Employer lost dispute over 11 thousand hryvnias: Supreme Court allowed employee not to return advance

The Supreme Court partially satisfied the cassation appeal of a former employee of JSC "Kharkivoblenergo" and refused the company’s claim to recover an extraordinary advance paid against future wages after the start of the full-scale Russian invasion. At the same time, the Court upheld the decision on the legality of the employee’s dismissal for absenteeism without valid reasons.

The Civil Cassation Court as part of the Supreme Court emphasized that the provisions of Article 1215 of the Civil Code of Ukraine apply to funds voluntarily paid to an employee as wages. Such payments cannot be returned to the employer in the absence of a calculation error on their part or employee bad faith.

Case circumstances

JSC "Kharkivoblenergo" filed a lawsuit against a former employee — a legal counsel of the company’s district unit. The company sought to recover UAH 11,766.32, which it considered debt for unworked days of the extraordinary advance paid after the introduction of martial law.

According to the company, after the start of the full-scale war, management decided to provide material support to employees and made a number of extraordinary payments against future wages. The employee received part of these funds, but due to her prolonged absence from work, the employer believed there was an outstanding debt.

In response, the employee filed a counterclaim. She requested to cancel the dismissal order, reinstate her at work, recover average earnings for the forced absence period, and compensation for moral damages. Among the reasons, she cited life danger due to hostilities, lack of shelter at the workplace, and that she had submitted a resignation letter back in August 2022.

Decisions of the courts of first and appellate instances

The district and appellate courts satisfied the claims of JSC "Kharkivoblenergo" regarding the recovery of funds.

The courts reasoned that the extraordinary advance is not wages since it was paid outside the terms established by the collective agreement and is not remuneration for work performed. Therefore, they applied Article 1212 of the Civil Code of Ukraine on unjust enrichment and recovered UAH 11,766.32 from the employee.

The courts also concluded the dismissal was lawful. It was established that the employee was absent from work from October 19, 2022, to July 14, 2023, and did not provide sufficient evidence of valid reasons for such absence.

Supreme Court’s position on the return of the advance

Reviewing case No. 624/892/23, the Supreme Court disagreed with the conclusions of the previous courts regarding the recovery of funds.

The Court noted that the disputed payments were made precisely as wages. Although the employer called them an extraordinary advance, they were paid to the employee as a means of subsistence under martial law conditions.

The Supreme Court emphasized that the previous courts mistakenly applied Article 1212 of the Civil Code of Ukraine to the disputed legal relations. Instead, a special provision — Article 1215 of the Civil Code of Ukraine — which defines cases when even unjustly acquired funds are not subject to return, should have been applied.

The Court reminded that wages and other payments that are a means of subsistence for an individual are not subject to return if they were paid voluntarily, without calculation errors by the payer and without bad faith by the recipient.

At the same time, the correctness of the calculations and the good faith of the recipient are presumed, and the burden of proving a calculation error or bad faith lies with the person demanding the return of funds.

In this case, JSC "Kharkivoblenergo" did not prove either the existence of a calculation error or the employee’s bad faith. Therefore, there were no grounds for returning the disputed funds. For these reasons, the Supreme Court denied the company’s original claim.

Why the Supreme Court did not reinstate the employee

At the same time, the cassation court agreed with the conclusions of the previous courts regarding the legality of the dismissal.

The courts established that the employee was absent from work from October 19, 2022, to July 14, 2023. This was confirmed by time sheets and absence records and was not effectively disputed by the employee herself.

The Supreme Court noted that labor legislation does not contain an exhaustive list of valid reasons for absence from work. Martial law, hostilities, and related risks may be considered valid reasons by courts depending on the specific circumstances of the case.

However, in this case, the employee did not provide sufficient evidence confirming the impossibility of performing labor duties for a long period, did not formalize her absence in the prescribed manner, and did not provide written explanations to the employer even after receiving a corresponding request.

Moreover, the Supreme Court took into account that in another case, courts had already established the absence of an agreement between the parties on dismissal by mutual consent in August 2022. Therefore, the mere submission of a resignation letter did not justify termination of labor relations nor the prolonged absence from work.

Argument about the employment record book

The Supreme Court also rejected the employee’s arguments about violation of her rights due to non-issuance of the employment record book on the day of dismissal.

The Court noted that on the day of dismissal, the employer sent her a dismissal notice, a copy of the order, and a letter offering to come and collect the employment record book. Under these circumstances, the company created conditions for timely receipt and properly informed the employee about the need to collect the document.

Supreme Court conclusions

The Supreme Court partially satisfied the employee’s cassation appeal.

The decisions of the previous courts regarding the satisfaction of JSC "Kharkivoblenergo"’s claim to recover UAH 11,766.32 were canceled. The company’s claims were denied.

At the same time, the decisions to refuse reinstatement, recovery of average earnings for the forced absence period, and moral damages were left unchanged.

Additionally, the Supreme Court ordered JSC "Kharkivoblenergo" to pay the employee UAH 4,294.40 in court fees for filing the cassation appeal.

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