The key aspects of the Law of Ukraine on control of the business activity! 

4.06 2019

As it is known, on 14 May, 2019 the Sixth Administrative Court of Appeal of Kyiv cancelled Ruling No.295 which regulated a procedure of on-site inspections and inspection visits by the State Labour Service of Ukraine.  So, as of now, the Service is entitled to inspect within the scope of the general procedure defined by the Law of Ukraine “On main principles of state supervision (control) in the business sphere” of 05.04.2007, No. 877-V.

Let us review the key points of this Law:

  • Accomplishment of by the state supervision (control) inspections by various state supervision (control) bodies regarding one and the same issue is prohibited.
  • Scheduled and out-of-schedule inspections are to be performed during the working hours of a business which is set up by its internal labour regulations.
  • The state supervision (control) authorities and businesses are entitled to record the process of the scheduled and out-of-schedule inspections by means of audio and video equipment.
  • While performing the state supervision (control) inspections it is prohibited to withdraw originals of the financial, business, accounting and other documents from businesses as well as their computers an their parts, except for the instances stipulated by the law on criminal procedure.
  • A scheduled or out-of-schedule measure that concerns a business, which is a legal entity, should be conducted in the presence of the manager or the person authorized by the manager.
  • Before proceeding to the supervision (control) inspections the authorized person of the state supervision (control) body is to make an entry in the logbook of the state supervision (control) inspections (provided the business has such logbook).
  • During and after the state supervision (control) inspections the officials of the state supervision (control) body are obligated to preserve commercial secrets and confidential information of the enterprise.
  • When performing the state supervision (control) inspections the officials of the state supervision (control) body are obligated to use the unified forms of the acts only (until now the State Labour Service has not yet approved them).
  • Scheduled inspections are performed in accordance with the annual plans that are approved by a state supervision (control) body before 1 December of the year preceding the planned one.
  • The state supervision (control) bodies implement scheduled inspections on state supervision (control) provided they have preliminary notified a business about such scheduled measure at least 10 days before the day of implementing such measure (by registered letter and/or hand delivery).
  • Duration of then scheduled measure may not exceed 10 working days, and in case of micro- and small enterprises – 5 working days. Out-of-schedule inspections may not be longer than 10 working days, and, as regards, small enterprises – 2 working days. No extension of the inspection period allowed!
  • Before proceeding to an inspection the officials of the state supervision (control) body have to produce their order and service certificate to the business manage, and hand him a copy of the order.
  • The results of the inspection are finalized in the act and directions (within 5 working days after the inspection) describing elimination of the violations revealed during the inspection. If there are grounds for a full or partial suspension of production, sales of products, provision of services, etc., the appropriate claim is filed with the administrative court.

The grounds for the out-of-schedule inspections are:

  • submission of a written application by a business entity requesting an inspection by the state supervision (control) body;
  • identification and confirmation of unreliable data in the statutory report document;
  • checking how a business entity fulfilled the directions regarding elimination of violations of the legislation that have been issued by the results of the inspection;
  • application of an individual (individuals) concerning violations that have impaired his/their rights lawful interests, life or health, etc. attached with documents or their copies that confirm such violations (if any);
  • non-presentation of the statutory report documents for two successive reporting periods by a business entity without acceptable reasons or without submitting a written explanation of the reasons that precluded submission of such documents;
  • order of the Prime Minister of Ukraine to perform inspection of business entities working in the appropriate sphere in connection with the detected systematic violations;
  • occurrence of an emergency, death of the injured as a result of accident or professional disease which resulted from the activity of the business entity.

Should the directions be fulfilled timely and in full, the financial and administrative sanctions, the measures applied to the business and its officials are not applicable!

The instances when the inspectors may not be allowed to inspect:

  • if the inspectors have no service certificates and orders (together with a copy of the latter) issued in compliance with the legal requirements;
  • if no message about the scheduled inspection was not received or if a copy of the approval of the Ministry of Social Policy for an out-of-schedule inspection was presented;
  • if the period of inspection exceeds the periods stipulated by Law No.877;
  • if the requirements concerning the intervals between inspections have not been observed (high risk of business activity – not more than once in 2 years; medium risk – not more than once in 3 years; and low risk – not more than once in 5 years);
  • if the inspectors did not make the entry concerning the inspection in the inspection logbook;
  • if there is a repeated out-of-schedule inspection referring to the same fact.

Therefore, we warn businesses and ask them to be more attentive, know their rights and, if necessary, invite qualified attorneys to protect their interests and assist them during inspections.