The Supreme Court explained who is responsible for unpaid wages to a bank employee during liquidation

A bank being withdrawn from the market, until the moment of its official state registration of termination, is not deprived of legal personality and remains an independent participant in legal relations. Since labor relations arise directly between the employee and the bank as a legal entity, claims regarding the fulfillment of employer obligations must be directed to the bank. The Deposit Guarantee Fund and its authorized person only represent the bank and perform the functions of its management bodies, therefore they do not acquire independent rights and obligations in these legal relations.

These conclusions were reached by the Supreme Court in the composition of the panel of judges of the First Judicial Panel of the Cassation Civil Court.

Case circumstances

The plaintiff filed a lawsuit against the Deposit Guarantee Fund and its authorized person responsible for the bank's liquidation, demanding the issuance of her employment record book, an order of dismissal due to the employer's violation of labor legislation, recovery of wage arrears, and compensatory payments. She justified her claims by stating that after the introduction of downtime at the institution, payments stopped, and her resignation request was ignored.

The court of first instance, whose conclusions were upheld by the appellate court, partially satisfied the claim. The courts established the fact of violation of the employee's labor rights and imposed the obligation to issue documents and make payments directly on the Fund and its authorized person, considering them the proper defendants in this case.

Supreme Court conclusions

The Cassation Civil Court of the Supreme Court overturned the decisions of the lower courts and issued a new ruling refusing the claim against the Fund and its authorized person. The cassation court stated that holding the Fund and the bank liquidator directly responsible for unpaid wages is erroneous, as it does not take into account the legal nature of the representation of the bank being withdrawn from the market.

According to part 1 of article 21 of the Labor Code of Ukraine, an employment contract is an agreement between an employee and the owner of an enterprise, institution, organization, or an authorized body or individual, under which the employee undertakes to perform work defined by this agreement, subject to internal labor regulations, and the owner or authorized body or individual undertakes to pay the employee wages and provide working conditions necessary for the performance of the work, as stipulated by labor legislation, collective agreements, and the parties' agreement.

Justifying its legal position, the Cassation Civil Court of the Supreme Court explained that a bank in the liquidation procedure, until the moment of its official termination registration, is not deprived of legal personality and remains an independent participant in legal relations. In these relations, the Fund and its authorized person act solely as representatives of the bank, performing the functions of its management bodies based on the law. Since they do not act as independent entities (employers), obligations regarding the recovery of arrears or issuance of the employment record book must be imposed on the bank itself.

According to part 3 of article 37 of the Law of Ukraine "On the Deposit Guarantee System," the Fund's authorized person acts on behalf of the bank within the Fund's authority.

The Cassation Civil Court emphasized that the determination of defendants in a claim is the plaintiff's right, but establishing their proper status is the court's duty, performed during the case consideration. Given that the claims were made against representatives (the Fund itself and the Fund's authorized person for bank liquidation) instead of the bank as an independent legal entity and the plaintiff's employer, the Cassation Civil Court in case 761/36941/20 noted that filing a claim against an improper defendant is an independent ground for refusal to satisfy the claim.

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