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General legal newsletter for October 2022

Some of the most notable legal developments in Uzbekistan in October 2022 were the adoption of a new Labour Code introducing many changes and novelties into the employment legislation, and a Law “On Electronic Digital Signature”; new measures to ensure the safety of processed personal data; significant liberalization steps in the area of construction standards; and measures to improve the supply of raw materials for production purposes. Moreover, the President initiated important steps to simplify the import and sale of medicines and medical products to improve access to them for the population and signed a Resolution on the further development of the chemical and gas chemical industries, envisaging the creation of specialized clusters, a further transformation of state-controlled enterprises in the sectors and their sale. Uzbekistan’s accession to the CIS Agreement on Protection of Copyright and Related Rights in Information and Telecommunication Networks, signed in 2021, was also approved.

1. NEW LABOUR CODE

On 28 October 2022, a new edition of the Labor Code was adopted. It will enter into force on 30 April 2023. A number of notable novelties are introduced. They, among others, include the following:

where an employer makes a job offer to a candidate, it may not refuse to hire him/her during the term of validity of this job offer or during 1 month from the date of sending the job offer, if the validity period has not been specified;
a fixed-term employment contract may not exceed 3 years (previously, 5 years). Fixed-term employment shall now be concluded in, among others, the following cases: (i) with foreign individuals; (ii) for performing temporary (up to 2 months) work; (iv) with persons hired to perform temporary work in cases where its completion date cannot be determined; (iv) for doing work that goes beyond regular activities of an employer (e.g. reconstruction, installation, commissioning works);
special rules and regulations for remote work and remote workers as well as individuals producing goods or rendering services at home, seasonal workers, rotational workers, some categories of managers, and some other employees (in transport, education, healthcare, etc.) have been set;
clarification of rules for paying salaries, including rules for setting an hourly wage, tariff and non-tariff systems of payment;
the minimum duration of the annual leave has been increased to 21 calendar days (previously, 15 calendar days);
rules for the provision of leaves with partial pay have been introduced;
now, an employer may not terminate an employment contract at his own initiative on the grounds that an employee has reached a retirement age set by law;
the concept of “mass dismissal of employees” has been defined (hence, among others, the dismissal of 50 or more employees within 30 calendar days shall be considered mass dismissal). Where such dismissal happens, local labor bodies must be notified and have the right to intervene to suspend the dismissal with reimbursing an employer relevant expenses;
the amount of severance pay now depends on the length of service of an employee with a relevant employer;
rules for the protection of the personal data of employees have been set out in the new Code;
more detailed rules for creating internal representative bodies of employees (trade union committees); for creating committees for social partnership, i.e. negotiating employment matters, between employees and employers; and for negotiating and approving internal policies and acts affecting employees have been established.

Law No. ZRU-798 of 28 October 2022
Labour Code of Uzbekistan

2. LAW ON ELECTRONIC DIGITAL SIGNATURE

A Law “On Electronic Digital Signature” has been adopted. It enters into force on 14 January 2023 and, among others, envisages the following novelties:

it has been clarified that an electronic document certified by an electronic digital signature (EDS) of a legal entity is equated to a paper document certified by a seal of this legal entity, subject to the following conditions: the authenticity of EDS has been confirmed; a relevant EDS key certificate is valid at the time of confirmation or at the moment of signing the electronic document; EDS is used for the purposes indicated in the EDS key certificate;
for electronic documents containing restricted information, additional requirements for EDS keys may be set;
individuals and legal entities may have several EDS keys;
the validity period of EDS key certificates may not exceed 24 months from the date of EDS registration. It may be extended no more than twice;
rules and requirements for the establishment, accreditation, operation, and liquidation of centers for the registration of EDS have been clearly set;
EDS registration centers can provide "cloud" EDS through trusted storage systems. Two-factor authentication is required to use such EDS.

Law No. ZRU-793 of 12 October 2022

3. PROTECTION OF PERSONAL DATA

The Cabinet of Ministers has approved regulations on measures for protecting the processing of personal data and on requirements for physical carriers and technologies for storing biometric and genetic data. The regulations enter into force on 7 January 2023. Some of the relevant rules include:

while processing personal data, owners and/or operators of relevant databases must identify the presence of security threats, as divided into three categories in accordance with the regulations;
depending on relevant threats, types of processed personal data, and the number of subjects whose personal data are processed, a set of security measures must be taken, as divided into four levels in accordance with the regulations with the measures of level 1 being the most stringent and comprehensive. At all the relevant levels, it is necessary to ensure the security of buildings where personal data are stored and the security of relevant physical assets and to approve a list of persons who are authorized to access databases;
when storing biometric and genetic personal data, owners and/or operators of relevant databases must, among others, ensure their proper protection with encryption, cryptographical, and other tools; compliance with applicable fire safety, sanitary, hygienic, and waterproofing standards; and that the data are stored in safes, metal shelves, or metal racks in premises equipped with burglar alarms and video surveillance devices.

Resolution of the Cabinet of Ministers No. 570 of 5 October 2022

4. SIMPLIFICATION OF CONSTRUCTION REGULATIONS

The Cabinet of Ministers has adopted a Resolution envisaging the simplification of regulations and standards for the construction industry. The Resolution, among others, provides for the following:

(a) lists of urban planning norms and rules will seize to be mandatory starting from 1 January 2023, and will be brought into compliance with international construction standards in cooperation with the Korean Institute of Civil Engineering and Building Technology in 2022-2024 (Annexes 1 - 6 of the Resolution);

(b) starting from 1 January 2023:

so-called costs estimation standards will seize to be mandatory for entrepreneurs financing construction works at their own expense;
costs of construction work implemented under the Law on Public Procurement will be determined based on the costs estimation standards;
urban planning norms and rules will be revised every 3-4 years;
standards for construction materials and construction equipment will be set exclusively by the Ministry of Construction;
parts of projects that have passed an examination on compliance with a number of listed foreign standards of urban planning (European Codes, British Standards, Construction Rules, and Standards of Russia, etc.) in relevant foreign countries are recognized in Uzbekistan without conducting a local examination.

Resolution of the Cabinet of Ministers No. 577 of 6 October 2022

5. SUPPLY OF RAW MATERIALS FOR MANUFACTURING

The President has signed a Resolution on measures for improving the supply of raw materials for production purposes. The following is, among others, provided in the Resolution:

till 1 January 2025, a zero customs duty rate will apply to imported raw materials and semi-manufactured products listed in Annex 1 to the Resolution (some types of fabrics, dyestuffs, marble, etc.);
the requirement to pay customs duties has been abolished for the customs regime “processing within the customs territory”;
the list of technological equipment not produced in Uzbekistan that is exempted from customs duties and VAT has been supplemented with the equipment listed in Annex 2 (mainly, different types of lifting equipment and conveyors);
starting from 1 January 2023, where an equipment supply contract does not provide for a price for related installation, commissioning, and staff training services of a supplier, a taxable income of the supplier from rendering these services shall be calculated based on market prices for such services. A rule that the relevant taxable income of suppliers shall be 20% of a total contract value by default shall no longer apply. Amendments to the Tax Code will have to be introduced to effectuate this change.

Presidential Resolution No. PP-392 of 12 October 2022

6. SALE OF MEDICINES AND MEDICAL PRODUCTS

A Presidential Resolution on measures to provide the population with high-quality medicines and medical devices has been adopted. It, among others, provides for the following:

(a) the provision of medicines and medical products to patients in state hospitals of the central (republic) level financed by the State Health Insurance Fund is carried out through these hospitals;

(b) till the end of 2022, the Ministry of Healthcare shall approve a list of medicines and medical products that have no analogues registered in Uzbekistan and the import and use of which are allowed without conducting the state registration till 1 January 2025, subject to the certification;

(c) starting from 1 January 2023:

all new medicines (except for those listed in Annex 1 to the Resolution) will be registered only (i) based on positive results of clinical trials. Rules for registering specific medicines without conducting clinical trials will be determined by the Ministry of Healthcare; (ii) after checking that they are manufactured in compliance with the "Good Manufacturing Practice - GMP";
the following procedures will be abolished: (i) the procedure whereby the Ministry of Healthcare regularly sets lists of medicines dispensed without a prescription; prescription and over-the-counter medicines shall be dispensed based on relevant requirements in instructions for their medical use; (ii) the state registration of medicinal substances; (iii) the claiming of standard samples of medicines in the course of the procedure for recognizing results of the registration of medicines outside Uzbekistan;

(d) starting from 1 July 2023, it is prohibited to certify medicines if a reference price is not specified or a specified price is exceeded;

(e) a roadmap for the implementation of some of the above and other relevant measures is provided in Annex 3 of the Resolution.

Presidential Resolution No. PP-411 of 26 October 2022

7. DEVELOPMENT OF CHEMICAL AND GAS CHEMICAL INDUSTRIES

The President has signed a Resolution on the development of the chemical and gas chemical industries. It, among others, envisages the following:

the creation of chemical technological clusters in the Fergana, Navoi, and Karakalpakstan regions of Uzbekistan. Tax and customs incentives available to participants of special economic zones will be extended to businesses working in these clusters;
a list of investment projects envisaged to be implemented in the above clusters (Annex 5 to the Resolution);
the State Assets Management Agency and a number of other state agencies are instructed (i) to elaborate a program for the development of the large chemical enterprise Navoiyazot JSC till 1 September 2023 and (ii) to organize the sale of shares owned by state-owned holding company Uzkimyosanoat JSC in some enterprises in the chemical industry, as listed in Annex 7 to the Resolution (including Fergonaazot JSC, Dekhkonobod Kaliy Zavodi JSC, and Birinchi Rezinoteknika Zavodi LLC), till 1 October 2023;

Presidential Resolution No. PP-388 of 10 October 2022

8. CIS AGREEMENT ON PROTECTION OF COPYRIGHT AND RELATED RIGHTS

The President has issued a Resolution approving the Agreement on the Cooperation of the Members of the Commonwealth of Independent States (CIS) on the Protection of Copyright and Related Rights in Information and Telecommunication Networks of 12 November 2021. One of the main aims of the Agreement is to enhance cooperation between the CIS member-states in ensuring effective protection of the relevant rights on the Internet. The Ministry of Justice and the State Inspectorate for Control in the Sphere of Informatization and Telecommunications are named responsible for implementing the Agreement.

Presidential Resolution No. PP-385 of 3 October 2022

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Sincerely,
Kosta Legal Law Firm

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