New Rules for Recognising Enterprises as Critical
The government has announced a large-scale update to the rules for designating enterprises as critical and for reserving employees. This concerns amendments to Resolution of the Cabinet of Ministers of Ukraine No. 76 of 27 January 2023, 'Certain Issues of Implementing the Provisions of the Law of Ukraine "On Mobilisation Preparation and Mobilisation" regarding the Reservation of Those Liable for Military Service During Mobilisation and Wartime.'
It is important to note that, at present, the updated wording of Resolution No. 76 has not yet been published; however, the Ministry of Economy, Environment and Agriculture of Ukraine has already officially announced that the Cabinet of Ministers of Ukraine has adopted a decision aimed at refining the reservation system for critical enterprises.
What Are the Main Changes Awaiting Business and What to Prepare For:
- The salary criterion will be increased
In the current wording of Resolution No. 76, one of the criteria for recognising an enterprise as critical is the level of the average salary of its employees. For the last calendar month, it must be no less than the minimum wage multiplied by a coefficient of 2.5, i.e. UAH 21,617.50. Hereafter we round this figure up to UAH 21,618.
According to the Ministry of Economy, the new salary level for confirming an enterprise's criticality must be no less than the minimum wage multiplied by a coefficient of 3, i.e. UAH 25,941.
Thus, the salary-criterion requirement will rise by 20% — UAH 4,324. Enterprises wishing to retain critical status and the ability to reserve employees will need to check in advance whether they meet the new bar and, if necessary, review their pay levels.
At the same time, for enterprises operating in front-line territories, the Ministry of Economy has announced a more flexible approach. For them, the current salary requirement remains unchanged, i.e. at the level of UAH 21,618. This concerns territories specified in the order of the Ministry for the Development of Communities and Territories of Ukraine.
- The reservation quota will be clarified
Currently, when reserving employees at most critical enterprises, the baseline reference for determining the number of employees who may be reserved is a share of the number of employees liable for military service. That is why the total number of employees liable for military service directly affects how many people an enterprise may reserve.
The Ministry of Economy has announced that the government has clarified the rules for counting employees towards the reservation quota. That is, employees who already have a deferral from conscription under Article 23 of the Law of Ukraine 'On Mobilisation Preparation and Mobilisation,' as well as part-time employees, are to be counted towards the quota at only one place of work. The logic of this change is clear: if an employee works at several enterprises, they should not be used to increase the reservation quota at each of them; however, the precise mechanism by which such employees will be counted can only be assessed after the full text of the amendments to Resolution No. 76 is published.
- The sector-specific criteria of ministries and military administrations will be reviewed
According to the Ministry of Economy, ministries, central executive authorities, and regional military administrations must re-approve their own criticality criteria within one month.
This means that the changes will not be limited to a formal increase in the salary threshold. In effect, the entire system of sectoral and regional criteria by which enterprises are recognised as critical in the relevant fields or regions must be reviewed.
The Ministry of Economy noted that, within three months of the amendments taking effect, the status of all enterprises already designated as critical by the relevant authorities must be reviewed. During this review, an enterprise's criticality, together with reservation, will be retained.
However, once the review is complete, if an enterprise does not meet the updated criteria, it may lose critical status, which will in turn affect the ability to reserve employees going forward. According to Ukrinform, Minister Oleksii Sobolev also noted that companies that do not pass the updated criteria by the end of summer may be stripped of critical status.
Conclusion
The announced changes indicate a tightening of the requirements for enterprises to be designated as critical. The main emphasis is on three things: raising the salary threshold, preventing the formal inflation of the quota through part-time workers or employees with other types of deferral, and re-reviewing the sector-specific criteria of ministries and military administrations.
Final conclusions can be drawn only after the text of the amendments to Resolution No. 76 and the updated orders of the relevant authorities are published. Even now, however, enterprises should assess their compliance with the new salary threshold, check for employees liable for military service who work part-time or who already have a deferral under Article 23 of the Law of Ukraine 'On Mobilisation Preparation and Mobilisation,' and prepare to re-confirm their criticality under the updated criteria.