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(Aug 02, 2013) On July 1, 2013, a set of amendments to Ukrainian laws on retirement and other social benefits entered into legal force. (Law of Ukraine on Introduction of Amendments to Some Laws of Ukraine Regarding Awarding and Indexation of Pension [in Ukrainian], No. 231-VII [hereinafter Law No. 231-VII] (May 14, 2013),Verkhovna Rada [Ukraine's parliament] website.) Most of the amendments affect the Law of Ukraine on Obligatory State Pension Insurance (Law No. 058-IV [in Ukrainian] (July 9, 2003), Verkhovna Rada website) and change the procedure for the allocation of the funds of the pregnancy and childbirth allowance for women on maternity leave.

After the amendments became effective, the recipients of the allowance were recognized as insured for purposes of the state pension insurance (id. art.1 § 2). As a result, working women and their employers will have to make certain contributions to the system of obligatory state social insurance, which covers pension insurance. Under the currently applicable law, working Ukrainian women are required to pay 2% of the amount of the pregnancy and childbirth allowance to the state budget, while their employers will contribute 33.2%. (Law on Unified Social Security Contribution, art. 10 § 6 [in Ukrainian], No. 2464-VI (July 8, 2010), Verkhovna Rada website.)

At present in Ukraine, women are entitled to 126, or in some cases to 140, days of paid maternity leave, during which time they receive 100% of their earned income. (Labor Code of Ukraine [in Ukrainian], No. 322-VIII (Dec. 10, 1971), art. 179, Verkhovna Rada website.) Prior to the July 2013 legislative changes, the cost of the monetary maternity benefits was covered by the government, but the maternity leave period was not counted when the employee's seniority and length of service were calculated.

The purported goal of the legislators was to include the duration of the 126-day maternity leave in the length of service, with the costs covered through the social insurance contributions paid by the employee and her employer. (Explanatory Note to the Draft Law [No. 231-VII] [in Ukrainian] (Dec. 18, 2012), Verkhovna Rada website.)

However, it appears that in Ukraine, characterized by some observers as a country with "a high level of employment discrimination based on gender and family status," this legislative amendment may instead lead to a reduction of pregnant women's official salaries, an increase in the shadow economy, and women becoming less competitive in the labor market in general. ("Pregnancy Tax" Will Increase Shadow Economy by Ten Percent, [in Russian], POSLEZAVTRA (July 17, 2013).) Experts therefore say that implementation of the new Law will result in companies not hiring women or firing them in violation of statutory anti-discrimination provisions. (Tax on Maternity Benefits: Discrimination Against Women and Shadowing of Wages [in Russian], UBR (July 23, 2013).)

Prepared by Svitlana Vodyanyk, Law Library of Congress intern, under the supervision of Peter Roudik, Director of Legal Research.

Author: Peter Roudik More by this author
Topic: Employee benefits More on this topic
 Taxation More on this topic
 Families More on this topic
Jurisdiction: Ukraine More about this jurisdiction

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Last updated: 08/02/2013