The Constitutional Court of Ukraine: the Scope of the Minimum Salary (Tariff Rate) Must Provide for Sufficient Level of Life and Encourage the Employee to Improve Living Conditions for Themselves and Their Families

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The Constitutional Court of Ukraine declared constitutional the provisions of Article 6.6 of the Law of Ukraine "On Remuneration of Labour" of March 24, 1995 No. 108/95–VR (hereinafter – the Law) as amended by the Law of Ukraine "On Amendments to some Legislative Acts of Ukraine" of December 6, 2016 No. 1774–VIII, Article 96.6 of the Labour Code of Ukraine (hereinafter – the Code) as amended by the Law of Ukraine "On Amendments to some Legislative Acts of Ukraine" of December 6, 2016 No. 1774–VIII (hereinafter – the Law No. 1774) (on minimum salary (tariff rate)).

The Decision was adopted on Thursday, 15 July, in the case upon the constitutional petition of 47 People's Deputies of Ukraine. The Judge-Rapporteur in the case – Oleh Pervomaiskyi.

Pursuant to Article 6.6 of the Law in the wording of the Law No.1774 and Article 96.6 of the Code in the wording of the Law No.1774, „the minimum salary (tariff rate) shall be established in the amount not less that the subsistence minimum established for the able-bodies persons as of 1 January of calendar year“.

The petitioners argued that the subsistence minimum may not be used for establishing the minimum salary (tariff rate), since it is only a social guarantee that the minimum salary will not be established at a level lesser than the quantity sufficient „for ensuring normal functioning of the human organism, a set of foodstuffs as well as minimum set of non-grocery goods sufficient for preserving his or her health and a minimum set of services necessary for satisfying basic social and cultural needs of a personality“.

The People’s Deputies of Ukraine stressed that after the Law No. 1774 entered into force, in order to establish the size of the minimum salary (tariff rate) in the disputed norms of the Law and the Code there was applied an indicator which in monetary terms is lesser than that applied for calculating salaries before the introduction of relevant amendments.

In analysing the disputed provisions of the Law in the wording of the Law No.1774 and the Code in the wording of the Law No.1774, in the essential connection with the norms of other acts of law regulating the relationship regarding payment for work and social protection, the Constitutional Court concluded that „the salary not lesser that the established by law (minimum salary)“, „subsistence minimum“ and „minimum salary (tariff rate)“ are not identical notions, and the powers to determine or to establish their monetary size belong to different public authorities, i.e. the Verkhovna Rada of Ukraine and the Cabinet of Ministers of Ukraine.

The Court indicates that the minimum salary (tariff rate) is not a type of social guarantee and is functionally applied during the formation of the tariff system of payment for work and is a basis for differentiation of the amounts of salary. At the same time, the amount of the minimum salary and that of minimum tariff rate may not be lesser than that of the subsistence minimum. The said difference of the essence of the minimum salary and the minimum tariff rate gives the Court grounds to conclude that they have difference functional purpose.

The Court notes that when determining the amount of the minimum salary and establishing the minimum tariff rate the competent public authorities have to take into account that their amounts have to ensure personal needs not only of everyone who works but of the members of their families if the latter are not able or capable to ensure satisfaction of these needs independently by their work or otherwise.

Thus, even if the Cabinet of Ministers establishes minimum salary (tariff rate) in the amount which is lesser than the salary, application of the rules of the current legislation in their total guarantees the observance of the requirements of Article 43.5 of the Constitution of Ukraine.

The minimum amount of payments that everyone is to receive as the basic source of existence for guaranteeing the implementation of the constitutional right to sufficient level of life is the subsistence minimum the amount of which with account of its essence and purpose is determined by the Verkhovna Rada of Ukraine in a relevant law.

The Court stated that in order to implement the rules of the Constitution and the laws of Ukraine the Cabinet of Ministers of Ukraine based on the impugned norms of the Law in the wording of the Law No 1774 and the Code in the wording of the Law No 1774 shall be obliged to establish such amount of the minimum salary (tariff rate) so that its use in tariff system of payment for work would not only allow sufficient level of life for those who work but would encourage the employee to improve the living conditions for themselves and their families.

The Decision of the Constitutional Court of Ukraine is mandatory, final and may not be appealed.

Developed with the support of OSCE Project Co-ordinator in Ukraine
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