Limitation of average earnings accrual for delayed settlement to six months, introduced to Article 117 of the Labour Code of Ukraine after July 19, 2022, applies to legal relations that arose before July 19 and continued after that date – SC GC

For legal relations that arose before the entry into force of the Law of Ukraine dated July 1, 2022 No. 2352-IX “On Amendments to Certain Legislative Acts of Ukraine on the Optimization of Labour Relations”, but which did not terminate or terminated after its entry into force (continuing legal relations), the provisions of Article 117 of the Labour Code of Ukraine in the new version shall apply from July 19, 2022, limiting the accrual of average earnings for the period of delay in settlement to six months.

This conclusion was reached by the Grand Chamber of the Supreme Court.

According to the circumstances of the case, in August 2021 the claimant was dismissed by order of the State Enterprise from the position of Deputy Director for Legal Affairs due to a reduction in the number of staff. On the day of dismissal, the enterprise did not make a full settlement with him. By court decision, the debt on wages was recovered in favour of the claimant, which the defendant paid in July 2023. In connection with this, the claimant filed a lawsuit to recover average earnings for the period of delay in settlement upon dismissal.

The court of first instance refused to satisfy the claim. The court of appeal overturned that decision and partially satisfied the claim, stating that the failure to make a settlement with the employee through the fault of the owner or the body authorized by him within the specified time limits is grounds for payment to the employee of his average earnings for the entire period of delay until the day of actual settlement, in accordance with Article 117 of the Labour Code of Ukraine.

The panel of judges of the Civil Cassation Court of the Supreme Court referred the case to the Grand Chamber of the Supreme Court due to the need to deviate from the conclusion set out in the resolution of the Administrative Cassation Court of the Supreme Court dated December 6, 2024, in case No. 440/6856/22, regarding the recovery of average earnings for the period of delay in settlement, taking into account the amendments introduced by the Law of Ukraine dated July 1, 2022 No. 2352-IX “On Amendments to Certain Legislative Acts of Ukraine on the Optimization of Labour Relations” (entered into force on July 19, 2022).

When reviewing the court decisions, the Grand Chamber of the Supreme Court noted that the peculiarity of the amendments introduced by Law No. 2352-IX is that the previous version of Article 117 of the Labour Code of Ukraine did not contain a six-month limitation on the recovery of average earnings for the entire period of delay until the day of actual settlement.

In other words, the above changes mitigate the employer’s liability for improper performance of the obligation to make a full settlement upon dismissal of an employee.

The Constitutional Court of Ukraine, in its Decision dated February 9, 1999, No. 1-7/99, established that the provision of Part 1 of Article 58 of the Constitution of Ukraine concerning the retroactive effect in time of laws and other normative legal acts in cases where they mitigate or abolish the liability of a person applies to natural persons and does not extend to legal entities.

Accordingly, the Grand Chamber of the Supreme Court concluded that the mitigation of liability provided for by Law No. 2352-IX cannot be applied to the employer – a legal entity. Therefore, the new version of Article 117 of the Labour Code of Ukraine cannot be applied to legal relations that arose and terminated before July 19, 2022.

At the same time, the Grand Chamber of the Supreme Court concluded that for legal relations that arose before the entry into force of Law No. 2352-IX, but which did not terminate or terminated after its entry into force (continuing legal relations), the provisions of Article 117 of the Labour Code of Ukraine in the new version shall apply from July 19, 2022, limiting the accrual of average earnings for the period of delay in settlement to six months.

In other words, if an employee was dismissed on August 2, 2021, but full settlement had not been made with him as of the date Law No. 2352-IX entered into force, the amounts provided for in Article 117 of the Labour Code of Ukraine should be accrued to him as follows: from August 3, 2021, to July 18, 2022 – without the six-month limitation, since the previous version of the said norm did not contain such restrictions; from July 19, 2022, to January 19, 2023 – for 6 months, the calculation of which begins on the date Law No. 2352-IX entered into force, or until the day of final settlement, if it was made before the expiry of the said six months.

Resolution of the Grand Chamber of the Supreme Court dated November 12, 2025, in case No. 306/2708/23 – https://reyestr.court.gov.ua/Review/131941693.

These and other legal opinions of the Supreme Court can be found in the Supreme Court’s Database of Legal Positions – https://lpd.court.gov.ua.