Alexey Paliy, Managing partner, Attorney at law
at Primary Advisers LLC
Anastasia Bondarenko, Lawyer, attorney at law
at Primary Advisers LLC
Currently, the issue of reserving employees is one of the most pressing, as it creates the preconditions for mobilizing forces and resources and economic stability in times of war.
Regarding the categories of employees eligible for booking. Businesses currently have an urgent need to reserve their employees in order to support the economy of the entire country. Before covering this issue, it should be emphasized that the reservation of persons liable for military service during martial law is regulated by the Reservation Procedure provided for by the Resolution of the Cabinet of Ministers of Ukraine No. 76 dated 27.01.2023 “Some Issues of Implementation of the Provisions of the Law of Ukraine “On Mobilization Preparation and Mobilization” on Reservation of Persons Liable for Military Service for the Period of Mobilization and for Wartime” (hereinafter – the Procedure).
This Procedure defines 4 categories of entities subject to reservation and the corresponding mechanism for reserving such entities.
The first category includes entities working in state and local government bodies;
The second category includes entities working at enterprises, institutions and organizations that have been assigned mobilization tasks (orders);
The third category includes entities working at enterprises, institutions and organizations engaged in the production of goods, performance of works and provision of services necessary to meet the needs of the Armed Forces and other military formations;
The fourth category includes entities employed by enterprises, institutions and organizations that are critical to the functioning of the economy and the livelihoods of the population during a special period.
Regarding the specifics of booking employees. In fact, a small number of companies are able to book employees liable for military service, as the current booking procedure sets a number of restrictions, among other things:
– Reservation is generally possible for no more than 50% of the number of employees liable for military service. In case of exceeding the number of employees liable for military service, you will need to provide appropriate justifications in your application.
– Another feature is that persons under the age of 27 (except for those who have already served and/or received a military rank), i.e. conscripts, are not subject to reservation;
– A prerequisite for booking is that the employee who is liable for military service is registered for military service and that his/her credentials are verified.
– The main feature of employee reservation is that not all enterprises fall under the category of critical enterprises. A critical enterprise must meet at least three of the seven criteria set out in the Procedure. However, while the size of the average wage and the absence of unified social contribution arrears are generally available criteria, other criteria, including annual taxes of the equivalent of EUR 1.5 million and foreign currency revenues exceeding the equivalent of EUR 32 million, are unattainable for small and most medium-sized enterprises, although they make a significant contribution to the economic stability of the state.
Regarding the risks of booking employees. In this case, every employer who plans to book his/her employees must, firstly, fall under the criteria of critical importance, and secondly, correctly draw up, justify, and submit the necessary documents for booking, since due to minor discrepancies either in the statements of justification or in the list of persons liable for military service offered for booking, they may not be accepted. For example, if an employer tries to book his/heremployees, the employer must make sure that the employees are registered for military service and meet the criteria of persons liable for military service, and only then prepare lists, applications, and certificates of the number of persons liable for military service, because in the absence of the necessary documents or discrepancies in the documents, the employer will unfortunately be denied the reservation. And in this case, the employee may be mobilized while the employer is correcting the deficiencies.
It should be understood that temporary reservations in accordance with the Procedure are provided for up to 6 months, with the possibility of extension for 2 months, and then the possibility of re-booking. It is more common to re-book an employee than to extend the booking period. Employers should understand that there are circumstances that may shorten this period, for example, if the company has completed the mobilization task in 1 month, then in this case the reservation is canceled and a situation arises where previously booked employees may be mobilized.
Another risk the employer may face is that some military specialties are in short supply, and therefore the relevant employees will not be subject to reservation. The list of such specialties is set out in the letter of the General Staff of the Armed Forces of Ukraine dated 20.04.2023 No. 300/1/C/3886 . Another major risk factor for employers is the absence of an employee’s military specialty. However, according to the latest changes, these risks do not apply to those employees who are booked by the Ministry of Strategic Industries.
Summarizing the above, while other grounds for postponement of mobilization provided for in Article 23 of the Law of Ukraine “On Mobilization Preparation and Mobilization” are more permanent, the reservation of employees is, in a way, a temporary right to postpone mobilization. In view of the above, it is necessary to be as careful as possible in preparing the necessary documents for submission for reservation and especially to have the prospect of maintaining the status of a “critical enterprise” so that in the future the employer can reserve an employee for a certain period to perform the tasks assigned to him/her.
Due to the complicated and not entirely transparent reservation procedure, many enterprises, although they meet the criterion of importance for the state economy or the budget of a particular territorial community, do not dare to submit documents for reservation, as they are aware of the existing risks. Attempts by representatives of the Parliament, the Cabinet of Ministers and other relevant government agencies to amend the existing reservation procedure to bring it in line with its purpose, namely, to mobilize forces and resources to repel the aggressor, while ensuring economic stability and economic development of the state, are encouraging.