Businesses have identified the main drawbacks of reserving military conscripts under the new rules

As is known, recent amendments have been made to the regulations governing the mobilization and reservation process for employees..

In particular, there are inconsistencies between various regulatory acts that govern the reservation process. We have analyzed the most relevant questions and suggestions from Ukrainian businesses regarding reservation issues, as outlined below.

In the field of reserving conscripts, the following issues remain the most critical and require urgent resolution:

1. According to paragraph 63 of the Procedure for the Call of Citizens for Military Service during Mobilization, in a Special Period (approved by the CMU Resolution No. 560), the conscripts who apply to the territorial recruitment centers (TRCs) for a deferment are not sent for a medical examination to determine their fitness for military service until a decision is made by the relevant commission. However, considering that according to the same Procedure, the persons subject to reservation do not submit applications for deferment to the relevant commission, this provision does not apply to them. Therefore, paragraph 63 of the Procedure should be supplemented with a provision, according to which the conscripts undergoing the reservation procedure are not sent for a medical examination to determine their fitness for military service until the completion of this procedure.

2. According to paragraph 2 of the Procedure for Reserving Conscripts (approved by the CMU Resolution No. 76 of 27.01.2023, hereinafter — the “Reservation Procedure”), the reservation period for conscripts working in enterprises, institutions, and organizations that are critically important for the functioning of the economy and ensuring the livelihood of the population in a special period cannot exceed 12 months. However, this Reservation Procedure does not regulate the procedure for extending the reservation period. This situation leads to ambiguous interpretations of the Reservation Procedure’s provisions and complex bureaucratic procedures, resulting in counterproductive time losses for enterprises. We consider it necessary to supplement the Reservation Procedure for conscripts with a mechanism for automatic extension of the reservation for the employees of enterprises, institutions, and organizations that are critically important for the functioning of the economy and ensuring the livelihood of the population in a special period, in the event that the enterprise submits the corresponding application. 

3. The inability to reserve private entrepreneurs (FOPs), gig specialists, and employees of foreign non-governmental organizations implementing humanitarian projects funded by foreign and international partners. This issue is extremely relevant, and it is necessary to introduce appropriate amendments to the regulatory acts.

4. In the new version of the Reservation Procedure, the previously existing provision allowing for the reservation of 100% of company executives and their deputies is absent. We consider it necessary to reinstate this provision in the Reservation Procedure. It is also essential to provide the possibility of reserving conscripts working in positions which are mandatory in enterprises, institutions and organizations according to legislative requirements, even if such enterprises do not have critical status. For example, in joint-stock companies this includes management and control bodies personnel, as well as members of supervisory boards (in accordance with the Law of Ukraine “On Joint Stock Companies”). In enterprises operating under licensing conditions or authorization requirements this includes key management personnel, auditors and chief accountants, whose absence from the enterprise’s staff leads to sanctions from the state authorities up to license annulment and is classified as a high-risk activity.

5. The existing 50% quota deters employers from reserving employees due to fears of losing the other half of their working conscripts. It should be noted that reserving 50% of personnel does not solve the problem of ensuring the going concern of most enterprises. For the companies with an extensive branch system it is crucial to reserve a minimum number of personnel to ensure the critical staffing levels of each regional unit. The Reservation Procedure no longer includes a provision allowing for the submission of justifications to increase the number of reserved employees. We consider it necessary to reinstate this provision.

6. The reservation of enterprise executives should be excluded from the 50% quota. If an enterprise is designated as critically important, its executive must be guaranteed a deferment from conscription and should not be included in the 50% quota, as well. The enterprise executives are responsible for managing the enterprise, ensuring business quality, overseeing the workforce, making strategic and financial decisions and having access to all critical aspects of management, including the interactions with banks and investors, obtaining loans, making payments and more. Mobilization of the critically important enterprise’s executive could prompt foreign investors to close their business in Ukraine, leading to a loss of investment.

7. The Reservation Procedure does not provide for the sending of a reservation decision to enterprises. The Reservation Procedure does not specify the procedure for obtaining the Ministry of Economy’s decision on reserving conscripts for entities submitting the relevant lists. Therefore, paragraph 12 of the Reservation Procedure should be supplemented with a provision stating that, for the purpose of granting deferment to conscripts, the Ministry of Economy sends the reservation decision to the enterprises, institutions, and organizations that submitted the lists.

8. The TRCs ignore company requests and fail to enter data into the “Oberih” system. Currently, there is no accountability for failing to meet the deadlines for enrolling conscripts into the special military register by the TRCs. They often ignore company requests and fail to enter the relevant information into the Unified Electronic Register of Conscripts, Military Personnel, and Reservists “Oberih”, thereby making the reservation procedure impossible. As such, the Ministry of Defense should ensure that the information is entered and establish proper control over the entry of data regarding the enrollment in the special military register and the provision of deferment to reserved conscripts.

9. There is uncertainty about which TRC should enter the special register data. The Law on Mobilization Preparation and Mobilization places the responsibility for granting deferment to reserved conscripts on the employer, specifically at the TRC responsible for the employer’s area. Meanwhile, the Reservation Procedure places the responsibility for enrolling conscripts in the special military register on the TRCs where the conscript is registered already. Therefore, after the employer arranges the deferment for the reserved employee at the TRC in its area, it becomes necessary to approach the TRC of the conscript’s registration, as well. We propose resolving this issue so that businesses do not have to visit different TRCs, where they are required to obtain marks for special registration in the reservation extracts.

10. The e-Reservation Procedure stipulates that the formation of a notification is automatically terminated or its submission is blocked by the “Diia” portal if the information specified in the notification: is not confirmed by the information in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Formations; is provided incompletely; is inconsistent.

Therefore, this paragraph should be supplemented with a provision stating that from the moment the authorized person of the Ministry of Economy or a state body using the “Diia” portal enters the necessary, accurate, and complete information into the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Formations, the submission of the notification is unblocked and its formation automatically continues.

As we previously informed, an electronic reservation of conscripts has been launched on the “Diia” portal. Undoubtedly, the electronic reservation has significantly simplified the reservation procedure. Currently, the reservation process takes up to 15 minutes, and the result is received within one day. However, along with this, businesses have encountered a number of errors and inaccuracies in the state registers, including:

• The system includes in the total number of conscripts not only employees under labor contracts but also gig specialists and individuals providing services under civil law contracts. 
• The “Diia” portal provides the possibility to create a “reservation extract”, serving as a confirmation of the reservation. However, this functionality has not been launched yet and is still under development.
• The information about the employee is not always displayed in the “Oberih” registry extract in “Diia”, even though all the documents have been submitted to the Pension Fund, and the personal account has the relevant record of the main place of work.

 

In this regard, Ukrainian businesses call on the representatives of the Cabinet of Ministers and Parliament to take into account the aforementioned proposals and urgently make the necessary changes to the regulatory acts.

Please, contact the BDO in Ukraine specialists if you have any questions or need additional information regarding military record-keeping at your enterprise and employee reservation conditions. We are always ready to provide professional consultations and support in implementing current regulations and procedures.