Can Heirs Inherit Unpaid Social Insurance Benefits in Ukraine?
It is well established that where an employee suffers an occupational accident resulting in a loss of working capacity, the social insurance system may provide compensation for the harm caused to that employee. Such insurance payments, sometimes referred to as “regress payments”, were generally paid on a monthly basis.
Following the beginning of the Anti-Terrorist Operation (ATO) in eastern Ukraine, the issue of receiving such insurance payments became particularly important for persons permanently residing in the affected territories.
In practice, social insurance authorities sometimes suspended payments because a person had not obtained or renewed internally displaced person (IDP) status. As a result, some individuals died without receiving insurance payments that had accrued or should have been paid to them.
However, the death of the person entitled to such payments does not necessarily mean that the right to the unpaid amounts disappears.
The deceased person’s heirs may, subject to the applicable inheritance rules, claim insurance payments that the deceased was entitled to but did not receive during their lifetime. This may involve opening an inheritance case and obtaining the relevant certificate of inheritance.
In practice, however, social insurance authorities have also refused to calculate or pay such outstanding amounts to heirs.
One of the reasons historically relied upon for refusing payment was that the deceased had not obtained an IDP certificate during their lifetime or had not submitted an application to the competent authorities in government-controlled territory requesting the calculation and payment of the relevant insurance benefits.
This raised an important legal question: could the absence of IDP registration or the failure to submit an application during the deceased person’s lifetime eliminate their entitlement to insurance payments and, consequently, prevent those amounts from being inherited?
The Supreme Court addressed this issue in its judgment of 20 September 2018 in Case No. 243/3505/16-ц.
The Court concluded that the absence of a certificate confirming registration as a person displaced from temporarily occupied territory or from the ATO area could not, by itself, constitute lawful grounds for refusing to pay the insurance benefits to which the person was entitled.
Accordingly, entitlement to the relevant social insurance payments could not be made dependent solely on whether the person had obtained formal IDP status.
The Supreme Court subsequently considered the issue of inheritance of unpaid insurance payments in its judgment of 12 February 2020 in Case No. 642/6946/18.
Referring to its earlier legal position, the Supreme Court concluded that the deceased person’s entitlement to the calculation and payment of the relevant insurance benefits did not depend solely on whether they had personally submitted an application to the competent authority in government-controlled territory.
This was important for inheritance purposes. If the deceased had a substantive right to the relevant payments, the failure to complete certain administrative formalities during their lifetime did not necessarily extinguish that right.
Consequently, the Court recognised that the heirs may be entitled to receive the outstanding insurance payments in accordance with the applicable inheritance rules.
The broader principle reflected in this case law is that a person’s property and social protection rights should not be restricted solely because that person was not registered as an internally displaced person or did not obtain a particular administrative status.
Therefore, where a person entitled to insurance payments died without receiving the amounts due, their heirs should determine whether the outstanding payments can be claimed as part of the inheritance. A refusal based solely on the deceased person’s lack of IDP registration or failure to apply for payment during their lifetime may be subject to legal challenge.
Please note: the institutional framework for social insurance payments in Ukraine has changed since the judgments discussed in this article. Therefore, a current inheritance claim involving unpaid insurance benefits should be assessed under the legislation and administrative arrangements applicable at the relevant time.
