Regardless of the fact that for many people in Ukraine “compliance” seems to be an incomprehensible foreign word, the national legislation has been using it for more than ten years, especially in the banking sector.
Perhaps the most fitting definition of “compliance” is contained in the Methodological Recommendations on Improving Corporate Governance in the Ukrainian Banks. The Recommendations describe compliance as “the need to know, understand and comply with all the requirements of Ukrainian legislation, norms, regulations and rules, internal policies, standards and codes related to the bank’s activities”.
By and large, such a definition, provided that the word “bank” is replaced by another type of organization, may also apply to companies that do not enjoy the status of banks.
Obligations and compliance
When addressed the matter of the terminology, it is worthwhile to say what specific documents may describe employees’ responsibilities and how such documents are related to compliance.
The main labor duties are established by Ukrainian labor legislation and, first of all, by the Labor Code of Ukraine. An important provision is contained in Article 9 of the Labor Code: the terms of employment agreements worsening the state of employees in comparison with the provisions of Ukrainian labor laws are deemed to be invalid.
The main document establishing the rights and obligations of the employer and the employee in relation to each other is an employment agreement. The definition of an employment agreement provided in Article 21 of the Labor Code of Ukraine, in particular, states that during the performance of his work an employee undertakes to follow the internal labor regulations.
Article 139 of the Labor Code of Ukraine defines the way how an employee is supposed to perform his work. He must “honestly and conscientiously, in a timely and accurate manner carry out the instructions of the owner or his authorized body, observe labor and technological discipline, requirements of labor protection acts, and carefully treat the property of the owner with whom such employee has entered into an employment agreement”.
Perhaps, the most proximal to the definition of “compliance” is the term “labor discipline”, which is provided in the Labor Code of Ukraine. According to the Model rules of internal work order for employees and officials of enterprises, institutions and organizations, violation of labor discipline is defined as “failure to perform or improper performance, due to an employee’s fault, of the labor duties assigned to such employee”.
The authors of one of the draft versions of the Labor Code of Ukraine (Draft Law No. 1658) take more complex approach to the issue which is related to the employees’ duties, devoting them an individual Article 21. The Article states that among the main duties of an employee are, among other things: personal and diligent fulfillment of his/her duties under an employment agreement; observance of labor discipline and rules of internal labor regulations, requirements of the employer’s regulations; other obligations stipulated by law, collective agreement, employment agreement with an employee or by the employer’s statutory act. The employer has the right to issue normative regulations in the field of labor by issuing orders, instructions, decisions, etc. The employer is obligated to bring the issued regulations to the attention of all its employees.
Although the Labor Code of Ukraine does not use the term “an employer’s internal statutory act”, it nevertheless refers to the orders, instructions and internal employer’s labor regulations, which are binding on the employees.
Therefore, we come to conclusion that the following conditions are mandatory for the operation of compliance rules:
– all employees’ duties must be fixed in writing as labor duties, and their violation must be determined as a violation of labor discipline. Obligations can be recorded in the constituent employer’s documents, the collective agreement, the internal labor rules, other regulatory acts of the employer (which may be referred to as the “compliance rules”, “corporate ethics code”, etc.), employment contract (contract) with a particular employee and, of course, in the legislation;
– all employees must be familiarized with the relevant job responsibilities against the signature;
– the employer must implement an effective mechanism (system), through which the rules of compliance could be implemented in practice.
Based on practical experience, the following main responsibilities and limitations in the field of compliance, which the employer seeks to put on their employees, may be listed:
– obligation to comply with the requirements of the legislation, employer’s constituent documents, orders, employer’s instructions or regulations;
– prohibition to carry out actions bearing the signs of corruption and receipt of unlawful benefits;
– prevention of conflicts of interests, including the restrictions as regards to working for competitors or engaging into entrepreneurship activities competing with the employer’s activities;
– refraining from the use of the employer’s resources for personal purposes;
– compliance with the requirements towards handling confidential information and commercial secrets;
– restrictions on political, public or religious activities with reference to the employer;
– avoidance of committing acts that may discredit the employer;
– fulfillment of requirements related to the employee’s look;
– meeting the requirements of the culture of communication and etiquette.
At the same time the degree of the possibility of enforcement of the above responsibilities and restrictions may be different.
Indeed, there is no doubt that the employee is obliged to comply with the requirements of the law or the employer’s instructions, as well as not engage into corruption. At the same time, the limitation of an employee’s right to work for another employer (within off-duty hours) may be interpreted as violation of the constitutional right to free choice of work, and the establishment of the rules for expressing a political or public position – as an offensive on freedom of speech.
Since the balance between “possible” and “impossible”, and between the “duty” and the “recommendation” regarding the above is very delicate, only an experienced lawyer who specializes in compliance issues is able to competently draw up documents containing the rules of compliance in such way as to establish the employees’ duties to the widest extent permitted by law, which are wished by the employer, as well as to minimize the risks of the employees’ rights violations for the employer.
Liability for the violations
In conclusion, we would like to note that in case of violation of compliance rules, which constitute a part of labor duties, an employee can be subjected to such measures of liability as punitive reprimand (Articles 147-152 of the Labor Code of Ukraine) or dismissal (subject to various grounds, depending on the specific situation provided Articles 36, 40 and 31 of the Labor Code of Ukraine). Additional measures include the establishment of conditions for the payment of bonuses (failure to comply with the requirements leads to non-payment of bonuses) and material, administrative and criminal liability in particularly serious cases.
Source: Yuridicheskaya Praktika