term employment contract are:
the nature of the work performed;
working conditions;
employee interests;
other cases provided by legislative acts.
By Part 3 of Art. 24 of the Labor Code, the conclusion of an employment contract is formalized by an order or directive of the owner or his authorized body on the enrollment of the employee.

  The term for which the employee is hired must be specified in the employment order, otherwise, it will be considered that the employee has been hired under a permanent employment contract. An entry is made in the employment record book without reference to the urgent nature of the employment relationship.
Concluding an employment contract for a specified period, if there are no conditions specified in Part 2 of Art. 23 of the Labor Code, is the basis for declaring it invalid in terms of determining the term. That is, such agreements will be considered concluded for an indefinite period from the time of their conclusion.
Thus, the procedure for registration of employment under a fixed-term employment contract is the same as under a permanent contract. However, the fact of concluding an employment contract for a certain period or for the time of performing a certain job must be reflected both in the employee’s application for employment and in the order or instruction of the employer, which issued this employment contract.
By paragraph 2 of Part 1 of Art. 36 of the Labor Code, the grounds for termination of the employment contract is the expiration of the term (paragraphs 2 and 3 of Article 23), except when the employment relationship continues and none of the parties has demanded their termination.
On this basis, only a fixed-term employment contract concluded as a fixed-term employment contract may be terminated. If the fixed-term employment contract is concluded contrary to the rules of Art. 23 of the Labor Code, the condition of the term is illegal. In this case, the employment contract is concluded for an indefinite period and cannot be terminated due to the expiration of the term. As established by the courts and seen from the case file, in the employment application, the latter asked to hire him for the position of 0.5 rates of dentist-orthopedist of the self-supporting dental department with a dental laboratory. The employment application did not state that he had asked to be hired under a fixed-term contract.
In addition, the reason for writing the application states that in response to the person’s application for employment in the newly created self-supporting dental department with a denture laboratory, the chief physician announced the possibility of employment at a 0.5 rate of dentist-orthopedist. This answer does not specify the possibility of concluding an employment contract with a person only on the terms of a fixed-term employment contract.
In such circumstances, the conclusion of the appellate court that the employment contract concluded between the parties is indefinite is correct, as there is no evidence of agreement on concluding a fixed-term employment contract and evidence that concluding a fixed-term contract was in the plaintiff’s interests and will. Therefore, the release of the plaintiff is based on paragraph 2 of Article. 36 of the Labor Code is illegal.
Regarding the conclusions of the Supreme Court set out in the decision of 19.05.2021 in case № 591/5815/18. In this case, the plaintiff filed a lawsuit with the Court for reinstatement and recovery of wages. She noted that she is not interested in short-term employment (as stipulated in the contracts – 2 or 3 years) and in the legislation of Ukraine, there are no restrictions on the mandatory conclusion of a fixed-term employment contract (contract) as a mandatory condition for associate professorship, which has already been competitively selected. Article 35 of the Law of Ukraine “On Higher Education” sets such restrictions only for managerial positions (rector, deputy rector, director of the institute, dean of the faculty, head of the department).
The Supreme Court stated its position, namely: after assessing the evidence provided by the parties and establishing the facts of the case, the courts of first and appellate instances correctly concluded that the impugned dismissal order was issued in compliance with labor law, and therefore there are no grounds to satisfy the claims.
The decision of the Supreme Court of the Second Judicial Chamber of the Civil Court of Cassation of 04.03.2021 № 640/15491/19 (proceedings № 61-11741св20) concluded that due to the nature of the work, namely: the length of the academic year and the number of students, which cannot be determined in advance, the employment relationship between the parties can not be established for an indefinite period, the renegotiation of a fixed-term employment contract in cases falling under Part 2 of Art. 23 of the Labor Code, does not result in the acquisition of an employment contract of indefinite or concluded for an indefinite period.

The Supreme Court notes that the conclusion of a fixed-term employment contract is possible by agreement of the parties, without the consent of the employee, the conclusion of such a contract is impossible.
Also, the Supreme Court in the decision of 27.04.2021 in the case № 536/232/19, refused to satisfy the claim for invalidation of the clause of the contract, recognition of illegal, and cancellation of the order of dismissal, reinstatement, and recovery of wages for forced absence came to the following conclusions:
When concluding the employment contract, the parties agreed on the term of the employment contract – from June 13, 2017, to June 12, 2018, inclusive (paragraph 8.1 of the employment contract), as well as the conditions that the contract is terminated, in particular, due to expiration its actions (clauses 7.3, 7.3.1 of the employment contract).
Thus, the will of the person to conclude a fixed-term employment contract is confirmed by his statement of June 9, 2017, personal signatures of the plaintiff on each page of the employment contract, which specifies its term, as well as issued based on the concluded employment contract that the employee was hired on the terms of a fixed-term employment contract indicating the relevant term of its validity, with which the plaintiff is acquainted under the signature. However, the plaintiff did not provide proper and admissible evidence to prove that he signed a fixed-term employment contract under pressure from officials of the defendant that his will at the time of the contract did not meet his internal will, or that he was not aware of the contract or was ill and sick. did not adequately evaluate his actions ”.
The Supreme Court in the case № 640/15491/19 in the decision of 04.03.2021 concluded that the courts correctly stated that the parties by paragraph 2 of Part 1 of Art. 23 of the Labor Code entered into an employment contract for a fixed period, established by their agreement, which could be extended only if the employment relationship lasted and neither party demanded their termination. However, the employer did not wish to renegotiate the employment contract with the plaintiff and issued a dismissal order within the timeframe established by law, paying the plaintiff a salary and compensation for unused leave.
The courts of previous instances came to the reasonable conclusion that since the nature of work, namely the length of the academic year and the number of students who can not be determined in advance, the employment relationship between the parties can not be established indefinitely, renegotiated fixed-term employment contract. fall under Part 2 of Art. 23 of the Labor Code, does not result in the employment contract becoming indefinite or concluded for an indefinite period, consistent with the position of the Supreme Court, set out in case № 725/2974/16 of 27.03.2019. The panel of judges of the court of cassation sees no grounds for deviating from the conclusion on the application of the rule of law in such legal relations, set out in the decision of the Supreme Court of 27.03.2019 in case № 725/2974/16.
The total training load of the plaintiff during his work as an assistant and his inclusion in the schedule of holidays for the 2018/2019 academic year does not affect the nature of the next job.
The courts also reasonably noted that the basis for concluding a fixed-term employment contract from 01.07.2018 between the parties was a statement of the plaintiff, in which he asked to enter into a fixed-term employment contract, then signed the contract and read the order № 215-k of 19 June 2018 and did not challenge them during the term of this agreement and the order, which testifies to the conclusion of a fixed-term agreement.
The plaintiff did not provide evidence of coercion by management to file this application.
Termination of the employment contract due to the expiration of its term does not require a statement or any expression of the will of the employee. He has already expressed his will to conclude a fixed-term employment contract when he wrote an application for employment under a fixed-term employment contract. At the same time, he expressed his will to terminate such an employment contract due to the expiration of the term for which it was concluded.
A similar legal position is set out in the decision of the Supreme Court of March 27, 2019, in case № 725/2974/16-ts (proceedings № 61-23868sv18).

The Supreme Court notes that the conclusion of a fixed-term employment contract is possible by agreement of the parties, without the consent of the employee, the conclusion of such a contract is impossible.
Also, the Supreme Court in the decision of 27.04.2021 in the case № 536/232/19, refused to satisfy the claim for invalidation of the clause of the contract, recognition of illegal, and cancellation of the order of dismissal, reinstatement, and recovery of wages for forced absence, came to the following conclusions:
When concluding the employment contract, the parties agreed on the term of the employment contract – from June 13, 2017, to June 12, 2018, inclusive (paragraph 8.1 of the employment contract), as well as the conditions that the contract is terminated, in particular, due to expiration its actions (clauses 7.3, 7.3.1 of the employment contract).
Thus, the will of the person to conclude a fixed-term employment contract is confirmed by his statement of June 9, 2017, personal signatures of the plaintiff on each page of the employment contract, which specifies its term, as well as issued based on the concluded employment contract that the employee was hired on the terms of a fixed-term employment contract indicating the relevant term of its validity, with which the plaintiff is acquainted under the signature. However, the plaintiff did not provide proper and admissible evidence to prove that he signed a fixed-term employment contract under pressure from officials of the defendant that his will at the time of the contract did not meet his internal will, or that he was not aware of the contract or was ill and sick. did not adequately evaluate his actions ”.
The Supreme Court in the case № 640/15491/19 in the decision of 04.03.2021 concluded that the courts correctly stated that the parties by paragraph 2 of Part 1 of Art. 23 of the Labor Code entered into an employment contract for a fixed period, established by their agreement, which could be extended only if the employment relationship lasted and neither party demanded their termination. However, the employer did not wish to renegotiate the employment contract with the plaintiff and issued a dismissal order within the timeframe established by law, paying the plaintiff a salary and compensation for unused leave.
The courts of previous instances came to the reasonable conclusion that since the nature of work, namely the length of the academic year and the number of students who can not be determined in advance, the employment relationship between the parties can not be established indefinitely, renegotiated fixed-term employment contract. fall under Part 2 of Art. 23 of the Labor Code, does not result in the employment contract becoming indefinite or concluded for an indefinite period, consistent with the position of the Supreme Court, set out in case № 725/2974/16 of 27.03.2019. The panel of judges of the court of cassation sees no grounds for deviating from the conclusion on the application of the rule of law in such legal relations, set out in the decision of the Supreme Court of 27.03.2019 in case № 725/2974/16.
The total training load of the plaintiff during his work as an assistant and his inclusion in the schedule of holidays for the 2018/2019 academic year does not affect the nature of the next job.
The courts also reasonably noted that the basis for concluding a fixed-term employment contract from 01.07.2018 between the parties was a statement of the plaintiff, in which he asked to enter into a fixed-term employment contract, then signed the contract and read the order № 215-k of 19 June 2018 and did not challenge them during the term of this agreement and the order, which testifies to the conclusion of a fixed-term agreement.
The plaintiff did not provide evidence of coercion by management to file this application.
Termination of the employment contract due to the expiration of its term does not require a statement or any expression of the will of the employee. He has already expressed his will to conclude a fixed-term employment contract when he wrote an application for employment under a fixed-term employment contract. At the same time, he expressed his will to terminate such an employment contract due to the expiration of the term for which it was concluded.
A similar legal position is set out in the decision of the Supreme Court of March 27, 2019, in case № 725/2974/16-ts (proceedings № 61-23868sv18).

Thus, the analysis of the above conclusions of the Supreme Court in cases of invalidation of the terms of the employment contract to determine its term shows that they are different, in particular, given the different nature of the plaintiffs’ professions and their activities.
Therefore, the case law once again shows that before signing an employment contract should pay attention to its main provisions, in particular regarding its duration, and analyze all the terms of such a contract for compliance with the law.
At the same time, analyzing the above positions, we can formulate the following conditions under which we can assume that the employment contract is concluded for an indefinite period:
there is no mention of the term of the contract in the application for employment and the order (disposition) of the employer on the employment of a person (position);
fixed-term employment contract concluded contrary to the rules of Art. 23 of the Labor Code.
Regarding the fictitiousness of the employment contract, the Supreme Court in its decision of 24.02.2021 in case № 757/46774/17 made the following conclusions: addressing the court with a claim, the plaintiff as a basis for his claims referred to the fact that signing an employment contract from 01.10. 2014 for the same position, but with a higher amount of basic and additional wages without issuing an order is not aimed at the occurrence of labor obligations, but to obtain illegal benefits.
In resolving the dispute, the court of the first instance, with which the appellate court agreed, proceeded from the fact that by Part 5 of Art. 203 of the CCU transactions should be aimed at the actual occurrence of the legal consequences caused by it.
According to Part 1 of Art.21 Labor Code employment contract is an agreement between an employee and the owner of an enterprise, institution, organization, or its authorized body or individual, under which the employee undertakes to perform work specified in this agreement, subject to internal labor regulations, and the owner of the enterprise, institution, organization or the body or individual authorized by him undertakes to pay the employee wages and provide the necessary working conditions for the performance of work, provided by labor legislation, collective agreement and agreement of the parties.
From the analysis of this rule of law, it is seen that the subject of the employment contract (contract) is the work (employment function) of a person who is the object of labor relations, which are fully regulated by labor law (in particular, Articles 3, 7, 9, 91, 44 of the Labor Code). The provisions of the CCU on the conditions of validity of the transaction and the legal consequences of the invalidity of the transaction are not applicable to regulate public relations arising in connection with the conclusion of an employment agreement (contract).
A similar conclusion was set out by the Supreme Court of Ukraine in its ruling on 24 June 2015 in case № 6-530tss15.
The Court of First Instance, with which the Court of Appeal agreed, having established the existence of an employment contract between the parties, which is governed by labor and special legislation, and the fact of concluding this contract in connection with the employment relationship came to the reasonable conclusion that concluded the contract is not a transaction within the meaning of Art. 202 of the CCU, which is covered by the provisions of Art. Art.203, 215 of this Code are general requirements for the validity of the transaction and which may be declared invalid (in particular, on the grounds of its fictitiousness) on the grounds provided by the CCU with the application of the consequences of its invalidity.
This conclusion is consistent with the legal opinion of the Supreme Court set out in the judgments of 05.09.2019 in case № 753/14887/17 (proceedings № 61-35601св18) and of 20.11.2019 in the case № 295/8991/17 (proceedings № 61-41341св18) in similar legal relations.
The arguments of the cassation appeal concern proving the circumstances under which the CCU establishes the fictitiousness of the transaction and the grounds for declaring it invalid, but the courts of previous instances refused to satisfy the claim due to the impossibility of recognizing the employment contract as fictitious. The cassation appeal does not contain arguments to refute the said conclusion of the courts of previous instances.
Therefore, given the case-law of the Supreme Court, the CCU provisions on the conditions of validity of the transaction and the legal consequences of the invalidity of the transaction are not applicable to regulate relations arising in connection with the employment contract.