Businesses can challenge the new reservation restrictions: a lawyer explained what to do
Kyiv • UNN
Companies can challenge the new reservation rules in court, but filing a lawsuit does not suspend their effect. Businesses can also submit collective appeals to the Cabinet of Ministers of Ukraine and Parliament.
The Cabinet of Ministers of Ukraine adopted a resolution introducing new rules for reserving military-liable employees of critically important enterprises. However, the business community’s reservations were only partially taken into account. Companies have the right to challenge the relevant decision in court. At the same time, the mere fact that entrepreneurs disagree with the government’s decision will not be sufficient grounds for its annulment. Danylo Honcharenko, senior military lawyer at Prykhodko & Partners Law Firm, told UNN what legal defense mechanisms businesses will have and whether it is possible to seek a review of the restrictions.
Business opposed the reduction in reservations: what the new rules threaten
The Cabinet of Ministers’ initiative to review the rules for reserving military-liable employees triggered a broad wave of criticism from the business community, industry associations, employers, and representatives of strategically important enterprises.
The government proposed reducing reservation quotas for defense-industrial and energy enterprises from 100% to 85%, and for municipal services from 75% to 60%. At the same time, amendments to the procedure for calculating the number of employees eligible for reservation were discussed. In addition, government officials wanted to establish a Coordination Center that would decide whether enterprises qualified as critical.
The National Agency on Corruption Prevention noted that the government initiative contained a number of corruption risks, including those related to the creation of a new body.
Representatives of the Union of Ukrainian Entrepreneurs, the Ukrainian Business Council, the Federation of Employers of Ukraine, the Ukrainian Air Transport Association, the Aerospace Association of Ukraine, defense enterprises, trade unions, and other industry associations opposed the proposed restrictions.
The business community’s main argument is that reducing the number of reserved employees does not take into account the actual needs of production. Losing even a small number of specialized professionals could lead to the shutdown of individual production processes, the disruption of contracts and state orders, and a reduction in output.
This issue is particularly acute for defense enterprises carrying out state orders, energy companies ensuring the stability of critical infrastructure, and enterprises in related industries. The latter may not directly produce weapons or electricity, but they provide strategic production facilities with the necessary materials, equipment, logistics, and services.
Business representatives also emphasized the unpredictability of government policy and noted that there had been no dialogue with the government regarding this initiative. The constant review of reservation rules complicates long-term planning, creates investment risks, and threatens the fulfillment of contracts that have already been concluded.
The government promised to hold consultations with businesses before making a final decision. However, it is obvious that no dialogue took place after all, since none of the associations reported this publicly.
What the new reservation rules provide for
On October 23, Prime Minister Serhii Koretskyi announced that the Cabinet had finalized the resolution.
According to him, an enterprise’s critical status is separated from its economic performance. The sectors that actually contribute to defense and the economy should be considered critical: the defense industry, energy, communications, logistics, housing and communal services, and others. Nothing will change for them. At the same time, industry and regional criteria for critical status will be updated and checked for abuse.
In addition, the maximum level of reservations, in particular for the energy sector and the defense industry, will no longer be 100%. According to the Prime Minister, unconditional full reservation is unfair to those who serve and creates room for abuse.
He promises that the work of those who produce weapons or maintain critical infrastructure will not be weakened. If uninterrupted operations require reserving more employees, the enterprise will be able to submit a substantiated request to the Coordination Center.
It is planned that the Ministry of Defense will strengthen liability for evading service. "The rules must be the same for everyone," Koretskyi stressed.
According to him, the government is also preparing a mechanism for 100% reservation, provided that the mobilization obligation is fulfilled.
"An enterprise will be able to reserve all of its employees if it regularly and voluntarily involves some of them in military service. It is crucial that a person knows where they are going and for how long. Their job and salary will be retained. The conditions will be worked out by the Ministry of Defense and the Ministry of Economy together with businesses," the head of government added.
The mechanism is planned to be approved by December 1.
Can businesses challenge a Cabinet of Ministers resolution?
According to Danylo Honcharenko, a senior military lawyer at Prykhodko & Partners Law Firm, Ukrainian legislation provides for the possibility of judicially challenging regulatory legal acts of the Cabinet of Ministers if they violate the rights of enterprises or contradict the law.
Pursuant to Article 264 of the Code of Administrative Procedure of Ukraine, regulatory legal acts may be challenged not only by persons to whom they have already been applied, but also by those who are participants in legal relations in which the relevant provisions will be applied. Legal grounds for challenging them may include the Cabinet of Ministers exceeding its powers, the resolution contradicting the laws of Ukraine, violation of the mandatory procedure for its adoption, or failure to comply with the principle of proportionality
Enterprises do not necessarily have to wait until their employees actually lose their reservation or production is halted. If a company belongs to the group of entities to which the new requirements will apply, it may already apply to an administrative court.
Honcharenko pointed out that special rules for preparing government decisions apply during martial law. In particular, the Cabinet of Ministers' Rules of Procedure provide for exceptions under which public consultations on issues related to ensuring the state's defense capability are not held.
Therefore, the mere absence of discussions of the new reservation rules with entrepreneurs will not necessarily indicate a violation of the law. The prospects of a challenge will depend primarily on the content of the specific provisions and their compliance with the laws of Ukraine
Can the new restrictions be suspended for the duration of the court proceedings?
Enterprises may challenge either the Cabinet of Ministers resolution in its entirety or individual provisions thereof. For example, the subject of a claim may include specific reservation limits, new criticality criteria, or requirements for confirming the status of a critically important enterprise.
However, simply filing a court action will not mean that the new rules are automatically suspended.
Clause 1 of Part Three of Article 151 of the Code of Administrative Procedure of Ukraine expressly prohibits suspending the effect of acts of the Cabinet of Ministers of Ukraine as an interim measure
This means that the challenged restrictions will continue to apply during the court proceedings unless the government independently changes the relevant provisions. Consequently, enterprises may face the need to comply with the new requirements even before the court finally assesses the legality of the resolution.
At the same time, the lawyer noted that companies may separately challenge individual decisions by state authorities, including a refusal to reserve employees or an enterprise losing its status as critically important. In such cases, the issue of interim relief will be considered separately.
What evidence will help businesses protect their rights?
One of the main issues in a potential court dispute will be proving that the new restrictions not only create economic difficulties but also violate the rights of enterprises or establish unjustified requirements.
Businesses must first substantiate which specific provisions of the resolution violate their rights and legitimate interests, contradict the law, or impose disproportionate restrictions
According to Honcharenko, mere references to possible financial losses, staff shortages, or the risk of production being halted will not be sufficient. To prepare a relevant lawsuit, enterprises should collect financial statements, staffing schedules, documents concerning reserved employees, criticality decisions, customer contracts, and confirmations of the fulfillment of government or defense contracts.
Particularly important will be evidence that the mobilization of specific specialists could lead to a production shutdown, failure to fulfill a government contract, or disruption of the functioning of critical infrastructure.
For example, if an enterprise proves that the loss of several engineers, technologists, or operators would make it impossible to fulfill a defense contract, this could become a strong argument when assessing the proportionality of the restrictions imposed.
Not only the courts: how businesses can seek a review of the resolution
Court appeals are not the only mechanism for protecting business interests. Even after the new rules are adopted, business associations and individual companies may initiate their review through the Cabinet of Ministers, relevant ministries, parliamentary committees, and members of parliament.
In his opinion, collective appeals by enterprises and industry associations containing specific facts could become an effective tool for influencing state policy.
By the way, on October 16, 63 members of parliament registered draft resolution No. 16160 in the Verkhovna Rada, which provides for the cancellation of the Cabinet's decision on employee reservations dated October 13. It was this resolution that the government revised after a wave of criticism.
Thus, even after the new reservation rules are adopted, businesses have legal mechanisms to seek their review. At the same time, court appeals may take months, while the negative consequences for enterprises may emerge much sooner. Therefore, the key issue remains the government's readiness for constructive dialogue with business and for further consideration of the risks that could jeopardize the operation of strategic industries. After all, in wartime, the state must not only meet mobilization needs but also preserve the economic and industrial potential on which its defense capability directly depends.