Changes in the regulation of reservation of employees liable for military service and the designation of critical enterprises

Between October and December 2025, a number of regulatory changes were adopted to regulate labor relations and the procedure for reserving employees liable for military service at the critical enterprises, primarily in the defense-industrial sector:

1. Temporary Reservation of Employees Liable for Military Service at Defense-Industrial Enterprises

On 4 December 2025, Law of Ukraine No. 4630-IX On Amendments to Certain Laws of Ukraine Regarding the Organization of Labor Relations under Martial Law ("Law No. 4630-IX") entered into force.

Law No. 4630-IX is intended to regulate the hiring, dismissal and reservation of employees liable for military service at critical enterprises operating in the defense-industrial complex (DIC).

Enterprises that are critical for meeting the needs of the Armed Forces of Ukraine, other military formations or for ensuring the functioning of the economy and the livelihood of the population during a special period in the DIC sector are now permitted to reserve the following categories of employees liable for military service:

• Employees who do not have military registration documents or whose documents have not been properly issued/formalized
• Employees who do not have proper military registration
• Employees who have not updated their personal data
• Employees who are under a search in connection with violations of military registration rules, legislation requirements on defense, mobilization preparation and mobilization.

Such employees may be reserved for a period not exceeding 45 calendar days from the date of conclusion of the employment agreement and no more than once per year. If, within the 45-day reservation period, the employee fails to bring their military registration documents into compliance with legal requirements, the employer is entitled to terminate the employment relationship at its own initiative.

If the employee remedies the violations of mobilization-related legislation, the employee will be eligible for reservation on the general grounds.

At the same time, reserving such employees does not relieve them of liability for violations of military registration rules or mobilization legislation.

2. Reduction of the Review Period for Employee Reservation Lists to 24 Hours

On 8 December 2025, the Cabinet of Ministers of Ukraine adopted Resolution No. 1608,[1] which abolished the previously applicable 72-hour review period for employee reservation lists submitted by enterprises designated as critical. Under the new rules, such reviews are now carried out within up to 24 hours.

According to the Ministry of Economy, Environment and Agriculture of Ukraine, these changes are driven by the need to accelerate decision-making on employee reservations and to ensure the uninterrupted operation of critical enterprises.

3. Expansion of Criteria for Critical Enterprises in Defense Technology Sector

By Resolution No. 1475,[2] the Cabinet of Ministers of Ukraine expanded the list of enterprises eligible for critical status. Companies engaged in the development of defense technologies without the use of budget funds, but on the basis of contracts with the Ministry of Defense of Ukraine, can now be entitled to obtain the critical enterprise status.

The number of employees liable for military service who may be reserved by such enterprises may not exceed the maximum headcount specified in the relevant contracts between the enterprise and the Ministry of Defense.

4. Clarified Criteria for Diia City Residents

Resolution No. 1475 also clarifies the requirements applicable to Diia City residents that acquired resident status pursuant to Article 5(3) of the Law of Ukraine On Stimulating the Development of the Digital Economy in Ukraine (the "Law"), commonly referred to as “startups”.

When applying for the critical enterprise status, such residents are required to submit an expanded set of documents, including in particular:

• Confirmation of compliance with the requirements set out in paragraph 1 Article 13(2) of the Law, i.e., an initial compliance report covering the first three full months following the acquisition of Diia City resident status
• Certified copies of legal acts and primary accounting documents confirming that, during the first three full months after obtaining resident status, the company received income, royalties, grants and/or investments in an amount not less than the equivalent of EUR 20,000; or documents confirming compliance with the requirements of Article 13(3) of the Law, i.e., an annual compliance report and an independent auditor’s opinion.

In addition, the resolution specifies the list of documents confirming the submission of tax returns for the most recent tax period, which is a mandatory condition for confirming critical enterprise status.

5. Designing Defense-Industrial, Aircraft Manufacturing and Space Industry Enterprises as Important to the National Economy

By Order No. 722,[3] the Ministry of Defense of Ukraine approved new criteria for determining enterprises, institutions and organizations operating in the defense-industrial complex (DIC), the aircraft manufacturing sector and the space industry as being important to the national economy.

The Order applies to enterprises, institutions and organizations, which produce goods, perform works and provide services related to the development, production, repair, modernization and disposal of weapons, military and special equipment, ammunition and their components to meet the needs of the Armed Forces of Ukraine and other military formations. It also applies to authorized entities managing state-owned assets that regulate, supervise and coordinate the activities of such enterprises, institutions and organizations.

To be designated as important to the national economy in the DIC sector, an enterprise, institution or organization must meet one of the following criteria:

1) Be in the process of performing:

• A state defense contract
• A contract for the production of defense goods financed from non-budget sources
• A contract for defense-related works concluded with an entity included in the electronic register of state defense contract contractors

2) Receive state financial support in the form of grants

3) Perform the functions of an authorized entity managing state-owned assets.

In addition, the volume of defense-related goods, works and services must exceed 50% of the enterprise’s total activity, as confirmed by the state customer in the defense sector.

Decisions on designation as important to the national economy are adopted by the Ministry of Defense based on recommendations of a special working group.

Order No. 722 also provides an additional mechanism for recognizing as important to the national economy those DIC, aircraft manufacturing and space industry enterprises that do not meet the primary criteria. Such enterprises, institutions and organizations may obtain the relevant status if they meet at least three of the following six criteria:

1. Participation in the performance of a state contract
2. Involvement in the performance of a state contract concluded with a state defense customer
3. Inclusion in the electronic register of participants and contractors of the state customer in the defense sector
4. Participation in the implementation of tasks and measures under state target programs in the aircraft manufacturing and space sectors
5. Participation in state target programs for reforming and developing the DIC, developing and implementing new technologies or expanding existing production capacities for defense goods
6. Industrial production of goods, performance of works or provision of services used by DIC enterprises in the manufacture of defense products.

[1] Resolution of the Cabinet of Ministers of Ukraine "Certain Issues of Reserving Conscript Persons During Mobilization and Marcial Law" dated 8 December 2025 No. 1608

[2] Resolution of the Cabinet of Ministers of Ukraine "On Amendments to the Resolution of the Cabinet of Ministers of Ukraine of 27 January 2023 No. 76" dated 13 November 2025 No. 1475

[3] Order of the Ministry of Defense of Ukraine "On Approval of Criteria for Designating Enterprises, Institutions and Organizations in the Defense-Industrial Complex Sector, Aviation Industry and Space Activities as Important for the National Economy" dated 28 October 2025 No. 722