The material was prepared by lawyer Anastasia Yakimova, member of the Center for Labor Law and Social Security of the Higher School of Advocacy of the National Academy of Ukrainian Bar Association, member of the Committee on Civil Law and Procedure of the National Academy of Ukrainian Bar Association .
Typically, the head of the HR department is responsible for maintaining personnel records at the enterprise, and it is this employee who is responsible for the correctness of personnel records management and compliance with labor legislation. However, the head of the HR department is not always the only responsible person.
I propose to consider the legal position of the Supreme Court of Ukraine in case No. 663/1169/20 (Resolution of July 12, 2023) regarding the material liability of the manager in the event of illegal dismissal of employees.
The circumstances of the case
The defendant held the position of head of the Mykolaiv branch of the State Enterprise “USPA” (Mykolaiv Sea Port Administration). On November 1, 2017 and February 1, 2018, he issued orders to dismiss employees from their positions, respectively, in connection with staff reductions on the basis of paragraph 1 of part one of Article 40 of the Labor Code of Ukraine .
Subsequently, the specified orders were canceled in court, the dismissal of the employees was recognized as illegal, they were reinstated in their previously held positions, and the Mykolaiv branch of the State Administrative Service of Ukraine (USPA) paid the appropriate funds in their favor.
The plaintiff referred to the relevant provisions of the Labor Code of Ukraine , in particular:
-
Article 130, which defines the general grounds and conditions of material liability of employees;
-
Article 134, which provides for cases of full material liability;
-
Article 237 of the Labor Code of Ukraine , which regulates the imposition of material liability on an official guilty of the illegal dismissal or transfer of an employee.
Taking into account the above, the State Enterprise “USPA” requested the court to recover from the Defendant in its favor material damage in the form of recourse, caused as a result of the illegal dismissal of PERSON_2, in the amount of UAH 271,419.97, and as a result of the illegal dismissal of PERSON_3, in the amount of UAH 202,827.19.
Position of the Supreme Court of Ukraine
According to paragraph 8 of part one of article 134 of the Labor Code of Ukraine, employees are liable for the full amount of damage caused
due to their fault to the enterprise, institution, organization, in cases where an official is guilty of the illegal dismissal or transfer of an employee
for another job.
Article 237 of the Labor Code of Ukraine stipulates that the court shall impose on an official guilty of unlawful dismissal or transfer of an employee to another job the obligation to cover the damage caused to the enterprise, institution, or organization in connection with payment to the employee for the time of forced absenteeism or the time of performing lower-paid work. Such an obligation shall be imposed if the dismissal or transfer occurred in violation of the law or if the owner or an authorized body delayed the execution of the court decision on reinstatement.
According to the explanations of the Plenum of the Supreme Court of Ukraine provided to the courts in paragraph 33 Resolution No. 9 of November 6, 1992 “On the practice of considering labor disputes by courts”, in case of illegal dismissal or transfer to another job, failure to implement the decision to reinstate the employee, which occurred after the entry into force of paragraph 8 of part one of Article 134 and the new wording Article 237 of the Labor Code of Ukraine (from April 11, 1992), the officials guilty of this come under full material liability and the obligation to cover the damage caused to the enterprise, institution, organization in connection with paying an employee for time of forced absenteeism or time of performing lower-paid work may be imposed if they commit any violation of the law in these cases, and not only an obvious one, as was previously provided for.
According to paragraph 13 of the Resolution of the Plenum of the Supreme Court of Ukraine dated December 2, 1992 No. 14 “On Judicial Practice in Cases on Compensation for Damage Caused to Enterprises, Institutions, and Organizations by Their Employees”, applying material liability in the full amount of damage on the basis of paragraph 8 of part one Article 134 of the Labor Code of Ukraine, courts must bear in mind that under this law, the obligation to compensate for damage caused to an enterprise, institution, or organization in connection with the payment to an illegally dismissed or illegally transferred employee for time spent on forced absenteeism or time spent performing lower-paid work is imposed on guilty officials by whose order or direction the dismissal or transfer was carried out in violation of the law or by whom the execution of a court decision on reinstatement was delayed; liability in these cases arises regardless of the form of fault.
In the case under review by the Supreme Court, the appellate court, overturning the decision of the court of first instance and partially satisfying the claim of the state-owned enterprise, having given due legal assessment to the parties and the evidence requested by the court, including the Regulations on the Mykolaiv branch of the State Enterprise “USPA”, proceeded from the fact that only the head of the branch has the right to issue orders to dismiss employees, he is obliged to ensure compliance with labor legislation and bears personal responsibility for the illegal dismissal of employees.
At the same time, the court of appeal assessed the circumstances established by the courts during the resolution of case No. 487/950/18 and case No. 487/6338/17, in which the courts established the fact of the illegal dismissal of PERSON_2 and PERSON_3 by order of PERSON_1 as the head of the branch of the enterprise.
In accordance with Part Four of Article 82 of the Code of Civil Procedure of Ukraine, circumstances established by a court decision in a commercial, civil or administrative case that has entered into legal force are not proven when considering another case in which the same persons or the person in respect of whom these circumstances were established participate, unless otherwise established by law.
Prejudicial facts are facts established by a court decision or verdict that has entered into legal force.
Prejudiciality is based on the legal property of the legal force of a court decision and is determined by its subjective and objective boundaries, beyond which the parties and other persons who participated in the case, as well as their successors, cannot again challenge in another process the legal relations established by the court decision in such a case.
Subjective limits are the fact that the same persons or their legal successors, or at least one person in respect of whom these circumstances have been established, participate in two cases. Objective limits concern the circumstances established by the court decision.
Prejudicial circumstances do not require proof if the following conditions are simultaneously met: the circumstance is established by a court decision; the court decision has entered into legal force; the same persons who participated in the previous case, or at least one person in respect of whom these circumstances were established, participate in the case.
The circumstances established by the court decision, that is, those circumstances regarding which there was a dispute and which were the subject of judicial review, do not require proof. The court’s assessment of specific circumstances of the case that were not disputed by the parties, the reasons for the court decision, the legal qualification of the disputed relations do not have a prejudicial value. Those facts, the presence or absence of which a dispute arose, and which, in particular, are specified in the operative part of the decision, may have a prejudicial value.
The Grand Chamber of the Supreme Court in its resolution of July 3, 2018 in case No. 917/1345/14 (proceedings No. 12-144гс18) noted that the preliminary significance in the case is given to the circumstances established by the court decision, and not to the legal assessment of such circumstances carried out by another court. Only decisions in a case involving the same persons or persons in respect of whom these circumstances were established have a preliminary significance. The preliminary significance is formed only by those circumstances that were directly investigated and established by the court, which was reflected in the motivational part of the court decision. The preliminary facts differ from the assessment of the circumstances of the case by another court. The Supreme Court agrees with the assessment of the court of appeal of the preliminary circumstances established during the consideration of the above-mentioned cases by the courts.
In particular, the decision of the Zavodsky District Court of Mykolaiv dated June 21, 2019 in case No. 487/6338/17, left unchanged by the resolution of the Mykolaiv Court of Appeal dated December 5, 2019, established the fact of the illegal dismissal of PERSON_3 by order of the defendant.
The decision of the Zavodsky District Court of Mykolaiv of February 22, 2019 in case No. 487/950/18, left unchanged by the resolution of the Mykolaiv Court of Appeal of April 25, 2019, established the fact of the illegal dismissal of PERSON_2 by order of the defendant.
At the same time, the court decisions of the courts of previous instances in case No. 487/950/18 were left unchanged by the resolution of the Supreme Court composed of the panel of judges of the Second Judicial Chamber of the Civil Court of Cassation dated December 11, 2019 (proceedings No. 61-9775св19).
According to Part One of Article 6 of the Law of Ukraine “On Access to Court Decisions”, everyone has the right to fully or partially reproduce court decisions pronounced by a court in public, in any way, including through publication in printed publications, in the media, and the creation of electronic databases of court decisions.
When conducting legal proceedings, the court may use only the text of a court decision that has been officially published or entered into the Unified State Register of Court Decisions (Part Three of Article 6 of the Law of Ukraine “On Access to Court Decisions” ).
The fact of illegal dismissal of employees has been established by the courts and indicates the guilt of the person authorized to dismiss employees.
Thus, PERSON_1, as an official who issued orders to dismiss employees, which were subsequently recognized as illegal and canceled in court, bears full material liability for the damage caused to the enterprise in connection with the payment of average earnings to illegally dismissed employees during forced absenteeism.
Taking into account the above, the court of appeal made reasoned conclusions on the partial satisfaction of the state-owned enterprise’s claim for compensation for material damage in the amount of average earnings during forced absenteeism – UAH 334,479.30 (UAH 206,104.80 + UAH 128,374.50), which were collected by court decisions from the enterprise and paid in favor of the dismissed employees.
The arguments of the cassation appeal in this part are refuted by the case materials and are mainly aimed at re-evaluating the evidence, which is beyond the powers of the cassation court.
In this case, the obligation to compensate for the damage caused to the enterprise in connection with the payment of the time of forced absenteeism to an illegally dismissed employee is imposed on the guilty officials, by whose order or instruction the dismissal was carried out in violation of the law. Liability in these cases arises regardless of the form of fault.
The above refutes the reference in the cassation appeal that PERSON_1’s guilt in causing material damage to the enterprise has not been proven, as well as that other persons who participated in the dismissal of employees, in particular, prepared and approved the dismissal orders, are responsible for the illegal dismissal of employees.
Similar legal conclusions are set forth in the Supreme Court’s resolution of January 22, 2021 in case No. 332/832/18 (proceedings No. 61-3858св19).
When selecting and applying a rule of law to a disputed legal relationship, the court takes into account the conclusions on the application of the relevant rules of law set out in the resolutions of the Supreme Court (Part Four of Article 263 of the Code of Civil Procedure of Ukraine ).
Taking into account the above, the Supreme Court rejects the reference in the cassation appeal to the absence of a conclusion of the Supreme Court on the issue of the application of paragraph 8 of part one of Article 134 of the Labor Code of Ukraine in similar legal relations.
The court of appeal, when resolving the dispute, correctly applied the relevant norms of the Labor Code of Ukraine , and the judicial practice of the Supreme Court regarding their application is stable and established.
The arguments of the cassation appeal in this part are reduced to disagreement with the ruling of the court of appeal, which cannot be a legal basis for its annulment.
The panel of judges believes that, pursuant to the provisions of Part Three of Article 89 of the Code of Civil Procedure of Ukraine, the court of appeal comprehensively, completely and objectively assessed both the evidence collected in the case as a whole and each individual piece of evidence, and the grounds for their consideration or rejection are motivated. Other arguments given in support of the cassation appeal cannot be grounds for overturning the court decision of the court of appeal, since they are not confirmed by the case materials and amount to a reassessment by the court of evidence, which, pursuant to the requirements of Article 400 of the Code of Civil Procedure of Ukraine , is not within the competence of the court of cassation.
Taking into account the above, the panel of judges considers it necessary to leave the cassation appeal unsatisfied, and the ruling of the court of appeal unchanged, since the arguments of the cassation appeal do not refute the conclusions of the court of appeal and do not affect the legality and validity of the court decision.
🔗 The full text of the resolution can be found at the link: https://reyestr.court.gov.ua/Review/112174989 .