The Employment Contract In IT

Activities in the field of information technology are profitable and relevant now. It is not difficult to start up an IT company in Ukraine, but doing IT business could cause a complexity and confusion. One of the difficult issues is the formalization of labor relations with employees. Unfortunately, the Ukrainian labor law consists of many Soviet laws that do not meet modern realities and cause difficulties in practice.
Usually between employer and employee concludes an employment contract. Under Article 21 of Labor Code of Ukraine the employment contract is an agreement entered into between the employee and the owner of enterprise, institution or organization or authorized by him/her body or individual according to which the employee shall undertake to perform work determined in this agreement subject to observance of internal regulations, and the owner of enterprise, institution or organization or authorized by him/her body or individual shall undertake to pay the employee salary and provide working conditions required for performance of work as prescribed by labor legislation, collective contract and agreement of the parties.
Often IT sector employees would like to work distantly. However, the question of distance work is not actually resolved in Ukraine. The valid legislation provides for the possibility of homework only. According to p. 1 of Regulation on working conditions of homeworkers (approved by State committee of the labor №275/17-99 of 29/09/1981) homeworkers are persons who have signed an employment contract to work personally at home and use materials and tools that were purchased by the employer. The labor laws apply to homeworkers. The work of homeworkers usually involves production of consumer goods, provision of certain services to citizens and enterprises. Unfortunately, the Regulation on working conditions of homeworkers is already outdated and ignores current realities. Therefore the question of distance worker should be regulated by the employment contract.
Another important issue for workers in the IT sector is flexible working hours, when the employee can freely choose the start and the end of working hours during the day. Studies confirm the effectiveness of flexible work schedule establishment; because it allows the employee to independently organize its working mode, while successfully solving their personal or family issues. Instead, the regulation of flextime is not as exciting as the expectation of the establishment of that mode for the employee. In the Labor Code of Ukraine there is no any provisions for the flexible working schedule, but only provides the possibility of its establishment through fixing in internal regulations or collective agreements the beginning and ending time of daily work both for a company and for certain categories of workers (Art. 57 of the Labor Code), the division of working day into parts (Art. 60 of the Labor Code), break for rest and meal (Art. 66 of the Labor Code).
The main act, which regulates flexible working schedule if Guidelines for the establishment of a flexible mode of work, approved by the Ministry of Labour and Social Policy of Ukraine of 04.10.2006 p. №359. The employee’s working time according to the flexible mode is divided into three components: 1) a fixed time – a time when the employee must be at work and perform his/her direct functions; 2) variable time – a time when an employee can start and finish his/her working day at his/her discretion; 3) a break for rest and meal, which can range from 30 minutes till 2 hours (this time an employee uses at its discretion and may be absent in the workplace). An obligatory condition for flexible mode of work is the implementation of working hours in accordance with the established accounting period. The accounting period may be a day, week, month, quarter, and so on. Flexible working time mode can be set in the employment contract and be formed as the order of the employer.
If you have any question about the employment contract in the IT sector, feel free to contact us.]]>

The Employment Contract In IT
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A new law on virtual assets: the picture is formed, but without details. On September 8, 2021, the Verkhovna Rada has finally adopted the long-awaited law "On Virtual Assets", which clarified many ambiguous points. This is especially true for the status of cryptocurrency and the rules of its circulation in the country. Let`s take a closer look at novelties. An ambiguous term Let's start with what the legislator actually means by "virtual assets". There are the following features:  they are an intangible good (cannot be represented on tangible media)  fall under the list of objects of civil rights (that is, they can be owned and be disposed of)  represent an electronic form of a set of data (essentially, they are blocks of information put in order);  the existence and circulation of assets are due to software tools (specific electronic environment). From these features we can draw the following conclusion: virtual assets are not limited to cryptocurrency. Digital currency is part of the concept, but other instruments, such as tokens, NFTs, or even in-game items, fall under the definition. Actually, the actual existence of most digital products, having a certain value, is due to the software environment (ecosystem), either it is blockchain technology, a trading platform, or an online game server. It should be noted that the attempt to define virtual assets was already made in the adopted Law of Ukraine in counteracting money laundering. In this act, they understand it as digital means of payment, which goes against the new definition. As a result, there are now two different explanations for virtual assets, which causes significant confusion not only in regulation but also in interpretation. It is definitely necessary to expect clarifications from competent state bodies. Let's return to the new law. Its application covers legal relations in which the "Ukrainian element" is present:  provider or recipient of services represented in Ukraine;  an agreement according to which the turnover of virtual assets is carried out in accordance with Ukrainian legislation;  the acquirer of assets (or both counterparties) is a resident(s) of Ukraine. The law also introduces an interesting division of all virtual assets into two groups: secured and unsecured. Here again, there is a problem of interpretation. The first category includes products exchanged for (state) currency, the second category includes instruments that can be exchanged only for other digital assets. There is an alternative opinion: that the turnover of secured assets is supported by real goods (money or other property), while unsecured ones are not supported by anything. The latter interpretation is the most credible, as the new law stipulates that virtual assets are NOT means of payment. Moreover, they cannot be exchanged for real goods, be they property, services or money. This significantly narrows the potential for the use of virtual assets not only for commercial but also for civilian purposes. About obligatory licensing The new law states that in some cases, the use of virtual assets will require licensing. The 4 types of activity are mentioned:  storage and management of virtual assets (or its` keys)  servicing of exchange operations with virtual assets (both for other analogues and for real goods);  translation of digital assets;  any intermediary services. A list is quite impressive, but there are some important exclusions:  if your service works with cryptocurrency wallet (it means users can dispose of accumulations into cryptocurrency independently);  If your service works on smart contracts or decentralized protocol, based on which internal transfers are performed. As to intermediary services, everything is more compicated. Actually, any mediation is based on the public share offering. That is why it is subject to licensing. How to get a license? A company that wishes on legal grounds to engage in virtual assets must satisfy legislative requirements. The key role is played by the minimum amount of the statutory capital, which equals 1,19 million hryvnyas (for non-residents it is 5,95 million hryvnyas) in case of storage and administration. For other types of activity (trading, translation and mediation services) the minimum size of the statutory capital amounts to 595 thousand hryvnyas (for non-residents is 2,98 million hryvnyas). The order of the registration of license:  to compose an application and prepare documents.  to pay state fee (68-136 thousand hryvnyas for residents and 340-680 thousand hryvnyas is for non-residents).  to pend review of the request (30 days).  to get a license. The duration of the license is 1 year. 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The adoption of the law by the parliament is a significant step forward in adjusting and legal market of virtual assets creation in Ukraine. However, the new rules haven`t come into effect yet - their term of introduction depends on making amendments in the Internal Revenue Code. It is yet unknown, when a legislator will decide to enter the renewed system of taxation for such assets. Being "IT-hub" and territory, where cryptocurrency enjoys large popularity, the question of taxes must be decided maximally safely. Despite the presence of obvious gaps in interpretation, a new law on virtual assets gives the official narrative of what takes place and that, how the legal relationships related to cryptocurrency will be regulated. It is to be hoped that in the nearest time the Ministry of digital information will give out the detailed explanations concerning debatable norms.

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