Guide to Going Global Employment 2015Guide to Going Global • Employment Contents INTRODU CTION 03 AUST RALIA 04 AUST RIA 11 BEL GIUM 16 BRAZIL 23 CANADA 28 CHINA 34 FINLAND 39 FRAN CE 44 GERMANY 51 HON G KON G 57 INDIA 64 INDONESIA 72 IRELAND 80 IS RAEL 85 ITALY 91 JAPAN 97 LU XEMBOU RG 105 ME XICO 111 NET HERLANDS 117 POLAND 122 RUSSIA 130 SAUDI ARABIA 136 SIN GAPO RE 142 SOUT H KOREA 149 SPAIN 156 SWEDEN 163 SWITZERLAND 170 TAI WAN 176 TU RKEY 182 UNITED ARAB EMIRATES 188 UNITED KIN GDOM 194 UNITED STATES 200 Country Contacts 206 2Guide to Going Global • Employment INTRODUCTION Welcome to the inaugural edition of DLA Piper’s Guide to Going Global – Employment. Guide to Going Global Series Many companies today aim to scale their businesses globally and into multiple countries simultaneously. In order to help clients meet this challenge, we have created a handy set of global guides that cover the basics which companies need to know. The Guide to Going Global series reviews business-relevant corporate, employment, intellectual property and technology, and tax laws in key jurisdictions around the world. Employment As business grows more global, the challenge for in-house counsel and HR professionals responsible for workforce issues and employment law compliance is intensifying. This guide is designed to meet that challenge head-on and has been produced following feedback from clients in both established and emerging international businesses. We hope that it will become an invaluable resource for you. This guide covers all of the employment and labor law basics in 32 key jurisdictions across the Americas, Asia Pacific, Europe and the Middle East. From corporate presence and payroll set-up requirements, language rules, minimum employment rights, business transfer rules, through to termination and post-termination restraints, we cover the whole employment life span. We have used our global experience and local knowledge to bring you this guide. With over 300 lawyers, DLA Piper’s global Employment group is one of the largest in the world, with one of the widest geographical footprints of any global law firm. We partner with our clients, wherever they do business, to find solutions and manage risk in relation to their legal challenges and objectives. While this guide provides high-level guidance, it is not a substitute for legal advice, and we encourage you to take advice in relation to specific matters. If you wish to speak to any of our contributors, their contact details are set out towards the back. We hope that you find this guide valuable and we welcome your feedback. Key contacts Tim Marshall Partner Global Co-Chair, Employment Group T +44 (0)20 7796 6617 [email protected] Michael Sheehan Partner Global Co-Chair, Employment Group T +1 312 368 7024 [email protected] Ute Krudewagen Partner Editor, Guide to Going Global – Employment T +1 650 833 2245 [email protected] 3Guide to Going Global • Employment Australia LEGAL SYSTEM, CURRENCY, LANGUAGE Common law jurisdiction with employment laws that operate at both the federal and state levels, Australian Dollar (AU$), English. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign entity can engage employees in Australia subject to certain business and tax considerations and proper payroll registration. Personal income tax must be paid by employees on their assessable income. However, employers are obliged to deduct tax from an employee’s remuneration (called Pay as You Go or PAYG tax withholding) and also to pay 9.25 percent of salary (which will gradually be increased to 12 percent) into the employee’s superannuation account (a form of pension system). PRE-HIRE CHECKS REQUIRED Immigration compliance. PERMISSIBLE Permitted with applicant’s consent and subject to relevant discrimination laws. Offers of employment may be subject to criminal record checks or medical examination (if necessary to determine fitness for a particular job). IMMIGRATION Foreign nationals must apply for visas to visit, live and work in Australia. Application is through the various immigration programs and visas administered by the Australian the Department of Immigration and Border Protection (DIBP). The subclass 457 Temporary Work (Skilled) Visa is the most commonly used visa for employers to sponsor foreign nationals who are skilled workers, and where there is a genuine skills shortage, to live and work in Australia for up to four years. HIRING OPTIONS EMPLOYEE Individuals can be recruited on either a full-time, part-time or casual basis (which means that they are employed by hour or by day) or a fixed-term contract for a limited duration. INDEPENDENT CONTRACTOR Independent contractors can be engaged directly by the company or via a personal services company. 4Guide to Going Global • Employment AGENCY WORKER Agency or temporary workers are used widely by some organizations for short periods. Agency staff are not engaged as employees of the business where they are placed on assignment. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS A contract can be oral, but written contracts are strongly recommended and all new employees must be given a Fair Work Information Statement containing key terms as soon as possible after the commencement of employment. PROBATIONARY PERIODS Permissible. No statutory limit, but three to six months common. POLICIES Not mandatory, but some policies (especially regarding anti-discrimination and harassment, bullying and occupational health and safety) are strongly encouraged by laws and regulations. THIRD-PARTY APPROVAL No requirement to lodge employment contract or policies with or get approval from any third party. LANGUAGE REQUIREMENTS No statutory requirements. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS Most employees are covered by federal minimum employment rights; a minority derives minimum rights from state jurisdictions. WORKING HOURS 38 hours a week, although the employer may require an employee to work reasonable additional hours. OVERTIME Overtime payment (or overtime loading) may be required under an applicable award or enterprise agreement. WAGES National minimum wage as of July 1, 2013 is AU$622.20 per week or AU$16.37 per hour. This is reviewed annually. 5Guide to Going Global • Employment VACATION Four weeks’ paid annual leave for each year of service accruing progressively. In addition, an employee is entitled to be absent from work on a day that is a public holiday (eight in total). Casual employees would not normally be paid for their vacation. To make up for this, they receive extra pay, called casual loading. SICK LEAVE AND PAY Employees entitled to take ten days of paid personal/carer’s leave for each year of service. An employee may take the leave if he/she is not fit for work because of personal illness or injury, or to provide support to a member of the employee’s immediate family who requires care or support because of personal illness/injury or an unexpected emergency. Casual employees would not normally be paid for their sick leave. To make up for this, they receive extra pay, called casual loading. MATERNITY/PARENTAL LEAVE AND PAY Each member of an employee couple (not necessarily employed by the same employer) will be entitled to be absent from work for separate periods of up to 12 months in a single continuous period in relation to the birth or adoption of a child. As a result, the couple employees may take up to a total of 24 months’ leave between them. However, if only one person is taking leave as opposed to both persons of the couple, or if one member of an employee couple wishes to take more than 12 months’ leave, the employee may request a longer period from their employers. The period of extension cannot exceed 12 months less any period of parental leave taken, or intended to be taken, by the other member of an employee couple. If both members of the couple are taking unpaid leave, the leave entitlement has to be used in two separate periods. However, there are the exceptions of “concurrent leave” and “keeping in touch” days, where the couple is entitled to take up to eight weeks of unpaid parental leave at the same time. A paid parental leave scheme exists, giving eligible employees an entitlement to 18 weeks’ paid parental leave at the national minimum wage, to be paid by the government via employers. The government has announced plans to replace this scheme with a more generous scheme in 2015, offering replacement wages for up to six months’ leave. DISCRIMINATION The characteristics protected under equal opportunity and anti-discrimination legislation in the various states and territories of Australia, as well as in federal legislation, vary slightly from jurisdiction to jurisdiction. The protected characteristics common to all jurisdictions are: race, color, sex, sexual preference, age, physical or mental disability, marital or relationship status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction, social origin, gender identity, intersex status or trade union membership. 6Guide to Going Global • Employment BENEFITS AND PENSIONS Under the Superannuation Guarantee scheme, employers are effectively required to contribute 9.25 percent of employees’ quarterly “earnings base” to employee superannuation funds. There is a minimum monthly wage that should be paid before an employee is entitled to the 9.25 percent and a maximum contribution base. Most employers make regular contributions to the employees’ superannuation fund rather than making lump sum quarterly or annual contributions. Australian law also requires that all employers maintain adequate workers’ compensation insurance for the benefit of workers injured during the course of their employment. DATA PRIVACY Australia has very stringent data privacy obligations. As a general rule, personally identifiable data can only be processed if it is required for the performance of the employment contract and constitutes an employee record. Certain acts and practices are exempt from the application of Australia’s data privacy laws, but there are strict criteria which must be met for an exemption to apply. Employee records are generally exempt but this exemption will not apply to documents that come into existence prior to the employment relationship (such as pre-employment/hire documentation). At the time it collects personal information, the employer is required to provide the individual with a statement setting out the company’s obligations under Australia’s data privacy laws and the individual’s rights. Further restrictions apply for sensitive personal data. The monitoring of individuals and their data is covered by various surveillance legislation in each state/territory. Essentially surveillance of employees is prohibited in sensitive areas such as washrooms and change rooms, unless the surveillance device is installed pursuant to a warrant or authorization. Surveillance is permitted in public areas if it conforms with relevant legislation. The monitoring of an employee’s use of their work computer (emails and Internet browsing) is governed by specific laws in some states. RULES IN TRANSACTIONS/BUSINESS TRANSFERS At common law, employees cannot be transferred from one employer to another without their consent. Under the Fair Work Act, there are rules which apply if there has been a ‘transfer of business’. The transfer of business rules apply when there is a connection between two employers (including the sale and purchase of all or part of a business, certain outsourcing and in-sourcing arrangements and where the two employers are associated entities), the new employer agrees to employ some or all employees of the old employer and there has been no significant change to the work performed by those employees. The main effect of the transfer of business rules is that a transferrable instrument (i.e., a collective agreement) that covered the employee before the transfer will continue to apply after the transfer. The Fair Work Commission can make certain orders altering the effect of the transfer of business rules if it deems it appropriate. 7Guide to Going Global • Employment EMPLOYEE REPRESENTATION Under federal law, employees can choose to be represented by a union or not. As a consequence, any union validly appointed to represent an employee or employees must be recognized and dealt with according to the law. There are no employee representatives or works councils. TERMINATION GROUNDS Termination can be brought about by: mutual agreement; upon expiry of a fixed-term contract; termination by the employer, with or without notice; or termination (resignation) by the employee. WHO IS SUBJECT TO TERMINATION LAWS Employees who have completed six months of service with their employer (or 12 months in the case of a small business employer with fewer than 15 employees) and earn less than the high income threshold (currently AU$129,300); or who are covered by a modern award or enterprise agreement, are eligible to make a claim for unfair dismissal. PROHIBITED OR RESTRICTED TERMINATIONS Employers are prohibited from taking “adverse action” (including termination) against other persons because the other person has, or exercises a “workplace right”, or engages in ”industrial activity” or because of a protected attribute. Further protections include a prohibition on an employer dismissing an employee because the employee is temporarily absent from work because of illness or injury. THIRD-PARTY APPROVAL FOR TERMINATION/TERMINATION DOCUMENTS N/A. MASS LAYOFF RULES Reporting requirements apply where a decision is made to make 15 or more employees redundant, including notifying the relevant government agency and relevant unions. NOTICE Between one week and four weeks, depending on length of continuous employment (although employment contract may specify longer notice period). Where an employee is over 45 years of age and has completed at least two years’ continuous service, he or she will be entitled to another week’s notice. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE Employer can pay in lieu of notice. No right to garden leave unless specified in the contract. 8Guide to Going Global • Employment SEVERANCE The entitlement to severance as a result of a termination by reason of redundancy is based on a sliding scale and calculated by reference to the length of the employee’s period of continuous service on termination. Period of continuous service Pay Less than 12 months of service 0 12 months to less than 2 years of service 4 weeks’ pay 2 years of service to less than 3 years of service 6 weeks’ pay 3 years of service to less than 4 years of service 7 weeks’ pay 4 years of service to less than 5 years of service 8 weeks’ pay 5 years of service to less than 6 years of service 10 weeks’ pay 6 years of service to less than 7 years of service 11 weeks’ pay 7 years of service to less than 8 years of service 13 weeks’ pay 8 years of service to less than 9 years of service 14 weeks’ pay 9 years of service to less than 10 years of service 16 weeks’ pay 10 years and over 12 weeks’ pay (Note: The scale does drop from 16 weeks to 12 weeks. This is an odd historical anomaly that continues to be the case, and is usually justified by the employee’s entitlement to long service leave after reaching ten years’ service.) A “week’s pay” is generally calculated on the basis of the employee’s entire compensation package (including cash equivalent components). Service prior to January 1, 2010 is only counted if the employee had an entitlement to redundancy pay under some other instrument. POST-TERMINATION RESTRAINTS Those that protect the employer’s legitimate business interests can be enforced if reasonable in all the circumstances. NON-COMPETES Typically no longer than 12 months (with some exceptions). CUSTOMER NON-SOLICITS Permissible. 9Guide to Going Global • Employment EMPLOYEE NON-SOLICITS Permissible. WAIVERS Enforceable to waive contractual rights. Statutory entitlements cannot be waived or contracted out of. REMEDIES DISCRIMINATION If an employee thinks they have been subject to adverse action (including dismissal) because of a protected attribute, they may apply for a remedy under the Fair Work Act. Remedies include compensation (there is no cap on the amount of compensation that can be awarded) and reinstatement. A civil penalty can also be ordered. Compensatory remedies for discrimination can also be sought under Federal or State antidiscrimination legislation. Damages for economic loss and general damages (for hurt and suffering) may be ordered. UNFAIR DISMISSAL If the Commission decides that the employee has been unfairly dismissed, it may order the reinstatement of the dismissed employee or, if that is not practicable, the payment of compensation up to a maximum of six months’ remuneration. FAILURE TO INFORM AND CONSULT An employer who breaches any of the general protections may incur a penalty. Further, an employee, or a union acting on behalf of a member, may seek an injunction to stop the prohibited conduct or seek compensation (noting there is no cap on the amount of compensation that can be awarded). CRIMINAL SANCTIONS There are criminal sanctions for breach of relevant work health and safety laws. 10Guide to Going Global • Employment Austria LEGAL SYSTEM, CURRENCY, LANGUAGE Civil Law. Member of the European Union (EU), so required to implement relevant EU Directives. Euro (€). German. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign entity can engage employees in Austria with proper payroll registrations, subject to business and corporate tax planning considerations. Withholdings for pay-as-you-earn (i.e., social insurance [employer and employee portion], severance payment funds [1.53 percent to the so called BV-Kasse], local taxes) and income tax to be done through payroll. PRE-HIRE CHECKS REQUIRED Immigration compliance. PERMISSIBLE Criminal and credit reference checks are only permissible for specific roles (e.g., certain finance positions) and subject to proportionality requirements. Reference and education checks are common and permissible with applicant consent. IMMIGRATION Nationals of the European Economic Area (EEA) and Switzerland have a right to work in Austria (with exceptions for Bulgaria, Romania and Croatia). For other non-Austrian nationals an immigration permission is likely to be required. HIRING OPTIONS EMPLOYEE Indefinite, fixed-term, full-time or part-time. Part-time and fixed-term employees have the right not to be discriminated against due to their status. INDEPENDENT CONTRACTOR Independent contractors can be engaged directly by the company or via a personal services company. Engagement may be subject to misclassification exposure. AGENCY WORKER Agency workers are common and typically will be either employees or workers. Agency workers have the right to equal treatment to employees in relation to pay and other benefits terms. 11Guide to Going Global • Employment EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS Employment contracts are not required per se, but employees must be provided with certain minimum terms defined by Austrian labor law. Accordingly, contracts are common. PROBATIONARY PERIODS Permissible for (in general) the first month of employment. POLICIES No mandatory policies. THIRD-PARTY APPROVAL No requirement to lodge employment contract or policies with or get approval from any third party. LANGUAGE REQUIREMENTS No statutory requirements as long as the employee understands the agreement. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All employees are entitled to minimum employment rights provided by law. In addition, most employees are entitled to minimum rights provided by the applicable collective bargaining agreement. Since in Austria almost every industry branch has its collective bargaining agreement, minimum rights may differ (e.g., minimum wages, annual leave, working time). WORKING HOURS In general, 40 hours a week and eight hours a day limit on working time. Most collective bargaining agreements provide for a 38.5-hour week. OVERTIME Legal obligation to provide payment for overtime worked, but individual agreements for all-in salary in general possible (depending on the individual status of the employee). WAGES Mandatory minimum wages provided in collective bargaining agreements; not by law. VACATION 25 working days per year (30 working days per year after 25 years’ seniority). SICK LEAVE AND PAY Legal obligation to provide payment for six weeks; after that period, obligation to pay one-half for another four weeks. Depending upon whether the employee is white or blue collar worker and seniority, those periods may differ slightly. 12Guide to Going Global • Employment MATERNITY/PARENTAL LEAVE AND PAY Minimum maternity leave starting eight weeks before giving birth (according to the calculated birth date by a physician) ending eight weeks after birth. The mother is paid a portion of her wages from the social insurance in that period. Unpaid parental leave with the right to return to work for up to two years after birth of the child. DISCRIMINATION Characteristics protected from unlawful discrimination and harassment: age, disability, gender reassignment, marriage or civil partnership, pregnancy or maternity, race, religion or belief, sex or sexual orientation. BENEFITS AND PENSIONS Currently, no benefits required above those covered under social insurance contributions. DATA PRIVACY Employees must be generally notified of personal data processing (and in certain cases, give consent) if the data processing is not necessary in order to fulfil the employment contract or labor law obligations. Then, registration with the Austrian Data Protection Authority is mandatory. Strict rules apply to data transfer outside the EEA. Monitoring employees usually requires an agreement with the work counsel (if any) or an individual agreement with each employee. RULES IN TRANSACTIONS/BUSINESS TRANSFERS Automatic transfer under the Austrian rules implementing the EU Acquired Rights Directive in a business sale or service provision change. Significant restrictions on changing terms and conditions following a transfer. Duty to inform and consult with employees and/or the works counsel (if any). Any dismissal connected to the transfer would be void unless for a good reason. EMPLOYEE REPRESENTATION Trade unions are prevalent in almost every sector. Collective bargaining agreements are very common, including industry-wide collective agreements. Every employee in an applicable sector by law is a member of his or her trade union. Works councils are very common and may be established by at least four employees. TERMINATION GROUNDS No grounds required. In special cases (e.g., if termination is exceptionally hard for the employee), the employee may claim unfair termination. 13Guide to Going Global • Employment EMPLOYEES SUBJECT TO TERMINATION LAWS Employees with fewer than six months’ seniority have no unfair dismissal protection. PROHIBITED OR RESTRICTED TERMINATIONS Certain employees, e.g., pregnant employees, disabled employees, members of works councils, etc., enjoy special protection and their termination requires prior consent by the competent court. THIRD-PARTY APPROVAL FOR TERMINATION/TERMINATION DOCUMENTS With the exceptions outlined above, generally, approval is not required to implement a termination. If a works council exists, the works council has a right of information and may give a statement. Special documents, e.g., termination in writing, are in general not mandatory (collective bargaining agreements or special legal provisions, e.g., with respect to trainees, may provide different regulations). MASS LAYOFF RULES Information of the competent Austrian authorities is mandatory for a mass layoff, that is, if the employer employs between 20 and 100 employees, termination of at least five employees, if the employer employs between 100 and 600 employees, termination of at least 5 percent of the employees, if the employer employs more than 600 employees, termination of at least 30 employees, triggers an obligation to inform the competent authorities. Termination of at least five employees each older than 50 years triggers an obligation to inform the competent authorities regardless of the threshold outlined above. Furthermore, redundancy programs must be implemented together with the respective works council. NOTICE For the employer, six weeks’ statutory notice to the end of every calendar quarter (possible agreement to six weeks to the end of every month and/or 15th of every month, which is common); additional notice due to seniority. Not required for terminations for good reason. For the employee one month to the end of every month (if not agreed otherwise). Not required for terminations for good reason. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE No payment in lieu of notice. Right to place an employee on garden leave depends on contract terms. SEVERANCE Every month during employment, the employer is obliged to pay 1.53 percent of the gross salary to a public insurer (Mitarbeitervorsorgekasse). Employee then has a severance right against that insurer, but there is no additional severance payable by the employer. 14Guide to Going Global • Employment POST-TERMINATION RESTRAINTS Those that protect the employer’s legitimate business interests can be enforced if reasonable. Garden leave is common for senior employees. NON-COMPETES For special employees with a higher income permitted, but not longer than 12 months. If the non-competition clause is valid and enforceable (depending if the (i) employee terminates the employment or if (ii) the employee has been terminated for good reason with immediate effect or if (iii) the employee has terminated the employment with immediate effect without good reason), there is no requirement for payment during the non-competition period. If it is not enforceable (e.g., if the employer terminates the employment without good reason), the employer may pay the salary during the non-competition period in order to make the non-competition clause enforceable. CUSTOMER NON-SOLICITS Permissible in narrow circumstances. EMPLOYEE NON-SOLICITS Permissible. WAIVERS Not enforceable for the future with respect to statutory rights. With respect to rights already accrued, Austrian courts usually are of the opinion that employees may not waive them. REMEDIES DISCRIMINATION Compensation, based on the claimant’s financial loss and injury to feelings as well as recommendation that the employer takes action. UNFAIR DISMISSAL Claim for reinstatement of the employment agreement. Alternatively compensation based on the claimant’s financial loss as a result of the employer having failed to give proper notice. FAILURE TO INFORM AND CONSULT Nullity of termination if information of work council or an authority is required. CRIMINAL SANCTIONS Criminal sanctions are not generally a concern. 15Guide to Going Global • Employment Belgium LEGAL SYSTEM, CURRENCY, LANGUAGE Civil Law. Member of European Union (EU), so required to implement relevant EU Directives. Euro (€). Dutch, French and German. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign entity can engage employees in Belgium with proper registration as employer, proper payroll registrations and proper registration of the employees. Payment of social charges on remuneration, up to approximately 35 percent employer portion and up to approximately 13.07 percent employee portion) and income tax (up to 50 percent), to be done through payroll. PRE-HIRE CHECKS REQUIRED Immigration compliance (work permit and/or residence permit). PERMISSIBLE Criminal checks are only permissible for specific roles and subject to proportionality requirements. Reference and education checks are common and permissible with applicant consent. IMMIGRATION Nationals of the European Economic Area (EEA) and Switzerland have a right to work in Belgium (with exceptions for Bulgaria, Romania and Croatia). For other non-Belgian nationals, work and/or residence permit likely to be required. HIRING OPTIONS EMPLOYEE Indefinite, fixed-term (including specific assignment), full-time or part-time. Part-time and fixedterm employees have the right not to be discriminated against due to their status (also applies to sales representatives, home and teleworkers, students, etc.). INDEPENDENT CONTRACTOR Independent contractors can be engaged directly by the company or via a personal services company. Engagement may be subject to requalification of the service agreement to an employment contract. 16Guide to Going Global • Employment AGENCY WORKER Agency workers are common, but can only be employed to temporarily replace an employee whose employment contract is terminated or suspended, to address an extraordinary increase of the work load, or to fill in a vacancy. Each type of agency work is subject to strict conditions and is limited in time. Agency workers have the right to equal treatment to employees in relation to pay and other benefits. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS Specific requirements for written employment contract with regard to specific clauses (e.g., trial period, non-compete and notice) and specific contracts (e.g., fixed-term, part-time and working from home arrangements). PROBATIONARY PERIODS As of January 1, 2014, it is no longer permissible to insert a trial period in an employment contract. Valid trial periods in employment contracts concluded by December 31, 2013 will continue to have effect after December 31, 2013. POLICIES Work regulations, containing applicable work schedules, an overview of disciplinary measures, grievance procedure, a policy on alcohol and drug abuse, etc., as well as written health and safety policy (global prevention plan, yearly action plan, dynamic risk prevention system, risk analysis) are mandatory. THIRD-PARTY APPROVAL No requirement to lodge employment contract with, or get approval from, any third party. A copy of the work regulations and its annexes, as well as any modification of the work regulations and/or its annexes, have to be sent to the Social Inspection. LANGUAGE REQUIREMENTS Dutch, French or German mandatory, depending on the employee’s place of work or the location of the exploitation seat from which the employee is working. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All, but some categories of employees are excluded from the scope of the legislation on working time and overtime, such as employees with a managerial position or a position of trust, strictly defined by royal decree sales representatives and home workers. WORKING HOURS Average of 38 hours per week limit on working time. Deviations based on industry level provided in collective bargaining agreements within the competent joint committees. 17Guide to Going Global • Employment OVERTIME In principle only allowed due to certain events (e.g., sudden, unexpected increase of the workload, work to prevent or repair damages to assets) under certain conditions (e.g., prior consent of the trade union delegation, notification to the Belgian Federal Government Service of Employment, Labor and Social Dialogue). WAGES At least €1,559.38 gross per month; deviations on industry level and deviations for employees younger than 21 years or with limited seniority. VACATION 30 days per year (which includes ten public holidays); deviations on industry level possible. SICK LEAVE AND PAY Employees are entitled to sick leave in case of incapacity of work. Employees are entitled to 30 days guaranteed remuneration, paid by the employer: (i) if the employee is a white-collar worker: equal to 100 percent of the employee’s remuneration; (ii) if the employee is a blue-collar worker: equal to 100 percent of the remuneration during the first seven days, reduced to 85.88 percent of the remuneration from day 8 until day 14 inclusive, further reduced from day 15 until day 30 inclusive. Afterwards, the employees are entitled to disability allowances paid by the National Health Service. MATERNITY/PARENTAL LEAVE AND PAY 15 weeks of maternity leave (deviations in case of multiple birth). During leave, allowances paid by the National Health Service (82 percent of pay for first 30 days, then 75 percent); right to return to work and protection against dismissal. Ten days of paternity leave at birth; right to return to work and protection against dismissal. Four months of paternal leave; possibility to take up part-time parental leave (one-half or one-fifth of working time); right to return to work, protection against dismissal. DISCRIMINATION Characteristics protected from unlawful discrimination and harassment: age, disability, gender, marital status, religion or belief, sex or sexual orientation, political conviction, physical or genetic characteristic, language, current or future health, affiliation to trade union. BENEFITS AND PENSIONS Currently, no benefits obligatory above those covered under social insurance contributions. Sectorial pension schemes within some joint committees. Strict legal framework with regard to complementary pension schemes. DATA PRIVACY Employees generally must be notified of personal data processing (and in certain cases, give consent). Registrations with the Privacy Commission are required in certain cases. Special rules apply to data transfer outside the EEA. Significant restrictions on monitoring email and Internet use and use of cameras at the work place. 18Guide to Going Global • Employment RULES IN TRANSACTIONS/BUSINESS TRANSFERS Automatic transfer under the EU Acquired Rights Directive/Collective Bargaining Agreement No. 32 bis in a business sale or service provision change. Significant restrictions on changing terms and conditions following a transfer. Duty to inform and consult with employee representative bodies, or in absence of employee representative bodies, information to employees. Any dismissal connected to the transfer is unfair unless for an economic, technical or organizational reason. EMPLOYEE REPRESENTATION Trade unions are prevalent. Approximately 50 percent of workers are members. Works councils have to be installed by social elections if the company has an average of 100 employees. Committees for Prevention and Protection at Work have to be installed by social elections if the company has an average of 50 employees. Industry level collective bargaining agreements, concluded within the joint committees (permanent bodies on the industry level in which an equal number of employer’s federations and trade unions are represented and that have as their main task concluding industry-wide collective bargaining agreements and mediate in social conflicts) are common. TERMINATION GROUNDS Through 2013 no obligation to justify the dismissal, except in case of a dismissal for serious cause. Within the framework of the unification of the statute of white-collar and blue-collar workers, an obligation to justify the dismissal is implemented and enters into force as of 1 April 2014. On the request of the employee, the employer will have to motivate the dismissal on grounds related to the employee’s work ability, his or her behavior at work or the employer’s business necessities. EMPLOYEES SUBJECT TO TERMINATION LAWS All. RESTRICTED OR PROHIBITED TERMINATIONS Specific protection against dismissal applies in the following circumstances: application for time credit leave; application for maternity or paternity leave, parental leave or adoption leave; formulation of observations in the register in the framework of the procedure for introducing or amending the work regulations; being a holder of or a candidate for a political mandate; redundancy or threatened redundancy due to the introduction of new technologies; application for paid educational leave; application for leave in order to assist a person with palliative care, in order to assist a person who is suffering a serious disease or in order to take up the education of a child; request by a night worker to return into a day time schedule; prevention consultant; lodging of a claim in relation to violence, harassment or sexual harassment or testifying in the framework of such a claim; lodging of a claim in relation to discrimination; appointment as union delegate; and being a candidate in the election process for the appointment of employee representatives within the works council or the committee for prevention and protection at work. Other protections against dismissal can exist on industry level. 19Guide to Going Global • Employment In case of a protection against dismissal, the employer will either have to prove that the grounds of dismissal are not related to the reason why the employee is protected (e.g., in case of maternity leave) or will have to comply with a strict dismissal procedure before terminating the employment contract (e.g., in case of the contemplated dismissal of a candidate or employee representative). THIRD-PARTY APPROVAL FOR TERMINATION Required in the event of a dismissal of a candidate or employee representative in the works council or the Committee for Prevention and Protection at Work: (i) in case of a dismissal for economic or technical reasons, an approval by the competent joint committee, or in absence of such approval, an approval by the president of the employment tribunal is required; (ii) in case of a dismissal for serious cause, an approval by the president of the employment tribunal is required. A prevention advisor can only be dismissed in case of approval by the Committee for Prevention and Protection of Work, unless the employment contract is terminated for serious cause. MASS LAYOFF RULES Yes, strict information and consultation rules apply where 20 or more employees are to be made redundant over 60 days or less and in case of a closure of an undertaking or a department thereof. Failure to do so is a criminal offence. NOTICE As of January 1, 2014, the following notice periods will apply in case of dismissal of an employee: Period of continuous service Notice period Less than 3 months of service 2 weeks 3 months up to less than 6 months 4 weeks 6 months up to less than 9 months 6 weeks 9 months up to less than 12 months 7 weeks 12 months up to less than 15 months 8 weeks 15 months up to less than 18 months 9 weeks 18 months up to less than 21 months 10 weeks 21 months up to less than 24 months 11 weeks 2 years up to less than 3 years 12 weeks 3 years up to less than 4 years 13 weeks 4 years up to less than 5 years 15 weeks As of 5 years plus 3 weeks per commenced year of continuous service As of 20 years plus 2 weeks per commenced year of continuous service As of 21 years plus 1 week per commenced year of continuous service Transitional provisions apply to employees who entered in service prior to January 1, 2014. Deviations within certain industry sectors (e.g., construction sector). No notice period to be observed in case of a dismissal for serious cause. 20Guide to Going Global • Employment STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE The employer can terminate the employment contract with immediate effect, by payment of an indemnity in lieu of notice equal to the remuneration due for the notice period. Garden leave is in principle not allowed under Belgian law, except in case of an agreement between the employer and the employee. SEVERANCE No general statutory severance, but clientele indemnity in case of the dismissal of a sales representative; closure indemnity in case of the closure of an undertaking or a department of an undertaking; mobilization indemnity within the framework of a mass layoff (collective dismissal); protection indemnity; etc. POST-TERMINATION RESTRAINTS Those that protect the employer’s legitimate business interests can be enforced if reasonable. NON-COMPETES Strict conditions. In principle no longer than 12 months. Non-compete indemnity due equal to one-half of the remuneration due for the period of non-compete obligation, except for a non-compete in an employment contract for sales representatives. CUSTOMER NON-SOLICITS Permissible, but only enforceable if reasonable. EMPLOYEE NON-SOLICITS Permissible, but only enforceable if reasonable. WAIVERS Enforceable, but employees can only sign a settlement agreement with regard to acquired rights, and not with regard to future rights. REMEDIES DISCRIMINATION Uncapped compensation, based on the claimant’s financial loss or lump sum indemnity equal to six months’ remuneration. FLAGRANT AND UNREASONABLE DISMISSAL If the employer cannot motivate the dismissal of the employee on grounds related to the employee’s work ability, his or her behavior at work or the employer’s business necessities, and if a normal and reasonable employer would not have dismissed the employee in the case at hand, the dismissal will be considered flagrant and unreasonable. The employee will be entitled to an additional indemnity equal to 3 up to maximum 17 weeks’ remuneration. 21Guide to Going Global • Employment FAILURE TO INFORM AND CONSULT Re-employment of the employees in case of a collective dismissal (mass layoff). Compensation for moral damages. CRIMINAL SANCTIONS Most legal dispositions with regard to labor law are subject to criminal or administrative sanctions in case of breach. 22Guide to Going Global • Employment Brazil LEGAL SYSTEM, CURRENCY, LANGUAGE Civil Law. Brazilian Real (R$). Portuguese. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign entity cannot hire employees in Brazil without a local corporate presence. Employers must pay social security contributions and labor charges on top of compensation, which represent an additional cost of approximately 65 percent on top of salaries. Employees will have income tax (up to 27.5 percent) and social security contributions (up to 11 percent of the compensation, subject to a legal cap) withheld at source from compensation. PRE-HIRE CHECKS REQUIRED Immigration compliance. Valid ID. Pre-hire medical examination. PERMISSIBLE Background checks for education, prior employment and basic personal information such as proof of identity and residential address are accepted. Criminal checks are limited to certain circumstances. IMMIGRATION Nationals of the Mercosul (Argentina, Paraguay, Uruguay, Bolivia and Chile) have a right to work in Brazil. For other non-Mercosul nationals immigration permission likely to be required. For nationals from other countries immigration permission is required. HIRING OPTIONS EMPLOYEE Indefinite, fixed-term, full-time or part-time. INDEPENDENT CONTRACTOR Independent contractors can be engaged directly by the company or through an entity. Engagement may be subject to misclassification exposure. AGENCY WORKER Agency workers are hired by temporary work agencies to render services to the temporary agencies’ clients. Agency workers are entitled to various employment rights. Agency work is governed by a specific law, which sets forth specific requirements. 23Guide to Going Global • Employment EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS Written agreement not legally required, but usual. Basic terms and conditions of employment are recorded in the employee’s booklet (Carteira de Trabalho e Previdência Social – CTPS) and in other mandatory documents upon hiring. PROBATIONARY PERIODS Permissible. Statutory limit of 90 days. POLICIES Written Employment Health and Safety policies such as Occupational Health Medical Control Program (PCMSO) and an Environmental Risk Prevention Program (PPRA) are legally required. THIRD-PARTY APPROVAL The employment relationship with foreign employees must be submitted to the Ministry of Labor’s approval. LANGUAGE REQUIREMENTS Although not required by statute, all employment documents should be in Portuguese. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All. WORKING HOURS Working hours cannot exceed eight hours per day or 44 hours per week. Collective bargaining agreements may set forth that the employees subject to them will work fewer than 44 hours per week. Certain types of employees are not subject to control of work hours. OVERTIME Maximum two hours per day. Compensation for overtime hours must exceed the compensation for normal hours in at least 50 percent. Collective bargaining agreement may set forth higher amounts of overtime compensation. It is not possible to make a fixed payment in lieu of overtime. WAGES Currently, the national minimum wage is R$724.00 per month. Regional minimum salaries and minimum salaries set forth by collective bargaining agreements often apply. VACATION Employees are entitled to remunerated vacations (30 days) after every 12 months of work as from their hiring date. The vacation payment is equivalent to one month’s wage, plus at least one-third of the monthly wage. Granting of vacation is subject to specific terms and conditions set forth by law. 24Guide to Going Global • Employment SICK LEAVE AND PAY The company must pay the wages corresponding to the first 15 days of absence, after the 15th day of absence. The employee will be entitled to social security benefits. Collective bargaining agreements may require payments in addition to the social security benefit for a limited period of time. MATERNITY/PARENTAL LEAVE AND PAY Women are entitled to a paid maternity leave of 120 days starting on the date of the birth of their children or 28 days before such event. Adopting mothers have the same right. After the birth of a child, fathers are entitled to a paid five day leave. Collective bargaining agreements may set forth additional requirements. DISCRIMINATION Characteristics protected by statute from unlawful discrimination: gender, origin, race, color, marital status, family situation, age, pregnancy, religion, disability. Case law has also protected homosexuals, transgender individuals and individuals with severe illnesses from discriminatory termination. BENEFITS AND PENSIONS All Brazilian employees must be enrolled with the Brazilian Social Security System, which provides for pension and disability benefits, and public health coverage. Employees must be granted transportation vouchers and benefits set forth by collective bargaining agreements. Granting meal vouchers and private health plan is not uncommon. DATA PRIVACY Notification and consent is recommended. The National Congress is reviewing some bills addressing data privacy matters and the Executive Branch has presented a new proposal for a specific data protection law. Monitoring of corporate email and Internet use is allowed and employees should be notified that they shall not expect privacy in the use of such work tool. RULES IN TRANSACTIONS/BUSINESS TRANSFERS There is no obligation to notify the union or the government before asset or share deals. There are significant restrictions on changing terms and conditions of employment. EMPLOYEE REPRESENTATION Union representation is mandatory and all employees are subject to industry-wide collective agreements. There are no works councils. 25Guide to Going Global • Employment TERMINATION GROUNDS As a rule, termination does not require a cause, but severance payments for terminations are higher. Certain circumstances protect employees against unmotivated dismissal. EMPLOYEES SUBJECT TO TERMINATION LAWS All employees. RESTRICTED OR PROHIBITED TERMINATIONS Certain circumstances prevent the termination of the employment relationship without cause or cause an increase in the severance payments, such as: (i) pregnancy; (ii) application by the employee or election of the employee for a position at the Internal Commission for Accident Prevention (Comissão Interna de Prevenção de Acidentes or CIPA); (iii) application by the employees or their election for a management position at the employees’ union; (iv) work accident (the employee who suffers a work-related accident shall not be dismissed until one year after the illness allowance has ceased); (v) acceptance by the employee of a position in the conciliation commission in charge of settling labor disputes. Other events provided under collective conventions or collective agreements may lead to the temporary freezing of the employment agreement. THIRD-PARTY APPROVAL FOR TERMINATION Union may be required to be involved in the termination process of employees in circumstances preventing termination per collective bargaining rules. Union is required to ratify terminations of employees with one year or more of service to the employer. MASS LAYOFF RULES Not governed by law, but may be governed by collective bargaining agreement. Strong recommendation to involve the union in the process due to relevant case law precedents. NOTICE Termination without cause by employer’s initiative: 30 days during the first year plus three days per additional year of service for the same company, limited to 90 days. Termination for cause: Not applicable, effective immediately. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE The company has the statutory right to pay in lieu of notice. Garden leave not allowed. SEVERANCE In case of termination without cause, the employee is entitled to severance, amounting to the equivalent to 40 percent of the balance in the employee’s Unemployment Guarantee Fund (Fundo de Garantia do Tempo de Service) (FGTS) accrued during the employment relationship. Additional payments will be due, such as one month’s salary if the termination takes place in the 30 days 26Guide to Going Global • Employment before the expected date of the collective bargaining agreement for the following period, payout of accrued vacation plus one-third vacation bonus, pro-rated 13 months’ pay, and other payments required by the applicable collective bargaining agreement or contract. In case of termination with cause, accrued non used vacation plus vacation bonus, and other payments required by the applicable collective bargaining agreement or contract are still required, but no FGTS payout or additional one month’s salary. POST-TERMINATION RESTRAINTS Brazilian law does not address post-termination restraints, so enforcement of post-termination restraints can be challenging. NON-COMPETES Periods of up to 24 months have been accepted, but enforceability is more likely for shorter periods (6–12 months). Case law has upheld non-competes that were limited with regards to scope, territory, timeframe and payment. CUSTOMER NON-SOLICITS Generally permissible. EMPLOYEE NON-SOLICITS Generally permissible. WAIVERS Not enforceable unless in a settlement at court. REMEDIES DISCRIMINATION Indemnification based on the claimant’s damages in case of labor lawsuit, plus recommendation that the employer takes action. UNFAIR DISMISSAL Severance in case of termination without cause in which the employee is not protected by job tenure is set forth by law. In case of termination without cause of employees protected by job tenure can trigger damages and reinstatement. FAILURE TO INFORM AND CONSULT As a rule there is no obligation to inform and consult the union about terminations, unless so required by the collective bargaining agreement. In such case, failure triggers the consequences set forth by the collective bargaining agreement. Failure to inform and consult in mass terminations may trigger reinstatement orders and financial consequences. CRIMINAL SANCTIONS Violation of employment laws and discrimination can trigger criminal sanctions. 27Guide to Going Global • Employment CANADA LEGAL SYSTEM, CURRENCY, LANGUAGE Common law and, for certain matters in the province of Quebec, civil law. Canadian dollar (C$). English and French. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign entity can engage employees in Canada with proper corporate and payroll registrations, subject to business and corporate tax planning considerations. The payroll registration is achieved through obtaining a Canada Revenue Agency business number. Withholdings for statutory remittances required for relevant social security charges – Canada Pension Plan (or in Quebec, the Quebec Pension Plan) and Employment Insurance – as well as income tax to be done through payroll. PRE-HIRE CHECKS REQUIRED Immigration compliance. Certain employers mandate criminal records checks through a Canadian Police Information Check (CPIC). In some instances an even more intensive check is required by law for persons who work with vulnerable individuals (such as children). In any case where such a check is required, the prospective employee may have grounds to claim discrimination if a decision not to hire is based on a criminal offence for which a pardon has been granted or minor offences revealed by the check. These checks may be unlawful in certain circumstances, particularly for employees in the province of Alberta. PERMISSIBLE Credit checks are only permissible for specific roles, such as those which involve handling money or financial decision making. In all such cases, the check must be conducted in accordance with applicable consumer protection legislation, which contemplates consent and a proper process to be followed when the credit check is undertaken. Reference and education checks are common and permissible with applicant consent. Certain employers also engage in more detailed background checks, at times through third-party organizations who specialize in this. Consent is required for these checks, which may be unlawful depending on their scope. IMMIGRATION Canadian citizens and permanent residents have a right to work in Canada. For other non-Canadian nationals an immigration permission is likely required. There are rules under the North American Free Trade Agreement (NAFTA), which allow for easier mobility rights for certain categories of workers wishing to work in Canada. The process for obtaining work permits is managed by Canada’s federal government through Citizenship and Immigration Canada and some provincial programs. 28Guide to Going Global • Employment HIRING OPTIONS EMPLOYEE Indefinite, fixed-term, full-time or part-time. Employers can provide for differential treatment between these classes of employees. INDEPENDENT CONTRACTOR Independent contractors can be engaged directly by the company or via a personnel services company. Engagement may be subject to misclassification exposure, which can give rise to claims for notice as well as tax and social security contribution liabilities. AGENCY WORKER Agency workers are common. Certain jurisdictions in Canada are subject to special rules for temporary help agencies. These rules are intended to provide protections to agency workers. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS Common best practices is to have a contract, although there are no statutory or other legal obligations to provide employees with a written agreement. PROBATIONARY PERIODS Permissible. There are, in some instances, applicable statutory limits during which the employer can dismiss an individual without being obliged to provide statutory termination pay. As an example, in the province of Ontario, there is no obligation under the Employment Standards Act, 2000, to provide statutory notice of termination if the employee is dismissed prior to the completion of three months of employment. Employees terminated during a probation period may still have a claim for an allegedly wrongful dismissal. POLICIES Written health and safety policy required, with contents based on the nature and size of the employer’s operation. Workplace violence policy required in certain circumstances. Harassment and anti-discrimination policies highly recommended. THIRD-PARTY APPROVAL No requirement to lodge employment contract or policies or get approval from any third party. LANGUAGE REQUIREMENTS Two official languages, English and French. Individuals are entitled to receive certain government services in either official language. Quebec’s provincial language laws require certain business or other matters be conducted in French. In some instances, this can be avoided by having the employee consent to English documentation. 29Guide to Going Global • Employment MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All, but subject to certain exceptions based on category of work (such as managers, students, IT professionals or those in specified industries). WORKING HOURS Varies by jurisdiction. On average 40 hours. OVERTIME Overtime rules vary by jurisdiction, with a weekly-hours-of-work threshold of 44 hours per week being common. WAGES Minimum wage varies by jurisdiction. There are also some differential requirements for certain categories of work such as food servers and students. VACATION Amounts and related requirements vary slightly by each jurisdiction, as do the public holidays. The floor obligation, which is often exceeded in practice or by statutory requirement in a particular jurisdiction, is two weeks per year of time off for vacation (and a corresponding four percent vacation pay requirement). In addition, paid time off for public holidays is also required. SICK LEAVE AND PAY Employment standards rules vary by jurisdiction, but employees will generally have rights to a certain amount (such as up to ten days per calendar year) of statutorily protected but unpaid sick leave. There is no requirement to provide for paid sick leave, but this is a common practice. Eligible employees may also have the right to claim Employment Insurance sick leave benefits. MATERNITY/PARENTAL LEAVE AND PAY There is some variation by jurisdiction, but pregnant employees generally have the right to take pregnancy leave (called maternity leave in certain jurisdictions) of up to 17 weeks of unpaid time off work. In some cases the leave may be longer. Employers do not have to pay wages to someone who is on pregnancy leave though some do pay part or all of the wages for a stipulated period. New parents have the right to take parental leave and unpaid time off work when a baby or child is born or first comes into their care. Birth mothers who take pregnancy leave are entitled to up to 35 weeks’ leave. Birth mothers who do not take pregnancy leave and all other new parents are entitled to up to 37 weeks’ parental leave. Parental leave is not part of pregnancy leave and so a birth mother may take both pregnancy and parental leave. In addition, the right to a parental leave is independent of the right to pregnancy leave. For example, a birth father could be on parental leave at the same time the birth mother is on either her pregnancy leave or parental leave. Employees on leave have the right to continue participation in certain benefit plans and continue to earn credit for length of service and seniority. In most cases, employees must be given their old job back at the end of their pregnancy or parental leave. An employer cannot penalize an employee in any way because the employee is or will be eligible to take a pregnancy or parental leave, or for taking or planning to take a pregnancy or parental leave. 30Guide to Going Global • Employment DISCRIMINATION Characteristics protected by human rights legislation vary by jurisdiction but include: age, disability, sex, sexual orientation, citizenship, ethnic origin, record of (criminal) offences, family status, race, creed. BENEFITS AND PENSIONS Currently, no benefits required above those covered under social security contributions (Canada Pension Plan/ Quebec Pension Plan and Employment Insurance regimes). There are no mandatory employer benefits or pension schemes or other contributory arrangements, though these are commonly offered. DATA PRIVACY The legislative regime varies by jurisdiction, though employee privacy rights are an emerging area of statutory and case law. Best practice (or in some case required compliance) dictates that employees be notified and consent to the manner in which their personal information is being collected, stored and used. While email and Internet use may be monitored, there is some law emerging which suggests that consent and express notice to employees might be required. There is also some possibility that, even on employer IT systems or devices, employees may have at least some expectation of privacy. RULES IN TRANSACTIONS/BUSINESS TRANSFERS Applicable rules vary by jurisdiction, but employees who accept an offer of employment following closing with a purchaser will be deemed to continue in their prior employment and past service will be honored. Unless a contract provides otherwise employers accepting the purchaser’s offer will not be entitled to claim terminator amounts from the seller. There is a risk of constructive dismissal claims if the purchaser wishes to amend the terms of employment following closing. EMPLOYEE REPRESENTATION The levels of union density continue to decline, particularly in the private sector. Unions still continue to have high levels of representation in the public sector as well as in certain industries such as construction and transportation. Many businesses have no union or other worker representation. There are no works councils. Industry level collective bargaining agreements are rare outside of certain industries in Quebec and the construction industry. TERMINATION GROUNDS Termination for cause permissible but only in limited circumstances, such as gross misconduct, fraud, serious breach of applicable policies or repeated insubordination. Termination without cause is permissible for bona fide reasons, such as position elimination, unsuitability, or lack of work, provided the selection decision was not based on or influenced by discriminatory reasons. 31Guide to Going Global • Employment EMPLOYEES ENTITLED TO TERMINATION PROTECTION All employees are protected and can seek damages as a result of their dismissal, but there are limited rights to seek reinstatement (about two-thirds of Canadian employees cannot seek reinstatement). These rights are only available either under applicable human rights legislation, or for certain employees who both have requisite service and are working in federally-regulated industries or the province of Quebec. PROHIBITED TERMINATIONS Employers may not make termination decisions based on or influenced by discriminatory reasons. There are also prohibitions against terminating employees as an act of reprisal for asserting their statutory rights with respect to conditions of work or legislated employment standards. THIRD-PARTY APPROVAL FOR TERMINATION/TERMINATION DOCUMENTS Not required. However, for group terminations, the relevant Minister of Labor generally needs to be provided with a form of notice which outlines details of the employer’s operations and the group being terminated. MASS LAYOFF RULES Yes. Group termination obligations, which can include enhanced termination pay and a requirement to notify the government, are triggered when a number of employees such as 50 (and in some cases fewer) are terminated in a period such as four weeks. As noted above, information must be provided to the relevant Minister of Labor. There is not generally a consultation obligation. NOTICE Amounts, which vary by jurisdiction, are based on employee service. These can be up to a maximum of ten weeks. Longer notice periods are awarded and, subject to there being no valid employment agreement which prescribes the entitlement, can be claimed under applicable common law. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE Pay in lieu of notice permitted. While the term ‘garden leave’ is not generally used, the employer can retain the employee in employment and essentially achieve this objective for a reasonable period. SEVERANCE Payable to those eligible employees working in the province of Ontario or subject to the jurisdiction of the Canada Labor Code. Amounts vary based on employee service, and can be up to a maximum of 26 weeks. POST-TERMINATION RESTRAINTS These are becoming increasing challenging to enforce. Restrictions which are the minimum required to protect the employer’s legitimate business interest might potentially be enforceable if reasonable. Garden leave is not commonly used. NON-COMPETES Typically no longer than 6–12 months. Not enforceable if any ambiguity in drafting or provisions are too broad. Also not valid if non-solicit provision would have been accurate. Can be used for deterrence value, though even then often only for more senior level employees. 32Guide to Going Global • Employment CUSTOMER NON-SOLICITS Permissible in narrow circumstances subject to the provisions being reasonable. EMPLOYEE NON-SOLICITS Permissible subject to provisions being reasonable. WAIVERS A waiver of statutory rights will not be enforceable unless the waiver is made in exchange for a so-called greater right or benefit with respect to the same subject matter of the right being waived. REMEDIES DISCRIMINATION While guidelines are notionally in play, these vary by jurisdiction. In addition, there are potential damages which can be awarded in discrimination cases for items such as back pay which can be substantial. Reinstatement following a discriminatory termination is possible but rare. There are also guidelines varying by jurisdiction for applicable damages. UNFAIR DISMISSAL As noted above, there is only a narrow band of employees who have a right equivalent to this. The damages which can be awarded in these cases can vary quite widely based on the individual circumstances. Reinstatement following an unjust dismissal is possible and occurs with some regularity. FAILURE TO INFORM AND CONSULT This is not a relevant consideration. CRIMINAL SANCTIONS The main area of concern regarding criminal sanctions arises under occupational health and safety legislation. There are also related Canada Criminal Code provisions relating to unsafe work. The scope of criminal sanctions can include employees and directors. 33Guide to Going Global • Employment CHINA LEGAL SYSTEM, CURRENCY, LANGUAGE Civil Law. Chinese Reminbi (¥). Mandarin. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign entity cannot engage employees in China without setting up a representative office or a subsidiary. Once established, payroll has to be set up. Note that representative offices of foreign companies need to engage an agency to engage its workforce. PRE-HIRE CHECKS REQUIRED Immigration compliance. PERMISSIBLE Reference and education checks are common, even without applicant consent. There is no restriction on criminal record checks. IMMIGRATION A work permit is required for any non-PRC-passport holder. HIRING OPTIONS EMPLOYEE Indefinite, fixed-term, full-time or part-time (note that, after two fixed-term contracts, the employee may be entitled to an indefinite term contract). INDEPENDENT CONTRACTOR It is very uncommon for independent contractors to be engaged directly. Such a relationship is likely to be considered de facto employment. AGENCY WORKER Labor dispatch arrangements are becoming increasingly regulated (in terms of treatment of labor dispatch workers and the numbers that can be hired within any one workplace) so this is becoming a less attractive hiring option. The rules are more relaxed for representative offices as they cannot hire local staff directly so must rely on agencies. 34Guide to Going Global • Employment EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS A written contract in Chinese is required. A translation into Mandarin is highly recommended and the risk of not translating the contract can be significant. PROBATIONARY PERIODS The PRC labor laws only allow a maximum of probation period of one month for contracts less than one year, two months for contracts longer than one year but less than three years, and six months for contracts of three years or longer. POLICIES No mandatory policies. THIRD-PARTY APPROVAL No requirement to lodge employment contract or policies with or get approval from any third party, but the employer must go through a consultation process with relevant representatives to implement and vary employment policies. LANGUAGE REQUIREMENTS The written employment contract must be in Chinese. There are no statutory requirements for other documents. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All. WORKING HOURS Forty hours per week and eight hours per day, with the exception of flexible working hour system and comprehensive working hour system. OVERTIME For work in excess of the standard working hours, overtime is due (of between 150 percent and 300 percent of the employee’s daily salary rate or hourly salary rate depending on when the employee carried out the overtime). WAGES Minimum wage stipulated by local regulations. VACATION Employees who have worked for one full year or more are entitled to 5 to 15 days annual leave with pay. The duration of leave for each employee is determined by reference to his or her accumulated years of work (with all employers, not just the current employer). 35Guide to Going Global • Employment SICK LEAVE AND PAY Reduced pay should be paid for sick leave days according to the local standard. MATERNITY/PARENTAL LEAVE AND PAY Ninety-eight days of maternity leave. Employees that experience a difficult childbirth get 15 extra days. For multiple births (twins, triplets, etc.), 15 extra days may be added for each child. After giving birth, female employees are entitled to one paid working hour per day for nursing purposes until the baby is one year old. Parental leave varies from three to ten days, depending on location. DISCRIMINATION Characteristics protected from unlawful discrimination and harassment: age, disability, gender reassignment, marriage or civil partnership, pregnancy or maternity, race, religion or belief, sex or sexual orientation. However, the legal remedy in this respect is limited in China. BENEFITS AND PENSIONS Employers and employees are required to contribute to certain mandatory social insurance and housing fund schemes in China. Social insurance includes pension, medical insurance, unemployment insurance, work-related injury insurance and maternity insurance. The minimum contributions required by employers and employees are determined by the local labor and social security bureaus. DATA PRIVACY China does not presently have a general data protection law. However, the Regulations on Employment Services and Employment Management require that an employee’s personal data be kept confidential and not be made public without the employee’s consent. RULES IN TRANSACTIONS/BUSINESS TRANSFERS No automatic transfer of employment in an associated company transfer or change of business ownership. Therefore, the previous employer will need to terminate the employee’s employment contract and the new employer will need to offer (and the employee accept) employment. If the new employer recognizes the service years with the previous employer, then the previous employer may be able to avoid liability for a severance payment. EMPLOYEE REPRESENTATION Trade unions are prevalent in state-owned enterprises. In most cities, local regulations require employers to set up Employee Representative Councils (ERC). However, failure to set up an ERC is not subject to penalties. Many businesses have no union or other worker representation. Industry level collective bargaining agreements are uncommon. 36Guide to Going Global • Employment TERMINATION GROUNDS There is no ‘at-will’ employment in China and termination of employees must be for cause. EMPLOYEES SUBJECT TO TERMINATION LAWS All employees. RESTRICTED OR PROHIBITED TERMINATIONS Employees (i) who are pregnant, on maternity leave or in the nursing period; (ii) who are suffering from work-related injuries or occupational diseases; (iii) who have been employed by the employer for more than 15 years and have less than five years from the statutory retirement age (60 for male employees, 55 for female employees holding office positions, and 50 for female factory workers); and (iv) who are on sick leave, may not be unilaterally terminated. THIRD-PARTY APPROVAL FOR TERMINATION The trade union’s opinion should be solicited for any unilateral termination. MASS LAYOFF RULES Yes, strict information and consultation rules apply where 20 or 10 percent or more employees are to be made redundant. The employer must also notify the trade union/all employees of the redundancies and report to the local labor bureau. NOTICE Thirty days prior notice. Not required for misconduct case or termination due to failure to meet the conditions employment during the probation period. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE There is a statutory right to make a payment in lieu of notice. Garden leave with full pay is also permissible. SEVERANCE Severance pay is based on the number of years an employee has worked with the employer at the rate of one month’s wage for each full year worked. The wages used for calculation during the service years after 2008 are subject to a statutory cap. 37Guide to Going Global • Employment POST-TERMINATION RESTRAINTS Those that protect the employer’s legitimate business interests can be enforced if reasonable. Garden leave with full pay is permissible. NON-COMPETES No more than two years. Compensation is required per local rules. CUSTOMER NON-SOLICITS Permissible. EMPLOYEE NON-SOLICITS Permissible. WAIVERS Enforceable to waive contractual rights. While an employee can be asked to waive statutory rights, there is some uncertainty as to whether such a waiver would be effective to prevent an employee from subsequently bringing a claim for statutory rights. REMEDIES DISCRIMINATION Compensation for direct losses. UNFAIR DISMISSAL The Court or Labor Tribunal may make an order for reinstatement or double severance pay. FAILURE TO INFORM AND CONSULT May be deemed as illegal dismissal. CRIMINAL SANCTIONS Limited circumstances, such as failure to pay salary in bad faith, may result in criminal sanctions. 38Guide to Going Global • Employment Finland LEGAL SYSTEM, CURRENCY, LANGUAGE Civil Law. European Union (EU) member, thus required to implement EU Directives. Euro (€). Finnish and Swedish. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP Foreign entities can engage employees in Finland, subject to business and corporate tax planning considerations, as well as compliance with payroll, tax, etc. requirements. Proper payroll operation includes making income tax, social security and other necessary deductions at source. PRE-HIRE CHECKS REQUIRED Under the Employer Sanction Directive and the Finnish Employment Contracts Act, employers are required to ensure that non-European Economic Area (EEA) nationals comply with residency/ immigration requirements or face fines for non-compliance. Certain positions may also require criminal record checks. PERMISSIBLE Reference and education checks are common and carried out with the applicant’s consent. IMMIGRATION EEA citizens have the right to work in Finland. They can stay for up to three months before having to register their right of residence. Non-EEA nationals require a residence permit to work in Finland, granted on the basis of temporary or permanent employment. HIRING OPTIONS EMPLOYEE Permanent, fixed-term, full-time or part-time, or by invitation. INDEPENDENT CONTRACTOR Independent contractors can be engaged by the company. They are not considered to be in an employment relationship, but may be engaged directly by companies or via a personal services company. AGENCY WORKER Agency workers are used in Finland. Temporary agency employment contracts are typically governed by fixed-term contracts. Agency workers are entitled to the same or no less favorable treatment to comparable employees. 39Guide to Going Global • Employment EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS Common best practice to provide employees with an employment contract. Employers are required to at least provide employment terms by the end of the first pay period. PROBATIONARY PERIODS Maximum probationary period is four months. Collective agreements may provide for a shorter period. If a fixed-term contract is for less than eight months, the trial period cannot exceed half the contract period. POLICIES Policies are not mandatory but often used by employers, especially where there is no collective agreement in place. THIRD-PARTY APPROVAL No requirement for third-party approval for employment contracts or policies unless in case of a minor. LANGUAGE REQUIREMENTS Finland’s official languages are Finnish and Swedish. However, employment contracts can be in another language understood by the employee. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All employees are entitled to minimum employment rights under statute. Collective agreements in place across most employment sectors set forth minimum employment conditions. Employers that do not belong to an employer union with a collective agreement must still observe the minimum collective sector conditions. In the absence of binding sector conditions employers must provide terms which would be considered ‘normal’ and ‘reasonable.’ WORKING HOURS Working hours are specified by law or under the relevant collective agreement. Regular working hours are usually at most eight hours per day and 40 hours per week. Weekly hours may be arranged for longer periods provided the average does not exceed 40 hours per week. Certain senior and independent positions are not subject to working hour restrictions. OVERTIME In case working hours apply, overtime is compensated with additional pay. The first two hours of overtime are paid with a 50 percent increase on normal pay and thereafter a 100 percent increase. Work on Sundays is paid with double wages. WAGES There is no universal level of minimum pay. Minimum wages are specified in the relevant collective agreement (if applicable). Otherwise wages must be ‘reasonable.’ 40Guide to Going Global • Employment VACATION Holiday accrues at a minimum rate of two holiday days per month. If the employment relationship has been in place for at least one year before 31 March, the rate is 2 1/2 days per month. This equals to either four or five weeks of paid annual holiday. SICK LEAVE AND PAY Employees are legally entitled to sick leave. The relevant rate is either specified under the Employment Contracts Act and/or in the relevant collective agreement (if applicable). Based on the Employment Contracts Act, employees are entitled to full pay from the employer for the day they become sick and the nine days thereafter. MATERNITY/PARENTAL LEAVE AND PAY Maternity leave amounts to 105 working days. 158 working days of parental leave can be shared between the mother and father. Benefits during parental leave are either earnings-related or subject to a minimum amount for unemployed parents, which in 2014 equated to around €500 per month. All parental leaves are paid by the state, unless provided for otherwise in the applicable collective agreement (if any). DISCRIMINATION All employees have the right to equal treatment. Employers must not discriminate on the basis of: gender, descent, ethnic or national origin, nationality, religion, age, health, disability, political activity, trade union activity or related reason. BENEFITS AND PENSIONS There is an earnings-based mandatory state pension which accrues on the basis of paid employment. Such pension payments are compulsory and cannot be opted-out of. The contributions are shared between the employee and the employer. DATA PRIVACY Employees must usually be notified of personal data processing (and give consent where necessary). Special rules apply to data transfers outside of the EEA. Significant restrictions on monitoring email and Internet use. RULES IN TRANSACTIONS/BUSINESS TRANSFERS Business transfer rules apply, i.e., in a business transfer, the rights and duties of the employer are transferred to the new owner, who may not dismiss employees merely because of the business transfer. Employer having more than 20 employees has consultation requirements under the Cooperation Act irrespective of the number of employees to be transferred. 41Guide to Going Global • Employment EMPLOYEE REPRESENTATION Trade unions are prevalent across all sectors and membership is high. Trade unions negotiate collective bargaining agreements among themselves that specify minimum conditions (such as salary) for their relevant trade sector. There are three ways in which collective agreements are made binding on the employers, either by company specific collective agreement, membership of the employer’s association or through the generally applicable collective agreement system, which covers all employers operating in the relevant sector. Trade unions typically have representatives in the workplace. The number of representatives varies depending on the applicable collective agreements for each relevant trade sector. These representatives enjoy special protection from termination. TERMINATION GROUNDS Employers cannot terminate an indefinite employment contract without proper and weighty reason as referred to in the Employment Contracts Act, such as serious breach or neglect of obligations or specified economic reasons. EMPLOYEES SUBJECT TO TERMINATION LAWS All employees are protected, meaning the employer must have weighty legal grounds for termination. RESTRICTED OR PROHIBITED TERMINATIONS Fixed-term employment cannot be terminated due to redundancy. Furthermore, certain employee representatives and employees on parental leave have special employee protection. THIRD-PARTY APPROVAL FOR TERMINATION No approval required. MASS LAYOFF RULES Consultation and negotiation requirements need to be followed for mass redundancies as set out in the Co-operation Act, if the company regularly employs at least 20 employees. NOTICE May be specified under the relevant collective agreement (if applicable) or an individual’s employment contract. Otherwise, notice periods depend upon the length of employment and are specified under the Employment Contracts Act as follows: 14 days if less than 1 year, 1 month if between 1 and 4 years, 2 months if between 4 and 8 years, 4 months if between 8 and 12 years and 6 months if longer than 12 years. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE No statutory right to pay in lieu of notice. Employees can be placed on garden leave. SEVERANCE No statutory right to severance pay although this may be provided for in individual employment contracts. 42Guide to Going Global • Employment POST-TERMINATION RESTRAINTS NON-COMPETES Only if there is a particular weighty reason for enforcement. Typical period would be 6–12 months. Do not apply in case of redundancies. CUSTOMER NON-SOLICITS Only if there is a particular weighty reason for enforcement. Typical period would be 6–12 months. Do not apply in case of redundancies. EMPLOYEE NON-SOLICITS Not regulated and may be deemed invalid. WAIVERS Possible to waive statutory or contractual rights in Finland. REMEDIES DISCRIMINATION The maximum award for discrimination is now €17,800. UNFAIR DISMISSAL Compensation varies between 0 and 24 months’ salary in case of redundancies and three to 24 months’ salary in case of termination due to personal reasons. The court cannot order reinstatement. FAILURE TO INFORM AND CONSULT Maximum is now €34,140. CRIMINAL SANCTIONS Possible in case of breach of various employer obligations. 43Guide to Going Global • Employment FRANCE LEGAL SYSTEM, CURRENCY, LANGUAGE Civil Law, Member of the European Union (EU), so required to implement relevant EU Directives. Euro (€). French. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign entity can engage employees in France with payroll registrations subject to business and corporate tax planning considerations. Registration as an employer with labor authorities and “Pôle Emploi” via the Declaration Priorto Hiring (DPAE) to be made within eight days before starting date. The employee share of social contributions amounts to 25 percent – 28 percent of his or her gross monthly compensation. The employer share amounts to approximately 45 percent of each employee’s gross compensation in companies with fewer than ten employees and approximately 50 percent in companies with ten employees or more. PRE-HIRE CHECKS REQUIRED If the individual to be employed is a foreigner, the employer is required to check the validity of his or her work permit. Employers must set up a mandatory medical examination before employment commences and at the latest before the end of the trial period. PERMISSIBLE Pre-hire checks may be permissible subject to data privacy laws and if the information is related to the job position. Reference checks are permissible, provided the applicant is informed. A criminal record check is permissible for specific job positions only (e.g., those involving the handling of cash). IMMIGRATION Nationals of the EU, the European Economic Area (EEA), and Switzerland have the right to work in France provided they have a valid ID (except for Romania and Bulgaria until January 1, 2014 and Croatia until January 1, 2014). Citizens of other countries need a valid work permit. HIRING OPTIONS EMPLOYEE Indefinite-term employment contract (CDI) (which is the rule) or fixed-term contract (CDD), which is only permissible in limited circumstances. The employment contract may be full-time or part-time. Part-time and fixed-term employees enjoy the same rights as regular employees. 44Guide to Going Global • Employment INDEPENDENT CONTRACTOR Independent contractor relationships are permissible. Risk of reclassification into an employment contract if a relationship of subordination is demonstrated. AGENCY WORKER Agency workers are strictly regulated by the French Labor Code. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS Within two months of commencement of employment, the employee must be provided with certain minimum terms (in principle mentioned on their pay slips). Written employment agreements are recommended. Certain types of employment contracts must be established in writing, e.g., fixed-term and part-time employment contracts. PROBATIONARY PERIODS Two months for blue-collar employees and standard employees; three months for supervisors and technicians; four months for management-level employees. Collective Bargaining Agreements (CBAs) may provide for differentiating terms. Trial period renewable once for two, three and four months respectively if a CBA and the employment contract expressly provide for it. POLICIES Internal rules (règlement intérieur) mandatory in companies or establishments employing at least 20 employees. THIRD-PARTY APPROVAL Implementation of the internal rules subject to consultation of staff representatives, submission to the labor inspector and posting at the company’s premises. LANGUAGE REQUIREMENTS All employment documents must be drafted in French. 45Guide to Going Global • Employment MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All. WORKING HOURS Legal working time is 35 hours per week. Other working time schemes available depending upon the terms of the CBA. Employees may be entitled to RTT days, i.e., resting days to compensate for days worked above the legal working time, under the conditions set by CBAs. OVERTIME Annual limit of 220 hours, unless the applicable CBA provides for a lower ceiling. WAGES Minimum wage set at €1,430.22 gross per month for 2013. In addition, minimum (higher) salaries provided by applicable CBAs. VACATION 5 weeks i.e., 25 working days (if Monday – Friday working) or 30 working days (if Monday – Saturday working). Additional RTT days may apply (see above). SICK LEAVE AND PAY Daily indemnity paid by the Social Security Authorities as from the fourth day of absence. For employees having at least one year of seniority within the company, social security indemnity to be supplemented with an employer-paid indemnity, depending on certain conditions and within certain limits, as from the eighth day of absence (first day in case of occupational accident or sickness): (i) 90 percent of the employee’s gross compensation for the first 30 days of absence, (ii) two-thirds of such compensation for the next 30 days, each of these two 30-day periods increased by ten days per full period of five additional years’ seniority, up to 90 days for each compensation period. MATERNITY/PARENTAL LEAVE AND PAY Maternity leave: The minimum amount of maternity leave is 16 weeks. Maternity insurance daily indemnity paid by the Social Security Authorities under certain conditions. The employer is not required by law to maintain the employee’s salary in whole or in part, but is often required to do so by the applicable CBA or common practice. Paternity leave: Up to 11 consecutive days (18 days in case of multiple births), to be taken in principle within 4 months as from the birth date. Parental leave: Upon the expiry of the maternity leave. one year to be extended up to three years. Full-time leave or part-time work permissible during the leave period. DISCRIMINATION Protected characteristics: origins, sex, customs, sexual orientation, age, family situation, pregnancy, general characteristics, affiliation or non-affiliation, whether actual or assumed, to an ethnic group, a nation or a race, political opinions, activities linked to a union or a mutual benefit company, religious beliefs, physical appearance, family name, health and disability. 46Guide to Going Global • Employment BENEFITS AND PENSIONS State social system provides for social security, welfare and pension coverage. CBAs and/or employment contracts can provide for additional mandatory benefits: complementary health insurance, complementary welfare coverage for all employees, supra-complementary pension plan, etc. CBAs can also provide for minimum benefits entitlements (minimum welfare contribution rates, insurance bodies to be affiliated to, etc.). Retirement upon the employee’s initiative: initial entitlement to base retirement set at the age of 62 for employees born as from January 1, 1955; for those born between July 1, 1951 and December 31, 1954, the legal retirement age is gradually increased. Retirement upon the employer’s initiative: restricted under 70 years old. ‘Clause couperet,’ i.e., clauses under which the employment relationship will automatically terminate at a specific age limit, are prohibited under French labor law. DATA PRIVACY Various restrictions, declaration or authorization requirements towards the French data protection authority (CNIL). Data transfers outside of France are subject to additional requirements. Significant restriction on monitoring Internet and email use. RULES IN TRANSACTIONS/BUSINESS TRANSFERS Automatic transfer of the employment contract under the EU Acquired Rights Directive/Article L. 1224-1 of the French Labor Code in case of a modification in the employer’s legal situation (e.g., sale, merger) and provided the criteria set by case law are met, meaning that it is a transfer of a standalone business that maintains its identity within the transferee. In share or asset deals, there is a requirement to consult with the work council, if any. EMPLOYEE REPRESENTATION Workers’ delegates mandatory in establishments with at least 11 employees. Works council mandatory in establishments with at least 50 employees. Health, Safety and Working Conditions Committee (CHSCT) mandatory in establishments with at least 50 employees. Union representatives may be appointed in establishments with at least 50 employees. Virtually all companies are subject to industry-wide CBAs. 47Guide to Going Global • Employment TERMINATION GROUNDS Termination of an indefinite-term employment contract is permissible on personal grounds (e.g., misconduct, poor performance) and economic grounds (e.g., economic difficulties, technological changes, reorganization to safeguard competitiveness). Economic grounds are assessed at the group level worldwide in the relevant business sector. Early termination of a fixed-term employment contract permissible only in limited circumstances as stated by the French Labor Code. EMPLOYEES SUBJECT TO TERMINATION LAWS All employees. RESTRICTED OR PROHIBITED TERMINATIONS Restrictions on terminations and specific procedures (labor inspector authorization) required for termination of protected employees: • Termination of workers’ representatives (workers’ delegates, members of the works council, union delegates and union section representatives). • Termination while the employment contract is suspended as a result of an occupational disease or accident, save on the grounds of serious misconduct or the impossibility to maintain the contract for a reason unrelated to the occupational disease or accident. • Termination during pregnancy, maternity/adoption leave and for four weeks following maternity leave, save on the grounds of serious misconduct or the impossibility to maintain the contract for a reason unrelated to the pregnancy, childbirth or adoption. Termination on discriminatory grounds is prohibited. THIRD-PARTY APPROVAL FOR TERMINATION Need for the Labor Inspector’s authorization in case of termination of a protected employee. MASS LAYOFF RULES Applicable rules differ depending on the number of employees made redundant over 30 days (plus/ minus ten) and the number of employees within the company (plus/minus 50). If fewer than ten employees made redundant over 30 days in a company employing at least 50 employees: information/consultation of the works council. If at least ten employees made redundant over 30 days in a company employing at least 50 employees: need to implement an employment safeguard plan (PSE); information/consultation of the works council; procedure under the control of the Labor Administration. In companies employing fewer than 50 employees: information/consultation of workers’ delegates (if any). 48Guide to Going Global • Employment NOTICE Under six months’ seniority: as determined by law, the CBA or geographical and professional common practice. Between six months and less than two years’ seniority: one month. At least two years’ seniority: two months. Subject to differentiating provisions in the CBA, employment contract or common practice, whichever is more favorable to the employee. No notice period in case of dismissal for gross or willful misconduct. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE Employee can be paid in lieu of notice. Alternatively, employee can be paid his or her usual salary for the duration of the notice period even if not performed. SEVERANCE Employee with at least one year of seniority entitled to one-fifth of his or her average monthly salary per year of seniority for the first ten years and one-third of his or her average monthly salary per year of seniority for each following year, subject to more favorable provisions in the applicable CBA. POST-TERMINATION RESTRAINTS Restrictive covenants are allowed if justified by the company’s business and employee’s role. NON-COMPETES Allowed under five conditions: it must (i) be essential to the protection of the company’s legitimate interests; (ii) be limited in time; (iii) be limited in space; (iv) take into account the specificities of the employee’s duties; and (v) provide for a financial compensation (commonly at least 33 percent of the employee’s compensation for the duration of the non-compete, but depends on the applicable CBA). CBAs may provide specific terms. CUSTOMER NON-SOLICITS No legal requirement for a financial compensation, although their validity is currently challenged by the courts, which often consider that they in fact constitute a non-compete restriction and as such should be duly compensated. EMPLOYEE NON-SOLICITS Allowed. WAIVERS An employee may waive his or her rights in a settlement agreement concluded with his or her employer, after termination of his or her employment contract. Criminal claims are not covered. A settlement indemnity is to be paid on top of mandatory severance. A mutual termination does not result in a settlement agreement/waiver. 49Guide to Going Global • Employment REMEDIES DISCRIMINATION Any measure taken on discriminatory grounds would be held null and void and entail criminal sanctions (up to three years’ imprisonment and a fine of up to €45,000 for the company’s legal representative and €225,000 for the company as a legal entity), in addition to potential damages for the harm sustained. UNFAIR DISMISSAL Dismissal without “real and serious” cause: if the employee has at least 2 years’ seniority and the company employs at least 11 employees, the court may order his or her reinstatement in his or her former position; if either party disagrees, the employee will be awarded damages amounting to at least 6 months’ salary. If the employee has less than 2 years’ seniority and/or the company employs fewer than 11 employees, he or she will be awarded damages for the harm sustained as determined by the court. Damages to be appraised by the court based on the employee’s age, length of service, circumstances of dismissal, etc. FAILURE TO INFORM AND CONSULT Offence of obstruction, which entails criminal liability (up to one year of imprisonment and a fine of up to €3,750 for the company’s legal representative and €18,750 for the company as a legal entity). CRIMINAL SANCTIONS Yes (e.g., discrimination, harassment, offence of obstruction). Both the company’s representative and the company as a legal entity may be held criminally liable. 50Guide to Going Global • Employment Germany LEGAL SYSTEM, CURRENCY, LANGUAGE Civil law. Member of the European Union (EU), so required to implement relevant EU Directives. Euro (€). German. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign company can engage employees in Germany without local corporate presence, subject to doing business and corporate tax considerations. For employment purposes, registrations with tax and social security authorities are required for payroll purposes. Employee earnings are subject to withholdings for social security (19 percent employer and 21 percent employee portion, up to a ceiling of €5,950 per month) and wage tax (from 14 percent to 42 percent) to be done through payroll. PRE-HIRE CHECKS REQUIRED Immigration compliance. For certain employment positions (e.g., public services, education sector, medical sector, security services), statement of good standing (Führungszeugnis) from the Federal Central Register (Bundeszentralregister). PERMISSIBLE Requiring a credit reference check or of a statement of good standing is only permissible for roles justifying interest in such information and subject to proportionality requirements. Reference and education checks are common and permissible with applicant consent. IMMIGRATION Free movement of employees for all countries of the European Economic Area (EAA) (EU, Iceland, Liechtenstein, Norway) and Switzerland. All other nationals require a residence and work permit. Nationals of, inter alia, the US, Israel and Japan, and skilled workers enjoy favorable immigration treatment and have access to fast track procedures. 51Guide to Going Global • Employment HIRING OPTIONS EMPLOYEE Indefinite, fixed-term, full-time or part-time. Part-time and fixed-term employees have the right not to be discriminated against due to their status. INDEPENDENT CONTRACTOR Independent contractors can be engaged directly by the company or via a personal services company. Engagement may be subject to misclassification exposure with high financial risk. Work instructions and organizational integration, in particular, will jeopardize the independent contractor position. AGENCY WORKER Agency workers shall not work for unlimited periods of time at the same business, although German law does not define the maximum permissible term. The agency is required to hold a special permit granted by the Federal Employment Agency. Agency workers have the right to equal treatment to employees in relation to pay and other benefits terms, unless a specific collective agreement provides otherwise. The law on agency workers is under review. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS Written employment agreements are common, but not mandatory, except for fixed-term contracts. A written statement of the core working conditions has to be provided by the employer within one month of commencement of employment. PROBATIONARY PERIODS Permissible, subject to proportionality, for a term of up to six months. Statutory dismissal protection will start after six months only. POLICIES No mandatory policy requirements. If a works council exists, works agreements will largely replace policies. Without a works council, policies are common, but subject to standard contract term provisions, which means they cannot be changed unilaterally to the detriment of the workforce. THIRD-PARTY APPROVAL No requirement to lodge employment contract or policies with or get approval from any third party. LANGUAGE REQUIREMENTS No statutory requirements. Employees are often open to English agreements or policies. In case of litigation, the courts would request official translations. 52Guide to Going Global • Employment MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All. WORKING HOURS 48 work hours per week as average in any 6 months’ period. Minimum break of 11 hours per day. Work on Sundays and official holidays requires special permission. OVERTIME No overtime rate set forth by statute, instead subject to contractual agreement, which is largely regulated by standard contract term provisions. The agreement needs to be fair; any provision incorporating overtime into overall wages needs to be related to a defined amount of overtime. WAGES No general minimum wage. This is currently under political review with a clear commitment to introduce a minimum wage of €8.50 per hour. VACATION Four weeks per year plus local public holidays (between 9-12 days depending on the state). SICK LEAVE AND PAY Statutory sick leave and pay provisions allow for up to six weeks of employer paid sick leave, followed by 72 weeks of sick allowance paid through the public health fund. MATERNITY/PARENTAL LEAVE AND PAY Fourteen weeks maternity leave fully paid by the employer. Parental leave paid by the state for 12 months (14 months if the other parent takes at least two months) with a 67 percent net payment rate. Further 24 months of unpaid parental leave possible with full protection of the workplace and right to return to work. DISCRIMINATION Statutory protection against unlawful discrimination and harassment based on: race or ethnical origin, gender, religion or belief, disability, age, or sexual orientation. BENEFITS AND PENSIONS No benefits required above those covered under social insurance contributions. Employers are required to provide all employees with an option to enroll in a deferred salary pension insurance and the administration costs borne by the employer. 53Guide to Going Global • Employment DATA PRIVACY Covered by the Federal Data Protection Act and EU rules. Processing of personal data generally unlawful except as listed by the Act, a works council agreement or free and individual consent. Appointment of data protection officers required if more than nine individuals deal with electronically saved personal data. Special rules apply to data transfer outside the EEA. Significant restrictions on monitoring email and Internet use. RULES IN TRANSACTIONS/BUSINESS TRANSFERS Automatic transfer under the EU Acquired Rights Directive/Germany’s transfer of business (sec. 613a Civil Code) rules in case of an asset deal or service provision change. Employees shall receive detailed written information prior to the transfer and may object to the transfer within one month after receipt thereof. Duty to inform and consult with the works council. Significant restrictions on changing terms and conditions following a transfer. Any dismissal connected to the transfer would be unfair, dismissals for other reasons are possible. EMPLOYEE REPRESENTATION Works Council: The elected works council plays a major role in everyday life of larger German businesses. By law, employees in every business of at least five employees may form a works council at their own initiative. The works council has information, consultation and co-decision rights in the area of hiring, positioning and dismissals, internal organization of the business, restructuring and personal planning, among others. Employer and works council shall form works agreements to regulate the affairs of the business except working time and remuneration, which is reserved for collective agreements with a trade union. Works councils may not call any industrial action. Co-Determination on Supervisory Board Level: Companies with a regular workforce above 500 employees in Germany establish a supervisory board with one-third elected employee representation and a fairly limited scope of duties. If the regular workforce in Germany exceeds 2,000, one-half of the members of the supervisory board are elected employee representatives with a fixed list of duties. The chairman of the supervisory board is by law always nominated from the shareholder’s side and has a casting vote, ensuring control by the business owners. Trade Unions: 18 percent of the German work force are members of a trade union. Trade unions are prevalent in certain sectors (manufacturing, building, transport and the public sector). Trade unions deal with employer associations or individual employers. Once represented businesses agree on a collective agreement, those are widely used by other businesses as reference. Formation of collective labor organizations is a constitutional freedom, as is the right to stay away. TERMINATION GROUNDS In a business with up to ten employees no dismissal protection and termination can generally be for any reason, over ten employees dismissal protection unless dismissal is justified by compelling operational reasons, conduct related reasons (in particular misconduct) or personal reasons (unable to work due to health or new job requirements). 54Guide to Going Global • Employment EMPLOYEES SUBJECT TO TERMINATION LAWS Employees with fewer than six months’ seniority have no unfair dismissal protection (save in certain circumstances where no seniority is required, including dismissals connected to family/pregnancy rights, works council membership or discrimination). RESTRICTED OR PROHIBITED TERMINATIONS Pregnant employees, mothers during maternity leave, employees on parental leave, works council members, candidates during elections, data protection officer, severely disabled employees. THIRD-PARTY APPROVAL FOR TERMINATION/TERMINATION DOCUMENTS The works council, if established, has to be consulted about each termination. Dismissal of disabled employees, employees on maternity or parental leave can be permitted by specific authorities. Collective redundancies require consultation with the works council about a restructuring agreement and a social plan, whereby consent is only mandatory for the social plan; in case of a tie, the employer’s decision on the restructuring plan prevails. MASS LAYOFF RULES Yes, strict information and consultation rules apply where six or more employees in a business between 20 – 60 employees are to be made redundant within 30 days, in larger businesses the threshold is 10 percent or 25 individuals. The employer must file an application with the Federal Employment Agency, failure to do comply will render all notices and agreed terminations invalid. NOTICE Four week’s statutory notice; after 2 years of employment 1 month effective to the end of a calendar month; with a sliding scale of up to 7 months’ notice after 20 years of service. Not required for terminations for very serious misconduct. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE No statutory right to pay in lieu of notice. As to garden leave, the right depends on contract terms and merits of the case, applying a weighting of interests between both parties. SEVERANCE No statutory severance. A valid dismissal will end the employment without compensation, unless it is part of a collective restructuring covered by a social plan agreed with the works council. Invalid dismissal leads to enforced reinstatement by the labor courts, unless the parties settle the dispute. Settlements are standard, the general formula is between half and one and a half monthly salaries per year of service. There is no maximum threshold on settlements. POST-TERMINATION RESTRAINTS Need to be in writing. Those that protect the employer’s legitimate business interests can be enforced if reasonable. Garden leave is common for senior employees. NON-COMPETES Typically no longer than 6–12 months, with a statutory maximum of 2 years. Compensation of 50 percent of the employee’s wages required during the non-compete period. 55Guide to Going Global • Employment CUSTOMER NON-SOLICITS Permissible in narrow circumstances. EMPLOYEE NON-SOLICITS Permissible only if related to illegal poaching; an agreement not to hire employees from a certain business is not enforceable. WAIVERS Enforceable, subject to legal review if, for instance, employees were not given time to consider. REMEDIES DISCRIMINATION Injunction to continue or repeat discriminating actions. Compensation capped at three monthly salaries if discrimination related to the recruitment process. Uncapped compensation in all other cases, based on the claimant’s financial loss and injury to feelings. German courts tend to award limited compensation, awards of €30,000 have been seen as extreme exception. UNFAIR DISMISSAL Reinstatement. Therefore most cases are settled. FAILURE TO INFORM AND CONSULT The works council can bring legal action, which could result in administrative fines of up to €10,000. CRIMINAL SANCTIONS Significant frequent violation of works council information and consultation rights could lead to criminal charges; however, this is rarely the case. 56Guide to Going Global • Employment Hong Kong LEGAL SYSTEM, CURRENCY, LANGUAGE Common Law. The Basic Law of the Hong Kong Special Administrative Region (HKSAR) provides that courts of HKSAR may refer to the precedents of other common law jurisdictions when making decisions. Hong Kong dollar (HK$). English and Chinese. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign entity can engage employees in Hong Kong subject to certain business and tax considerations and proper payroll registration. Payment of Hong Kong tax is the employee’s responsibility. Therefore, Hong Kong employers are not required to withhold tax through the payroll system. PRE-HIRE CHECKS REQUIRED Immigration compliance. PERMISSIBLE Any data collected as a result of pre-hire checks must be necessary and not excessive. In order to comply with the Personal Data (Privacy) Ordinance (PD(P)O), candidates are to be expressly informed of the collection, use and disclosure of any personal data in relation to them by their employer (or prospective employer). Asking a candidate to sign a Personal Information Collection Statement will assist an employer in complying with those obligations. A candidate can be asked to have a medical examination but this should only be after the employer has made a conditional offer of employment to a selected candidate. If criminal checks are carried out, an employer must be careful not to dismiss, exclude or prejudice against the candidate on the basis of any spent conviction (that is, where a person was previously convicted of an offence for which he or she was not sentenced to imprisonment of more than three months or a fine of more than HK$10,000, and the person has not been convicted of any other offence and he or she has not been convicted for at least three years). IMMIGRATION Any person who does not have the right of abode in Hong Kong and who undertakes work of any kind (whether paid or unpaid) must hold a valid employment visa. Processing time is generally six to eight weeks. 57Guide to Going Global • Employment HIRING OPTIONS EMPLOYEE Indefinite, fixed-term, full-time or part-time. INDEPENDENT CONTRACTOR Independent contractors can be engaged directly by the company or via a personal services company. AGENCY WORKER Typically agreements between the agency and the end-user will stipulate that the end-user is not the employer, while the agreement between the worker and the agency will stipulate that the worker is self-employed. The placement may be for a fixed term or open-ended. The Employment Ordinance (EO) and Employment Agency Regulations regulate employment agencies. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS A prospective employee must be provided with certain information (wages and wage period, any end-of-year payment, and length of notice) prior to commencing employment. There is no requirement to have an employment contract in writing, but if the intention is that the contract operates other than as a contract which renews from month to month then it should be in writing and signed by both parties. PROBATIONARY PERIODS Permissible. No statutory limit, but 3-6 months common. Regardless of what the employment contract states, either party can terminate the employment contract without notice during the first month of the probationary period. POLICIES No mandatory policies. THIRD-PARTY APPROVAL No requirement to lodge employment contract or policies with or get approval from any third party. LANGUAGE REQUIREMENTS No statutory requirements. 58Guide to Going Global • Employment MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS The EO applies to every employee engaged under a contract of employment, to an employer of such an employee, and to a contract of employment between such parties. For employees to whom the EO applies, they will be entitled to the basic protections including payment of wages, restrictions on wage deductions, the granting of statutory holidays (albeit not necessarily paid) and employment protection in respect of unlawful dismissal. Employees who are employed under a continuous contract (i.e., for 18 hours a week for four consecutive weeks) (continuous employment) are entitled to further benefits such as rest days, paid annual leave, sickness allowance, paid statutory holidays, maternity leave, severance payments and long service payments. WORKING HOURS Currently no restrictions but there is a proposal in Hong Kong to introduce a maximum working week. OVERTIME No obligation to provide pay for overtime worked. WAGES At least HK$30 per hour. VACATION Between seven and 14 days depending on length of service. In addition, 12 statutory holidays. SICK LEAVE AND PAY Employees in continuous employment will accrue paid sickness allowance at a rate of 2 paid sickness days for each completed month of service in the first year of employment and 4 paid sickness days for each completed month of service thereafter, up to a maximum accrual of 120 sickness days. Sickness allowance is paid by the employer and payment is only due for sickness days taken by an employee if the employee has taken 4 or more consecutive sickness days off. Once the employee is off for at least 4 sickness days, all of the sickness days are deemed subject to be paid the sickness allowance (including the first three days) up to the maximum accrual. The sick leave must also be supported by a valid medical certificate. Sickness allowance is paid at a daily rate equivalent to four-fifths of the daily average of the wages earned by the employee during the period of 12 months immediately before the sickness day or the first sickness day (as appropriate) (or if the employee has been employed by the employer for a period shorter than 12 months immediately before the sickness day, the shorter period) (daily average wages). MATERNITY/PARENTAL LEAVE AND PAY Ten weeks’ maternity leave. This will be paid at four-fifths of the employee’s average daily wages if the employee has 40 weeks’ continuous employment at the commencement of the maternity leave. Where an employee gives birth later than expected, an employee can also ex tend the period of maternity leave by the number of days between the expected date of birth and the actual date of birth. This period is unpaid. Finally, an employee can take a further period of up to 4 weeks, for illness or disability arising out of the pregnancy or childbirth. This period is unpaid and in addition to sickness allowance. 59Guide to Going Global • Employment There is currently no entitlement to paternity leave, but there is a proposal to introduce this into Hong Kong. If introduced, male employees may be entitled to three days’ paternity leave paid at four-fifths of the employee’s average daily wages. DISCRIMINATION Characteristics protected from unlawful discrimination, victimization and harassment: sex, pregnancy, marital status, family status (i.e., having the responsibility for the care of an immediate family member), disability and race. BENEFITS AND PENSIONS Subject to certain exemptions (for example, for people from overseas who enter Hong Kong for employment for fewer than 13 months, or who are covered by an overseas retirement scheme), once an employee has been employed for 60 days, the employer is required to enroll the employee into a Mandatory Provident Fund (MPF) scheme. Generally, both the employer and the employee are required to contribute a minimum of five percent of the employee’s ‘relevant income’ up to a capped maximum amount of HK$1,250. Relevant income includes wages, salaries, leave pay, fee, commission, bonus, gratuity, housing allowance, housing benefits, any perquisite or allowance. It does not include any non-monetary benefits, severance payments or long service payments. DATA PRIVACY The PD(P)O centers around six data protection principles (DPPs). Broadly these require that personal data is only collected for a lawful purpose and that only personal data which is necessary and not excessive for that purpose may be collected and that individuals are informed of certain things before data is collected or used (DPP 1); that all reasonably practicable steps need to be taken to ensure that personal data is accurate and that it should only be retained for as long as necessary to fulfill its purpose (DPP 2); that personal data must not, without the prescribed consent of the job applicant or employee, be used for a purpose other than the purpose for which it was collected (DPP 3); that all reasonably practicable steps must be taken to ensure that the personal data is secure and protected against unauthorized or accidental access, processing, erasure or other use (DPP 4); that all reasonably practicable steps must be taken to ensure that an individual can access information about the data user’s policies and practices in relation to the personal data, the kind of personal data about him or her that is being held, and the purposes for which it will be used (DPP 5); and that, with some exceptions, an individual is entitled to request access to all personal data held by a data user and to correct that data if it is inaccurate (DPP 6). There are provisions in the PD(P)O restricting the transfer of personal data outside of Hong Kong but these are not currently in force. 60Guide to Going Global • Employment RULES IN TRANSACTIONS/BUSINESS TRANSFERS No automatic transfer of employment. This includes an associated company transfer of change of business ownership, or a merger situation where the employment entity will be changed. Therefore, the previous employer will need to terminate the employee’s employment contract and the new employer will need to offer (and the employee accept) employment. If the employee accepts employment with the new employer or unreasonably refuses employment with the new employer in circumstances where the offer of new employment is on the same terms or terms and conditions no less favorable when compared to the terms and conditions with the previous employer, then the previous employer may be able to avoid liability for a severance payment. There is no duty to consult (either individually or collectively) with employees or employee representatives. EMPLOYEE REPRESENTATION Although Hong Kong residents have the right and freedom to form and join trade unions, the level of employee participation in trade unions is relatively low and Hong Kong enjoys a relatively harmonious climate of industrial relations. Collective bargaining agreements are uncommon. There are no employee representatives or works councils. TERMINATION GROUNDS Termination is permissible on these grounds: the conduct of the employee; the capability or qualifications of the employee for performing work of a kind which he or she was employed by the employer to do; redundancy; illegality or some other substantial reason. WHO IS SUBJECT TO TERMINATION LAWS Employees with more than two years’ continuous employment are protected against unreasonable termination (i.e., employee is terminated in order to extinguish or reduce any right, benefit or protection that the employee has under the Eo). Presumption of unreasonable termination can only be rebutted by showing that the termination was for one of the permissible grounds. No requirement to show that the termination was “reasonable” or “fair” in the circumstances. RESTRICTED OR PROHIBITED TERMINATIONS Female employees who are pregnant or on statutory maternity leave; any employee who is absent from work on sick leave and is in receipt of sickness allowance; any employee who has suffered a work related injury entitling him or her to compensation under the Employees’ Compensation Ordinance; any employee who is undertaking jury service; any employee who has given evidence under the Factories and Industrial Undertaking Ordinance; and an employee with a spent conviction. THIRD-PARTY APPROVAL FOR TERMINATION Not required. MASS LAYOFF RULES None. 61Guide to Going Global • Employment NOTICE Minimum seven days’ notice after the first month of the probationary period and during subsequent employment. Assuming the notice is specified in the employment agreement if no notice period is specified, it is presumed to be one month. Not required for terminations for very serious misconduct. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE There is a statutory right to make a payment in lieu of notice. Right to place on garden leave depends on the terms of the contract. SEVERANCE Statutory severance payment payable to redundant employees with two years’ or more continuous service. Calculated using a base amount per year of service of two-thirds of the employee’s last full month’s wages (being the monthly average of the wages earned by the employee during the previous 12 months (or such shorter period where the employee has been employed for less than 12 months) or two-thirds of HK$22,500, whichever is less). Total severance payment is capped at HK$390,000. Employers are entitled to off-set from the liability to pay a severance payment, any gratuity or retirement scheme payment that has been made to the employee in respect of any years of service for which the severance payment is payable. POST-TERMINATION RESTRAINTS Those that protect the employer’s legitimate business interests can be enforced if reasonable. Garden leave is common for senior employees. NON-COMPETES Typically no longer than 6–12 months. CUSTOMER NON-SOLICITS Permissible in limited circumstances. EMPLOYEE NON-SOLICITS Permissible in limited circumstances. WAIVERS Enforceable to waive contractual rights. While an employee can be asked to waive statutory rights, there is some uncertainty as to whether such a waiver would be effective to prevent an employee from subsequently bringing a claim to exercise his or her statutory rights. FAILURE TO INFORM AND CONSULT DISCRIMINATION Uncapped compensation, based on the claimant’s financial loss and injury to feelings compensation of between HK$7,400 and HK$370,000 (based on the Vento guidelines in the United Kingdom, which set out the guidelines used by tribunals to decide how much they should award for injuries to feelings). 62Guide to Going Global • Employment UNFAIR DISMISSAL The EO provides a statutory right to remedies which differ depending on the circumstances in which the unlawful termination took place. In addition to these remedies, an employee is able to claim reinstatement, reengagement or terminal payments. However, for an order of reinstatement or reengagement to be made, both the employee and employer must agree. Where no order for reinstatement or reengagement has been made, the court or Labor Tribunal may also make an award of compensation (up to HK$150,000) to the employee if it considers it just and appropriate. UNREASONABLE TERMINATION The court or Labor Tribunal may make an order for reinstatement, reengagement or for termination payments. Failure to inform and consult not applicable. As set out above, both parties must consent for an order of reinstatement or reengagement to be made. CRIMINAL SANCTIONS The provisions of the EO are enforced, first by criminal law sanctions (where the usual penalty is a fine, except for payment of wages offences, which can give rise to a sentence of imprisonment) and secondly by way of extensive civil remedies at the instance of the aggrieved employee. Further, in some instances, liability can be passed to the individual decision makers of the employing company. 63Guide to Going Global • Employment India LEGAL SYSTEM, CURRENCY, LANGUAGE Based on common law and statutory law, both on a central and state level. Indian Rupee (`). Hindi, in Devanagiri script, is the official language, with English being the additional language used for official purposes and in parliament. However, individual states are able to set their own official language. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign company without local registration cannot directly engage employees in India. Also, proper payroll needs to be set up to make withholdings and deductions. PRE-HIRE CHECKS REQUIRED There is no statutory requirement to carry out pre-employment background/immigration checks. However, the visa stamp/sticker in the employee’s passport will include the name of the employer, and the employer will be required to provide an undertaking to the Foreigners Regional Registration Office (FRRO) on behalf of the employee to register the employee with the FRRO. Therefore, it is advisable for the employer to undertake a basic immigration check. PERMISSIBLE Background checks for applicants can be conducted as long as they comply with the fundamental right to privacy, which means that applicant/employee consent should be obtained. This includes requesting information regarding an applicant’s health and criminal record. The procedure for processing and storing certain sensitive personal information must comply with the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 (Sensitive Information Rules). IMMIGRATION A person who is not an Indian citizen who wishes to undertake any work in India must obtain a valid visa. There are two key work related visas: a business visa and an employment visa. Business visas are usually granted to foreigners coming to India on shorts visits for trainings, business meetings etc. Employment visas are granted to foreigners desiring to come to India for the purpose of employment. All foreigners (including those of Indian origin) are required to register with the relevant authorities (usually the FRRO) within 14 days of their first arrival in India, if they hold a visa for more than 180 days. 64Guide to Going Global • Employment HIRING OPTIONS EMPLOYEE Two categories of employees: workmen and non-workmen. A workman, as defined under the Industrial Disputes Act, 1947 (ID Act), is any person employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or super visor y work for hire or reward. Those mainly employed in a managerial or administrative capacity, or those employed in a super visor y capacity (and earning more than `10,000 per month) are non-workmen. Whether an employee is a workman or a non-workman is a matter of fact which can be determined on the basis of nature of duties of the employee and the job description. If the employee is a workman, the employer will have to comply with certain labor and industrial laws, such as the ID Act. If the employee is a non-workman, the terms and conditions of his or her employment are primarily governed by his/ her contract of employment with the employer. However, in some circumstances, employees who are non-workmen may still be governed by the state specific shops and establishment legislation (S&E Acts), which apply to most companies engaged in commercial activity. Employment can be indefinite, for a temporary term, full-time or part-time. A temporary worker is one who is engaged for a limited time period and/or for a specific purpose. The definition of ‘workman’ under the ID Act does not expressly exclude temporary workers, and therefore temporary workers are deemed to be workmen and are entitled to the same benefits as full-time worker, including in relation to termination provisions. Where a temporary worker is employed for a genuine specific task for a limited time period, the usual provisions concerning termination for full-time workers will not, however, apply to that temporary worker. INDEPENDENT CONTRACTOR Independent contractors can be engaged. A person is deemed to be an independent contractor when a company designates the deliverables sought from a contractor and provides all input necessary to create the deliverables. The contractor is free to carry out the work in the manner he/she deems fit, as long as the timelines and the quality of deliverables are met. AGENCY WORKER More commonly referred to as contract workers. The engagement of agency workers through third-party contractors is governed by the Contract Labor (Regulation and Abolition) Act 1970, which is applicable to every establishment not seasonal in character that employs more than 20 workmen as contract labor in the preceding 12 months, and every agency employing 20 or more workmen in the preceding 12 months. Agency workers are treated as employees of the agency. However, in some respects agency workers enjoy benefits similar to those of regular employees, such as (i) the primary obligation to make social security contributions lies not with the agency, but the principal employer (even though in practice, this payment will typically be made by the agency; (ii) the definition of ‘worker’ under the Factories Act 1948 (FA) includes agency workers to ensure that there is no discrimination between regular workers and agency workers in relation to health, safety, working hours, welfare (e.g., first aid, canteen and washing facilities), etc. (the principal employer still does not have the right (or obligation) to take disciplinary action against agency workers or to hire/fire them or to sanction their leave); (iii) under the law on sexual harassment at the workplace, the principal employer will be obliged to take action in case there has been an incident of sexual harassment in relation to one of the agency workers. 65Guide to Going Global • Employment EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS No requirement for a formal written contract of employment, although in some states an employer is required to provide an employee with a written statement of terms. This statement must include basic employment information such as the commencement date, remuneration payable, hours of work, holiday entitlement, sick pay, pension, notice obligations and job title. PROBATIONARY PERIODS Common for the first 3-6 months. In the case of employees at management level, a longer probationary period may be agreed between the employer and the employee. S&E Acts may contain specific provisions. POLICIES Certain establishments are legally required to adopt Standing Orders – a set of rules relating to prescribed matters which have statutory force once certified by the appropriate labor department. The Industrial Employment (Standing Orders) Act, 1946 (Standing Orders Act) is usually applicable only to the manufacturing sector, if there are more than 50 workmen (or 100, in some states). In some states such as Karnataka and Maharashtra, the SOA has been extended to cover commercial establishments. Policies are optional and may be amended without employee consent, if drafted appropriately. However, for workmen employees, certain terms and conditions of service can only be modified after giving 21 days’ notice. THIRD-PARTY APPROVAL Not required, with the exception of the Standing Orders, which must be certified by the labor department. LANGUAGE REQUIREMENTS None. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS Depends on the category of employee and other factors, including remuneration, location of employee and type of industry. An employee who does not qualify as a workman will not receive any protection or benefit under the ID Act. However, employees working in commercial establishments will still be entitled to certain minimum rights under the S&E Acts (if they are not excluded from the scope of the Act), which have provisions in relation to leave, hours of work, etc. WORKING HOURS Working hours are governed by a variety of statutes depending on the nature of the activity undertaken by the establishment and the location of the establishment. Generally, these statutes provide for working hour limits both on a daily and weekly basis. The normal daily hour limits range from between 8 to 9 hours, and the usual weekly limit is 48 hours. 66Guide to Going Global • Employment OVERTIME If employees are required to work more than the prescribed minimum working hours, they are normally required to be paid at a prescribed overtime rate (usually double the rate of ordinary wages). WAGES The Minimum Wages Act 1948 grants each local government the power to fix the minimum wage rates for scheduled industries, thus the minimum wage varies from region to region and industry to industry and depends on the nature of employment. VACATION Holiday entitlement is generally covered by the employment contract. However, where the S&E Acts apply these determine minimum holiday entitlements, which usually range from 12 to 21 days’ holiday per year. Further, the FA provides that every adult worker who has worked in a factory for at least 240 days in a calendar year is entitled to one day’s leave with wages for every 20 days of work. SICK LEAVE AND PAY Not mandatory, unless the S&E Acts apply and contain minimum sick leave requirements. Also, the Standing Orders Act, if applicable, may contain sick leave requirements. Generally, an employee is entitled to the most beneficial leave entitlement provisions that are provided under the Standing Orders Act or S&E Act or the employer’s service rules. Factories (i.e., (i) premises where 10 or more workers are/were employed in the preceding 12 months in any manufacturing process carried on with the aid of power; or (ii) premises where 20 or more workers are/were employed in the preceding 12 months in any manufacturing process carried on without the aid of power) must also provide paid sick leave to their employees (in accordance with the FA). While the FA does not provide for a sick leave entitlement, the Standing Orders Act (in whichever states it provides for sick leave) should be complied with, as it is applicable to all “factories” as defined under the FA . Employees who are covered by the Employees’ State Insurance Act (ESI Act) can claim sickness or disablement benefit (which is paid by the government). The authorities will obtain a certificate of absence (including details as to whether the employee was absent on a paid/unpaid leave) directly from the employer before releasing the sickness benefit to the employee. MATERNITY/PARENTAL LEAVE AND PAY The Maternity Benefit Act 1961 provides maternity leave to every woman employed in an establishment for at least 80 days in the 12 months immediately preceding the expected date of delivery. The woman is entitled to a maximum period of 12 weeks’ leave (of which not more than 6 weeks can precede the date of delivery). The employee receives her salary during the statutory maternity period. In the case of miscarriage, a female employee is entitled to leave with payment of maternity benefit for a period of 6 weeks immediately following the day of her miscarriage or medical termination of the pregnancy. A woman suffering from an illness arising out of pregnancy is entitled to leave with payment of maternity benefit for an additional 1 month period. In the event the employee is covered under the ESI Act, the benefit is paid by the government. There are no paternity or parental rights. 67Guide to Going Global • Employment DISCRIMINATION Discrimination against persons belonging to a different caste, religion or race is strictly prohibited (in accordance with the provisions made in the Constitution of India). The Equal Remuneration Act 1976 provides for the payment of equal remuneration to men and women for similar work and for the prevention of discrimination on the grounds of gender, while the ID Act prohibits discrimination on the grounds of trade union activity. The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013 (Sexual Harassment Act) received presidential assent in April 2013, though it will not become binding law until it is notified by the central government. The Sexual Harassment Act requires the employer to, inter alia, provide a safe working environment for women and treat sexual harassment as misconduct. BENEFITS AND PENSIONS Benefits will depend on a number of factors such as the size of the employer, the industry and the employee’s length of service. Mandatory statutory benefits include Provident Fund Contribution (for those who have a basic salary of up to `6,500), gratuity (payable at the rate of 15 days’ wages (basic plus inflation allowance) for every completed year of service after five years of service), group insurance, maternity benefits and bonus (for certain establishments). Other benefits such as pension contributions and superannuation benefits are not mandatory. DATA PRIVACY Employers who collect, receive, possess, store, deal with or handle personal information or sensitive personal data or information such as passwords, physiological and mental health conditions; medical records; and call data records, are required to comply with the obligations set out in the Sensitive Information Rules, which requires the entity to obtain prior individual consent before collecting, storing or transferring sensitive personal data, amongst other things. RULES IN TRANSACTIONS/BUSINESS TRANSFERS No automatic transfer of employees in most situations. There are conflicting judicial precedents even at the Supreme Court level on the need to obtain employee consent. Such debate relates to the interpretation of Section 25FF of the ID Act and whether employee consent is necessary when a transfer (including a merger) falls within the ambit of Section 25FF. According to the conservative view, employee’s consent is necessary. Under the ID Act, workmen are deemed to have been dismissed and are entitled to all associated severance payments, unless (i) the buyer agrees to provide the employee with terms which are no less favorable than those the employee was entitled to prior to the transfer; (ii) continuity of service of the workmen is not interrupted; and (iii) the buyer undertakes to pay compensation to such workmen on the basis that the service has been continuous. Where these conditions are not met, the transferring employer will be liable for redundancy payments and salary in lieu of the notice period (at least one month). 68Guide to Going Global • Employment EMPLOYEE REPRESENTATION Employees are free to form a trade union. However, in order to get registered, any seven or more members of a trade union must subscribe their names to the rules of the trade union and seek registration in accordance with the Trade Unions Act 1926. A registered trade union of the workmen shall at all times continue to have not less than 10 percent of workmen or 100 workmen (whichever is less), subject to a minimum of 7. Certain states have enacted laws imposing an obligation on an employer to recognize a trade union and collectively bargain, but there is no such law at the national level. The ID Act only imposes an obligation on the employer to bargain collectively with recognized unions, leaving unrecognized but registered trade unions at a position of disadvantage. TERMINATION GROUNDS All dismissals must be for “reasonable cause” – e.g., redundancy, poor performance, continued ill health, etc. Such dismissals are referred to as termination simpliciter. Otherwise, employees may be dismissed for misconduct (or ‘for cause’). The employer must hold an enquiry before dismissing an employee for cause. Such dismissals are referred to as stigmatic terminations. In practice, many terminations in India are implemented through negotiated resignations. EMPLOYEES SUBJECT TO TERMINATION LAWS All employees. PROHIBITED OR RESTRICTED TERMINATIONS Where an employee receiving sickness benefit is dismissed, a fair and reasonable procedure must be followed. If it appears that the employee has been dismissed due to sickness, this may be held to fail the ‘reasonable cause’ test. A female employee who is on maternity leave cannot be dismissed during, or on the basis of, her maternity leave. THIRD-PARTY APPROVAL FOR TERMINATION Under the ID Act, employers of factories/mines/plantations with more than 100 workmen are required to seek the approval of the government before carrying out employee terminations. Other establishments covered by the ID Act are only required to notify the government when employee terminations are carried out. MASS LAYOFF RULES Employers may terminate by reason of redundancy, but there are no specific rules for mass dismissals as opposed to individual economically motivated dismissals. The services of a workman can be terminated for redundancy in accordance with the ID Act, which refers to the termination of workmen’s services by the employer for any reason other than (i) termination as a result of disciplinary action; (ii) retirement; or (iii) termination on grounds specified in a fixed-term contract and (iv) termination on the ground of continued ill health. Specific procedures must be followed while carrying out redundancy terminations under the ID Act. 69Guide to Going Global • Employment NOTICE The notice period may vary from state to state but it is normally one month for ordinary dismissal, unless the employment contract provides for a longer notice period. In some states, if the employee has worked for less than three months/six months, no notice is required to be given. No notice required for dismissal with cause. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE Payment in lieu of notice is possible. Garden leave is possible, though there is little case law to suggest how it will be enforced by the courts. It is preferable to include a specific garden leave in the contract of employment and company policy. SEVERANCE In case of a termination due to redundancy, employers are required to pay retrenchment compensation equivalent to 15 days’ average pay for every year of continuous service to all workmen who are made redundant (for non-workmen, the amount payable is specified in the contract of employment or governed by the relevant S&E Act). In addition, the employer must pay certain termination benefits to employees who are dismissed, including: leave encashment; gratuity payment (for employees, whether workmen or not, with five years or more of seniority); payment in lieu of notice (if no notice is given); and any other amounts due under the employment contract. Employees who are being terminated on account of misconduct will not be entitled to notice pay or retrenchment compensation. POST-TERMINATION RESTRAINTS Most restrictive covenants are unenforceable in India. Courts in India have consistently refused to enforce post-employment restrictive covenants in employment contracts, especially non-compete clauses, because of their potential to deprive an individual of the fundamental right to earn a livelihood. NON-COMPETES The Indian Contract Act 1872 (ICA) allows for an exception in the context t of the sale of a business; the seller of the goodwill of the business may agree with the buyer to refrain from carrying on a similar business within a specific geographic area. In these circumstances, the Courts will assess whether the restriction is reasonable after considering the nature of the business and whether the buyer of the goodwill is continuing the seller’s business, or a similar business. CUSTOMER NON-SOLICITS Possibly enforceable. While there can be no blanket restriction that prevents past employees from providing services to the employer’s customers (without any solicitation), they can be prevented from proactively soliciting an existing customer and inducing him/her to break his or her contract with the employer. 70Guide to Going Global • Employment EMPLOYEE NON-SOLICITS Possibly enforceable. While there can be no blanket restriction that prevents past employees from engaging the services of their ex-colleagues (without any solicitation), they can be prevented from proactively soliciting an employee and inducing him/her to break his or her contract with the employer. WAIVERS The doctrine of waiver is recognized in Indian Contract Law. A waiver must amount to an unambiguous representation arising as the result of a positive and intentional act done by the party granting the concession with knowledge of all the material circumstances. Though any waiver against statutory entitlements given by an employee is unlikely to be enforceable, a generic waiver of rights may be enforced. This happens when an employee agrees to waive certain conditions in or certain rights arising from a contract. REMEDIES DISCRIMINATION Compensation for wrongful dismissal on the grounds of discrimination. Damages for wrongful dismissal will be assessed in accordance with what the employee would have received if the contract had been properly terminated on its terms. Section 10 of the Equal Remuneration Act (ECA) provides for penalties if an employer recruits in contravention of the ECA or pays men and women differently for the same or similar work or in any way discriminates between male and female workers. The penalty may be a fine or imprisonment. UNFAIR DISMISSAL The employee can seek redress from the Industrial/Labor Court for reinstatement with full back wages with continuity in service, or reinstatement without back wages, or only back wages without reinstatement, or only monetary compensation and consequential benefits. FAILURE TO INFORM AND CONSULT An employer only has a duty to consult if this is expressed in the employment contract. If the employer has contractually agreed to consult the employees on certain issues and if it fails to do so, the employees can refer the matter to the courts/tribunals to enforce those rights. CRIMINAL SANCTIONS For committing unfair labor practices (as defined under the ID Act) – up to six months’ imprisonment or a fine of up to `1,000, or both. 71Guide to Going Global • Employment Indonesia LEGAL SYSTEM, CURRENCY, LANGUAGE Civil Law system, Indonesian Rupiah (Rp), Bahasa Indonesian. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign company cannot directly engage employees in Indonesia without setting up a local corporate presence. An employer must set up payroll in Indonesia and make withholdings for income taxes and social charges under the Jamsostek program. PRE-HIRE CHECKS REQUIRED Indonesian legislation is silent on pre-hire checks. As such, there are no requirements or prohibitions on background checks on applicants. PERMISSIBLE Yes. IMMIGRATION All expatriates coming to Indonesia will need a visa and those working in the country will also need a work permit. Fines and imprisonment may be imposed on those who breach immigration requirements. HIRING OPTIONS EMPLOYEE Law No. 13 of 2003 (Manpower Law) divides employees into two categories: Definite-term Employees: employees under a definite or fixed-term employment agreement. Also known as “contract workers.” May per form: work to be per formed and completed at once or work which is temporary; work the completion of which is estimated to be accomplished within a period of time (in practice, not longer than three years); seasonal work; work that is related to a new product, new activity or additional product which is still in the experimental stage or try out process. Indefinite-term Employees: employees who do not fall into the category of definite-term employees. Also known as a permanent workers. Employees can be engaged on a full-time or part-time basis. INDEPENDENT CONTRACTOR Can be engaged but should not be provided with fees or benefits which could be deemed as salary or employment benefits as they may be deemed to be employees. Not separately regulated but will fall under general contract law. 72Guide to Going Global • Employment AGENCY WORKER Outsourcing of labor or business services is subject to significant recent regulatory restrictions and requirements which, if not met, may mean that the agency worker becomes an employee of the outsourcing user. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS Fixed-term agreements (i.e., those for definite-term employees) must be made in writing and registered with the Ministry of Manpower and Transmigration. Employment agreements of indefinite term can be made either orally or in writing. Both must contain certain required provisions. PROBATIONARY PERIODS Any employment relationship that includes a probationary period must be documented in writing, and the probationary period cannot be longer than a single period of three months. A fixed-term employment contract cannot contain a probationary period. POLICIES No mandatory policies, but the following clauses and policies are recommended: gifts and favors policies for compliance with anti-bribery rules; policy on conflicts of interest with external parties; policies on electronic communications, email/Internet abuse and software copyright; policy on code of conduct; policy on data privacy and changes in personal data; clause in contemplation of natural disaster; political activities; clause on rotation and relocation (mutasi); clause on demotion; clause on suspension (without termination); clause on personal leave; policy on preventing sexual harassment; and early retirement schemes. THIRD-PARTY APPROVAL Subject to the Employment Contracts section above, there is generally no requirement to lodge employment contracts or policies with, or get approval from, any third-party. LANGUAGE REQUIREMENTS Written agreements must be in the Indonesian language using the Latin alphabet. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All (with certain exceptions in respect of expatriate employees). WORKING HOURS 7 hours a day or 40 hours a week limit (in a 6-day week); or 8 hours a day or 40 hours a week (in a 5-day week). 73Guide to Going Global • Employment OVERTIME An employer who employs workers in excess of the standard work hours is obliged to pay overtime (with limited exceptions). Under current regulations, an employer is not obliged to pay overtime to those in certain positions of responsibility. The overtime payment rate is dependent on how many hours are worked overtime and the timing of such overtime work. WAGES No national minimum wage. Provinces settle their own minimum wage every year. The minimum wage is intended to cover employees working a 40 hour week in the formal sector (that is, any job sector or industry that is recognized, monitored and regulated by the government). VACATION Minimum of 12 days of paid vacation per year after 1 year uninterrupted service. SICK LEAVE AND PAY Paid sick leave in the case of illness or injury evidenced by a medical certificate or statement. Sickness pay is paid by the employer. The employee will receive 100 percent of his salary for the first four months; the percentage of pay decreases thereafter. If the sickness continues after 12 months then the employee may be terminated with severance payment. Female employees are also entitled to two days of menstrual leave during the first and second day of menstruation. MATERNITY/PARENTAL LEAVE AND PAY Pregnant employees are entitled to take three months’ fully-paid maternity leave, of which 1 1/2 months is to be taken in the pre-natal period and the remaining 1 1/2 months in the post-natal period (a period of 1 1/2 months’ fully-paid rest must be given to those who have miscarried). A male worker is entitled to two days’ paid paternity leave if his wife gives birth or miscarries. An employee is entitled to two days’ paid leave for his or her child’s wedding, circumcision, baptism or death. Muslim employees may take “long leave” of up to three months in order to fulfill religious duties, that is, a pilgrimage to Mecca. During this time the full salary must be paid. This entitlement may only be taken once. DISCRIMINATION Characteristics protected from unlawful discrimination: sex, ethnicity, race, religion, and political orientation. No regulated protection from harassment for employees. Employees wishing to take action against sexual harassment in the workplace can file a claim on the basis of the civil tort law. 74Guide to Going Global • Employment BENEFITS AND PENSIONS It is mandatory for every company or individual employing ten or more workers or generating a monthly payroll of at least Rp1 million per month to apply for the Workers Social Security Program (Jamsostek). Other enterprises may participate in the program on a voluntary basis. The Jamsostek program also ex tends to cover foreign employees. Jamsostek covers occupational accident security, death security, old age security, and health maintenance. A company or an individual is not obligated to enroll its employees in the social security program if it offers an independent employee social security program with benefits comparable or better than those offered under Jamsostek. DATA PRIVACY Law No. 11 of 2008 on Electronic Information and Transactions restricts the electronic use of private data without the data subject’s consent. Under Law No. 39/1999 on Human Rights, each individual has the right to their own privacy, and cannot be subjected to an investigation in relation to personal data without their agreement, except on the order of a court or other legitimate authority under prevailing legislation. RULES IN TRANSACTIONS/BUSINESS TRANSFERS Employees are not automatically transferred on a business transfer, which includes a merger. Employees should be consulted and the following three options are possible in relation to permanent employees: • The employee is not willing to continue their employment with the new employer, in which case they must be paid a severance payment. • The new employer is not willing to accept the employee, in which case the employee is entitled to two times the stipulated severance pay, plus long service pay and compensation. • The new employer and the employee are willing to continue the employment as if no business transfer has occurred, with the employment relationship continuing on the basis of the same terms and conditions (or better) as before the transfer and usually carrying forward accrued seniority. (Employees cannot be given less beneficial terms unless they are terminated by the former employer/made redundant and rehired by the new employer. In that case, the new employer may rehire on its own terms.) A non-permanent worker who chooses not to accept a transfer of employment offer or who is not offered a transfer, is generally entitled to receive the wages for the remaining period of his or her fixed-term contract. No protection against dismissal for employees in a business transfer. However, as with nearly all terminations of employment, Industrial Relations Court (IRC) approval is required before the employee’s employment can be terminated. 75Guide to Going Global • Employment EMPLOYEE REPRESENTATION Any group of at least ten employees can establish a labor union which will have the right to: (i) enter into a Collective Labor Agreement with the employer, (ii) represent workers in industrial disputes and at manpower institutions, (iii) establish institutions (e.g., cooperatives) or carry out activities relating to the improvement of the welfare of the workers, and (iv) carry out other legal activities in the area of industrial relations. Criminal sanctions can be imposed on anyone, including the employer, who engages in certain anti-union activity. TERMINATION GROUNDS Termination is possible on the following grounds but in each of these cases Industrial Relations Court (IRC) approval is required: • Termination without cause (i.e., where dismissal cannot be avoided, such as in the case of a merger, a reorganization of the company, or bankruptcy of the employee; note that the employer still has to show grounds for termination). • Termination with cause (e.g., where the employee breaches the employment contract or company regulation, or commits gross misconduct). • Where the employee has been unable to work for over six months due to legal proceedings brought against him or her (however, if the court finds the employee not at fault, the employer must re-employ the employee). • Where the employee has been absent from work for five or more consecutive working days without providing reasons or evidence and two notices have been given. EMPLOYEES SUBJECT TO TERMINATION LAWS All. PROHIBITED OR RESTRICTED TERMINATIONS Termination cannot be on the basis of the following circumstances: a worker is absent due to illness according to the physician’s statement for a period of not more than 12 months; a worker is unable to carry out work due to the fulfillment of state duties; a worker performs his or her religious rituals; a worker gets married; a female worker is pregnant, in delivery, experiences miscarriage or breastfeeds her baby; a worker has a blood relationship and or a marital relationship with another worker within one company (except if it is prohibited in the employment agreement, the company regulation, or the collective labor agreement); a worker forms, becomes a member and/ or the manager of a union, carries out activities of the union outside working hours, or during the working hours with (i) consent from the employer, or (ii) based on the provisions under the employment agreement, the company regulations or the collective labor agreement; a worker has reported the employer to the authorities concerning the question of whether the employer has committed criminal actions; or a worker has a permanent disability condition or is ill due to a work accident or due to the employment relationship, which, according to a physician’s statement, the recovery period cannot be determined. 76Guide to Going Global • Employment If the employer purports to terminate an employee’s employment under any of the circumstances above, such termination is void by law and the employer must continue to employ such employee. THIRD-PARTY APPROVAL FOR TERMINATION In order to unilaterally terminate employment, generally employers must first undertake bipartite or tripartite negotiation as well as mediation or conciliation procedures (if no mutual agreement is reached) by obtaining a favorable decision on the termination of employment from the IRC. Exceptions apply if the termination of employment occurs during the probation period of the worker (as long as the probation period is specifically provided in writing), due to the worker’s voluntary resignation without pressure/intimidation from the employer, due to a mutually agreed termination or due to the worker reaching retirement age under the employment agreement or law. MASS LAYOFF RULES No specific definition of redundancy or layoff. Employers seeking to make employees redundant should ensure that they provide valid evidence as grounds for the redundancy. Employers must attempt to negotiate a proposed termination with an employee or relevant labor union, as all dismissals on redundancy grounds require approval from the IRC (if not mutually agreed). A consultation process must be completed before notice of termination is given to employees. Where a redundancy occurs, the employer must pay the employee severance pay, service pay and compensation pay. NOTICE Employment cannot be terminated unilaterally through notice. In practice, some employment agreements stipulate a notice period for termination even though termination by written notice alone is not permitted and the written notice does not negate the legal requirement to obtain approval of the termination from the IRC , absent mutual agreement as to the termination and its terms. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE Payment in lieu of notice is not a recognized concept under the Manpower Law but is simply a part of the calculation of severance and may be given in addition to the statutory termination package. However, an employment agreement will sometimes stipulate that payment in lieu of notice can be set off against the statutory termination package. Employers can require employees to serve a period of garden leave in a form of suspension pending the outcome of mediation and IRC proceedings. During such period the employees are still entitled to their salary. 77Guide to Going Global • Employment SEVERANCE Amount and type of severance depends on the basis of the dismissal. For example, if the dismissal is due to the employee’s minor misconduct, the employee is entitled to the following after a process involving the issuance of three written warning letters: • Standard severance pay: one month’s salary for every year of service, up to nine months’ salary. • Service appreciation pay: 2 months’ salary for the first 3 years of service, followed by an additional 1 month’s salary for every 3 years of service thereafter, up to a maximum of 10 months’ salary for 24 years of service. • Compensation: to cover annual leave that has not expired or been taken, relocation expenses (to return the employee and his or her family to the place from which they were recruited), medical and housing allowance, other benefits under the employment relationship; and other compensation amounts as determined by the IRC. If the dismissal is without cause or there is termination on retirement, the employee is entitled to two times the severance pay amount plus the standard service appreciation pay and compensation. POST-TERMINATION RESTRAINTS Enforceable by virtue of the principle of freedom of contract, adopted in the Indonesian Civil Code. However, in practice they are almost impossible to enforce. NON-COMPETES Permissible in theory, but may be difficult to enforce. CUSTOMER NON-SOLICITS Permissible in theory, but may be difficult to enforce. EMPLOYEE NON-SOLICITS Permissible in theory, but may be difficult to enforce. WAIVERS The general freedom of contract provisions of the Indonesian Civil Code will allow parties to waive rights, however the operation of such waiver would not be permitted if it resulted in a violation of public policy or order, or was not being applied in good faith. REMEDIES DISCRIMINATION The employee is entitled to reinstatement, if applicable, or double severance pay, ordinary service pay and ordinary compensation. The Manpower Law does not expressly recognize other damages such as loss of reputation and mental suffering but these may be recognized if a separate, civil action is raised. 78Guide to Going Global • Employment UNFAIR DISMISSAL Reinstatement or termination benefit (such as compensation which includes back pay). FAILURE TO INFORM AND CONSULT Employees are entitled to voice their concerns, but no remedial action will be taken. CRIMINAL SANCTIONS Imposed on employers who breach the Manpower Law, including where employers: participate in anti-union activity; intentionally and without any rights or illegally access computers and/or electronic systems owned by somebody else for the purpose of obtaining electronic information and/or electronic documents; violate workplace healthy and safety regulations; fail to submit written annual reports on their industrial relations to the Minister of Manpower; or fail to pay overtime due. 79Guide to Going Global • Employment Ireland LEGAL SYSTEM, CURRENCY, LANGUAGE Common Law. Member of European Union (EU), so required to implement relevant EU Directives. Euro (€). Irish and English. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP Foreign entities can directly engage employees in Ireland, subject to business and corporate tax planning considerations. Depending on the nature and extent of activity in Ireland, though, registration with the Companies Registration Office and the Revenue Commissioners may be required. Withholdings for pay-as-you-earn (i.e., pay-related social insurance charges – up to 10.75 percent employer portion and up to four percent employee portion) and income tax (up to 41 percent) to be done through payroll. PRE-HIRE CHECKS REQUIRED Immigration compliance. Certification from An Garda Siochana (the Irish police service) for certain limited professions. Central Bank of Ireland approval for specific roles in financial institutions. PERMISSIBLE Reference and education checks are common and permissible with applicant consent. In order to carry out a criminal background check, employers can require the applicant to obtain a certificate from An Garda Siochana. IMMIGRATION Nationals of the European Economic Area (EEA) and Switzerland have a right to work in Ireland. For entry into Ireland, non-EEA nationals are categorized as visa required or non-visa required. Non-EEA nationals require permission to be employed in Ireland. This requires an application to be made to the Department of Jobs, Enterprise AND Innovation, by the employing organization and employee. HIRING OPTIONS EMPLOYEE Indefinite, fixed-term, full-time or part-time. Part-time and fixed-term employees have the right not to be discriminated against due to their status. INDEPENDENT CONTRACTOR Independent contractors can be engaged directly by the company or via an agency. Engagement may be subject to misclassification exposure. 80Guide to Going Global • Employment AGENCY WORKER Agency workers are common. Agency workers have the right to equal treatment in relation to certain forms of pay, access to facilities, and access to information about permanent employment opportunities. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS Within two months of commencement of employment, employees must be provided with a written statement of minimum terms. Common best practices to have an employment contract. PROBATIONARY PERIODS Permissible. No statutory limit, but six months is common. POLICIES Written health and safety policy and disciplinary and grievance policy mandatory. THIRD-PARTY APPROVAL No requirement to lodge employment contract or policies with or obtain approval from any third-party. LANGUAGE REQUIREMENTS No statutory requirements, but all documents should be in English. Where the workforce comprises non-English speaking employees, it may be prudent to translate employment documents (i.e., contracts, health and safety materials and disciplinary materials) into other languages. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All. WORKING HOURS 48 hours per week limit on working time. Employees who are in charge of their own working time are not governed by the restriction. OVERTIME No statutory obligation to provide pay for overtime worked. However, certain sectors of employment covered by industrial agreements may have specific overtime rates. Entitlement to paid overtime may also exist due to contractual agreement or custom and practice in the employment. WAGES Minimum wage of €8.65 per hour. VACATION Twenty days annual leave per year plus nine public holidays. 81Guide to Going Global • Employment SICK LEAVE AND PAY No right to pay while on sick leave. Pay is at the employer’s discretion. Employees may be entitled to State illness benefit. MATERNITY/PARENTAL LEAVE AND PAY Twenty-six weeks’ paid maternity leave (state benefit of €230 per week – no obligation on employer to pay but some top up the State benefit to normal salary). 16 weeks additional unpaid maternity leave. 18 weeks unpaid parental leave. No statutory paternity leave. DISCRIMINATION Nine specific grounds protected from unlawful discrimination: age, disability, gender, family status, civil status, race, religion, sexual orientation and membership of the Traveler community. BENEFITS AND PENSIONS No legal obligation on employers to provide occupational pension schemes or other benefits for employees. However they must offer access to a personal retirement savings account (PRSA) for employees to make personal contributions. DATA PRIVACY Employees generally must be notified of personal data processing (and in certain cases, give consent). Registrations with the Data Protection Commissioner are required. Special rules apply to data transfer outside the EEA. RULES IN TRANSACTIONS/BUSINESS TRANSFERS Automatic transfer under Ireland’s European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 in an asset or service provision change. Significant restrictions on changing terms and conditions following a transfer. Duty to inform and consult with employee representatives. Any dismissal connected to the transfer would be unfair unless for an economic, technical or organizational reasons. EMPLOYEE REPRESENTATION Trade unions are prevalent in certain sectors (the public sector, manufacturing and transport). Thirty-one percent of workers are members, but most are employed in the public sector. Many businesses have no union or other worker representation. Works Councils are uncommon. Industry level collective bargaining agreements are uncommon. 82Guide to Going Global • Employment TERMINATION GROUNDS Termination permissible on these grounds, if a fair process has been followed: Capability, conduct, competence or qualifications of the employee, redundancy or some other substantial reason. EMPLOYEES SUBJECT TO TERMINATION LAWS Employees with more than one year’s service have unfair dismissal protection except in certain circumstances where no service is required, including dismissals for pregnancy related matters and trade union membership and activities. PROHIBITED OR RESTRICTED TERMINATIONS No statutory prohibitions. THIRD-PARTY APPROVAL FOR TERMINATION Not required. MASS LAYOFF RULES Strict information and consultation rules apply where 50 or more employees are to be made redundant over 90 days or less. The employer must also notify the Minister for Jobs, Enterprise and Innovation of the redundancies. NOTICE Statutory notice: 13 weeks to 2 years – 1 week; 2 years to 5 years – 2 weeks; 5 years to 10 years – 4 weeks; 10 years to 15 years – 6 weeks; 15 years or more – 8 weeks. Contract may be terminated without notice for gross misconduct. Notice periods are often extended under contract. Periods of 1 to 3 months are the most common. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE No. Right dependent on contractual terms. SEVERANCE Payable to redundant employees with two years’ or more continuous service. Statutory pay calculated at two week’s pay per year of service plus an additional bonus week. Pay capped at €600 per week. Enhanced payments are common in certain industries and for senior positions. 83Guide to Going Global • Employment POST-TERMINATION RESTRAINTS Terms that protect the employer’s legitimate business interests can be enforced if reasonable. Garden leave is common for senior employees. NON-COMPETES Typically no longer than 6–12 months. CUSTOMER NON-SOLICITS Permissible in limited circumstances. EMPLOYEE NON-SOLICITS Permissible. WAIVERS Enforceable, but employees must be represented by counsel to sign a settlement agreement waiving statutory rights. REMEDIES DISCRIMINATION Compensation for discrimination up to two years’ remuneration; arrears of remuneration for up to three years before date of referral for unequal pay claim; order for equal treatment and order for employer to take specific action in rectifying inequality. UNFAIR DISMISSAL Three remedies available: reinstatement, re-engagement and compensation based on the claimant’s financial loss (capped at two years’ remuneration). Compensation is the most common remedy. FAILURE TO INFORM AND CONSULT In collective redundancy situation up to four weeks’ remuneration. In transfer of undertakings situation up to four weeks’ remuneration. CRIMINAL SANCTIONS Prosecution and penalties under health and safety legislation, immigration legislation and exceptional collective redundancy legislation. 84Guide to Going Global • Employment Israel LEGAL SYSTEM, CURRENCY, LANGUAGE Strong common law heritage with elements from other legal systems. New Israeli Shekel (₪). Hebrew and Arabic. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP Generally, registration of the employer, either an Israeli subsidiary or a foreign company (branch), is required, in order to set up a bank account for payroll and to open tax and national insurance files for mandatory withholding requirements. PRE-HIRE CHECKS REQUIRED Immigration compliance. PERMISSIBLE Reference and education checks are common and permissible with applicant consent. Other types of checks are subject to restrictions and must be directly related to the position. IMMIGRATION All non-Israeli citizens (except for holders of certain types of residency permits) are required to obtain a work visa from the Israeli Ministry of Interior. Companies wishing to employ non‑Israeli citizens must obtain work permits and work visas for their foreign workers from the Israeli Ministry of Interior. HIRING OPTIONS EMPLOYEE Indefinite, fixed-term, full-time or part time. INDEPENDENT CONTRACTOR Independent contractors can be engaged directly by the company or via a personal services company. Engagement may be subject to misclassification exposure. AGENCY WORKER Agency workers will typically be either white or blue-collar workers. Certain agency workers have the right to become employees of the employer after nine months, and receive rights and benefits equal to these provided to employees at the same work place. Special rules apply for agency workers providing security, catering and cleaning services. 85Guide to Going Global • Employment EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS Common best practices. Within 30 days of commencement of employment, employees must be provided with a notice listing certain employment conditions (as well as written updates with respect to changes in employment terms). PROBATIONARY PERIODS Permissible, generally relating to shortened prior notice periods only. No statutory limit, but up to three months is common practice. POLICIES Common best practices. In most cases, prevention of sexual harassment policy is mandatory. In addition, a computer use policy is required if the employer intends to monitor the employee computer use. In companies in the high tech sector employee handbooks are common. THIRD-PARTY APPROVAL No requirement to lodge employment contract or policies with or get approval from any third-party. LANGUAGE REQUIREMENTS In a language understood by the employee. As a common best practice, it is recommended that all documents will be in English, provided that employee positions will require a working knowledge and use of English. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All. WORKING HOURS Up to 43 hour a week, and 9 hours a day, for a 5-day’ work week. OVERTIME Up to 3 hours per day and a maximum of 15 hours per week. Pay of 125 percent of the base hourly wage for the first 2 hours of overtime per day, 150 percent of the base hourly wage for any additional overtime hours. Special rates for weekend and night work. WAGES Minimum wage is ₪23.12 per hour. VACATION Based on seniority. Assuming a five-day work week, the annual minimum vacation entitlement is: ten days – first two years of employment; 11 days – 3rd and 4th year of employment; 12 days – 5th year of employment; 17 days – 6th, 7th and 8th year of employment; 23 days – 9th year and after. In addition, employees are entitled to 9 days of public holidays per year. 86Guide to Going Global • Employment SICK LEAVE AND PAY Under law, employees are entitled to 1 1/2 sick days per month of employment (18 days per year). Sick leave can be accumulated up to a maximum of 90 days. The employer is not required to pay for the first day of sick leave and it is not deducted from the annual entitlement. On the 2nd and 3rd sick days an employee will be paid 50 percent of his or her salary, and beginning on the fourth day of sick leave, the employee will be paid his or her full salary until accrued sick days are fully used. During sick leave, benefits are paid in the same ratio as salary Employees may take certain sick leave days in connection with the illness of any child under the age of 16, or of any parent over the age of 65 who is totally dependent on assistance to carry out day-to-day activities. In practice, many companies in Israel pay full salary from the first sick day. MATERNITY/PARENTAL LEAVE AND PAY In general, up to 26 weeks’ maternity leave (may be extended to up to 1 year, based on seniority with employer), paid for up to 14 weeks by the National Insurance Institute, right to return to work for at least 60 days. Men can receive up to eight weeks of paid paternity leave if mother returns to work during her paid maternity leave. DISCRIMINATION Characteristics protected from unlawful discrimination and harassment: age, disability, gender, sexual orientation, race, religious belief, nationality, country of origin, opinion, political party, participation in military service (including military reserve duty), and matrimonial and parental status. BENEFITS AND PENSIONS Mandatory pension with minimum contributions (including distributions towards severance pay). In certain circumstances employees are also entitled to reimbursement for travel expenses. Employees working over a year are entitled to recuperation pay, based on seniority (starting at five days) and payable on a monthly or annual basis, according to the employer’s preference. Recuperation pay is much like vacation pay in other jurisdictions and is intended to be used for vacation or recuperation purposes and is normally paid between June and September. An additional benefit known as ‘Education Fund’ is common, and provides tax breaks for employer and employee disbursements set aside for at least six years. DATA PRIVACY Employees generally must be notified of the terms of the employer’s personal data processing policy, and consent. Registrations in the Databases Register may be required. Special rules apply to data transfer outside Israel. Significant restrictions on monitoring email and Internet use. Monitoring personal email is restricted. 87Guide to Going Global • Employment RULES IN TRANSACTIONS/BUSINESS TRANSFERS Acquisitions that entail change of ownership will generally not result in changes in employment relations. Transfer of employees to a new employer as part of an asset transfer requires the employees consent. This can be achieved through assumption of employment arrangements by buyer (including seniority based rights) or through a ‘fire-rehire’ approach (there may still be transfer of residual liabilities deriving from the period of employment preceding the transfer). EMPLOYEE REPRESENTATION Trade unions are prevalent in certain sectors (such as industry, transport and the public sector). Many businesses have no union or other worker representation, however, an employer may not object to the incorporation of a workers’ union, and is required to negotiate with the union in good faith. Industry level collective bargaining agreements are common in certain sectors (such as transport and public sector). There are no works councils, but trade unions may be entitled to certain information and consultation rights. TERMINATION GROUNDS Any reasonable reason provided that a fair process has been followed in accordance with the procedural requirements for termination. Employees may claim unlawful dismissal on the grounds of discrimination, breach of the employers’ good faith obligation and/or failure to comply with the procedural requirements for termination. EMPLOYEES ENTITLED TO TERMINATION PROTECTION All employees. PROHIBITED OR RESTRICTED TERMINATIONS Pregnant women (after six months of employment), women on maternity leave and during the first 60 days following their return to work, and employees undergoing fertility treatments may not be dismissed without the prior approval of the Minister of Economy. Employees may not be dismissed during their military reserve duty or 30 days following their return to work. THIRD-PARTY APPROVAL FOR TERMINATION No, apart from the notification below in case of a mass dismissal. MASS LAYOFF RULES No special rules apply, however, if all employees without exception are dismissed, the prior hearing process for termination can be skipped. In the event of dismissal of more than ten employees, the employer is required to notify the local Employment Services Bureau of the dismissal. 88Guide to Going Global • Employment NOTICE Absent a contractual arrangement setting a longer notice period than the minimum requirements, the notice period for full-time employees is as follows: (i) during the first year of employment – one day for each month during the first six months of employment and an additional two and a half days for every additional month thereafter; and (ii) following completion of at least one entire year of employment on a full-time basis – 30 days. The length of the notice period will be less for employees paid on an hourly basis. Most employment agreements include a 30 days’ contractual notice period. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE Yes. Payment in lieu of notice in an amount equal to the employee’s salary is permissible. The employer/employee relationship is terminated immediately, and benefits need no longer be paid, unless a contractual provision or binding practice requires otherwise. Garden leave is permissible on full salary and benefits. SEVERANCE Payable to dismissed employees with at least one year seniority. Usually last monthly salary multiplied by the number of years the employee worked. Generally, a substantive portion of the severance pay entitlement will have been accrued as part of the employees managers’ insurance and/or pension fund. If the parties provided so in the employment agreement or as a result of a collective bargaining agreement applicable to the employee, the employee will not be entitled to severance pay other than the amount accumulated in the employee’s pension fund. POST-TERMINATION RESTRAINTS NON-COMPETES Although common, generally not enforceable under current Israeli case law. CUSTOMER NON-SOLICITS Permissible. Typically not longer than 12 months. EMPLOYEE NON-SOLICITS Permissible. Typically not longer than 12 months. WAIVERS Generally enforceable, if the employee receives additional benefits in consideration for signing the waiver commensurate with the rights waived. Employees may not waive certain statutory rights and benefits. 89Guide to Going Global • Employment REMEDIES DISCRIMINATION Uncapped compensation, based on the claimant’s financial loss. Punitive compensation of up to ₪120,000 without demonstrating damages. Reinstatement or reengagement is possible but rare. UNFAIR DISMISSAL Uncapped compensation, usually between 1-12 salaries, depending on circumstances. Reinstatement or reengagement is possible but rare. FAILURE TO INFORM AND CONSULT In most circumstances employees are not entitled to information and consultation rights, and these rights will generally only apply to organized workers. Accordingly, awarded damages for failure to inform and consult are rare. CRIMINAL SANCTIONS Failure to comply with various labor laws (such as minimum wage, work hours, unlawful discrimination and prohibited termination) is a criminal offence and may result in criminal proceedings (at least in theory). 90Guide to Going Global • Employment Italy LEGAL SYSTEM, CURRENCY, LANGUAGE Civil Law. Member of European Union (EU), so required to implement relevant EU Directives. Euro (€). Italian. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign entity can engage employees in Italy with proper payroll registrations, subject to business and corporate tax planning considerations. Withholdings for social contributions (up to approximately 30 percent employer portion and up to approximately 10 percent employee portion) and income tax (up to approximately 43 percent) to be done through payroll. Notice of commencement of the employment has to be given by the employer to the labor authorities at least one day before the commencement of the relationship. PRE-HIRE CHECKS REQUIRED Immigration compliance. PERMISSIBLE Criminal and credit reference checks are only permissible for specific roles (e.g., certain finance positions) and subject to proportionality requirements. Reference and education checks are common and permissible with applicant consent. IMMIGRATION Depending on the duration and reason of the immigration, work permits are required for non-Italy nationals/non-EU citizens. HIRING OPTIONS EMPLOYEE Indefinite, fixed-term, full-time or part-time. Part-time and fixed-term employees have the right not to be discriminated against due to their status. Additional engagement options are available, such as on-call employment, job sharing or apprenticeships. INDEPENDENT CONTRACTOR Independent contractors can be engaged directly by the company, provided that certain requirement are met. For project contracts, a specific project has to be specified in the contract in order for the agreement to be valid, and the duration of the contract cannot be indefinite. Freelancers can also be engaged on an open-term basis, but there is increased misclassification exposure. 91Guide to Going Global • Employment AGENCY WORKER Agency workers are common. Agency workers have the right to equal treatment to employees in relation to pay and other benefits terms. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS Written employment agreements are required according to national collective bargaining agreements. Certain clauses are not valid if they are not put in writing (e.g., probationary clause, non-compete covenant). PROBATIONARY PERIODS Permissible, with statutory limits, depending on the category and level of the employee (maximum duration is six months for executives – so-called dirigenti). POLICIES Permissible, not mandatory. THIRD-PARTY APPROVAL No requirement to lodge employment contract or policies with or get approval from any third-party. LANGUAGE REQUIREMENTS No statutory requirements, but all documents should be in Italian. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All, with distinctions based on the employee level pursuant to the applicable collective bargaining agreement. WORKING HOURS 40 hour a week limit on working time. OVERTIME Statutory limits to overtime depending on the industry sector and the applicable collective bargaining agreement. WAGES Minimum rates are set in the applicable collective bargaining agreement and depend on the category of employee and enrollment level. Under Italian law, there are four categories of employees: workers (operai), white collar employees (impiegati), middle-managers (quadri) and executives (dirigenti). Collective bargaining agreements set sub-levels within the category of white collar employees. 13th or 14th salaries may be required by the applicable collective bargaining agreement. 92Guide to Going Global • Employment VACATION Employees are entitled to a minimum four weeks (excluding public holidays) of paid vacation for each year of service. At least two weeks of vacations have to be taken during the entitlement year. Vacations cannot be replaced by monetary compensation before the employment is terminated. Collective bargaining agreements may provide additional holidays. In addition Italian law provides for the following public holidays: January 1, January 6, Easter Monday, April 25, May 1, June 1, August 15, November 1, December 8, December 25, December 26, the day of the patron saint of the place of work. SICK LEAVE AND PAY In case of illness or accident employees cannot be dismissed before a period of time determined by law or by the applicable collective bargaining agreement has expired. The entitlement to sick pay depends on the applicable collective bargaining agreement. MATERNITY/PARENTAL LEAVE AND PAY Pregnant employees must not work for two months before, and three months after, the childbirth. Under certain conditions, the leave may be taken earlier or later. Female employees cannot be dismissed from the first day of pregnancy and until the child is one year old, except in certain circumstances (e.g., shutting down of the company). During the maternity leave, employees receive an allowance from the INPS (social security body). Collective bargaining agreements may contain requirements for company-paid leave. Parental leaves can be taken by the parents until the child is eight years old. DISCRIMINATION Employees are protected against direct and indirect discrimination, during the course of their employment, on several grounds, such as sex, religion, race, color, political opinion. Discrimination is always prohibited (from the hiring procedure to the termination of the employment). BENEFITS AND PENSIONS Enrolment in the social security public system and public insurance of employees is mandatory for all employers. In addition to the ordinary social security and insurance, collective bargaining agreements provide for supplementary forms of social security/health care insurance. DATA PRIVACY Employees generally must be notified of personal data processing (and in certain cases, give consent). Special rules apply to data transfer outside the European Economic Area (EEA). Not possible to control or monitor employees remotely with devices unless upon agreement with works council or authorization of the Labor Office. 93Guide to Going Global • Employment RULES IN TRANSACTIONS/BUSINESS TRANSFERS Automatic transfer of those employees who belong to the transferred business/branch of business, without any interruption of the employment, to the transferee regardless of their consent. The transferred employees maintain all the rights to which they were entitled to with the transferor, transferor and transferee are jointly liable for entitlements that the transferred employee had at the time of the transfer. Duty to inform and consult with employee representatives. EMPLOYEE REPRESENTATION All employees have the right to form or become members of labor associations as well as the right to perform labor-related activities. On the initiative of the employees, a works council can be established in every plant with more than 15 workers within the trade union’s associations that have executed the collective agreement applied in the company. Employees’ representatives are granted certain rights (e.g., additional protection in case of transfer and dismissal). Most companies are subject to mandatory industry-wide collective bargaining agreements. TERMINATION GROUNDS Termination permissible on these grounds: • Just cause, i.e., an irremediable and serious “breach of trust” (serious violation of contractual duties) between the parties of the employment relationship. In this case, the contract terminates immediately, without notice; • Justified reason, which may be subjective (breach of employee’s contractual obligation less serious than just cause) or objective (such as redundancy). In this case, the contract terminates with notice. Dismissals must be notified in writing. Reasons for dismissal must be detailed. If the dismissal is due to just cause/ subjective reasons, a special disciplinary procedure must be complied with. EMPLOYEES SUBJECT TO TERMINATION LAWS All employees except for those under probationary period. RESTRICTED OR PROHIBITED TERMINATIONS Discrimination, retaliation, pregnant women, mothers until the child is one year, women in case of wedding, disabled employees under certain conditions. THIRD-PARTY APPROVAL FOR TERMINATION Dismissal based on objective and economic reasons must be preceded by a mandatory administrative conciliation procedure when more than 15 employees are employed in the office where dismissal takes place (or more than 60 in the national territory). Notice to labor authorities has to be given within five days from the termination of the employment. 94Guide to Going Global • Employment MASS LAYOFF RULES Yes, strict information and consultation rules apply where five or more employees are to be made redundant over 120 days or less. NOTICE Notice is set forth by the collective bargaining agreements and varies depending on enrollment level, category and tenure. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE The employer or employee may pay an indemnity in lieu instead of working the notice period. Garden leave not possible under Italian law. SEVERANCE In all cases of termination (including for just cause) the employer has to pay a severance pay (so-called TFR), which is equal to the sum of each annual salary divided by 13.5, accrued for any single year. TFR is usually set aside on the books of the company. Employees are also entitled to receive the indemnity in lieu of any holidays or permits accrued and not used, as well as the pro-rata portion of the supplementary salary installments. POST-TERMINATION RESTRAINTS Those that protect the employer’s legitimate business interests can be enforced if reasonable. NON-COMPETES Typically no longer than 6–12 months. To be valid and enforceable such clauses must be agreed in writing and limited in scope, territory, time (up to 3 years; 5 years for executives), and must provide an adequate compensation (usually around 25 percent of the annual salary for a 1 year non-compete for the entire Italian territory). If such requirements are not met the clause is null and void. CUSTOMER NON-SOLICITS Permissible. EMPLOYEE NON-SOLICITS Permissible. WAIVERS Immediately unchallengeable if signed before a “protected venue” (administrative, union or judicial office), or challengeable within six months after termination. REMEDIES DISCRIMINATION Reinstatement (or alternatively, at employee’s discretion, compensation for damages of 15 months’ pay). Additional compensation equal to salary lost from dismissal to reinstatement with a minimum of five months’ pay. 95Guide to Going Global • Employment UNFAIR DISMISSAL If the company employs up to 15 employees in the same business unit and 60 employees total, the employer may be ordered to re-hire the employee or, at its choice, pay compensation for damages (ranging from 2.5 – 10 months’ salary). If the company employs more than 15 employees in the same business unit and 60 employees total, sanctions are more serious and may imply compensation from 12 to 24 months’ pay or, in other cases, forced reinstatement of the employee in the job, plus compensation for damages up to 12 months’ pay. FAILURE TO INFORM AND CONSULT Failure to follow collective dismissal procedure leads to compensation of 12 to 24 months’ pay. If the breach concerns the social criteria to choose the employees to dismiss, then reinstatement (or in alternative, at employee’s discretion, compensation for damages of 15 months’ pay) plus additional compensation up to 12 months’ pay. CRIMINAL SANCTIONS None. Under certain circumstances, failure to fulfill the court decision can expose to criminal liability. 96Guide to Going Global • Employment Japan LEGAL SYSTEM, CURRENCY, LANGUAGE Civil law legal system. Japanese yen (¥). Japanese. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP Foreign entities without a local corporate presence in Japan are generally unable to make proper payroll withholdings. Instead, a local corporate presence is generally required to engage employees in Japan. Employers are required to withhold national income taxes from employees’ salary each month and make contributions to certain social insurances. PRE-HIRE CHECKS REQUIRED Generally not required. PERMISSIBLE Criminal background checks are not prohibited, but are discouraged by the labor bureau. There should be a strong need to justify such checks. In addition, conducting a criminal background check in Japan is difficult as records are not publicly available. Reference and education checks can be done with consent but third parties receiving requests do not always cooperate. Some employers require a health check at hiring but employers should not conduct HIV testing and gene diagnosis unless there is strong and legitimate reason to do so. IMMIGRATION Foreign nationals who wish to live and work in Japan must obtain the requisite visa. Individuals are also required to have an appropriate “status of residence” (immigration status), which will determine the extent of the individual’s ability to live and work in Japan. HIRING OPTIONS EMPLOYEE Most employees will fall into one of three categories: regular employee, fixed-term contract employee, or dispatched employee. Employment can also be full-time or part-time. Starting from April 2013, if a fixed-term contract employee has worked under fixed-term contracts for five years or longer with renewal(s) and there has been no break in employment of six months or longer, the employer must make the employee an indefinite term employee upon the employee’s request. 97Guide to Going Global • Employment INDEPENDENT CONTRACTOR Independent contractors can be engaged, but care must be taken not to control or direct independent contractors, as such action can lead to the independent contractor being deemed an employee. AGENCY WORKER Hiring dispatched workers is popular as it can lessen some of the burdens associated with the employment relationship. The employees sent by the dispatching agency are direct employees of the agency and not the company utilizing their service. There are strict limitations on the positions that can be filled by dispatched employees, control over the employee and time limits on how long a dispatched employee can be used for the same position. The area is very heavily regulated and penalties for violations are severe. Only reputable and licensed dispatching agencies should be used. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS No requirement to have an employment contract, but the employer must provide the employee with certain terms and conditions of employment in writing. If the employer has work rules in place, the work rules may address many of the provisions that must be covered in the writing to be provided to the employee. PROBATIONARY PERIODS Permissible. No statutory limit, but 3-6 months common. An unreasonably long probationary period could be invalid and 12 months is probably the upper permissible period in many cases. Terminations are very difficult in Japan and this is true even during the probation period. POLICIES Employers with ten or more employees in a workplace are required to create work rules and file them with the Labor Standards Inspection Bureau. Most of the terms and conditions of employment are stipulated in the employer’s work rules. The work rules will constitute part of the employment contract and must stipulate certain terms and conditions of employment, including: wages, working hours and breaks, holidays, termination of employment, disciplinary action and other general matters that apply at the workplace. THIRD-PARTY APPROVAL Before filing, the work rules need to be submitted to a representative of the majority of employees (or a labor union if one exists) for comments. While employee comments do not need to be accepted by the employer (i.e., approval is not required), the comments must be considered in good faith. See above regarding the filing with the Labor Standards Inspection Bureau. LANGUAGE REQUIREMENTS The employment agreement and work rules should be provided in the language that is understandable to the employees. If work rules are in a foreign language, a Japanese translation must be filed with the Bureau. 98Guide to Going Global • Employment MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS Generally applicable to all employees. WORKING HOURS Employers cannot require employees to work for more than eight hours per day or 40 hours per week, unless they enter into a labor management agreement with either a labor union or a representative of the majority of employees in the workplace. The agreement must set out the maximum hours of overtime work (currently 45 hours per month and 360 hours per year unless the agreement includes a special clause allowing for additional overtime in exceptional circumstances). OVERTIME Subject to certain limited exemptions which have been interpreted by the Japanese courts and the Ministry of Health, Labor and Welfare narrowly (for example, for persons who are considered managers, may be exempted in some cases), employers must pay minimum overtime rates as follows: Basic overtime rate 125% of base hourly wage Work on a “rest day” 135% of base hourly wage Late night overtime (between 10:00pm and 5:00am) 150% of base hourly wage Late night overtime on a “rest day” 160% of base hourly wage Overtime work in excess of 60 hours/month* 150% of base hourly wage Late night overtime in excess of 60 hours/month* 175% of base hourly wage *Small to mid-sized companies are currently exempted. WAGES Minimum wages are set by prefecture. In addition, certain industries have minimum wages that apply to employees working in that industry. VACATION Where an employee has been continuously employed for 6 months and has attendance of at least 80 percent of the total number of working days during that period, he or she is entitled to a minimum of 10 days’ paid annual leave on the day after completing 6 months of employment. Entitlement increases by 1 day per year for the following 2 years and by 2 days per year thereafter up to a maximum of 20 days per year. Employees are entitled to carryover unused annual leave for 1 year. There are several national holidays in Japan and while not legally required, most employers recognize the national holidays or provide additional holiday pay for workers who are required to work on national holidays. SICK LEAVE AND PAY No statutory right to paid sick leave unless the work rules or employment contract provide otherwise. 99Guide to Going Global • Employment MATERNITY/PARENTAL LEAVE AND PAY A pregnant employee is entitled to maternity leave for a period of 6 weeks before the expected date of birth and 8 weeks after the birth. An employee who lives with and is raising a child up to 1 year of age (and in some cases, up to 18 months of age) is eligible for child care leave. In addition, employees are eligible for family care leave of up to 93 days to care for a family member. These absences are unpaid unless otherwise provided in the work rules or the employment contract. An employee will generally receive an allowance equivalent to a certain percentage of their salary under the national unemployment insurance scheme. DISCRIMINATION Japan’s labor law recognizes the principle of equal treatment of employees. Discriminatory treatment with respect to wages, working hours, or other working conditions by reason of nationality, creed or social status is prohibited. This includes a prohibition against discrimination with respect to dismissal, fringe benefits, pay and all other aspects of the working relationship between employer and employee. For instance, the Law Respecting the Guarantee of Equal Opportunity and Treatment Between Men and Women in Employment prohibits discrimination regarding gender in recruitment, hiring and employment in Japan. BENEFITS AND PENSIONS There are four main types of social security systems with current rates as follows: • Workers’ Accident Compensation Insurance – From 0.25 percent to 8.9 percent depending on business which an employee engages in, on the entire annual earnings; • Employment Insurance – With the exception of some businesses, the employee pays 0.5 percent and the employer pays 0.85 percent on annual earnings; • Employment Insurance Health Insurance/Nursing Care Insurance – 11.52 percent for an employee between age 40 to 64 and 9.97 percent for an employee under age 40 and over 64. The employer and employee equally bear the contribution; and • Employee’s Pension Insurance – 17.120 percent which is equally borne by the employer and employee. No obligation to provide additional benefits above those already covered but it is fairly common to provide bonuses and retirement allowances. Japan has a government sponsored pension plan that generally pays employees benefits if the employee has been paying into the system for at least 25 years (it will be shortened to ten years from October 2015). All persons employed in Japan pay into the system, even foreign nationals working in Japan (subject to any social security totalization agreements). 100Guide to Going Global • Employment DATA PRIVACY The receipt, maintenance of and access to personal information relating to an individual is regulated by the Act of Protection of Personal Information. Broadly, upon the collection of such information, the collector must notify the person of the purpose of the use of such information, and thereafter must take necessary and proper measures to prevent leakage, loss or damage of that information and take other reasonable steps to control the security of the personal information. In addition, the party maintaining such information is required to adopt internal regulations designed to ensure the confidential and secure maintenance of such information as long as it is held. Disclosure of personal information to third parties (a parent and affiliated companies are considered third parties) is strictly limited. RULES IN TRANSACTIONS/BUSINESS TRANSFERS In an acquisition by business transfer, employees of the selling company will continue as employees of the selling company. If employees are to be transferred to the buyer, it is typical for the employee to resign from the selling employer and will be newly hired by the buyer under a new employment contract executed by the employee. In a merger, the merged entity will cease to exist and the surviving entity shall succeed to the contractual obligations of the merged entity, including, employment agreements. Consequently, employees of the merged entity will automatically become employees of the surviving entity keeping terms and conditions of employment including those under the merged entity’s work rules. In a statutory company split, the split of the employees should be handled in accordance with the Labor Contract Succession Act and some employees may automatically transfer with the business that is being transferred. The splitting company must provide notice, in writing, as to the split-plan or agreement to the employees who will be transferred at least two weeks before the approval of the company split. An employee (i) who is mainly assigned to the target business but not included in the transfer to the purchaser; or (ii) who is not mainly assigned to the target business but included in the transfer to the purchaser has the right to object within two weeks of receipt of the notice. EMPLOYEE REPRESENTATION Labor unions are protected by the Constitution and by statute. All employees have the right to form unions. Two types of collective agreements. Most common is a labor-management agreement which is an agreement between management and either the representative of the majority of employees in the workplace or a labor union to which a majority of the employees belong. The second type is a collective bargaining agreement (CBA) which is between a labor union and an employer only. CBAs are not particularly common in Japan as the proportion of the workforce in Japan that is unionized has fallen below 20 percent according to recent statistics. There are no works or labor management counsels. 101Guide to Going Global • Employment TERMINATION GROUNDS Employees in Japan enjoy substantial security when it comes to their employment. Termination of employees generally must be for “cause”. While employers do have the right to dismiss employees, a dismissal will be regarded as an “abuse of rights” under Japanese law and therefore invalid, if a court determines that the dismissal lacks “reasonable” grounds and is not “socially acceptable”. This is a very high standard to meet. The following grounds may possibly be considered reasonable and socially acceptable: very serious misconduct (e.g., theft or violence in workplace); serious insubordination and failure to correct the action after clear warnings are given; serious and on-going poor performance, after formal warnings have been given, significant training has been provided through performance improvement plans and other positions have been explored, and it is determined that the training is ineffectual and no other suitable positions exist; provision of material false information about one’s background that impacts performance; and a loss of or significant and continuous lack in ability/capability to perform work duties. See below under “Mass Layoff Rules” regarding economic dismissals. EMPLOYEES SUBJECT TO TERMINATION LAWS Generally all employees. PROHIBITED OR RESTRICTED TERMINATIONS Under the Labor Union Act, disadvantageous treatment including dismissal, based on the fact that an employee is or intends to be a member of a labor union, intends to organize a labor union, or engages in a proper act of a labor union, is prohibited as an unfair labor practice. Terminating employees on leave of absence for work-related injury or illness or maternity leave is generally not permissible. THIRD-PARTY APPROVAL FOR TERMINATION Not required. MASS LAYOFF RULES There are no redundancy statutes in Japan. An employer may justify terminations based on the economic conditions of the company. However, four conditions must be met in order to justify such a termination: there must be a very strong economic necessity to reduce the workplace; the employer must have taken all reasonable steps to avoid terminations; the employees to be dismissed should be selected using a reasonable and fair standard; and termination procedures must be reasonable and proper. An employer must notify the Public Employment Security Office in advance if: • 30 or more employees will leave during a one month period • five or more employees who are between the age of 45 and 65 and reach the retirement age set by the employer, are dismissed or otherwise leave due to the employer’s actions within a one month period • an employee who is a foreign national leaves 102Guide to Going Global • Employment • an employee with a disability is dismissed (under certain conditions) or • the employer withdraws a job offer or extends the time of joining the company for new graduates or cancels or downsizes the size of hiring plans of new graduates. There are some exceptions to these notifications requirements. There may be additional notification requirements set out in any collective bargaining agreement. In any event, the employee is represented by a union, the employer is expected to consult with the union to fulfill the good faith consultation requirement. NOTICE Employers must give at least 30 days’ notice of dismissal. It is customary for the work rules to specify that an employee must give 30 days’ notice of resignation. However, under the Japanese Civil Code, employees may terminate an employment agreement with two weeks’ notice. The Civil Code will prevail over any longer requirement. Therefore, if an employee insists on two weeks’ notice, such notice will be valid. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE Payment in lieu of notice is permitted even if there is no contractual right to make such a payment. It is not common for an employee to be placed on garden leave. SEVERANCE There are no statutory requirements for severance payments in Japan. Given the severe limitations on the employer’s right to terminate an employee, most employees are offered a severance payment in exchange for a waiver and voluntary resignation. POST-TERMINATION RESTRAINTS Generally enforceable provided that they are reasonable in scope and duration. Japanese courts will closely examine issues such as the geographic scope, whether the restraint is necessary to protect a legitimate business interest and whether consideration was given to the employee. NON-COMPETES Generally permitted subject to the limitations noted above, and non-competition covenants should satisfy at least the following conditions in order to be held enforceable: • A duration for a maximum of two years • A reasonably limited geographical scope and • The types of jobs or businesses subject to the restriction are limited to jobs or businesses that compete directly or indirectly with the former employer’s actual business. CUSTOMER NON-SOLICITS Generally permitted, but enforceability will depend on the facts of the given case. 103Guide to Going Global • Employment EMPLOYEE NON-SOLICITS Generally permitted, but enforceability depend on the facts of the given case since employees have a constitutional right to move to another company. WAIVERS To be valid, the waiver must be given voluntarily by the employee. In order to avoid any claim from an employee that the waiver is not valid because it was given under duress, or as a result of a mistake due to fraudulent representation by the employer, meetings with the employee should be fairly short and attended by only one or two managers. The employee should be given a reasonable time to consider the document containing the waiver and should not be told that they will be terminated if they do not sign. REMEDIES DISCRIMINATION Discriminatory treatment against the employees shall be punished by imprisonment of not more than six months or by a fine of not more than ¥300,000. However, other than that, there is no special enforcement procedure. NULL AND VOID DISMISSAL If an employee’s dismissal is held by a court to be null and void, the employee could obtain the following remedies: reinstatement, and/or award compensation. Once the dismissal is held to be null and void, the employee has the right to have unpaid wages for the period from the dismissal to reinstatement plus statutory interest. UNFAIR LABOR PRACTICE A labor union may, within one year following the occurrence (or discontinuance) of an unfair labor practice, file a complaint against an employer for such unfair labor practice by seeking a remedial order from the local Labor Commission. This is an administrative procedure but is a quasi-judicial process. CRIMINAL SANCTIONS Some violations are subject to criminal sanctions. For example, violations of the worker dispatch law may result in criminal sanctions. 104Guide to Going Global • Employment Luxembourg LEGAL SYSTEM, CURRENCY, LANGUAGE Civil law. Member of the European Union (EU), so required to implement relevant EU directives. Euro (€). French, German and Luxembourgish. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign entity can engage employees in Luxembourg with proper payroll registrations, subject to doing business and corporate tax considerations. Income tax and the employee’s portion of the social security contributions are withheld from the remuneration paid out by the employer. The rate of the social security contributions is from 25.07 percent to 27.23 percent (minimum of 24.6 percent-plus a surplus depending upon the absentee rate within the company). The employee’s portion is 12.15 percent of this total amount. PRE-HIRE CHECKS REQUIRED Immigration compliance. PERMISSIBLE Reference and education checks are common and permissible with the applicant’s consent. For the purpose of human resources management and recruitment, the employer may request any applicant to provide a criminal record and may process the data collected for a period of time which may not exceed 24 months. IMMIGRATION Nationals of the European Economic Area (EEA) and Switzerland have the right to work in Luxembourg. The Croatian citizens may freely reside on the Luxembourg territory. However, their access to employment in Luxembourg remains subject to a work permit until July 1, 2015. Third country nationals will need to apply for a residence permit with authorization to work. HIRING OPTIONS EMPLOYEE Indefinite, fixed-term, full-time or part-time. Part-time and fixed-term employees have the right not to be discriminated against due to their status. INDEPENDENT CONTRACTOR Independent contractors can be engaged directly by the employer or via a personal services company. Engagement may be subject to misclassification exposure if a relationship of subordination is demonstrated. 105Guide to Going Global • Employment AGENCY WORKER Agency workers are common. Temporary lending of workforce is subject to specific conditions and non-discrimination rules. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS A written contract is required, and must be entered into for each employee no later than the date an employee commences work. PROBATIONARY PERIODS Trial period may be set for a minimum of 2 weeks up to a maximum of 12 months. 3-6 months common. POLICIES No specific policy is mandatory. THIRD-PARTY APPROVAL No requirement to lodge employment contract or policies with or get approval from any third-party, except for young employees under age 18. LANGUAGE REQUIREMENTS There is no specific requirement as far as the language is concerned, but the contract must be in a language understood by all the parties. English is commonly used and accepted by the courts. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All. WORKING HOURS 40 hours per week limit on working time. OVERTIME Overtime is compensated either with time off equivalent to the excess hours worked (for each overtime hour, 1 1/2 time off ) or with a supplementary payment of 40 percent. Overtime payment is not required for senior executives. WAGES €1,921.03 minimum wage per month for unqualified employees and €2,305.24 per month for qualified employees. VACATION 25 days per year (plus public holidays). 106Guide to Going Global • Employment SICK LEAVE AND PAY An employer must continue to pay the employee in case of sickness leave due to illness or an occupational accident and must do so until the end of the month during which the 77th day of sickness leave occurs, over a reference period of 12 successive months. As from the month following the 77th day of sickness leave, the National Health Fund (Caisse Nationale de Santé– CNS) pays sickness benefits to the employee on sickness leave. MATERNITY/PARENTAL LEAVE AND PAY Maternity leave starts eight weeks before the expected date of delivery and continues for eight weeks after the actual date of delivery and may be extended by four weeks if the employee breastfeeds her child. During maternity leave the employee is paid by the National Health Fund (Caisse Nationale de Santé– CNS). Maternity allowances cannot be lower than the social minimum wage (gross amount of €1,921.03 per month as of October 1, 2013) and do not exceed 5 times the social minimum wage (gross amount of €9,605.13 per month as of October 1, 2013). During parental leave (either full-time for up to 6 months or half-time for up to 12 months), the employee receives a fixed allowance paid by the CNPF (Caisse Nationale des Prestations Familiales). DISCRIMINATION Discrimination on the grounds of religion or belief, disability, age or sexual orientation, racial or ethnic origin and sex are prohibited with regard to access to employment, access to all types and levels of vocational guidance, employment and working conditions, and membership of and involvement in an organization of workers or employers. BENEFITS AND PENSIONS Employers have no legal obligations to provide complementary/supplementary social benefits in addition to the social coverage provided for by the social public scheme. DATA PRIVACY Employees generally must be notified of personal data processing, and in certain cases, give consent. Certain types of data processing are, however, exempt from notification while others are subject to prior authorization. Special rules apply to data transfers. RULES IN TRANSACTIONS/BUSINESS TRANSFERS In case of business transfers falling under the scope of the EU Acquired Rights Directive, as implemented in Luxembourg, all employment contract existing at the date of the transfer have to be maintained with the new employer. All employees’ rights are maintained and transferred to the transferee. Duty to inform and consult the employee representatives. 107Guide to Going Global • Employment Any dismissal connected to the transfer would be unfair unless for an economic, technical or organizational reason. EMPLOYEE REPRESENTATION Trade Union: Employees as well as employers are organized on a voluntary basis into a number of trade unions, trade and professional federations. Membership is optional. Staff Delegation: A staff delegation must be set up in every business in the private sector with at least 15 employees. Work Council: Every business employing at least 150 employees over a 3 year period must set up a work council. TERMINATION GROUNDS Termination permissible with immediate effect for gross misconduct, or with notice for real and serious cause connected with the employees’ attitude, aptitude or for operating needs of the business (“economic ground”). EMPLOYEES SUBJECT TO TERMINATION LAWS All. RESTRICTED OR PROHIBITED TERMINATIONS Employee representatives, employees who have duly notified their incapacity to work, pregnant women, employee during parental leave, etc. THIRD-PARTY APPROVAL FOR TERMINATION/TERMINATION DOCUMENTS No third-party approval is required for termination. MASS LAYOFF RULES • Any employer contemplating dismissing at least 7 employees within a period of 30 days, or 15 employees within a period of 90 days for one or more reasons not related to the employees is required to follow the procedure applicable to mass layoffs. • The employer must enter into prior negotiations with the employee representatives in order to come to an agreement in respect of the establishment of a social plan. Before negotiations start, the employer must inform the employee representatives in writing of the proposed collective dismissal and provide them with information thereon. Any dismissal notified before a social plan is signed is deemed null and void. 108Guide to Going Global • Employment NOTICE The notice period (which are not applicable in case of terminations due to gross misconduct) depends on the length of service: Less than five years: two months. Between five and ten years: four months. More than ten years: six months. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE No statutory right to pay in lieu of notice. The employee can be exempt from work during the notice. During the release, the employee is entitled to the same remuneration and benefits as if he or she was working. SEVERANCE The amount of the severance depends on the length of service and varies from 1 to 12 months. Not applicable for terminations for gross misconduct. POST-TERMINATION RESTRAINTS NON-COMPETES • Non-compete clause must be in writing, and is deemed null and void when the employee signing the contract of employment is under 18 years of age and/or if the employee’s annual remuneration when he or she leaves the employer does not exceed a certain amount. The non-compete clause is only effective if the restriction: (i) applies to a specific professional sector and to similar activities to those carried out by the former employer; (ii) does not exceed 12 months; and (iii) is limited to a geographical area where the employee would be in a position to effectively compete with his former employer. CUSTOMER NON-SOLICITS Valid under Luxembourg law. EMPLOYEE NON-SOLICITS Valid under Luxembourg law. WAIVERS Waivers are enforceable if they refer to rights which had arisen at the time of the waivers. 109Guide to Going Global • Employment REMEDIES DISCRIMINATION Uncapped compensation, based on the claimant’s financial loss and injury to feelings compensation. Imprisonment of up to a minimum of eight days and a maximum of two years and a fine between €251 and €25.000. UNFAIR DISMISSAL In case of dismissal with notice, the employee is entitled to compensation for moral damages and financial damages. In case of dismissal for gross misconduct, the employee is entitled to a pay in lieu of notice and a severance pay in addition to the compensation for moral and financial damages. FAILURE TO INFORM AND CONSULT Criminal sanctions if the employer does not inform/consult or negotiate with the employees representatives when required. Prosecution is rare. CRIMINAL SANCTIONS N/A. 110Guide to Going Global • Employment Mexico LEGAL SYSTEM, CURRENCY, LANGUAGE Civil Law. Mexican Peso (MX$). Spanish. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign entity cannot directly engage employees in Mexico without setting up a branch or subsidiary. Proper payroll registrations are required. Social security, tax, and union contributions withholdings may apply, depending on the employee’s category and income. PRE-HIRE CHECKS REQUIRED Immigration compliance. PERMISSIBLE Under Mexican law, there are few restrictions on an employer´s right to request substantiating documents and confirm the information provided by the applicant regarding his or her education, health condition, finances, drug use, family situation and criminal background. Employers have broad flexibility with regard to the questions that may be asked during the application process. Criminal background checks are permissible; however, only the employee itself can request such information from the corresponding authority. Credit checks are not common in Mexico, since there is no specific procedure established by law for employers to obtain credit information. Reference and education checks are common and permissible with applicant consent. IMMIGRATION A foreign national requires an immigration document (temporary visa) authorizing such foreign national to live and work in Mexico. Such visas are valid for one year and renewable for up to two additional periods, after which time the holder may apply for a permanent visa. It is the employer that must file a visa application with the Mexican immigration authorities. HIRING OPTIONS EMPLOYEE Indefinite, fixed-term, training, part-time and seasonal or intermittent. Fixed-term agreements can only be executed under very specific circumstances (e.g., temporary replacement of an employee on maternity leave). INDEPENDENT CONTRACTOR Independent contractors may be engaged. Specific rules (“judicial criteria”) must be followed in order to reduce misclassification exposure. 111Guide to Going Global • Employment AGENCY WORKER Agency workers can be hired only for activities different from the core business of the company receiving such services. Otherwise, the company receiving the services could be considered the employer and/or could be subject of monetary sanctions. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS Written employment agreement must be executed. PROBATIONARY PERIODS Employees hired pursuant to an indefinite employment agreement or a fixed-term agreement of at least 180 days can be hired subject to a probationary period of up to 30 days, extendable by up to 180 days if the employee is hired as an executive, manager or director or fills an administrative position. POLICIES Depending on the number of employees, written training and productivity policies (that is, policies addressing training and productivity/professional development plans) as well as health and safety policies are mandatory, and must be reviewed annually. An internal work policy may be issued in order to cover the general rules to be followed in the company and the expected conduct at the work place. THIRD-PARTY APPROVAL Labor board approval of the employment relationship is required if the employee is 14 to 18 years old or if the employment agreement is executed under Mexican law, but the activities are performed abroad. LANGUAGE REQUIREMENTS No statutory requirements, however, Spanish is always recommendable, since any Mexican authority will require any employment document to be in Spanish or translated into Spanish. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All. WORKING HOURS Up to 48 hours a week for work day shifts, 42 hours a week for night shifts, and 45 hours a week for mixed shifts. Employees must have at least one paid day off every six days. Common business practice in Mexico for employees to work 48 hours per week distributed among 5 days. 112Guide to Going Global • Employment OVERTIME An employee may not be required to work more than three hours more than the number of hours in the statutory work day during a given shift, or more than nine hours in a given week. An employee working overtime on a given day is entitled to a double compensation for each hour of overtime. In the event the employee works more than nine hours overtime in a given week, the employee is entitled to triple the applicable hourly wage for each hour of overtime. WAGES The minimum wage is established by geographical areas and/or for specific professions or specific fields (professional). There are two geographical areas for purposes of determining minimum wage: (i) geographical area “A” for 2014 is MX$67.29 per day; (ii) geographical area “B” for 2014 is MX$63.77. The minimum wage is usually increased annually in accordance to the INPC (National Consumer Price Index). VACATION An employee who has worked for more than one year is entitled to at least six days of paid vacations. The number of mandatory vacation days increases by 2 working days for each following year until it reaches 12 vacation days. Thereafter, the vacation period increases by 2 days every 5 years of service. SICK LEAVE AND PAY If an employee cannot work due to illness or an accident, the employee must obtain a medical authorization from the Mexican Social Security Institute in order to get paid for the days during which the employee could not attend work. MATERNITY/PARENTAL LEAVE AND PAY Women have the right to six weeks of paid leave prior to the birth of a child and six weeks following the birth of a child. Women can allocate up to four of the six weeks of the pre-birth leave to the post-birth leave period. If a child is born with disabilities or requires medical attention, the post-birth paid leave may be extended by up to two additional weeks. In case of adoption, female employees are entitled to six weeks of paid leave following placement of the child. A male employee is given five business days of paid paternity leave when his spouse gives birth or he has adopted a child. DISCRIMINATION Employers may not discriminate against employees or job candidates on the basis of: age, ethnic origin/race, sex, citizenship, disabilities, health conditions, religion, opinions, sexual orientation, marital status or any other criteria. 113Guide to Going Global • Employment BENEFITS AND PENSIONS The Social Security Law regulates employer, employee and government participation in different federal social benefit programs through the Mexican Institute for Social Security (Instituto Mexicano del Seguro Social (IMSS)). Registration of an employee with the IMSS relieves the employer from the following risks and obligations: (i) work-injury related risks; (ii) health and maternity insurance; (iii) disability pension and life insurance; (iv) retirement, advanced age and pension; and (v) child care and social benefits. Companies must set aside 10 percent of their taxable income for employee profit sharing, in accordance with the rules established in the Mexican Income Tax Law. DATA PRIVACY To process personal data, data controllers must provide a privacy notice to the affected employees prior to the collection and processing of such personal data. In the case of data transfers, the privacy notice must contain the name of the transferee or the person to whom the information is transferred. All transfers of personal data to domestic or foreign third parties must be pre-approved by the data subject/employee. RULES IN TRANSACTIONS/BUSINESS TRANSFERS Employment transfers may be implemented via an employer substitution letter. Transferred employees are entitled to receive at least the same benefits and perform their work subject to the same terms and conditions as before the transfer. The employer who has been substituted will be jointly responsible with the new employer for a period of six months. EMPLOYEE REPRESENTATION Trade unions are prevalent in certain sectors, sugar, railway, automotive and mining industry as well as the public sector (specially education and energy). Employers with more than 20 employees may have a union. There are no works councils or other employee representatives. TERMINATION GROUNDS An employer may rescind their employment relationship without incurring any liability if any of the justified “causes” established by law is given, which are mostly based on misconduct. The employer can also terminate employment without cause, in which case it needs to pay severance. EMPLOYEES SUBJECT TO TERMINATION LAWS All employees. RESTRICTED OR PROHIBITED TERMINATIONS If the employment relationships is suspended (e.g., an employee on maternity leave). 114Guide to Going Global • Employment THIRD-PARTY APPROVAL FOR TERMINATION No third-party approval is required, but it is common to have employees sign a resignation letter and a waiver and release letter in front of the labor authorities. MASS LAYOFF RULES No mass layoff rules. NOTICE No notice period. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE Not applicable under Mexican Law. SEVERANCE 90 days’ Integrated Salary (i.e., the last annual average of the employee’s income.), plus 20 days’ Integrated Salary for each year of services rendered, seniority premium equal to 12 days’ wages for each year of services rendered (subject to a limitation up to twice the minimum wage) and accrued benefits. POST-TERMINATION RESTRAINTS NON-COMPETES Post-termination non-compete clauses or agreements are not enforceable. However, such provisions are typically included in employment agreements because they can have a deterrent effect and even create a sense of moral obligation on the part of an employee. CUSTOMER NON-SOLICITS Post-termination customer non-solicits clauses or agreements are not enforceable. However, such provisions are typically included in employment agreements because they can have a deterrent effect and even create a sense of moral obligation on the part of an employee. EMPLOYEE NON-SOLICITS Post-termination employee non-solicits clauses or agreements are not enforceable. However, such provisions are typically included in employment agreements because they can have a deterrent effect and even create a sense of moral obligation on the part of an employee. WAIVERS Enforceable, however, employees cannot waive their right to receive mandatory benefits or rights. REMEDIES DISCRIMINATION No specific sanctions are in place. 115Guide to Going Global • Employment UNFAIR DISMISSAL Employer must pay the severance payment plus claimant’s unpaid wages from the day he or she was unfairly dismissed until one year thereafter, plus monthly increase of 2 percent of the claimant’s total amount awarded plus any proven unpaid benefit (such as overtime, bonus, commissions, etc.), plus 20 days’ Integrated Salary for each year of services rendered (this amount is only applicable in case the employee demands his or her reinstatement and the employer rejects it). FAILURE TO INFORM AND CONSULT Not applicable under Mexican law. CRIMINAL SANCTIONS Employees may be subject to criminal sanctions if they do not honor their non-disclosure agreement. Employers may be subject to criminal sanctions if they pay to their employees less than the minimum wage, or employ children under 14-years-old. 116Guide to Going Global • Employment Netherlands LEGAL SYSTEM, CURRENCY, LANGUAGE Civil law. Member of the European Union (EU), so required to implement relevant EU Directives. Euro (€). Dutch. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP Foreign entities can directly engage employees in the Netherlands, subject to doing business and tax considerations. Registration with the Dutch Tax Authorities as employer (to make mandatory payroll deductions) is required. PRE-HIRE CHECKS REQUIRED Immigration compliance. For certain limited provisions (e.g., judges, lawyers advocaat) an applicant has to provide a recent copy proving that he or she has no criminal record that should prevent him or her from performing his or her duty (verklaring omtrent gedrag) PERMISSIBLE Reference checks are common, and permissible with applicant’s consent. Other checks are only permissible in limited situations. IMMIGRATION Most of the nationals of the European Economic Area (EEA) and Switzerland are allowed to work in the Netherlands, although these nationals should be registered. Other nationals shall have a proper visa that allows them to work in the Netherlands. HIRING OPTIONS EMPLOYEE Indefinite, fixed-term, full-time or part-time. Fixed-term employees can gain an indefinite employment status after a certain time and cannot be discriminated against due to their status. INDEPENDENT CONTRACTOR Independent contractors can be engaged directly by the company. The contractor shall pay taxes himself/herself. The independent contractor should provide a so-called VAR to the company (declaration of independent contractor status). AGENCY WORKER Agency workers are common and cannot be discriminated against due to their status. 117Guide to Going Global • Employment EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS Common best practices, might depend on the requirements of the collective employment agreement, if any. PROBATIONARY PERIODS Permissible. In most contracts for a limited period of time (max two months). POLICIES Optional. THIRD-PARTY APPROVAL No requirement to lodge employment contract or policies with or get approval from any third-party. LANGUAGE REQUIREMENTS No statutory requirements, although the employer must make sure that the employee understands the relevant provisions. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All. WORKING HOURS Contractual not over 40 hours/week. OVERTIME No statutory obligation to provide pay for overtime worked, as long as pay overall does not fall below the statutory minimum. Collective employment agreements might set different obligations. WAGES Depends on the employee’s age. VACATION Based on a 40 hour/week: 20 days per year, excluding public holidays. SICK LEAVE AND PAY In case of sickness, the employer has to pay up to two years of at least a minimum salary. 118Guide to Going Global • Employment MATERNITY/PARENTAL LEAVE AND PAY Sixteen weeks maternity leave, right to return to work, two days of paternity leave. During the maternity leave, the employee is entitled to a maternity allowance. The employer continues to pay the full salary of the employee. However, the Employee Insurance Agency reimburses a part of the regular salary to the employer (with a maximum daily wage of €197 as of January 1, 2014. Statutory possibility of unpaid parental leave during a part of the working week, during a certain amount of time before the youngest child turns eight years old. DISCRIMINATION Characteristics protected from unlawful discrimination and harassment: age, disability, gender reassignment, marriage or civil partnership, pregnancy or maternity, race, religion or belief, sex or sexual orientation. BENEFITS AND PENSIONS Additional contractual pension rights are often provided to employees. However, no statutory benefits are required above those covered under social insurance contributions. This might be different under various collective employment agreements. DATA PRIVACY Employees generally must be notified of personal data processing (and in certain cases, give consent). Registrations with the Information Commissioner are required. Special rules apply to data transfer outside the EEA. Significant restrictions on monitoring email and internet use. RULES IN TRANSACTIONS/BUSINESS TRANSFERS Automatic transfer under the EU Acquired Rights Directive/Dutch civil code in a business sale or service provision change. Significant restrictions on changing terms and conditions following a transfer. Duty to inform and consult with employee representatives. Any dismissal connected to the transfer would be unfair unless for an economic, technical or organizational reason. Works council has the right to advise. EMPLOYEE REPRESENTATION Trade unions are prevalent in a number of sectors. Works councils are common and have significant rights. If the company has 50 or more employees, the company is obliged to establish a works council. If there are more than 10 employees, but fewer than 50 employees, the company must create the possibility to meet with the employees twice a year. Industry level collective bargaining agreements are common. 119Guide to Going Global • Employment TERMINATION GROUNDS Termination permissible on misconduct, performance, redundancy or other substantial reasons. EMPLOYEES SUBJECT TO TERMINATION LAWS All. PROHIBITED OR RESTRICTED TERMINATIONS Members of the works council, employees on sick leave, most pregnant employees. THIRD-PARTY APPROVAL FOR TERMINATION Employers do not need any third-party approval for termination for cause. In all other situations, employers must either seek approval of a Dutch government agency (UWV) or request a court to dissolve the employment agreement. Mutual terminations are common. MASS LAYOFF RULES Yes, strict information and consultation rules apply in situations where 20 or more employees are to be made redundant over a period of three months’ or less. NOTICE Statutory: one to four months depending on years of service. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE No. SEVERANCE Based on a court formula, depending on age, yearly income, years of service and a so-called “c-factor”, which typically varies from one-half to two It is likely that the severance payment will be significantly affected by a change in legislation per July 1, 2015 and will be maximized to €75,000 gross or one year’s salary, if higher. POST-TERMINATION RESTRAINTS NON-COMPETES Typically no longer than 12 months. In general no payment required for enforceability. CUSTOMER NON-SOLICITS Permissible. EMPLOYEE NON-SOLICITS Permissible. 120Guide to Going Global • Employment WAIVERS Enforceable, but employees must be given time to consider and to seek legal help. REMEDIES DISCRIMINATION Compensation depends on damages. UNFAIR DISMISSAL Employee can obtain a court order to be allowed back to work. If not, usually a higher c-factor applies to severance payment. FAILURE TO INFORM AND CONSULT Works council can litigate any decision of the company, that is, file an appeal with the Enterprise Chamber and request revocation of the company’s decision. CRIMINAL SANCTIONS Criminal sanctions are not generally a concern. 121Guide to Going Global • Employment Poland LEGAL SYSTEM, CURRENCY, LANGUAGE Civil Law. Member of the European Union (EU). Polish zloty (zł). Polish. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign entity can engage employees in Poland without having a local corporate presence. Engaging a Polish employee who will perform work in Poland requires registration with the social security authorities. Income of this Polish employee will be subject to Polish income tax and social security contributions. In order to conduct business activities in Poland, a foreign entity may need to establish a local corporate presence (branch or representative office) in Poland, registered in the National Court Register. PRE-HIRE CHECKS REQUIRED Immigration compliance (requirement to obtain a work permit for foreigners originating from non-EU and non-European Economic Area (EEA) countries). A statutory list of so-called regulated activities to be performed only by persons holding specific licenses or possessing certain type of education and professional experience. Initial medical examinations to a position to confirm that there are no health reasons barring the person’s employment. PERMISSIBLE Certain limited personal data can be requested from the candidate, as specified by the Polish Labor Code. Additional information (e.g., information on criminal convictions) can be requested only if the obligation to provide this information is provided for in separate statutory provisions. IMMIGRATION Free movement of employees from all countries of the EU and EEA as well as Switzerland. In general, citizens of other countries require a work permit and a work visa (or other residence permit). HIRING OPTIONS EMPLOYEE Employment relationship under: an open-ended employment contract or fixed-term employment contract (contract for a definite period, for the completion of specified task, for substitution or probationary period); part-time and full-time. Part-time and fixed-term employees cannot be discriminated against. 122Guide to Going Global • Employment INDEPENDENT CONTRACTOR A person engaged under civil law agreement is not an employee in the meaning of the Polish labor law. Nevertheless, a contractor will be deemed to be an employee (irrespective of the formal name of the contract between parties) if an individual is engaged under the other party’s supervision and subject to control of the place, hours of work and the manner of performance. AGENCY WORKER Temporary work is widely used for short periods of employment, in order to cover the absence of permanent employees or to perform seasonal works. Over a period of 36 successive months, the temporary work agency (which is the formal employer and must be entered into a register of work agencies) can send an employee to perform work for the single user-employer for a total period not exceeding 18 months. EMPLOYMENT CONTRACTS AND POLICIES REQUIREMENTS An employment contract must be concluded in writing, however, the validity of a contract of employment does not depend on the form. An employment contract must include basic employment information such as: (i) the parties to the employment contract; (ii) the type of employment contract; (iii) the date of concluding the employment contract; and (iv) the conditions of work and pay including in particular type of work (job position), the place of performance of work, remuneration, amount of working time and the date of the commencement of work. Provisions of employment contracts cannot be less favorable to an employee than the provisions of the Polish labor law or else they are null and void. PROBATIONARY PERIODS An employment contract for a probationary period is a separate employment contract which can precede other types of employment contracts. A probationary period cannot be longer than three months and can be concluded only once between a given employer and an employee. POLICIES Statutory requirement to adopt workplace and remuneration regulations by employer’s engaging at least 20 employees, not covered by a CBA . The content of the workplace and remuneration regulations must be agreed with the trade unions (if operating at the entity). Employers with at least 20 employees on the first day of each calendar year (i.e., 20 full-time positions or their equivalent) are obliged to create a company social benefits fund to allocate money for financing the employer’s social activities and adopt regulations on awarding benefits from this fund. THIRD-PARTY APPROVAL No requirement to obtain a third-party’s approval. 123Guide to Going Global • Employment LANGUAGE REQUIREMENTS Statutory requirement to draft employment-related documents in Polish in order for them to be binding. Possibility to prepare these documents in a bilingual (e.g., Polish-English) version, however, in the case of any discrepancies, the Polish version will prevail. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All employees. WORKING HOURS Standard (basic) working time may not exceed 8 hours per day and an average of 40 hours over an average 5 day working week within the adopted settlement period not exceeding 4 months. Polish labor law provides also for other systems of working time where the daily and weekly standards are different from the basic working time system. An employee’s weekly working time, together with overtime work, cannot exceed an average of 48 hours in a given settlement period. In general, an employee must be granted at least 11 hours of uninterrupted rest each day and 35 hours of uninterrupted rest per week. Work on Sundays and public holidays is permissible only in the cases enumerated in the Polish Labor Code. OVERTIME Statutory restrictions on the permissible number of hours of overtime work. An employer cannot instruct some groups of employees to work overtime (e.g., pregnant employees). The overtime work can be compensated by paying an allowance (in addition to a standard remuneration) in the amount specified by the Polish Labor Code (50 percent or 100 percent of remuneration) or granting time off from work. WAGES Statutory minimum wage whose amount is established each year – for 2014 the minimum wage amounts to zł1,680. Remuneration in the first year of employment cannot be lower than 80 percent of the minimum wage. VACATION Twenty or 26 days (after ten years) of holiday leave depending on the total years of service. The years of service include all previous employments and years of education (ending with graduation) specified under statutory law. Special rules apply to an employee beginning work for the first time. Additionally, an employee is entitled to 13 public holidays. SICK LEAVE AND PAY In general, for the period of total of 33 days (14 days in case of employees over 50 years of age) in the calendar year of incapacity to work due to illness, an employee is entitled to a sick pay from his or her employer in amount of 80 percent of remuneration. Starting from the 34th (15th) day of incapacity to work, an employee is entitled to a sickness benefit paid by the Social Insurance Institution (ZUS). In principle, the sickness benefit amounts to 80 percent of the employee’s remuneration. 124Guide to Going Global • Employment MATERNITY/PARENTAL LEAVE AND PAY Special protection against dismissal of pregnant employees and employees using maternity, paternity, parental or childcare leave. Basic maternity leave for a female employee is 20-37 weeks, depending on the number of children born. An employee-father is entitled to two weeks of the paternity leave to be used before the child reaches 12 months. Directly after using the basic maternity leave, an employee (mother or father) can apply for an additional maternity leave that amounts to six or eight weeks (depending on the number of children born). Employees can apply for 26 weeks’ parental leave (the length of this leave is not dependent on the number of children born). This leave can be used by both parents at the same time and can be divided into parts. An employee engaged for at least six months is entitled to childcare leave of up to 36 months, to be used before the child reaches five. Each parent has the exclusive right to one month’s childcare leave – this right cannot be transferred. Childcare leave can be combined with employment or training by the current or another employer; parents can use the childcare leave at the same time for four months and divide the leave in five parts. Alternatively, an employee may file a request to reduce his or her working time to no less than one-half of the full amount of working time within the time during which he or she could have benefited from such leave. For the period of the maternity leave (basic and additional), the paternity leave and the parental leave, an employee is entitled to a maternity benefit paid by ZUS. No benefits or salary are granted to an employee using childcare leave. DISCRIMINATION Any discrimination of employees is prohibited. Provisions of employment contracts that infringe the principle of equal treatment are null and void and the statutory provisions apply instead. Where there are no appropriate regulations, the infringing provisions should be replaced with appropriate provisions. BENEFITS AND PENSIONS The state social system provides for health insurance and pension coverage. Apart from the common pension system, an employer can voluntarily run a private pension scheme for its employees. After the reform of the pension system, the retirement age will be increased gradually and finally everybody (both women and men) should work until 67. DATA PRIVACY An employer is obliged to respect its employees’ dignity and other personal rights, including their privacy and the confidentiality of the content of employees’ private correspondence. There are no specific regulations on the protection of employees’ privacy at work. The Polish Labor Code sets forth specific rules regarding collecting and processing personal data of the candidates and the 125Guide to Going Global • Employment employees, in particular lists the type of data that can be requested by the employer. In matters not regulated by the Labor Code, general rules on data protection provided for in the Act on Protection of Personal Data apply. RULES IN TRANSACTIONS/BUSINESS TRANSFERS Automatic transfer of employees under the EU TUPE Directive and the Polish Labor Code. The transferor and the transferee are jointly and severally liable for the obligations resulting from the employment relationships that arose before the transfer of a part of an undertaking. They have certain information and consultation obligations towards the employees and the employees’ representatives (trade unions and works council). A transferred employee has the right to terminate his or her employment relationship within two months of the transfer date, without notice, providing seven days’ prior notice. Termination according to this procedure has the same legal effect as if the employment relationship was terminated with notice by an employer. Dismissal solely due to transfer is unlawful. The transferee is obliged to apply any CBA adopted by the transferor and applicable to the transferred employees for a period of one year after the transfer date, unless the transferee applies more favorable conditions than those resulting from this CBA. EMPLOYEE REPRESENTATION Trade unions: A single-establishment trade union can be formed either as (i) a unit of a nation-wide trade union or as (ii) a new, separate trade union organization, upon a resolution on its establishment, passed by at least ten persons entitled to establish trade unions. All employees are entitled to form and join trade unions. Nobody may be discriminated against for being or not being a member of a trade union. Trade unions represent all employees irrespective of their membership. In individual matters, trade unions solely represent the rights and interests of their members or of unassociated employee upon his or her request. Employers have multiple, various obligations towards the trade unions operating at their entities. Trade unions are granted certain rights, in particular the trade union leaders enjoy special protection against dismissal. Works council: Employees’ representative body elected by the employees that may be established within a company that engages at least 50 employees, excluding state enterprises, mixed-capital entities engaging at least 50 employees, and public movie institutions. The employer has an obligation to inform and consult with its works council in matters specified by law. Special protection against dismissal for works council’s members. TERMINATION An employment contract can be terminated by mutual agreement of the parties, with notice, with immediate effect (for cause or without any employee’s fault), after a lapse of the period it has been concluded for (fixed-term employment contracts) or upon completion of the task it was concluded for (in a case of an employment contract concluded for the completion of a specified task). Polish law sets forth detailed rules regarding the unilateral termination (with notice and with immediate effect) served by both an employer and an employee. These rules vary depending on the type of employment contract. 126Guide to Going Global • Employment GROUNDS An employer that terminates the open-ended employment contract or terminates the employment with immediate effect must specify the reasons for termination which must be concrete, justified and real. A termination letter must include all the reasons for termination as it is not possible to raise further grounds before the court. In case of termination with immediate effect, Polish law enumerates the reasons for termination. EMPLOYEES PROTECTED BY TERMINATION LAWS Polish law provides for general protection against dismissal (granted to all employees engaged under open-ended contracts) and special protection against termination (due to employee’s life situation or role he or she holds). PROHIBITED OR RESTRICTED TERMINATIONS Statutory limitations of an employer’s right to unilaterally terminate the employment relationship with some groups of employees due to their life situation (e.g., due to pregnancy, when using maternity leave, paternity leave, parental leave and childcare leave, during sick leave) or function they hold (e.g., trade union leaders, works council members). THIRD-PARTY APPROVAL FOR TERMINATION/TERMINATION DOCUMENTS In case of the protected employees, the restriction on termination may require the employer to seek consent of certain bodies for the termination of employment (e.g., trade union’s consent for summary dismissal of pregnant employee or terminating the employment relationship with a member of the trade union’s board; consent of the works council for the termination of employment with its member). In case of termination of an open-ended employment contract with notice or termination with immediate effect with an employee represented by the trade union (as its member or upon his or her request), it is necessary to notify the trade union in writing on the intended termination and its grounds. The trade union’s opinion is not binding for the employer. MASS LAYOFF RULES? Special procedure of termination in case of collective redundancies, applicable to employers engaging at least 20 employees terminating employment on grounds not related to individual employees. Collective redundancies cover the dismissal of at least: • 10 employees in entities normally employing less than 100 employees; • 10 percent of the employees in entities normally employing at least 100, but fewer than 300 employees; and • 30 employees in entities normally employing at least 300 employees. NOTICE The length of the notice period depends on the type of employment contract and, in case of open-ended employment, the years of service by a given employer. The maximum statutory notice period is three months. Parties can agree on the notice period longer than the statutory one. No notice period must be observed by termination by mutual agreement or termination with immediate effect. 127Guide to Going Global • Employment STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE Pay in lieu of notice: inadmissible. Only if the termination of an open-ended employment contract is due to employer’s bankruptcy or liquidation or other reasons not related to the employee, the three months’ notice can be shortened up to one month and the employee is entitled to compensation equal to salary for the outstanding notice period. Garden leave: permissible for the period of notice, provided that an employee retains the right to his or her standard remuneration and benefits. SEVERANCE In general, an employee is not entitled to severance pay, unless the parties agree otherwise. Only in case of the collective redundancies or an individual termination of employment made exclusively due to reasons not related to the employee (only by employers engaging at least 20 employees), an affected employee is entitled to severance pay which is fixed on the basis of the period of employment by the employer. The amount of the statutory severance pay is equal to the employee’s 1–3 months’ salary and cannot exceed 15 times the minimum wage. POST-TERMINATION RESTRAINTS Post-termination restraints, in particular the confidentiality obligation, result from the statutory provisions or are imposed on the employee upon the separate agreement between the parties. Contractual post-termination covenants are relatively common in Poland in relation to employees who, during their employment, have access to particularly important information (e.g., senior executives). NON-COMPETES Parties to an employment relationship can enter into a non-compete agreement which will be effective either during the term of employment, as well as after the employment relationship has ceased. A non-compete agreement must be concluded in writing in order to be valid. A non-compete agreement effective after the termination of employment must specify the period of prohibition of competition, the scope of the non-compete restriction and the amount of compensation due to the employee. The compensation must not be lower than 25 percent of the remuneration received by the employee prior to the termination of the employment relationship for a period corresponding to the period of validity of the prohibition of competition. Polish law allows such compensation to be paid in monthly installments. CUSTOMER NON-SOLICITS Statutory prohibition to induce the employer’s clients to terminate, not to fulfill or improperly fulfill the contractual duties with an aim for the inducing person to gain benefits for himself or herself or for a third-party or to cause damage to the employer. EMPLOYEE NON-SOLICITS Statutory prohibition to induce the person performing work for the employer not to perform or improperly perform his or her contractual duties with the aim for the inducing person to gain benefits for himself or herself or for a third-party or to cause damage to the employer. 128Guide to Going Global • Employment WAIVERS Waiver of the statutory rights is ineffective and is not enforceable in Poland. REMEDIES DISCRIMINATION An employee or a candidate can claim compensation of at least the statutory minimum wage. UNFAIR DISMISSAL In case of unlawful or unjustified termination with or without notice, an employee can claim reinstatement to work on the previous conditions or compensation in the limited amount specified in the statutory regulations. In case of reinstatement, an employee can also claim remuneration for the period of being out of work in the limited amount specified by the Polish law. In case of unjustified termination without notice served by the employee due to the employer’s fault, an employer can claim compensation in limited amount specified by law. FAILURE TO INFORM AND CONSULT Failure to inform or consult a works council or a trade union where such notification or consultation are required by law (e.g., transfer of undertaking) is subject to criminal sanctions (fine or restriction of liberty). CRIMINAL SANCTIONS An employer may be punished with a fine in amount between zł1,000 to 30,000 for committing the offences specified in the Polish Labor Code which relate to the employer’s basic obligations. 129Guide to Going Global • Employment Russia LEGAL SYSTEM, CURRENCY, LANGUAGE Civil law. Russian Ruble (руб). Russian. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign entity cannot directly engage employees in Russia and can only operate in Russia after corporate registration. Personal income tax to be withheld through payroll. PRE-HIRE CHECKS REQUIRED Immigration compliance, military compliance (with regard to a person’s responsibility to serve in the military). In certain situations, criminal record check. PERMISSIBLE Criminal and credit reference checks are only permissible for specific roles (e.g., certain finance positions) and subject to proportionality requirements. Reference and education checks are common and permissible with the applicant’s consent. IMMIGRATION Before foreign nationals (except for citizens of Belarus and Kazakhstan) may be employed and/or actually commence working in Russia, all employers must obtain the relevant documents, unless foreign workers qualify as “Highly-Qualified Professionals.” Employers are also required to provide financial, medical and social guarantees in respect of their foreign employees and must comply with general migration monitoring requirements and file notifications regarding foreign employees’ travel both into and out of Russia in accordance with the statutory procedure. HIRING OPTIONS EMPLOYEE Indefinite, fixed-term, full-time or part-time. A definite fixed-term employment agreement may be concluded, but cannot be for a term longer than five years and it may only be concluded in the circumstances specifically provided for by Article 59 of the Labor Code. INDEPENDENT CONTRACTOR Independent contractors can be engaged directly by the company. There are severe penalties if a services agreement is re-qualified as a labor agreement. 130Guide to Going Global • Employment AGENCY WORKER No statutory grounds, but generally permissible in practice. Currently there is a draft bill supposed to create a legal framework to engage workers via agencies, which has not yet gone through the final reading in the Russian Parliament. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS An employment contract must be concluded from the first day of employment. PROBATIONARY PERIODS Permissible. three months for newly hired employees and six months for employees hired for certain executive positions. POLICIES Written internal policies, such as an internal labor regulation, personal data protection policy, and confidential information protection policy are mandatory. The employer may also adopt other policies, such as a remuneration policy, etc. THIRD-PARTY APPROVAL Internal labor regulation shall be approved by employees’ representatives and trade unions (if any). LANGUAGE REQUIREMENTS No statutory requirements, but all documents should be in Russian (or bilingual) so that they can be presented to the Russian authorities without translation if necessary. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All. WORKING HOURS A standard working week is 48 hours (in some exceptional cases decreased by the Labor Code). OVERTIME In general, any time worked over 40 hours is classed as overtime. No more than 120 hours of overtime a year and no more than four hours of overtime in any two consecutive days are permitted. In most cases overtime is only permitted with the employee’s prior written consent. Overtime must be paid at a rate of 150 percent of the regular hourly rate for the first 2 hours of overtime worked during one day, and at a rate of 200 percent of the regular hourly rate thereafter. Upon an employee’s written request, the employer must compensate overtime work by granting the employee additional time off in lieu of payment, which should be no less than the overtime worked. 131Guide to Going Global • Employment Certain limitations regarding overtime apply to protected employee categories, which include employees under the age of 18, pregnant women, women with children under the age of three, disabled employees and certain other categories defined by federal law. WAGES At least руб5,205 per month. VACATION At least 28 calendar days per year of employment. SICK LEAVE AND PAY Employees are entitled to receive statutory sick leave compensation, which is covered by the Russian State Social Insurance Fund, which in turn is funded by the employer’s mandatory contributions paid as a percentage of its employees’ salaries. The amount of sick leave compensation will vary according to the grounds for the sick leave. In cases of a labor-related injury or occupational illness, the amount of sick leave compensation is 100 percent of the employee’s average earnings. In other cases, sick leave compensation may not exceed the maximum established by federal law which is subject to annual review. In general the maximum duration of sick leave is four months (in certain cases it can be nine months (after reconstructive operation) or 12 months (after tuberculosis). Employees are only required to submit a medical certificate for absence after their recovery and return to work. Generally, an employer cannot terminate an employee’s employment while the employee is on sick leave. MATERNITY/PARENTAL LEAVE AND PAY Paid maternity leave begins to accrue no later than 70 calendar days prior to the birth and continues for 70 calendar days thereafter, although the period may be extended in the event of a multiple births and/or complications during birth. The amount of maternity leave allowance is established by federal law and is subject to annual review. The allowance shall be paid by the employer, but will be reimbursed by the Social Insurance Fund. A person caring for a child, be it the child’s mother, father or any relative who is actually raising it, may request to be partially paid childcare leave until the child is three years old. The employee retains the right to return to work during the entire period of the maternity or childcare leave and the full leave period is included when calculating the employee’s term of service. DISCRIMINATION Characteristics protected from unlawful discrimination and harassment: age, disability, gender reassignment, marriage or civil partnership, pregnancy or maternity, race, religion or belief, gender or sexual orientation. BENEFITS AND PENSIONS Currently, there are no benefits required other than those covered under social insurance contributions. 132Guide to Going Global • Employment DATA PRIVACY Employers are required to obtain the prior written consent of their employees in order to process their personal data (e.g., transferring personal data to third parties including cross-border transfers). RULES IN TRANSACTIONS/BUSINESS TRANSFERS Employees need to consent to the transfer of employment and generally cannot be terminated because of the transfer. It is possible to terminate the agreements with the general director, his or her deputy and chief accountant no later than three months after a change of the owner in certain instances. EMPLOYEE REPRESENTATION Employees can be represented either by trade unions or by another employee representative(s). Under current laws, in order to create a basic trade union organization (or another representative body), it is sufficient to have three employees who should jointly decide to create a trade union, elect the union leader and approve the regulations. It is not necessary to register the trade union, as the trade union is deemed to have been created upon the adoption of all of the above decisions. There are no works councils. TERMINATION GROUNDS The Labor Code sets out specific circumstances for which an employer may terminate the employment of one of its employees, which include, but are not limited to, the following: • the employee’s repeated failure to perform his or her employment duties without a justifiable reason (if the employee was lawfully disciplined during the preceding 12 months); • dismissal due to redundancy; or • the employee’s unjustified absence from the workplace for more than four consecutive hours during one working day. EMPLOYEES SUBJECT TO TERMINATION LAWS All employees. PROHIBITED OR RESTRICTED TERMINATIONS Certain categories of employees stipulated by the Labor Code enjoy additional protection, these include, amongst others, minors, employees on sick or holiday leave, pregnant employees, employees with children and trade union members. THIRD-PARTY APPROVAL FOR TERMINATION Local trade union (if any). 133Guide to Going Global • Employment MASS LAYOFF RULES Yes, strict information and notification rules apply when 50 or more employees are to be made redundant within 30 calendar days, 200 and more employees within 60 calendar days or 500 and more employees within 90 calendar days; as well as in case of dismissal of employees amounting to one percent of the total number of employees in connection with the liquidation of the organization or staff reduction within 30 calendar days in areas with less than 5,000 working persons in total. The employer must also notify the Russian Employment Service of the redundancies. NOTICE 2 weeks’ statutory notice. Not required for dismissals due to gross misconduct as defined by law. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE No. SEVERANCE Payments to redundant employees of at least two average monthly earnings (in mass redundancies a payment of three average monthly earnings). Payments in the amount of at least three average monthly earnings in case of removal or termination of the general director. POST-TERMINATION RESTRAINTS Generally unenforceable. NON-COMPETES Generally unenforceable. CUSTOMER NON-SOLICITS Generally unenforceable. EMPLOYEE NON-SOLICITS Generally unenforceable. WAIVERS Unenforceable. REMEDIES DISCRIMINATION Compensation of moral damage is uncapped. UNFAIR DISMISSAL Reinstatement of employment and compensation of lost salary plus compensation for moral damage (uncapped). 134Guide to Going Global • Employment FAILURE TO INFORM AND CONSULT The Russian Administrative Offences Code does not specify liability for specific breaches of labor law and indicates a range of fines and possible liability which may apply for violating labor law. This generally ranges from between руб30,000 and руб50,000 for the company; and from between руб1,000 and руб5,000 for the company’s officials. This legal ambiguity leaves a lot of leeway for Russian supervisory authorities when deciding the amount of the fine and even the possibility of suspending the employer’s activity for 90 days (a measure which is applied extremely rarely). The most likely form of liability is the imposition of fines rather than the suspension of the business activity of the employer. CRIMINAL SANCTIONS Criminal sanctions are not generally a concern for employers. 135Guide to Going Global • Employment Saudi Arabia LEGAL SYSTEM, CURRENCY, LANGUAGE Shariah Law. Member of the Gulf Coordination Council (GCC); therefore required to implement the relevant GCC laws. Saudi Arabian Riyals. Arabic. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP Only Saudi registered entities may hire employees in the Kingdom of Saudi Arabia (Saudi Arabia or KSA). Non GCC employees will need to have a sponsor for immigration purposes and only a Saudi registered entity may sponsor non-GCC employees. PRE-HIRE CHECKS REQUIRED Immigration compliance for all non-GCC employees. PERMISSIBLE Criminal and credit reference checks are only permissible for specific roles (e.g., certain finance positions) and subject to proportionality requirements. Reference and education checks are common and permissible with applicant consent. IMMIGRATION GCC nationals are allowed to work in all the GCC states freely without the need for work visas. Employing non-GCC nationals will require a special type of visa issued by the employer who will become the sponsor of the non-GCC employee for all immigration purposes. HIRING OPTIONS EMPLOYEE Indefinite, fixed-term, full-time or part-time. Incidental work, that is, work that is not considered by its nature to be part of the usual activities of an employer, and whose execution does not require more than 90 days. Seasonal work. With respect to non-Saudis, all employment contracts are deemed to be for a fixed term. If the employment contract itself does not specify a definite term, the term will be the length of the employee’s work visa. Saudi employees will automatically become engaged on indefinite term contracts after two consecutive years of employment. Part-time and fixed-term employees have the right not to be discriminated against due to their status. 136Guide to Going Global • Employment INDEPENDENT CONTRACTOR Only Saudi independent contractors can be hired directly by the company or via a personal services company. Engagement may be subject to misclassification exposure. AGENCY WORKER Subject to following the legal immigration rules for non-Saudis, agency workers are permissible and have the right to equal treatment to employees in relation to pay and other benefits terms. EMPLOYMENT CONTRACTS AND POLICIES REQUIREMENTS In practice, the employment contract should be written, though an oral contract will be binding for employing GCC nationals. From a procedural perspective, an employment contract is required for all non-GCC national employees to obtain their visas. two copies of the employment contract should be made, one copy to be held by each party. The contract must contain a minimum of: name of the employer, authorized signatory and registered address; name and nationality of the employee; identification of the employee (national identity card number for nationals or foreign passport numbers for non-nationals); employee’s salary and any allowances; description of the employee’s duties; identification of the place where the work will be performed; date of appointment and commencement of contract; length of the contract, if applicable. PROBATIONARY PERIODS A probationary period may be agreed of up to 90 days for any new employee. During this probation period, the employee may be terminated for any reason at the convenience of the employer and the employee has no right to contest the termination or to require the employer to reinstate him or her, nor any right to end of service awards. The probationary period and its term must be included in the contract. An employee may be made to serve only one probationary period, unless the parties agree otherwise where the second probationary period is for a different position. POLICIES Written health and safety policy and disciplinary and grievance policy mandatory. THIRD-PARTY APPROVAL No requirement to lodge employment contract or policies with or get approval from any third-party. LANGUAGE REQUIREMENTS Arabic is the prevailing language in the KSA, though a contract can be established using another language. It is common practice in the KSA to produce a bilingual contract, with the Arabic and English texts written in one document. In case of a labor dispute, all proceedings will be conducted in Arabic and all documents, including the employment contract, must be submitted in Arabic. Even if the parties specify otherwise, the Arabic text will always prevail. 137Guide to Going Global • Employment MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All. WORKING HOURS Employees can be required to work a maximum of 8 hours per day or 48 hours per week. There are exceptions for those employed in trade, hotels, catering, security and similar jobs where the working hours may be increased to a maximum of 9 hours per day. For Muslims, the workday during Ramadan cannot exceed six hours per day and the work week cannot exceed 36 hours. There are particular requirements in relation to the hours that women can work and the industries they can work in. OVERTIME Overtime is to be paid at the rate of 150 percent of the employee’s regular wage. Employees who hold a senior, supervisory or managerial position are not entitled to paid overtime. WAGES Minimum wage for Saudi employees only of 3,000 per month. VACATION An employee is entitled to 21 days of annual leave. Salaries must be paid prior to the employee taking his or her vacation. After five years of employment, the employee is entitled to 30 days per year. SICK LEAVE AND PAY An employee with a proven illness which requires the submission of satisfactory medical evidence shall be paid in full for the sick leave for the first 30 days, then 75 percent of wages for the next 60 days. The employer is not required to pay the employee after 90 days of absence. MATERNITY/PARENTAL LEAVE AND PAY Women are entitled to maternity leave commencing four weeks before giving birth and six weeks thereafter. The employer has to pay the employee half of her pay if the female employee has completed one year of service and full pay if the employee has completed three years of service. Paternal leave only one day. DISCRIMINATION Generally, there may be no discrimination in terms of conditions of employment (e.g., as to leaves or end of service benefits), but there are few specific anti-discrimination or harassment laws. Some of the terms of the Labor Law are specific to expatriates. Provisions concerning foreign recruitment, repatriation and related matters do not apply to Saudi nationals. There are also some specific rules for female employees. 138Guide to Going Global • Employment BENEFITS AND PENSIONS Medical insurance required for all employees and their dependents under the age of 18. Pension is only payable for Saudi and GCC nationals. Pension is paid to the General Organization of Social Insurance (GOSI). The total cost of GOSI insurance is 20 percent; 9 percent is paid by the employee, the remaining 11 percent is borne by the employer. DATA PRIVACY Transfer of employee data outside of KSA is not regulated under Saudi law. However, general Shariah principles provide for personal data protection rules which imply that employers should include provisions in employment contracts where the employee’s consent is required for the employer to use or disclosure of the employee’s data to third parties to the extent that such disclosures may be required. RULES IN TRANSACTIONS/BUSINESS TRANSFERS If the ownership of a company is transferred to a new owner or a change takes place in its legal form through merger, partition or otherwise, the employment contracts shall remain in force and service shall be deemed continuous. As for the employees’ rights accrued for the period prior to the change (such as wages or unrealized end of service gratuity on the date of transfer of ownership), the predecessor and the successor shall be jointly and severally liable. However, in the case of an asset sale, employees generally transfer through termination and rehire, but the predecessor and the successor may agree to transfer all the previous rights of the employee to the new owner with the written consent of the employee. If the employee disapproves, he or her may request the termination of his or her contract and collect his or her dues from the predecessor. EMPLOYEE REPRESENTATION Labor unions are illegal in Saudi Arabia. “Worker’s Committees” or similar type organizations are also not permitted. Instead, the Ministry of Labor and the Labor Commissions have jurisdiction over safeguarding employment relations in KSA. Employees may be represented by counsel, if appropriate. TERMINATION GROUNDS Termination permissible on these grounds, if a fair process has been followed: Misconduct, performance, redundancy, illegality, some other substantial reason. EMPLOYEES SUBJECT TO TERMINATION LAWS All. RESTRICTED OR PROHIBITED TERMINATIONS No statutory restrictions/prohibitions. 139Guide to Going Global • Employment THIRD-PARTY APPROVAL FOR TERMINATION Not required. MASS LAYOFF RULES No statutory rules. NOTICE If the contract is of an indefinite term, either party may terminate it for a valid reason to be specified in a written notice to be served to the other party at least 30 days prior to the termination date if the employee is paid monthly and not less than 15 days for others. For fixed-term contracts, the employment will terminate once the fixed term has expired. If termination is sought prior to the expiry of a fixed-term contract, compensation may be payable to the employee in the form of all wages for the duration of the notice or the balance thereof. The last wage received by the employee shall serve as the basis for estimating the compensation. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE Payment in lieu of notice or garden leave are permissible. SEVERANCE End of Service Gratuity (EOSG) is not payable before the end of the employment relationship. If the employer ends the employment, the benefit is calculated by adding one-half month’s wage for each of the first five years and one month’s wage for each of the subsequent years. For fractions of a year, the employee shall be entitled to proportionate EOSG. EOSG shall be calculated on the basis of the employee’s last salary. If the employee resigns, he or she will entitled to one-third of the award after a service of not less than two consecutive years and not more than five years, to two-thirds if his or her service is in excess of five successive years but less than ten years and to the full award if his or her service amounts to ten or more years. An employee who resigns because of serious illness or disability is entitled to EOSG. If an employee is called to military service or cannot work because of force majeure, he or she is entitled to EOSG. Female employees are entitled to EOSG if they resign within 66 months of marriage or within 3 months of childbirth. POST-TERMINATION RESTRAINTS Those that protect the employer’s legitimate business interests can be enforced if reasonable. Garden leave is common for senior employees. NON-COMPETES Non-compete clauses will be honored as long as they are in writing and are no longer than two years. If there is no written agreement or an express non-compete clause is included in an employment contract, the law will not impose any restrictions. CUSTOMER NON-SOLICITS Permissible in narrow circumstances. 140Guide to Going Global • Employment EMPLOYEE NON-SOLICITS Permissible. WAIVERS Employees cannot waive rights under the Saudi Labor Law. REMEDIES DISCRIMINATION None. UNFAIR DISMISSAL If the contract is terminated for an invalid reason, the employee shall be entitled to indemnity to be assessed by the Commission for the Settlement of Labor Disputes, which will take into account the circumstances under which the termination occurred under. Employee may ask to be reinstated. FAILURE TO INFORM AND CONSULT None. CRIMINAL SANCTIONS Not generally a concern under Saudi Labor Law. 141Guide to Going Global • Employment Singapore LEGAL SYSTEM, CURRENCY, LANGUAGE Based on the English Common Law System. Singapore Dollar (S$). English, Chinese, Malay and Tamil. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign company cannot directly engage employees in Singapore without setting up a subsidiary, branch or representative office. While there are generally no income tax withholding obligations, payroll should be set up to comply with provident fund obligations and required payroll records (such as statutory funds and employee tax computations). PRE-HIRE CHECKS REQUIRED Immigration checks. PERMISSIBLE Offers of employment are often made subject to: (i) the prospective candidate having obtained the relevant work permit; (ii) where necessary the obtaining of satisfactory references; and (iii) when appropriate, criminal record checks. Employers may also wish the prospective candidate to undergo a medical examination and produce evidence of qualifications. Pre-hire checks need to comply with the Singapore’s Personal Data Protection Act (PDPA). The main data protection rules of the PDPA will come into force on July 2, 2014, but certain parts of the PDPA (regarding the Commission’s powers and a “Do-Not-Call” registry) are already in force. This includes requiring employers to notify candidates clearly of the purposes for which their personal data would be collected, used or disclosed, and obtain consent. IMMIGRATION Foreign nationals who wish to live and work in Singapore must obtain valid work passes. There are several types of work passes which are administered and issued by the Ministry of Manpower (Employment Pass, S Pass and Work Permits). The type of work pass required depends on the qualification and skill-level of the employee, or the nature of employment sought. 142Guide to Going Global • Employment HIRING OPTIONS EMPLOYEE The Employment Act (EA) is the primary statute regulating the relationship of employees and employers in Singapore. Coverage by the EA is dependent on how the EA defines an “employee.” The definition covers every employee who is under a contract of service with an employer (“EA Employees”), with the exception of seamen, domestic servants, certain government employees and most persons employed in a managerial or executive position (“Non- EA Employees”). A third category of employee comprises EA employees (other than workmen) who are in receipt of (currently) salaries not exceeding $2,000 per month (“Part IV EA Employees”). Employees can be hired on a full-time, part-time, definite-term or open-term basis. INDEPENDENT CONTRACTOR Independent contractors can be engaged, subject to misclassification exposure. AGENCY WORKER Agency workers can be engaged. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS There is no legal requirement for an employment contract to be in writing and there are no formalities that need to be complied with. Employers in Singapore typically include items such as the probationary period, job grade, salary, hours of work, leave and benefits, confidential information and termination provisions within an employment contract. PROBATIONARY PERIODS The EA does not have any clauses pertaining to the probation period for employees. As a common practice, employees are asked to serve a probation period of 3-6 months. POLICIES No mandatory policies. Certain terms can be implied into an employment contract by operation of law, or by custom and practice. THIRD-PARTY APPROVAL No requirement to lodge employment contract or policies with, or get approval from, any third-party. LANGUAGE REQUIREMENTS No specific requirements to be complied with. 143Guide to Going Global • Employment MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS Rights will depend on whether employees are EA Employees, Part IV EA Employees or Non-EA Employees. Generally, the minimum entitlements apply to EA Employees (including Part IV EA Employees only). Matters such as hours of work and leave entitlements are statutorily prescribed for Part IV EA Employees only. WORKING HOURS For shift workers, the hours of work must not exceed an average of 44 hours per week over any continuous period of three weeks (subject to a maximum of 12 hours per day). For non-shift workers, the hours of work must not exceed more than 8 hours per day or 44 hours per week. Where a non-shift worker works less than 5 days per week, the agreed hours of work shall not exceed 9 hours per day or 44 hours per week. A non-shift worker is not allowed to work for more than 12 hours in a day (inclusive of overtime work) except in prescribed circumstances. OVERTIME With some exceptions, all work done in excess of an average of 44 hours per week over any continuous period of 3 weeks is considered overtime for which an employee must be paid at least one and one half times his or her basic hourly rate. The maximum permitted overtime is 72 hours per month Rules relating to overtime only apply to Part IV EA Employees. WAGES Singapore law does not have a minimum wage stipulation. Wages are a matter to be agreed between the parties (in the case of children and young persons under the age of 16 working in particular industries, the Minister for Manpower is empowered to prescribe minimum wages). VACATION A Part IV EA Employee who has worked for his or her employer for at least 3 months is entitled to 7 days’ paid annual leave for the first year of service. An additional 1 day of leave for every subsequent 12 months of service will be provided, up to a maximum of 14 days. In addition, there are 11 public holidays each year in Singapore. Every EA Employee is entitled to be paid for each public holiday. SICK LEAVE AND PAY An EA Employee who has worked for his employer for at least 3 months is entitled to paid sick leave. The number of days of sick leave is subject to the employee’s service period and a cap of 14 days where hospitalization is not required; and where hospitalization is necessary, either 60 days in a year; or 14 days plus the number of days on which the employee is hospitalized, whichever is the lower. A pro rata entitlement exists for employees with less than six months’ continuous service. 144Guide to Going Global • Employment MATERNITY/PARENTAL LEAVE AND PAY All female employees in Singapore (including Non-EA Employees) are entitled to 16 weeks’ (4 weeks preceding birth and 12 weeks following birth or 16 weeks following birth) paid maternity leave if: the child is a Singapore citizen; the child’s parents are lawfully married before the child’s birth; and the employee has worked for the employer for at least three months immediately before the day of birth. However, if the female employee is unmarried, she will only be entitled to maternity leave if she is an EA Employee. The employee will receive full pay for the first eight weeks if she has less than two children of her own and has complied with the requisite notice requirements to her employer. Failure to provide such notice without sufficient cause will entitle an employer to pay the employee only half her salary during the leave. New statutory entitlement to one week’s paternity leave. All employees (including fathers) employed for at least three months (including Non-EA Employees) will be entitled to up to six days of paid childcare leave where the child is a Singapore citizen and below the age of seven. An EA Employee whose child is not a Singapore citizen, will be entitled to two days. DISCRIMINATION The only type of employment discrimination legislation prohibits is age discrimination. The Retirement and Re-employment Act applies to all employees and prohibits the dismissal of any employee who is below the retirement age of 62 years (or other retirement age prescribed by the Minister of Manpower) on the grounds of age, notwithstanding any agreement to the contrary. Singapore does not have any legislation which prohibits discrimination on the grounds of race, ethnicity, religion, gender, disability or sexual orientation. While the Constitution provides that all persons are entitled to the equal protection of the law and that there shall be no discrimination based on religion, race, descent or place of birth, challenges on constitutional grounds are rare. BENEFITS AND PENSIONS For employees who are Singapore citizens or permanent residents, the employer is required to make contributions to the Central Provident Fund. Benefits offered to an employee will usually depend upon their level of seniority within an organization. Those at manager or director level are likely to be offered additional benefits. Many organizations pay occupational sick pay in excess of statutory entitlement to a wide range of employees. DATA PRIVACY Under the PDPA, an employer is permitted to collect, use and disclose the employees’ personal data for purposes of managing or terminating an employment relationship, so long as the employee has been notified of such collection, use and disclosure. 145Guide to Going Global • Employment RULES IN TRANSACTIONS/BUSINESS TRANSFERS EA Employees are protected on business transfer and transfer automatically to the acquirer. Non-EA Employees do not transfer automatically, and instead will have their employment contracts terminated on a business transfer under the common law, and can then be rehired by the acquirer. EMPLOYEE REPRESENTATION The status of trade unions is administered by the Industrial Relations Act (IRA) the Trade Disputes Act (TDA) and the Trade Unions Act. The IRA regulates relations between employers and employees and provides the legal framework to prevent and settle trade disputes by collective bargaining, conciliation and arbitration. Individual disputes fit within the definition of trade disputes under the TDA. The TDA defines illegal industrial action and illegal lock-outs and provides penalties for the same. Collective agreements are common in Singapore within specific industries, such as transport and manufacturing. TERMINATION GROUNDS No legal requirement to state the reason for termination, so long as termination is effected in accordance with the employment contract (though generally there must be sufficient reason). In addition, an employer has a right to summarily dismiss an employee in exceptional circumstances (including gross misconduct). EMPLOYEES SUBJECT TO TERMINATION LAWS All employees. RESTRICTED OR PROHIBITED TERMINATIONS None, save female employee on maternity leave. THIRD-PARTY APPROVAL FOR TERMINATION None required. MASS LAYOFF RULES Lawful, subject to any restrictions under the contract of employment and collective agreement (if any). The 2009 Tripartite Guidelines on Managing Excess Manpower (Guidelines) issued by the Ministry of Manpower (MOM) provide guidance in redundancy situations and are commonly followed by employers, but are not legally binding. The MOM recognizes a genuine redundancy in a number of circumstances including: recession/economic downturn; high labor cost; high business costs other than labor cost; streamlining of operations; automation/mechanization/computerization; restructuring by reason of merger, take-over by another company; or outsourcing of functions. Any redundancy exercise should be implemented in consultation with a trade union (if the company is unionized). 146Guide to Going Global • Employment NOTICE Employment contracts typically specify a required notice period for termination. In the absence of a specified term, where the employee is an EA Employee, the required notice of termination is dependent upon the employee’s length of employment (from one day for those employed for less than 26 weeks to 4 weeks for those employed for 5 years or more). A Non-EA Employee, who is not subject to the statutory minimum notice period, is entitled to reasonable notice (usually not less than the statutory minimum notice period) if his or her employment contract does not set out a notice period. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE It is possible for the employer to make payment in lieu of notice – a sum equal to the amount of salary which would have been earned by the employee during the required period of notice. Employees on notice of termination may be placed on garden leave if permitted by the employment contract. It is not clear whether an employee can be placed on garden leave where not provided for in the contract, in that case, employee consent should be obtained. SEVERANCE Unless employment terms expressly provide that retrenchment benefits are payable, there is no obligation on the part of the employer to pay such benefits. POST-TERMINATION RESTRAINTS Covenants in restraint of trade are prima facie void in Singapore. They will only be considered to be enforceable if they protect a legitimate business interest and go no further than is reasonably necessary to protect that interest. The courts have recognized that a legitimate interest exists in an employer’s trade secrets, workforce stability and in the protection of special trade connections. NON-COMPETES Not enforceable, save where necessary to protect the employer’s legitimate business interests; and reasonable, both in the interest of the parties and in the interest of the public. CUSTOMER NON-SOLICITS Enforceable, subject to strict limitations. A post-employment restraint may be enforced by courts if it is: • necessary to protect the employer’s legitimate business interests; and • reasonable – both in the interest of the parties and in the interest of the public. EMPLOYEE NON-SOLICITS Enforceable, subject to strict limitations. A post-employment restraint may be enforced by courts if it is: • necessary to protect the employer’s legitimate business interests; and • reasonable – both in the interest of the parties and in the interest of the public. 147Guide to Going Global • Employment WAIVERS A waiver must be clear, but may be oral or written. A waiver need not be express, but can be inferred from a course of conduct. REMEDIES DISCRIMINATION Reinstatement to the employee’s former employment and payment of an amount equivalent to the salary that the employee would have earned had he not been unlawfully dismissed by the employer; or a just and equitable compensation. May amount to breach of the employer’s implied duties and allow the employee to claim constructive dismissal and/or claim for breach of contract under common law. UNFAIR DISMISSAL EA Employees may lodge a claim with the Ministry of Manpower for the purposes of recovering salaries and other statutory payments, or may appeal in writing for reinstatement (within one month from the date of dismissal). Non-EA Employees can only claim for a breach of contract in civil courts and do not have other claims. FAILURE TO INFORM AND CONSULT May amount to breach of the employer’s implied duties and allow the employee to claim constructive dismissal and/or claim for breach of contract under common law. CRIMINAL SANCTIONS Criminal sanctions including fines or imprisonment for offences under the EA. Offences include: wrongful detention of employee by employer after contract of services have been determined; obstruction of employee to appear before inquiry held by the Commissioner; fraudulent inducement of employee to emigrate out of Singapore to work; entering into prohibited contracts of service; failure to pay salary as stipulated; and employment of children under 12 years of age. Any director, manager, secretary or other officer of the company may also be charged with the same offence and punished upon conviction if it can be shown that the offence is committed with the consent or connivance of any act or default of such persons. 148Guide to Going Global • Employment South Korea LEGAL SYSTEM, CURRENCY, LANGUAGE Civil law jurisdiction, though court precedents play an important role. South Korean Won (₩). Korean. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP Foreign companies cannot directly engage employees in Korea. There are four ways for foreign nationals to engage in business activities in Korea: (i) establishing a local corporation; (ii) opening a private business; (iii) opening a branch; and (iv) opening a liaison office. Payroll withholdings are required. PRE-HIRE CHECKS REQUIRED Immigration checks. PERMISSIBLE Under the Personal Information Protection Act (PIPA), to conduct background checks that go beyond the scope generally required to enter into an employment agreement, consent must be obtained from the applicant. Separate consent must be obtained if an employee’s health information or criminal records are to be checked. IMMIGRATION Long-term and short-term general work visas are available to visit Korea for business-related purposes. Two short-term visas are available (C-3-4 and C-4 visas), and three long-term visas are available (D-7, D-8 and E-7 visas). The appropriate visa type depends, among other things, on the nature of the assignment/employment and the type of employing entity located in Korea. Special work visas (E-4, D-5 and D-9 visas) are available for foreign nationals working in highly specialized areas of expertise; and special resident visas (F-4 and F-5 visas) are available which allow a foreign national to live and work in Korea without requiring a separate work visa. HIRING OPTIONS EMPLOYEE Employees may be employed on either an indefinite basis (referred to as “regular” workers) or a definite/fixed-term basis for a maximum term of two years (“non-regular” workers). Fixed-term employees may be deemed to be employed on an indefinite basis if employed for a period of greater than two years, in principle. Employees can be engaged on a full-time or part-time basis. 149Guide to Going Global • Employment INDEPENDENT CONTRACTOR Independent contractors may be engaged and companies should be careful to avoid establishing “employee” status whereby the individual is entitled to all of the benefits of an employee including severance and employment security, thus, increasing the compliance, tax, payroll and other risks to the company. The primary factor distinguishing employees from contractors will be the degree of supervision and control by the company over the individual. AGENCY WORKER Engagement governed by the Act on the Protection of Temporary Agency Workers. These are “dispatched employees” employed by a temporary work agency, who provide services for a user company (under their direction and instruction) in accordance with the terms and conditions of a contract on temporary placement of workers, executed between the temporary work agency and the user company. The employment relationship is with the temporary work agency. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS Under the Labor Standards Act (LSA), all employers in Korea must enter into a written agreement with their employees which details, among other working conditions: wages, working hours and recess periods, weekly paid days off and paid annual leave. Any agreement that does not satisfy the standards prescribed by the LSA and other binding laws relating to working conditions will be void to the extent that it fails to meet those legal requirements. PROBATIONARY PERIODS No fixed period for probation by statute, though parties may agree to a probationary period. Generally a period of 3-6 months will be adopted. POLICIES Work rules are required in companies with ten or more employees in Korea. Apart from that, no mandatory policies. However, the Occupational Health and Safety Act (OHSA) establishes a basic framework of general standards for occupational health and safety, and requires most workplaces to establish an industrial safety and health committee which is to make regular reports to the government. THIRD-PARTY APPROVAL Work rules must be filed with the labor authorities. Apart from that, none required. LANGUAGE REQUIREMENTS No language requirements. 150Guide to Going Global • Employment MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS Generally all. Employees and dispatched employees are entitled to statutory employment rights, such as statutory severance pay and paid annual paid leave, while other types of workers (such as independent contractors) are not. WORKING HOURS Statutory limit is eight hours per day and 40 hours per week. Employees in managerial or supervisory positions and employees handling confidential information are not subject to the statutory limits on working hours. OVERTIME Limited to 12 hours per week, to be paid at 150 percent of ordinary wage. For an employer with fewer than 20 employees, a transitional period is in place up to July 1, 2014, during which an employer can require employees to work up to 16 hours’ overtime per week. The first four hours are to be remunerated at 125 percent of the ordinary wage, with the balance paid at 150 percent of ordinary wage. WAGES The Minimum Wage Act 1986 (MWA) provides for minimum wage levels. The minimum wage can be fixed on an hourly, daily, weekly or monthly basis. The hourly minimum wage rate in effect for 2013 is ₩4,860. The minimum wage is calculated by adding fixed allowances to basic pay, although it excludes other compensation, for example, discretionary bonuses, overtime pay and fringe benefits. VACATION Employees must be given a minimum of 15 days’ paid annual leave for at least 80 percent attendance during the previous year (from August 2, 2013, employees must be afforded at least one day of paid annual leave for each full month of attendance even if the employee does not meet the overall yearly requirement of 80 percent attendance in the previous year). Following completion of the first year of service, this entitlement increases by one day after each two years of service, up to a maximum of 25 days. SICK LEAVE AND PAY There is no legal requirement for employers to provide leave to employees for non-work related illnesses or injuries. It is not uncommon, however, for companies to provide paid sick leave whether or not an injury or illness is work related. Employees will generally use their annual paid leave as personal sick days if paid sick leave is not available. Employers are required under the LSA to provide paid leave for work-related illnesses or injuries. 151Guide to Going Global • Employment MATERNITY/PARENTAL LEAVE AND PAY Employers must grant pregnant female employees a total of 90 days’ paid maternity leave, which can be used before or after childbirth. Compensation for 60 days is paid by the employer, while the remaining 30 days is paid from the Employment Insurance Fund, a state-run fund established by the Ministry of Employment and Labor under the Employment Insurance Act 1993. The statutory 90 days’ maternity leave includes holidays and Sundays. At least 45 days must be used after childbirth so that even where more than 45 days were used before childbirth, an employer must allow 45 days of maternity leave after childbirth. Male employees are entitled to three days’ paid leave, with two additional days of unpaid leave, which can be taken at the employer’s discretion within 30 days of the child’s birth. Employees with pre-school children under the age of 6 have an entitlement to unpaid childcare leave of up to one year. This entitlement is applicable to both fathers and mothers. The employee must have worked for the same employer for at least 1 continuous year. The employer is not obliged to pay wages during childcare leave, however, employees are instead paid under the employment insurance system and may receive 40 percent of their ordinary wage up to ₩1 million with 15 percent of this amount payable 6 months after the employee’s return to work. DISCRIMINATION The LSA prohibits discrimination against employees on the grounds of sex, nationality, religion or social status. Discrimination is also prohibited under statutes protecting disabled employees, female employees, foreign workers, and non-regular workers. Age discrimination is also prohibited. BENEFITS AND PENSIONS Employers must subscribe to mandatory social insurance programs, the National Pension, the National Health Insurance, the Unemployment Insurance and the Industrial Accident Compensation Insurance. DATA PRIVACY Under the PIPA, an employee is entitled to request the employer to allow access to, correct or delete his or her personal information. The PIPA requires an employer to obtain the consent of the individual employee when his or her personal information is obtained or provided to third parties. RULES IN TRANSACTIONS/BUSINESS TRANSFERS The transferee automatically assumes the transferor’s responsibilities as regards to the employees (including their working terms and conditions, and liabilities), unless the employees otherwise agree. Unless there is just cause, employees are protected against dismissal (before or after the transfer). 152Guide to Going Global • Employment EMPLOYEE REPRESENTATION Employees have the right to establish and operate trade unions, and collective bargaining will have binding legal effect. Each workplace with more than 30 employees must have a Labor Management Council (LMC). LMCs are composed of an equal number of members representing employers and workers, and there shall be no less than three and not more than 10 members. TERMINATION GROUNDS The LSA provides that an employer may only terminate for “just cause,” though “just cause” is not defined. The courts have generally held that “just cause” only exists in limited circumstances, including: • Fault attributable to the employee making continued employment untenable: for example where the employee is guilty of sufficiently grave misconduct making it impossible to continue the relationship; continuous and persistent unsatisfactory performance; criminal or deliberate tortious acts against the employer; serious criminal acts not in the line of duty; improper relationships with other employees; or material misrepresentation in the hiring process. • Urgent business necessity to try and save a failing business from imminent bankruptcy. EMPLOYEES SUBJECT TO TERMINATION LAWS All employees are covered. RESTRICTED OR PROHIBITED TERMINATIONS Employees on sick leave due to a job-related illness or injury (and for 30 days after their return); employees on maternity leave (and for 30 days after their return); and employees on childcare leave. THIRD-PARTY APPROVAL FOR TERMINATION None required. MASS LAYOFF RULES Lawful, provided an employer can show there is an “urgent business necessity,” that the employer has made best efforts to avoid the termination and that an objective selection process is conducted. A duty to report dismissals may be triggered depending on the number of employees routinely hired: • where 99 or less employees are routinely hired, 10 or more dismissals will trigger a duty to report • where 100-999 employees are routinely hired, dismissal of 10 percent of the workforce will trigger a duty to report and • where 1000 or more employees are routinely hired, 100 or more dismissals will trigger a duty to report. 153Guide to Going Global • Employment NOTICE If an employee is dismissed, the LSA requires that the company provide the employee with 30 days’ prior notice or 30 days’ ordinary wages in lieu of notice. The company can be exempted from this requirement if either: (i) it can establish that it is impossible to maintain its business due to a natural disaster or other unavoidable reason; or (ii) the employee intentionally causes substantial problems for the company or intentionally damages company property. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE A statutory right to 30 days’ payment in lieu of notice. Garden leave possible if provided for in contract of employment or under company policy. SEVERANCE Employers must adopt a comprehensive retirement benefit system. The default is the statutory severance pay system whereby upon termination of employment for any reason (including employee resignation), where the employee has been employed for at least 1 year, the employee is entitled to severance pay of 30 days’ “average wages” (all wages generally including bonus paid within the previous 3 months) for each year of continuous service. POST-TERMINATION RESTRAINTS Restrictive covenants are generally enforceable in South Korea provided they are reasonable and protect an employer’s trade secrets. NON-COMPETES Enforceable if reasonable and protect employer’s trade secrets. CUSTOMER NON-SOLICITS Enforceable if reasonable and protect employer’s trade secrets. EMPLOYEE NON-SOLICITS Enforceable if reasonable and protect employer’s trade secrets. WAIVERS Permissible. Terminations are often implemented through mutual agreements. REMEDIES DISCRIMINATION Employee may bring claim before the National Human Rights Commission with possible remedy of recommendation for cease of discriminatory activities and/or damage compensation, etc. 154Guide to Going Global • Employment UNFAIR DISMISSAL Employee can bring claim before the relevant Regional Labor Relations Commission (RLRC) with possible remedy of reinstatement with back pay. Where the employee does not wish to be reinstated, a lump sum can be provided to the employee. Employees dismissed without cause may also initiate civil proceedings in the District Court. FAILURE TO INFORM AND CONSULT In certain circumstances the employer’s action can be deemed null and void in the absence of required consultation. Action for breach of contract may be possible but damages should be substantiated. CRIMINAL SANCTIONS If the ruling of unfair dismissal is finalized by the court and the employer does not comply with the reinstatement order from RLRC, the employer may be subject to an imprisonment of up to one year or a criminal fine of up to ₩10 million. 155Guide to Going Global • Employment Spain LEGAL SYSTEM, CURRENCY, LANGUAGE Civil Law. Member of European Union (EU), so required to implement relevant EU Directives. Euro (€). Spanish. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign entity can engage employees in Spain with proper payroll registrations, subject to business and corporate tax planning considerations. Withholdings for income tax and social security to be done through payroll. PRE-HIRE CHECKS REQUIRED Immigration compliance. For certain roles (e.g., security guards), the employee must provide the potential employer with a certificate proving lack of criminal records (the authorities issue certificates in this sense). Such certificates cannot be stored by the employer nor transferred to any other entity. PERMISSIBLE Reference and education checks are permissible with the applicant’s consent only. Most companies and institutions prefer to deliver the information directly to the applicant so that he or she can supply it to the potential new employer directly and personally. IMMIGRATION Nationals of the European Economic Area (EEA) and Switzerland have a right to work in Spain, subject to limitations for Croatia (until July 1, 2015). A residency and work permit is required for non-EEA/Swiss nationals. HIRING OPTIONS EMPLOYEE Indefinite, fixed-term (subject to strict limitations), full-time or part-time. Part-time and fixed-term employees have the right not to be discriminated against due to their status. INDEPENDENT CONTRACTOR Independent contractors can be engaged directly by the company. It is important to check that they are not misclassified, as this may create liability. AGENCY WORKER Agency workers can only be engaged for a fixed-term or in training situations. Agency workers have the right to equal treatment to employees in relation to their essential labor conditions through the entire length of the relationship. 156Guide to Going Global • Employment EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS Verbal employment contracts are legal in certain cases, but are not market practice. In all cases, certain minimum information has to be put in writing, and a summary of the main terms of the contract (copia básica) has to be lodged with the Employment Office. For certain types of contracts (e.g., a seasonal employment agreement), an official template employment agreement is also required (provided by the Employment Office). Mandatory employment legislation and the applicable Collective Bargaining Agreement (CBA) must be honored. PROBATIONARY PERIODS Permissible. Subject to the limits fixed by the applicable CBA, and where the CBA is silent, the term is six months for qualified employees, and two months for unqualified employees. Companies with fewer than 50 employees can enter into the so-called “contract to promote entrepreneurship,” which permits a 1 year probationary period (for qualified and non-qualified employees). POLICIES Not formally required, although is common practice for major companies on multinational employers. THIRD-PARTY APPROVAL Apart from the filing of the basic copy mentioned above, there are no requirements for employment contracts or policies to get approved by any third-party. However, if policies include work control systems (e.g., policy regarding the use of the IT systems) or professional formation plans, employees’ representatives should be invited to provide a non-binding report. LANGUAGE REQUIREMENTS The basic copy of the employment agreement (copia básica) must be in Spanish. The official template employment contract is provided by the Employment Office only in Spanish. If companies issues additional employment agreements, they could technically be in any language, but a Spanish version is highly recommended, as in case of conflict the judge will decide based on the Spanish translation. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All employees, except that employees subject to special employment regulation of senior management (Royal Decree 1382/1985) are not subject to the minimum employment rights established by the Workers’ Statute, unless otherwise agreed. In addition, most CBAs exclude senior managers from their scope. 157Guide to Going Global • Employment WORKING HOURS As a general rule, there is a 40 hours per week limit on working time. CBAs may establish reduced working hours. OVERTIME Only with employee consent (except in cases of force majeure). Overtime must be compensated in cash (with a value at least equivalent to the ordinary hour) or time-off in the following four months. CBAs may establish a more beneficial treatment for the employee. WAGES The minimum wage fixed by the Spanish government for 2014 is: €21.51 per day, €645.30 per month and €9034.20 per year (14 payments), for a full-time worker. All CBAs establish salary charts with higher minimum wages. VACATION 30 days per year (plus 14 public holidays). CBAs may establish longer vacation. SICK LEAVE AND PAY Employees are entitled to take time off for sick leave (usually up to 18 months). There is a mandatory sick pay to be borne by the Social Security Scheme. CBAs may require the employer to improve social security benefits. MATERNITY/PARENTAL LEAVE AND PAY 16 weeks’ paid maternity leave and 15 days’ paid paternity leave. In both cases the pay is to be borne by the Social Security Scheme and equivalent to 100 percent of the regulatory base (that is, the employee’s salary determined pursuant to a specific formula over which public benefits are calculated), except the first 7 days of the paternity leave where the cost is cover by the employer at the employee’s regular sick rate. Employees have a right to return to work. CBAs may require the employer to improve social security benefits. In some cases, the father can take a part of the maternity leave days. DISCRIMINATION Characteristics protected: age, disability, gender reassignment, marriage or civil status, pregnancy or maternity, race, religion or belief, sex or sexual orientation, political ideas, union membership, family relationships with co-workers and language. Discrimination cases are not frequent in Spain, with the exceptions of trade union related issues, or discrimination based on family related rights (i.e., maternity, paternity). BENEFITS AND PENSIONS Minimum benefits and pensions fixed by law and covered by the Social Security Scheme. CBAs may establish further benefits or pensions complementing those set out by the public system. 158Guide to Going Global • Employment DATA PRIVACY Employees generally must be notified of personal data processing (and in certain cases, have to give consent). Registration of databases with the Spanish Data Protection Commissioner (AEPD) is required. Special rules apply to data transfers, even between companies belonging to the same group. International data transfers are subject to a stringent regime of administrative approvals and consents. Significant restrictions on monitoring email and Internet use at the workplace. RULES IN TRANSACTIONS/BUSINESS TRANSFERS Automatic transfer under the EU Acquired Rights Directive and Section 44 of the Workers’ Statute in case of change of employer (e.g., sale of an independent stand-alone business unit, merger, or spin-off ). Right of the employees to maintain the same terms and conditions. The transfer is not by itself a cause for fair dismissal. Duty to inform, and in case labor measures are planned (e.g., change of work center, change of employment conditions, collective dismissal), duty to consult with employee representatives. EMPLOYEE REPRESENTATION Both trade unions and work councils occupy a preeminent position in Spanish labor law. Industry level CBAs are very common. They may coexist with CBAs agreed at a company level. In companies with 11-49 employees (or in companies with 6-10 employees if requested by the majority of employees), employees can invite elections to personnel delegates, in companies with 50 or more employees, elections to a works council. Personnel delegates and works commits have the same rights and countries. The company does not need to initiate such elections (but also cannot hinder employee rights in that regard). TERMINATION GROUNDS Decided unilaterally by the employer: redundancy of the job position based on economic, organizational, productivity or technological reasons on individual as on collective basis; disciplinary dismissal (including performance). Other termination grounds: employee resignation; constructive dismissal; mutual agreement; grounds legally agreed in the contract; expiration of a fixed-term contract; death; permanent disability; employee’s retirement; force majeure; death or permanent disability. EMPLOYEES SUBJECT TO TERMINATION LAWS All. 159Guide to Going Global • Employment RESTRICTED OR PROHIBITED TERMINATIONS Some employees are protected against unfair dismissal (e.g., pregnant employees, employees enjoying reduced working time to take care of a child, employee representatives, employees who have filed a claim against the company. Protected employees can be terminated, but only for fair cause, or they will be entitled to reinstatement and back wages. THIRD-PARTY APPROVAL FOR TERMINATION Third-party approval not required for individual terminations. Termination documents in accordance with employment legislation are required. MASS LAYOFF RULES Collective dismissal rules will be triggered in the case that the number of affected employees exceed the legal thresholds (e.g., ten terminations in a 90 day period in companies with fewer than 100 employees). Strict information and consultation rules apply, which require involving both the employees’ representatives and the labor authority. However, there is no need to obtain approval for termination. Terminations can be challenged by the employees, the employee’s legal representatives, and in exceptional cases by the administration. NOTICE 15 days’ notice in case of redundancy of common employees. Senior managers are entitled to a minimum 3 months’ notice. Not required in case of disciplinary dismissal. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE If the 15 days’ notice is not honored, payment in lieu of notice is required. Garden leave is not expressly regulated, although employers sometimes use garden leave (which may result in issues given the employee’s right to work). SEVERANCE Fair individual redundancy: 20 days of salary pay per year of service up to 12 months. For collective layoffs, usually increased through collective consultations. Fair disciplinary dismissal: no severance. POST-TERMINATION RESTRAINTS Those aimed to protect the employer’s legitimate business interests can be enforced provided that: (i) the employee receives adequate consideration and (ii) they do not exceed two years for qualified employees and six months for non-qualified employees. NON-COMPETES Permissible under the abovementioned rules. Once agreed the employer cannot unilaterally waive and therefore must pay the agreed compensation. This restriction is usually agreed with high profile employees only. 160Guide to Going Global • Employment CUSTOMER NON-SOLICITS Permissible under the abovementioned rules. Extensive solicitation could also be subject to civil law claims under unfair competition rules. EMPLOYEE NON-SOLICITS Permissible under the abovementioned rules. Extensive solicitation could also be subject to civil law claims under unfair competition rules. WAIVERS In principle, statutory rights cannot be waived and any waiver of the rights will be void and null. However, some exceptions apply. REMEDIES DISCRIMINATION Remedies include declaration of nullity of the Company’s decision; order to immediately stop the discriminatory practice; damages compensation; and/or reinstatement of the employee to his or her position prior to the violation of the fundamental right. In addition, companies can face a fine ranging from €6,251 to €187,515 to be imposed by the Labor Inspection, but subject to appeal firstly before higher administrative bodies and subsequently before the labor courts. UNFAIR DISMISSAL In case of null and void redundancy or disciplinary dismissal (e.g., due to breach of fundamental rights, or due to discrimination): automatic reinstatement plus payment of back wages; in some cases, an additional damages compensation. In the case of unfair redundancy or disciplinary dismissal: The employer must choose between: a) reinstatement plus payment of back wages; or b) payment of a severance compensation, as follows: (i) From the hire date until February 11, 2012: 45 days of salary per year of service capped at 42 monthly installments, plus (ii) From February 12, 2012 to the termination date: 33 days of salary per year of service capped at 24 monthly installments. In principle, the total severance cannot exceed compensation for 720 days of work, except that the employee is entitles to a higher severance, in which case compensation is capped at 42 monthly installments. Employee representatives who are unfairly terminated will have the right to choose between payment or reinstatement. 161Guide to Going Global • Employment FAILURE TO INFORM AND CONSULT Failure to inform the employee representatives of individual redundancy will lead to the declaration of in fairness of the termination. Failure to comply with information and consultation duties in a collective dismissal will lead to the declaration of nullity of the terminations and a fine ranging from €6,251 to €187,515. If the rights of the trade union are violated, an additional uncapped compensation can be imposed (usually between €3,000 and €6,000). Failure to inform or entrust in TUPE starting, will result in a fine ranging from €651 to €6,251 and exceptionally, declaration of nullity of the transfer of employees. CRIMINAL SANCTIONS There are criminal sanctions related to employment issues such as those linked to work-related accidents and social security fraud. Generally, legal persons shall be held criminally accountable for the felonies committed in their name or on their behalf, and to their benefit, by their legal representatives and de facto or de jure administrators. Legal persons shall also be criminally accountable for the felonies committed when perpetrating the corporate activities and on account and to the advantage thereof. 162Guide to Going Global • Employment Sweden LEGAL SYSTEM, CURRENCY, LANGUAGE Civil Law. Member of European Union (EU), so required to implement relevant EU Directives. Swedish Krona (kr). Swedish language. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign company can engage employees in Sweden with proper payroll registrations, subject to doing business and corporate tax planning requirements. Employers are obliged to pay social security charges on top of gross salary and most benefits. The social security charges amount to approximately 31 percent to be borne by the employer. The Swedish personal tax system operates with a progressive rate varying from approximately 28 percent to approximately 57 percent. The employer shall deduct from the gross salary and deliver an employee’s personal tax to the Swedish Tax Authority. PRE-HIRE CHECKS REQUIRED No pre-hire checks required. PERMISSIBLE Immigration compliance. Reference and education checks are common and permissible with applicant consent. Criminal record checks are only permissible for specific roles (e.g., child-care positions) and subject to proportionality requirements. IMMIGRATION Nationals of the Nordic countries, most EU/European Economic Area (EEA) countries and Switzerland are permitted to begin working immediately upon entering Sweden, but must register at the Migration Board no later than three months after entering the country. Most non-EU/EEA, non-Nordic and non-Swiss citizens who intend to enter Sweden to work need a work permit. HIRING OPTIONS EMPLOYEE Indefinite, fixed-term, full-time or part-time. An employer may not put an employee working part-time or employed on a fixed-term contract in a disadvantage by providing a less favorable salary or other employment terms, compared to employees in a similar situation working full-time or those in permanent employment. 163Guide to Going Global • Employment INDEPENDENT CONTRACTOR Independent contractors can be engaged directly by the company. However, engagement may be subject to misclassification exposure. Also, hiring of independent contractors may be subject to consultation requirements if the employer is bound by a collective bargaining agreement. AGENCY WORKER Agency workers can be hired in order to assign them to user undertakings to perform work under the user undertaking’s supervision and direction. The equal treatment principle under the Swedish Act on Agency Work requires that the employer (i.e., the temporary work agency) ensure that the basic working and employment conditions for the employee who has been assigned to a user undertaking shall be at least those that would have applied if the employee had been employed directly by the user undertaking to perform the same work. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS Within one month of the commencement of employment, employees must be provided with certain information regarding minimum terms, e.g., name of employer, salary, work place, vacation, type of employment etc. Issuing employment agreements is common best practice. PROBATIONARY PERIODS Permissible. Subject to a statutory limit of six months. POLICIES No requirement of written policies, but they are commonly used. It is generally advisable for an employer to have policies, e.g., concerning unilaterally issued benefits and use of work equipment (Internet access, computers and mobile phones). THIRD-PARTY APPROVAL No requirement. LANGUAGE REQUIREMENTS No statutory requirements, but it would be advisable to ensure that all employees understand the language of the documents provided. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All. WORKING HOURS Standard working hours are 40 hours per week. The employer may require the employees to work overtime for up to 48 hours during a period of four weeks or 50 hours during one month, subject to a maximum of 200 hours per year (general overtime). An employer may require, provided that there are special reasons and the situation cannot be resolved in any other way, overtime in addition to general overtime subject to a maximum of 150 hours per year (additional overtime). 164Guide to Going Global • Employment OVERTIME There is no statutory right to overtime payments, however, collective bargaining agreements typically include a right to overtime payments for employees in lower positions. WAGES There are no statutory regulations on minimum wages in Sweden. However, collective bargaining agreements typically include provisions regarding minimum wage/salary. Thus, subject to any collective bargaining agreement and non- discrimination law, an employer and employee can freely agree upon the level of salary to be paid and any future salary increases. VACATION Employees are entitled to 25 days of paid holiday (public holidays excluded), after one year of employment (qualifying year), pursuant to the Swedish Holiday Act. SICK LEAVE AND PAY Employees are entitled to sick pay for 14 days under the Swedish Sick Pay Act, subject to a qualifying day (karensdag). Sick pay amounts to 80 percent of the employee’s salary and benefits. As of day 15, employees are entitled to sickness allowance from the Swedish Social Insurance Office (Försäkringskassan). MATERNITY/PARENTAL LEAVE AND PAY Employees are entitled to parental leave under the Parental Leave Act. The mother is entitled to 7 weeks before birth as well as 7 weeks after birth (both included in the 480 days mentioned below). The father is entitled to 10 days in connection with the birth. Both parents also have 480 days of parental leave to split between the parents as they wish before the child turns 8 or has completed his or her first school year. However, 60 days are reserved for each parent. The employer is not required to pay the employee any salary during the time he or she is on parental leave (although the employee will accrue holiday during the parental leave as if the employee had worked for up to 120 days, or in case of a sole parent up to 180 days). Instead, an employee is entitled to a parental allowance from the government. The parental allowance is given for a maximum of 480 days, until the child has reached 8 years (450 days for children born before 2002). The parental allowance amounts to a maximum of SEK 944 (for 2014) per day for 390 days. DISCRIMINATION The Discrimination Act covers discrimination on the grounds of: sex, ethnic origin, religious or other belief, disability, sexual orientation, age and transgender identity or expression. The Discrimination Act contains provisions on active measures, supervision, and invalidity of discriminatory provisions in individual and collective bargaining agreements, entitlement to compensation and legal proceedings. 165Guide to Going Global • Employment BENEFITS AND PENSIONS In general, benefits are either introduced by the individual contract of employment or by the collective bargaining agreement. The benefits provided to an employee usually depend on the level of seniority in the organization. Common benefits, at least for persons at a more senior level, are additional paid holidays, contributions to a private pension insurance; health and death insurance; mobile-telephone; company car/car allowance; and contributions (in addition to what is paid from the Swedish state) from the employer during parental leave. Collective bargaining agreements typically include provisions regarding payment of pension contributions into private pension insurance. Benefits generally are subject to social security charges to be paid by the employer and taxes to be paid by the employee. DATA PRIVACY The Swedish Personal Data Act applies to the processing of employees’ personal data. The employer must ensure that the fundamental requirements for processing of the employees’ personal data are fulfilled (e.g., personal data must be correct, adequate and relevant in relation to the purposes of the processing and may not be retained for a longer period than is necessary in light of the purposes of the processing), there must be a legal basis for the processing, such as performance of the employment agreement or consent, and the employee must receive adequate information regarding the processing. Special rules apply to data transfers outside the EEA. RULES IN TRANSACTIONS/BUSINESS TRANSFERS Rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a business transfer are automatically transferred, under the Employment Protection Act (EPA). The employer has a duty to inform and consult with trade unions if the company is bound by a collective agreement, or with any trade union that whose members employed by the company will be affected by the transfer. Any dismissal connected to the transfer would be in breach of the EPA, unless for an economic, technical or organizational reason. EMPLOYEE REPRESENTATION Sweden has a high rate of trade union affiliation among employees, totaling around 75-80 percent. The Co-Determination Act (medbestämmandelagen) consists of rules regulating collective agreements, rules of procedure regarding negotiations, consultations and employee representation. Pursuant to the Co-Determination Act, both employees and employers have the right to belong to an organization of employees or employers and to exercise the rights of membership in such organization. The right of association may not be infringed upon. Collective bargaining in Sweden is centralized and historically bargaining in the private sectors has taken place on three levels: national (between the Confederation of Swedish Enterprises and the employee federations); industrialwide (between industrial-wide organizations on both sides); and local (between the company and the local union). Legally binding agreements are concluded at all levels of bargaining. Traditionally, the industrial-wide level has been the focus of bargaining and there are industrial-wide collective agreements in almost every sector of the Swedish economy. The concept of works councils is not recognized in Sweden (besides European Works Councils). Instead, employees’ influence is safeguarded by the trade unions. 166Guide to Going Global • Employment TERMINATION GROUNDS The EPA requires that the employer has a “just cause” in order to terminate employment. The EPA distinguishes between termination due to personal reasons (e.g., poor performance, misconduct or disloyalty) or economic reasons, (e.g., restructuring or reorganization, closing down of business, etc.). Redundancy is generally deemed to constitute just cause for termination under the EPA (the employer must, however, follow the substantive and the formal rules laid down by the EPA). Conversely, termination due to personal reasons is deemed to be a last resort by the courts and the burden of proof is on the employer. An employee may also be summarily dismissed in a situation where he or she grossly neglects obligations towards the employer. EMPLOYEES SUBJECT TO TERMINATION LAWS The EPA applies regardless of employment period and form of employment and to all employees with only a few minor exceptions, e.g., employees in managerial or similar positions (in respect of salary, position and job assignment), members of employer’s family, employees engaged in the employer’s household and employees assigned public temporary work. RESTRICTED OR PROHIBITED TERMINATIONS If employment is terminated due to redundancy, the notice period for an employee on full parental leave does not commence until the employee returns to work or the date the employee would have returned to work. If an employee is given notice of termination during the employee’s vacation, the notice of termination shall be deemed effective not earlier than the day after the vacation ends. Moreover, termination of employment may not be in violation of applicable anti-discrimination laws (e.g., the Discrimination Act and the Parental Leave Act). Employees who also are trade union representatives (fackliga förtroendemän) may be protected under the Trade Union Representative in the Workplace Act (lag om facklig förtroendemans ställning på arbetsplatsen). THIRD-PARTY APPROVAL FOR TERMINATION Not required. MASS LAYOFF RULES If more than five employees may be affected by a potential redundancy, the employer is obligated to notify the Swedish Public Employment Service in writing. Additionally, normal redundancy rules under the EPA must be adhered to. 167Guide to Going Global • Employment NOTICE The minimum period of notice for the employer is one month and the period of notice increases by one month for each two years of service, up to a maximum of six months when the employee has a length of service corresponding to ten years. The EPA includes extensive formal and substantive rules to observe in relation to termination. An employer who intends to terminate an employee’s employment for personal reasons shall notify the employee and his or her trade union at least two weeks in advance prior to handing over the termination notice. Thereafter the employee and his or her trade union have a right to request consultations. The termination cannot be effected until the consultations are concluded. In case of termination without notice (summary dismissal), the notification shall be given at the latest one week before the termination becomes effective. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE Employees are both entitled to and have a duty to work during the notice period. Garden leave and payment in lieu of notice is subject to the employee’s consent. SEVERANCE Severance is not mandatory. However, at least in midsize to large companies it is standard practice to include a severance payment on top of the notice period for a managing director in the employment agreement. The severance pay is normally corresponding to 6–12 months’ fixed salary. In addition, in a specific termination situation, it is common that the employer pays a severance payment in addition to notice in a settlement agreement, especially if it is unclear whether just cause for termination exists or if there are other issues (e.g., in relation to issues in relation to non-compliance with the last-in-first-out-rule (LIFO)). POST-TERMINATION RESTRAINTS There are no specific statutory rules under Swedish law prohibiting post-contractual restraints. However, such restraints may be deemed unreasonable and set aside or adjusted by a Swedish court. If the employee is provided with compensation (at least 60 percent of the employee’s monthly salary) during the restricted period, the chances of the restrictions being enforceable are typically better. NON-COMPETES Normally 12 months or at most 24 months. CUSTOMER NON-SOLICITS Permissible. EMPLOYEE NON-SOLICITS Permissible. WAIVERS Enforceable, the employee may sign a settlement agreement waiving statutory rights. 168Guide to Going Global • Employment REMEDIES DISCRIMINATION Any individual or legal entity that violates the prohibitions against discrimination and reprisals, or fails to fulfill the obligations to investigate and take measures against harassment, may be ordered to pay compensation to the individual who has been affected by the breach. An employer may also be liable to compensate for the economic loss that arises to the employee. UNFAIR DISMISSAL Employees can challenge a redundancy. If the termination is found unjust and deemed to be invalid, the employee is entitled to reinstatement; compensation for loss of income; and damages for other losses suffered and the infringement of the employee’s rights. If the employer refuses to comply with a court’s judgment regarding reinstatement, the employer is additionally liable for damages equal to 16-32 monthly salaries. If the employee does not ask for reinstatement, he or she will be entitled to economic damages to cover lost salary, capped at a maximum of 32 monthly salaries. In addition to economic damages, the employee would be entitled to general damages. FAILURE TO INFORM AND CONSULT Liability for damages to trade unions. Damages seldom exceed kr150,000 per breach. CRIMINAL SANCTIONS An employer who intentionally or negligently fails to comply with an order or prohibition issued by the Swedish Work Environment Authority pursuant to certain regulations may be fined or sentenced to imprisonment for a maximum of one year. 169Guide to Going Global • Employment Switzerland LEGAL SYSTEM, CURRENCY, LANGUAGE Civil law. Not a member of the European Union (EU), but member of the European Free Trade Association (EFTA). Swiss Francs (CHF). German, French, Italian. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign entity can generally engage employees in Switzerland subject to business and corporate tax planning considerations and provided the employee can validly work in Switzerland. Social charges vary according to canton and the employer’s chosen pension fund scheme. Employer’s contributions have to be paid in addition to the gross salary, at approx. 12-20 percent of the gross salary. Employee’s contributions have to be deducted from the employee’s gross salary, at approx. 10 percent-17 percent of the gross salary. The employer has to deduct employee’s tax at source where applicable. PRE-HIRE CHECKS REQUIRED Immigration compliance. Criminal and credit reference checks for specific roles (e.g., attorneysat-law, bank executives). PERMISSIBLE Criminal and credit reference checks are only permissible if they are relevant to the proposed work and are subject to proportionality requirements. Reference and education checks are common and permissible with applicant’s consent. IMMIGRATION For all non-Swiss nationals, a work permit is required. Swiss people have voted in early 2014 in a referendum that aims to terminate the agreements with European Union. Currently, we are uncertain about the legal consequences of this. The referendum has to be implemented within three years. The work permit is generally easily granted for EU/EFTA nationals with certain restrictions for Bulgarian and Romanian citizens. HIRING OPTIONS EMPLOYEE Indefinite, fixed-term, full-time or part-time. 170Guide to Going Global • Employment INDEPENDENT CONTRACTOR Independent contractors can be engaged with such status only if they can organize their time and duties themselves and effectively bear the economic risk related to their activity. Engagement may be subject to misclassification exposure. AGENCY WORKER Agency workers have to be formally employed by specifically authorized companies. If an extended collective employment agreement applies to the receiving company’s employees, agency workers will also benefit from its provisions regarding salary and work duration. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS The employee should at least receive, within the first month of employment, written indication regarding the names of the parties, the starting date, the position, the salary and possible additional salary elements and the weekly work duration. Mandatory legal provisions must be observed, as well as collective labor agreements whose scope has been extended by the State to all employers in a specific industry (which is the case, for instance, in the construction industry, furniture industry, hospitality and restaurant sectors, private security services and retail). PROBATIONARY PERIODS Permissible. Up to three months (statutory limit). POLICIES So-called “industrial companies” (i.e., factories manufacturing and processing goods and enterprises using machines and/or automatic processes) must have a written health and safety policy and, where necessary, a disciplinary measures policy. These are optional for other companies. It is common to have expense reimbursement policies. Specific grievance policies are highly recommended. THIRD-PARTY APPROVAL An industrial company’s mandatory health and safety policy need to be reviewed by the Cantonal Labor Authority. LANGUAGE REQUIREMENTS No statutory requirements. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All, except that top managers are not subject to a specific maximum work duration. 171Guide to Going Global • Employment WORKING HOURS Forty-five hour a week limit on working time for most workers (supplementary time possible within appropriate limitation, e.g., in case of emergency, and generally for max. 2 hours a day and 170 hours a year). OVERTIME Overtime must be compensated at 125 percent. The employee can consent to compensation by time off. As long as overtime is not over the maximum legal duration, the employer and the employee can have a written agreement providing for other compensation (e.g., at 100 percent instead of at 125 percent) or even no additional compensation at all when the agreed salary arguably compensates the overtime, and overtime is not much more than what could be expected when signing the contract. WAGES No general legal minimum wage; minimum wages are sometimes stated in specific collective labor agreements and specific standard employment agreements. VACATION At least 4 weeks per year (5 weeks for employees under 20 years old), and generally 9 public holidays (depending on the canton). SICK LEAVE AND PAY Sick leave is paid in proportion to increasing seniority. Companies and employees can opt for a derogatory scheme (loss of earning insurance providing for 80 percent of salary up to 720 daily indemnities). MATERNITY/PARENTAL LEAVE AND PAY 16 weeks’ maternity leave after childbirth (14 weeks paid by the Federal insurance, 2 additional weeks in Geneva canton). One week paternity leave common in practice but not mandatory. DISCRIMINATION Gender discrimination is directly prohibited. Other kinds of unjustified discrimination are indirectly prohibited (i.e., only if the employee is able to prove that the discrimination has led to a violation of his or her personality, that is when he or she has suffered a painful worse treatment than other employees, without any objective reason). BENEFITS AND PENSIONS Old-age, survivors and disability risks are covered by a three-tier system: first tier: mandatory social security contributions (AVS/AI); second tier: mandatory occupational insurance (the employer can agree an occupational insurance over and above the mandatory requirements); third tier (optional and not related to the employment relationship): voluntary payments with tax exemption. 172Guide to Going Global • Employment DATA PRIVACY Employees should in general be notified of personal data processing (and in certain cases, give consent). Registrations with the Federal Data Protection Commissioner are required in certain circumstances. Special rules apply to data transfer outside of Switzerland. Significant restrictions on monitoring email and Internet use. RULES IN TRANSACTIONS/BUSINESS TRANSFERS Automatic transfer of all employment agreements in case of transfer of business undertakings (mostly asset deals). Duty to inform and consult with employee representatives if any, or, if none, with the employees. EMPLOYEE REPRESENTATION Workers are entitled to elect a representative in companies with more than 50 workers. Trade unions are prevalent in certain sectors. Industry level collective bargaining agreements are common. Trade-union arbitrators often act as conciliators when there is collective labor dispute. TERMINATION GROUNDS Termination of indefinite duration contracts is possible for any reason, except for “abusive reasons.” Certain reasons cannot serve as a fair basis for a termination (individual characteristics, complaints made by employee regarding his or her working conditions or his or her agreement not being respected, trade-union membership, etc.) and a fair process must be followed in any case. EMPLOYEES SUBJECT TO TERMINATION LAWS All employees. RESTRICTED OR PROHIBITED TERMINATIONS When employee is unfit for work (accident, sickness) for limited periods increasing with seniority (30 to 180 days), or is pregnant or in military service, or within the 16 weeks following giving birth. THIRD-PARTY APPROVAL FOR TERMINATION Not required. MASS LAYOFF RULES Information and consultation rules apply when at least 10 employees are to be made redundant within 30 days, depending on various thresholds. The employer must also notify the Cantonal Labor Authority of the result of the consultation. Depending on the canton, specific rules may also apply when at least six employees are dismissed within the same calendar month. 173Guide to Going Global • Employment NOTICE Unless otherwise stated in the contract: seven calendar days within the probation period; one months’ notice to the end of a month during the first year of service, then two months’ notice to the end of a month from the second to ninth years of service and three months’ notice to the end of a month thereafter. The contract can provide for different notice periods, but no less than a one month’s notice after the probation period. No notice required for terminations for very serious misconduct (such terminations have to be notified within two to three days after having discovered the breach). STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE No. SEVERANCE Due only to employees of at least 50 years of age and 20 years or more of service provided there is a shortfall in pension benefits. Due to this last condition, this statutory entitlement almost never applies. The severance amount would be between two to eight months’ pay. Written agreements and collective labor agreements may adopt specific provisions. POST-TERMINATION RESTRAINTS NON-COMPETES Possible provided the working relationship allows for employees to have knowledge of their employer’s clientele or manufacturing and commercial secrets. Non-competition clauses based on knowledge of the client are in principle unacceptable in circumstances where the relationship between employees and clients is essentially a personal one based on employees’ abilities and their particular relationship with clients. The restraint has to be appropriately restricted with regard to place, time and scope such that it does not unfairly compromise the employee’s future economic activity. Typically no more than one year if based on the knowledge of the employer’s clientele, and no more than three years if based on knowledge of manufacturing and commercial secrets. CUSTOMER NON-SOLICITS Permissible (similar restrictions to non-compete). EMPLOYEE NON-SOLICITS Permissible (similar restrictions to non-compete). WAIVERS Waivers of mandatory entitlements agreed during the employment and the month after termination of employment are only enforceable if the waiver is made against well-balanced concessions. 174Guide to Going Global • Employment REMEDIES DISCRIMINATION Gender discrimination at hiring: up to three month’s salary. Sexual harassment: up to six months based on the Swiss average salary. Moral sufferance: generally no more than CHF 25,000. UNFAIR DISMISSAL Maximum penalty of an amount equivalent to six months’ salary (rarely more than four months). Unfair dismissal decided in retaliation against a gender claim may lead to reinstatement in the company (rarely invoked). FAILURE TO INFORM AND CONSULT Mass redundancies: two possible consequences: (i) the employment agreements are not considered as terminated as long as the Cantonal Labor Authority has been notified with the result of the consultation; (ii) the dismissal is considered as unfair, giving right to compensation capped to two months’ salary. Transfer of business undertakings: general remedies (reimbursement of damages). Merger: possibility to block the merger. CRIMINAL SANCTIONS Failure to comply with health and safety legal requirements; undeclared or illicit work; sexual and psychological harassment. 175Guide to Going Global • Employment Taiwan LEGAL SYSTEM, CURRENCY, LANGUAGE Civil Law. New Taiwan dollar (NT$). Mandarin. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP Foreign companies cannot directly engage employees in Taiwan, but can set up branches, subsidiaries and representative offices, all subject to different registration procedures. Withholdings for taxes, labor insurances, and health insurance. PRE-HIRE CHECKS REQUIRED Work permit and residency compliance. PERMISSIBLE Employers may request a non-criminal record certificate. Reference and education checks are permissible with applicant consent, although some restrictions apply (see Data Protection). IMMIGRATION All foreign nationals, including Hong Kong and Macau citizens, require work permits to work in Taiwan. Chinese citizens are not considered foreigners and are subject to special rules depending on their purpose of stay. Companies employing foreigners are required to abide by industry, quota, and credential restrictions. HIRING OPTIONS EMPLOYEE Fixed-term and non-fixed contracts. Full-time or part-time. INDEPENDENT CONTRACTOR Independent contractors fall outside the scope of the Labor Standards Act (LSA). Courts will review the degree of control over a worker in deciding whether he or she is subject to the LSA and in fact an employee. AGENCY WORKER Called “dispatch worker” in Taiwan and subject to government restrictions. 176Guide to Going Global • Employment EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS Employment contracts are not mandatory for Taiwanese nationals, but are common. Employment contracts are required for foreign employees. PROBATIONARY PERIODS Permissible but there are no provisions under the LSA which govern probationary periods. Accordingly, advance notice and severance required for terminations. POLICIES Work rules containing health, safety and grievance policies required for organizations with over 30 employees. THIRD-PARTY APPROVAL Foreign worker contracts are required to be submitted to the Council of Labor Affairs. Work rules must be submitted with the labor court. LANGUAGE REQUIREMENTS No statutory requirements, but any supporting documents must be presented to the courts in Chinese in the case of any disputes. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All. WORKING HOURS 8 hours per day or 84 hours over a continuous 2-week period. Depending on the industry, it may be possible to reallocate hours (“flex-time”) to add 2 additional hours onto some work days by deducting that time from previous days. Employers and employees can also agree to: (i) arrange for working hours of 2 days every 2 weeks to be spread out to other workdays, provided that no more than 2 hours shall be distributed to each of the other workdays; or (ii) arrange for regular working hours (over every 8 weeks) to be spread out in another format, so long as the regular working time does not exceed 8 hours per day or 48 hours per week. OVERTIME Total work time (normal hours plus overtime) cannot exceed 12 hours per day. Overtime is one-third of hourly rate for less than 2 hours overtime, two-thirds for 2 to 4 hours of overtime, and double pay during national emergencies. WAGES Minimum wage is NT$109 per hour (NT$19,047 a month). 177Guide to Going Global • Employment VACATION Seven days of paid vacation leave after one year. Nineteen days off for public holidays, with varying dates. SICK LEAVE AND PAY Thirty days of one-half pay sick leave per year. MATERNITY/PARENTAL LEAVE AND PAY Eight weeks of maternity leave at full pay (one-half for employees who have worked less than six months). Those suffering a miscarriage will also be entitled to leave. Three days of paid paternity leave. Unpaid parental leave for up to two years for each child under three years old. DISCRIMINATION Characteristics protected from unlawful discrimination and harassment: age, disability, class, thought, facial features, language, gender reassignment, marital status, political party, pregnancy or maternity, race, religion or belief, sex or sexual orientation. BENEFITS AND PENSIONS Labor and National Health Insurance systems covered through payroll deductions and contributions. Two pension systems (older LSA and newer New Pension Act). Foreigners are only allowed to participate in the LSA pension system. DATA PRIVACY The collection, processing, and use of employee personal information is governed by the Personal Information Protection Act. The Act has notice and consent requirements that can be applicable to the collection, processing, and use of employee information and are if there will be crossborder transmission of the information or any use outside of the norms of a domestic employment relationship. Under amendments to the Employment Services Act that came into force in late 2012, the amount of personal information that an employer may request from an employee or prospective employee has been severely restricted. Prohibited or restricted personal information includes: physiological Information: for example, medical tests and fingerprints; psychological Information: for example, psychiatric tests and polygraph tests; and personal lifestyle information: for example, financial records, criminal records, family information and plans, and background checks. 178Guide to Going Global • Employment RULES IN TRANSACTIONS/BUSINESS TRANSFERS There is no automatic transfer of employees in an asset sale. The new employer must inform the employees of the new terms and regulations and obtain the employees’ formal consent to the offer of new employment. If the employee refuses to accept the new terms and conditions, the previous employer must make severance payments to the employee. There is also a duty to inform and consult with employee representatives (“unions”). In a merger and acquisition situation, 30 days’ advance notice of the acquisition and the terms and conditions of employment with the new employer must be provided to the employees. Employees then have 10 days to accept or decline the offer with the new employer. The employee’s failure to respond presumes consent. Past seniority must be recognized. EMPLOYEE REPRESENTATION Unions are allowed, but highly regulated. 30 percent of the labor force are union members. It is mandatory for all businesses regulated by the LSA to have a labor management council. TERMINATION GROUNDS Allowed without notice and severance for acts of violence, serious contract/rule breaches, equipment abuse, misrepresentation of qualifications, unjustified absence from work for three days, or a jail sentence. Termination is allowed in other cases, but advance notice and severance are required. Employers may terminate the employment of employees for redundancy only: where the employer is ceasing business or the ownership of the employer is being transferred; where the employer suffers a loss or is curtailing business operations; where the operations of the employer are suspended for more than one month due to force majeure (i.e., when performance of contractual obligations are prevented by an event or circumstance outside the parties’ control); where the business nature of the employer has been altered, a reduction in the number of employees is necessary, and there are no other suitable job openings for the redundant employees. Employees can also be terminated on performance grounds where the employee is proven to be incapable of carrying out the work assigned to him or her. EMPLOYEES SUBJECT TO TERMINATION LAWS Most employees (95.3 percent), including foreigners, are covered under the LSA. RESTRICTED OR PROHIBITED TERMINATIONS No prohibitions, although termination is not allowed if there are available job openings for redundant employees. THIRD-PARTY APPROVAL FOR TERMINATION Not required, absent a mass layoff. 179Guide to Going Global • Employment MASS LAYOFF RULES The Mass Layoff Protection Act (MLPA) applies depending on number of employees and time frame. Where the MLPA applies, 60 days’ advance notice and public announcements must be given to (i) the labor union of which the affected employees are members of (if applicable), (ii) the employees’ representatives at the Labor-Management Conference and (iii) the employees affected by the redundancies. Further, the employer must notify the local labor authorities of the redundancy plans. Within 10 days of the date of notification of the redundancy plans, the employer and the affected employees must engage in discussion to reach agreement regarding the mass redundancies. NOTICE 10 days’ notice after 3 months to 1 year of employment, 20 days for 1–3 years, 30 days for 3 years of more. Notice not required for very serious misconduct. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE Both permitted. SEVERANCE Generally 50 percent of average monthly pay per year of service up to a maximum of 6 months’ pay. For foreigners and local employees still under the LSA pension system, 1 month’s average pay for each year of service. POST-TERMINATION RESTRAINTS Assessed by the courts on a case-by-case basis. Generally, they are enforceable to the extent that they are reasonable. One of the factors considered by courts to determine the enforceability of a restraint is whether the employer provides reasonable compensation to the employee. It is unclear how the Court decides whether a compensation package is “reasonable.” In practice, the amount of compensation can be based on the employee’s salary and cost of living, as well as the restraint period. The reasonableness of the amount of compensation may be an issue if it is less than one-half of the salary payable to the employee when the employment is terminated. NON-COMPETES Six to 24 months. No specific laws, only government guidelines. CUSTOMER NON-SOLICITS Permissible for restraint periods of 6–24 months. EMPLOYEE NON-SOLICITS Permissible, no longer than 12 months recommended. WAIVERS Waivers of statutory claims may not be enforceable in Taiwan. 180Guide to Going Global • Employment REMEDIES DISCRIMINATION Penalties range from NT$20,000 to NT$1.5 million. Severance and pay in lieu of notice may also be required in dismissal cases. UNFAIR DISMISSAL Employee usually entitled to severance and pay in lieu of notice. In unfair dismissal cases regarding pregnancy/miscarriage, or occupational injury, penalties range between NT$90,000 to NT$450,000. FAILURE TO INFORM AND CONSULT While consultation is required for a mass lay off, there is no requirement to consult the employees in case of individual redundancies unless a mass layoff is involved. Failure to inform would result in the employer being required to pay statutory severance as well as payment in lieu of notice. Penalties range from NT$20,000 to NT$300,000. CRIMINAL SANCTIONS Not a concern. 181Guide to Going Global • Employment Turkey LEGAL SYSTEM, CURRENCY, LANGUAGE Civil Law. Turkish Lira. Turkish. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign company without local corporate registration cannot directly engage employees in Turkey. When a foreign entity engages in commercial activities in Turkey, these activities should be performed though a branch office or a private company. The employees should be registered under the payroll of the branch office or the company. If a foreign entity will only engage in market research in Turkey and not in any commercial activity, the activities can be performed through a liaison office. The employees should be registered under the payroll of the liaison office. All employers should register the employees with the Social Security Institution as of their first day of employment and make the statutory contributions. PRE-HIRE CHECKS REQUIRED None. PERMISSIBLE Criminal and credit reference checks are only permissible for specific roles (e.g., certain finance positions). Reference and education checks are common and permissible with applicant consent. IMMIGRATION Foreign employees can work in Turkey once they obtain work and residence permits. HIRING OPTIONS EMPLOYEE Definite period, indefinite period, full-time, part-time, for a maximum or minimum term, seasonal, temporarily, on call. All employees have the right not to be discriminated against due to their status. INDEPENDENT CONTRACTOR Independent contractors can be engaged directly by the company. 182Guide to Going Global • Employment AGENCY WORKER Payroll subcontracting, while sometimes used in practice, is not permissible and is subject to an administrative fine. Outsourcing employees to a third-party agency is deemed to be payroll subcontracting from a Turkish labor law perspective and has no legal basis. Thus, the employees lent from the agency would be regarded as employees of the hiring company from the beginning of the employment relationship in any potential litigation initiated by such employees against the agency and/or the hiring company or as a result of an investigation to be conducted by the labor authorities. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS It is not mandatory to execute an employment contract, but it is common practice to do so. In cases where there is no written employment contract, the employer must provide the employee with a written document bearing the employer’s signature and stating the general and special conditions of employment within two months of the commencement of employment. PROBATIONARY PERIODS According to the Labor Law, the parties may agree on a probationary period of up to two months, which can be extended to up to four months through collective bargaining agreements. POLICIES No mandatory policies. THIRD-PARTY APPROVAL No requirement to lodge employment contract or policies with or get an approval from any third-party. LANGUAGE REQUIREMENTS All employment documents must be in Turkish. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All. WORKING HOURS 45 hours a week limit on working time. OVERTIME Overtime work is any work performed beyond 45 hours in a week. Employee’s consent is required for overtime work. WAGES Minimum monthly gross wage is £1.071. 183Guide to Going Global • Employment VACATION 14 days’ leave for 1 to 5 years (including 5th year) of employment; 20 days’ leave for more than 5 but less than 15 years of employment; 26 days’ leave for 15 years of employment and more (including 15th year). For employees below the age of 18 and above 50, the length of annual leave with pay shall not be less than 20 days. SICK LEAVE AND PAY The employee is entitled to paid sick leave and sickness allowances for as long as the sickness lasts (subject to a company termination right after a certain period of time), and as long as he or she proves his or her sickness with a health certificate obtained from the competent authorities. Under the Social Security and General Health Insurance Law, temporary disability allowance (sickness allowance) shall be paid for each day of temporary incapacity as from the third day of the incapacity to work to insured persons who have paid sickness insurance contributions for a certain time determined under this law. The temporary disability allowance paid by the Social Security Institution due to sickness can be deducted from the wage paid to the salaried employee remunerated on a monthly basis. MATERNITY/PARENTAL LEAVE AND PAY Female employees are not allowed to work eight weeks before an expected birth and eight weeks after having the baby. In case of multiple pregnancies, an extra two weeks’ period is added to the eight weeks before an expected birth. If the employee is a salaried employee, the employer must pay the employee her full salary during her statutory maternity leave. Otherwise, the employee is entitled to receive temporary disability allowance from the Social Security Institution. DISCRIMINATION No discrimination based on language, race, color, sex, political opinion, philosophical opinion, religion or similar reasons, union membership or non-membership, or maternity is permissible. BENEFITS AND PENSIONS No benefits required above those covered under social insurance contributions. DATA PRIVACY Employees generally must be notified of personal data processing and their prior written consent should be obtained for such processing and transfer of their personal data. RULES IN TRANSACTIONS/BUSINESS TRANSFERS Automatic transfer in a business sale. Significant restrictions on changing terms and conditions following a transfer. Any dismissal connected to the transfer would be unfair unless for an economic, technical or organizational reason. 184Guide to Going Global • Employment EMPLOYEE REPRESENTATION A trade union representing at least 3 percent of the employees who are engaged in a given branch of activity and more than half of the employees employed in the workplace of a company or if there is more than one workplace; 40 percent of the employees employed in all workplaces of the company at the enterprise level, shall have the power to conclude a collective bargaining agreement covering the workplace or workplaces in question. Apart from union’s workplace representatives, work councils or employee committees are not regulated under the Law on Unions and Collective Bargaining Agreement. Union’s workplace representatives are appointed by the union which is authorized to execute the collective bargaining agreement from among employees working in the workplace who are a member of such union. If there are up to 50 employees at least 1 representative; 51 to up to 100 – 2 representatives; 101 to up to 500 – 3 representatives; 500 to up to 1,000 – 4 representatives; 1,001 to 2,000 employees – 6 representatives; more than 2,000 – 8 representatives can be appointed. TERMINATION GROUNDS Requirements for termination of an employment contract vary depending on whether such contract has an indefinite or definite term. Employment contracts for a definite period terminate automatically with the expiration of the period. Employment contracts, regardless of whether they are for definite or indefinite period, could be terminated for just cause pursuant to the Labor Law (in which case no notice/severance would be due). Termination based on valid cause triggers notice and severance payment. Such valid cause could relate to efficiency or behavior of an employee or requirements of the enterprise, workplace or work. Moreover, whether the employment contract has a definite duration or not, it may be terminated with the mutual consent of the parties. For a workplace with fewer than 30 employees, the job security provisions do not apply, and the employer does need to give notice, but does not need to show cause. EMPLOYEES SUBJECT TO TERMINATION LAWS Employees in companies with fewer than 30 employees or employees who have less than six months’ employment in a company are not entitled to job security. RESTRICTED OR PROHIBITED TERMINATIONS No statutory prohibitions. THIRD-PARTY APPROVAL FOR TERMINATION Not required. 185Guide to Going Global • Employment MASS LAYOFF RULES Collective redundancy occurs when in establishments employing between 20 and 100 employees, a minimum of 12 employees are dismissed on the same date or in a 1 month period; in establishments employing between 101 and 300 employees, a minimum of 10 percent of employees are dismissed on the same date or in a 1 month period, and in establishments employing 301 and more employees, a minimum of 30 employees are dismissed on the same date or in a 1 month period. NOTICE Less than 6 months of employment 2 weeks; 6 months to 1 1/2 years of employment 4 weeks; 1 1/2 years to 3 years of employment 6 weeks; more than 3 years of employment 8 weeks. No need to comply with the notice in case of termination based on just cause determined under the Labor Law. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE A company entitled to pay wages corresponding to the term of notice (notice pay). Garden leave depends on contract or prior consent of the employee is required. SEVERANCE The employee’s employment must last for at least 1 year for the employee to be entitled to severance payment of 30 days’ pay for each year of service. Any period in excess of each full year is to be compensated on a pro rata basis. There is a ceiling in calculating the severance payment each year. No need to provide severance in case of termination based on just cause. POST-TERMINATION RESTRAINTS Written form is a condition for the validity of a non-competition agreement and valid if the employee must be employed within a position whereby he or she has the opportunity to acquire valuable knowledge or trade secrets. NON-COMPETES No longer than two years. No compensation is required for the validity of the non-compete clause. CUSTOMER NON-SOLICITS Permissible. EMPLOYEE NON-SOLICITS Permissible. WAIVERS A release deed is valid provided that it is executed in written form after at least one month has passed since the termination of the employment contract. 186Guide to Going Global • Employment REMEDIES DISCRIMINATION Compensation of up to four months’ wages plus other claims, such as unpaid wages, bonuses or other social allowances of which the employee has been deprived due to discriminatory acts of an employer. UNFAIR DISMISSAL If the employee benefits from job security provisions and the court reinstates the employee back to work, the employer shall make payment of up to four months’ total of the wages of the employee and other entitlements if the employer reinstates the employee in accordance the court’s decision. If the employer does not reinstate the employee back to work, it shall make (i) payment of up to four months’ total of the wages of the employee and other entitlements; (ii) reinstatement compensation to be not less than employee’s four months’ wages and not more than employee’s eight months’ wages. In the calculation of the reinstatement compensation, only the basic wage of the employee shall be taken into consideration. FAILURE TO INFORM AND CONSULT Subject to administrative fines. CRIMINAL SANCTIONS Criminal sanctions are not generally a concern, except in cases such as sexual harassment or an occupational accident. 187Guide to Going Global • Employment United Arab emirates LEGAL SYSTEM, CURRENCY, LANGUAGE Federal and Civil legal system – employment matters are governed by Federal Law No. 8 of 1980 (the Labor Law) (as amended). There are also relevant provisions in the Penal Code and Civil Code. Dirhams (مهرد). Official language is Arabic. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign entity cannot directly engage employees in the UAE. It would always need to have at least a branch or rep office to even engage a local national as they still need a work permit (which requires a local sponsor); the only other way around this would be to have a secondment type arrangement whereby a local entity sponsors the local national for their work permit but they are then seconded out to the foreign entity. PRE-HIRE CHECKS REQUIRED Foreign employees must receive prior approval from the Ministry of Labor and immigration authorities before they can be hired on local employment contracts. The level of background checking and screening carried out by the UAE authorities varies according to the nationality of an individual. PERMISSIBLE Generally, employers in the UAE are not able to obtain the same level of information from background checks as they can in other jurisdictions and in most cases, the employees themselves will be required to provide this information. IMMIGRATION In order to legally work and reside in a particular Emirate, all employees except GCC and UAE nationals (who require a work permit only) are required to have a residence visa and work permit under the sponsorship of their employer which must have an entity established in the UAE or their husband in the case of a married woman. Where an employee is only required to work in the UAE for a short period of time there are alternative permits and visas that may be applied for including business visit visas and mission visas. 188Guide to Going Global • Employment HIRING OPTIONS EMPLOYEE Unlimited or fixed term. Part time employment is legally possible but is not common. INDEPENDENT CONTRACTOR There is no concept of a consultant, unless individuals have established their own professional license and business, due to the requirement for employees to have sponsorship, which is generally obtained by the employer. AGENCY WORKER There is no general concept of an agency worker or “temp” in the UAE. Some Emirati owned employment agencies are licensed to provide manpower on a temporary basis who would remain under their sponsorship. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS Non-UAE national employees are required to sign a government employment contract to obtain their work permit and residence visa. This contract is in English and Arabic. There is only one standard employment contract for non-UAE/GCC nationals and a separate standard employment contract for UAE/GCC nationals. PROBATIONARY PERIODS Permissible. Maximum duration of six months. POLICIES There are no mandatory policies. Employees should be provided with any relevant staff handbook and the employer’s policies (if applicable) on commencement of employment. THIRD-PARTY APPROVAL The government employment contract must be lodged with the Ministry of Labor or relevant free zone authority to obtain the employee’s work permit and residence visa. Strictly speaking, any contractual changes should be notified to the Ministry of Labor and amended on the filed standard employment contract copy. LANGUAGE REQUIREMENTS Pursuant to the Labor Law all employment contracts and records must be in Arabic. Where a foreign language is used in addition to Arabic, the Arabic version shall prevail. 189Guide to Going Global • Employment MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All. Additional rights are also available to young workers (those under the age of 18) and women. WORKING HOURS 8 hours per day or 6 hours during Ramadan. This equates to a 48 hour maximum working week for a 6 day working week, Sunday to Thursday (inclusive) or 36 hours for a 6 day week during Ramadan. The working hours provisions presume that the employee is working a 6 day week. OVERTIME Not to exceed 2 hours per day unless the work is essential for preventing a substantial loss or serious accident or for eliminating or relieving the impact of a serious accident. The overtime and maximum working time provisions in the Labor Law do not apply to employees holding senior executive managerial or supervisory positions. WAGES At present, there is no minimum wage to be paid to employees in the UAE. VACATION 2 calendar days per month where the employee’s period of service is more than 6 months but less than 1 year; and 30 calendar days per year where the employee’s period of service is more than 1 year. SICK LEAVE AND PAY An employee is not entitled to statutory sick leave during the probationary period or 3 months thereafter. Employees are entitled to 90 calendar days sick leave per year of service thereafter (15 days at full pay, 30 days at half pay and the remaining days without pay). MATERNITY/PARENTAL LEAVE AND PAY After 1 year’s continuous service – 45 calendar days’ maternity leave at full pay. Before completion of 1 years’ service it is 45 days at half pay. Employees can take a further 100 consecutive or non-consecutive days if the employee falls ill as a result of her pregnancy or the delivery of her baby. There is no concept of parental leave or pay in the UAE. DISCRIMINATION There are no discrimination laws in the UAE (save for in the Dubai International Financial Centre Free Zone) except there are provisions which state that women must be paid the same as a man if she performs the same work. 190Guide to Going Global • Employment BENEFITS AND PENSIONS In respect of UAE national employees and GCC national employees, the employer is required to set up (and contribute to) a pension fund. All other employees are entitled to receive an End of Service Gratuity (EOSG) on termination calculated by reference to age and length of service unless the employer contracts our of these arrangements with their employees by providing a savings scheme or pension scheme. EOSG is reduced if the employee resigns within the first five years of service. DATA PRIVACY With the exception of the Dubai International Financial Centre Free Zone, there are no clear laws in the UAE comparable with those in the US or Europe concerning the handling and transmission of employees’ personal information and nor do any provisions address the cross-border flow of data. However, it is advisable to seek prior written consent to the processing of personal data from the employee to the extent necessary to overcome the various privacy protections set out in UAE law, including the protections set out in the UAE Penal Code and the UAE Constitution. RULES IN TRANSACTIONS/BUSINESS TRANSFERS No automatic transfer principles and no laws covering business transfers. Employees transfer through termination and rehire in an asset deal. EMPLOYEE REPRESENTATION No. Membership of a trade union and industrial action are both criminal offences for which an individual could be fined and imprisoned and in the case of expatriate workers deported. TERMINATION GROUNDS Termination possible on these grounds: by agreement, on the expiry of a fixed term contract, resignation, incapacity or death, dismissal with notice provided it is for a valid reason or summary dismissal (by reason of any of the grounds listed at Article 120 of the Labor Law). EMPLOYEES SUBJECT TO TERMINATION LAWS All employees. RESTRICTED OR PROHIBITED TERMINATIONS Employees who have not exhausted the statutory sick leave entitlement are protected from dismissal on grounds of health, unless the full sick leave entitlement has been taken (i.e., 90 calendar days per year of service). THIRD-PARTY APPROVAL FOR TERMINATION UAE nationals are entitled to higher protection from dismissal. Approval from the Ministry of Labor is required before the employment of a UAE national can be terminated. 191Guide to Going Global • Employment MASS LAYOFF RULES No. NOTICE 30 days’ statutory notice. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE No. Depends on contract terms. SEVERANCE Unless terminated under Article 120 of the Labor Law, employees are entitled to salary and benefits to the termination date, notice (or payment in lieu), payment in lieu of accrued but untaken annual leave, the cost of a f light /air ticket to repatriate the employee to their home country (unless (i) dismissal is at attributable to employee and the employee has the funds to pay his or her own costs; or (ii) the employee has obtained alternative sponsor ship to remain in the UAE, an end of service gratuity payment and reimbursement of unpaid business expenses. In case of employer termination, the end of service gratuity is computed at it is 21 days’ pay per year of service for the first 5 years of employment provided the employee has reached a year’s service (pay to include basic pay and potentially bonus and/or commission but not allowances) and 30 days’ pay for each subsequent year and such payment cannot exceed 2 years’ pay. POST-TERMINATION RESTRAINTS It is permissible to have restrictive covenants contained in the contract of employment, provided that the employee is at least 21 years of age when entering into the restrictions, the employee has become acquainted with the employer’s clients or the secrets of the business and the covenants are reasonably drafted in relation to their duration, geographic scope and the nature of the business to be protected. Parties are permitted to include a liquidated damages clause in the contract of employment as it is not possible to obtain an injunction onshore in the UAE although there are rules against “exorbitant” penalties being applied in employment contracts under the Civil Code. NON-COMPETES Typically no longer than 6–12 months. CUSTOMER NON-SOLICITS Typically no longer than 6–12 months. EMPLOYEE NON-SOLICITS Permissible. 192Guide to Going Global • Employment WAIVERS Waiver agreements are commonly used but their enforceability has not been tested by the UAE courts. REMEDIES DISCRIMINATION Not applicable. ARBITRARY DISMISSAL The maximum award is three months’ pay (to include salary and benefits/allowances). FAILURE TO INFORM AND CONSULT Not applicable. CRIMINAL SANCTIONS Criminal sanctions can be imposed for a variety of reasons, including but not limited to the setting up of a trade union, breach of health and safety obligations, breach of immigration laws, breach of data protection laws and breach of confidentiality. 193Guide to Going Global • Employment United Kingdom LEGAL SYSTEM, CURRENCY, LANGUAGE Common Law. Pound Sterling (£). Member of the EU and required to implement relevant EU Directives. English. CORPORATE PRESENCE REQUIREMENTS AND PAYROLL SET-UP A foreign entity can engage in the UK with proper payroll registrations, subject to business and corporate tax planning considerations. Withholdings for Pay-as-you-Earn (e.g., social charges – up to approximately 13.8 percent employer portion and up to approx. 14 percent employee portion) and income tax (up to 45 percent) to be done through payroll. Self-employed independent contractors are paid gross and are responsible for their own taxation. PRE-HIRE CHECKS REQUIRED Immigration compliance. For certain limited occupations (e.g., solicitors, chartered accountants), a criminal records’ check. PERMISSIBLE Criminal and credit reference checks are only permissible for specific roles (e.g., certain finance positions) and subject to proportionality requirements. Reference and education checks are common and permissible with applicant consent. IMMIGRATION Nationals of the EEA (European Economic Area) and Switzerland – right to work in the UK (with an exception for Croatia). Other non-UK nationals = immigration permission likely to be required. Companies employing non-EEA/Swiss nationals may be required to register with the UK Border Agency. HIRING OPTIONS EMPLOYEE Indefinite, fixed-term, full-time or part-time. Part-time and fixed-term employees have the right not to be discriminated against on the basis of such status. INDEPENDENT CONTRACTOR Independent contractors can be engaged directly by the company or via a personal services company. Engagement may be subject to misclassification exposure; whether as employee or worker. 194Guide to Going Global • Employment WORKERS A “worker” has less rights than an employee but more than an independent contractor. A worker works under a contract for personal service (i.e., he cannot send a substitute) with another party whose status is not one of customer or client to the individual. AGENCY WORKER Agency workers are common and typically will be either employees or workers. Agency workers have the right to equal treatment to employees in relation to pay and other benefits terms after a 12-week qualifying period. EMPLOYMENT CONTRACTS AND POLICIES EMPLOYMENT CONTRACTS Common best practice. However note that within two months of commencement of employment, employees must be provided with certain minimum terms in writing. PROBATIONARY PERIODS Permissible. No statutory limit, but 3-6 months common. POLICIES Written health and safety policy and disciplinary and grievance policy mandatory. The latter must be referenced in the contract of employment. THIRD-PARTY APPROVAL No requirement to lodge employment contract or policies with or get approval from any third-party. LANGUAGE REQUIREMENTS No statutory requirements, but all documents should be in English. MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS All. WORKING HOURS 48 hour a week limit on working time, opt out possible. Rules on rest breaks, night work and rest periods between shifts. OVERTIME No obligation to provide pay for overtime worked, as long as pay overall does not fall below the statutory minimum. 195Guide to Going Global • Employment WAGES Rate as at April 1, 2014 (GBP) Rate as at October1, 2014 (GBP) Adult rate 6.31 6.50 18-20 year olds 5.00 5.13 16-17 year olds 3.72 3.79 Apprentices 2.68 2.73 VACATION Total of 5.6 weeks’ per year (which includes 8 public holidays). SICK LEAVE AND PAY No right to take time off for sick leave but most contracts allow this. Employees are entitled to receive 28 weeks’ statutory sick pay at £86.70 per week (generally funded by the employer). MATERNITY/PARENTAL LEAVE AND PAY 12 months’ maternity leave, paid for 39 weeks (90 percent of pay for first 6 weeks, then statutory rate), right to return to work. Two weeks paternity leave at birth plus an additional 26 weeks (both paid at statutory rate subject to eligibility requirements). 18 weeks unpaid parental leave. Same rights for adopting parents. New rules around sharing the maternity leave entitlements between partners are expected for parents of children expected to be born or placed for adoption on or after April 5, 2015. DISCRIMINATION Direct and indirect discrimination prohibited, along with victimization and harassment. Employers are under a duty to make reasonable adjustments for persons with disabilities. Characteristics protected from unlawful discrimination and harassment: Age, disability, gender reassignment, marriage or civil partnership, pregnancy or maternity, race, religion or belief, sex or sexual orientation. BENEFITS AND PENSIONS Currently, no benefits required above those covered under social insurance contributions. New pension rights are being phased in. All employers will eventually be required to automatically enroll eligible workers in a pension scheme and make minimum contributions. DATA PRIVACY Employees generally must be notified of personal data processing (and in certain cases, give consent). Registrations with the Information Commissioner are required. Special rules apply to data transfer outside the EEA . Significant restrictions on monitoring employees, including email and internet use. 196Guide to Going Global • Employment RULES IN TRANSACTIONS/BUSINESS TRANSFERS Automatic transfer under the EU Acquired Rights Directive/UK’s Transfer of Undertaking Protection of Employees Regulations (TUPE) in a business sale or service provision change. Significant restrictions on changing terms and conditions following a transfer. Duty to inform and consult with employee representatives. Any dismissal connected to the transfer would be unfair unless for an economic, technical or organizational reason. EMPLOYEE REPRESENTATION Trade unions are prevalent in certain sectors (manufacturing, transport and the public sector). 25 percent of workers are members, but most are employed in the public sector. Many businesses have no union or other worker representation. Works councils are uncommon. Industry level collective bargaining agreements are uncommon. TERMINATION GROUNDS Termination permissible, if a fair process has been followed, on the following grounds only: Misconduct, capability (including performance and ill-health), redundancy, illegality and “some other substantial reason of a kind to justify dismissal.” EMPLOYEES SUBJECT TO TERMINATION LAWS Employees with fewer than two years’ seniority have no unfair dismissal protection (save in certain circumstances where no seniority is required, including dismissals for whistleblowing, connected to family/pregnancy rights, trade union membership and activities, etc.). RESTRICTED OR PROHIBITED TERMINATIONS No statutory prohibitions. THIRD-PARTY APPROVAL FOR TERMINATION Not required. MASS LAYOFF RULES Yes, strict information and consultation rules apply where 20 or more employees are to be made redundant over 90 days or less. The employer must also notify the Secretary of State of the redundancies (failure to do so is a criminal offence). NOTICE No notice required in the first month of employment. After this, 1 week per complete year of service up to 12 weeks. May be required to give longer notice, if reasonable. Not required for terminations for gross (extremely serious) misconduct. Longer notice can be agreed and set out in the contract of employment. STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE No. Entitlement depends on contract terms. 197Guide to Going Global • Employment SEVERANCE Payable to redundant employees with two years’ seniority only: 1 1/2 week’s pay per year of service for service under age 22; 1 week’s pay per year of service for service aged 22 to 40; 1-1/2 week’s pay per year of service for service age 41 and above. “Pay” capped at £450 per week. More generous terms are possible. POST-TERMINATION RESTRAINTS Considered to be in restraint of trade and void. However, those that protect the employer’s legitimate business interests can be enforced if reasonable. Need to be tailored for the specific business and the risks posed by the employee. Garden leave is common for senior employees. NON-COMPETES Permissible in narrow, justifiable, circumstances. Typically no longer than 3–6 (maximum of 12) months, depending on the circumstances. CUSTOMER NON-SOLICITS Permissible in specific circumstances. Typically no longer than 3–6 (maximum of 12) months, depending on the circumstances. EMPLOYEE NON-SOLICITS Permissible. Length of restriction will depend on the circumstances. WAIVERS Enforceable, but employees must be represented by counsel to sign a settlement agreement waiving statutory rights. Note that a waiver of contractual and common law rights is possible without formalities. REMEDIES DISCRIMINATION Uncapped compensation, based on the claimant’s financial loss and injury to feelings, compensation of between £600–30,000, plus recommendation that the employer take action, plus declaration of the claimant’s rights. Also possible to claim a declaration of rights or a recommendation (aimed at reducing impact of discrimination). 198Guide to Going Global • Employment UNFAIR DISMISSAL Basic award, based on claimant’s age and length of service (currently capped at £13,500) plus compensation based on the claimant’s financial loss (currently capped at £74,200 or 52 weeks’ pay – whichever is lower). In exceptional cases (e.g., whistleblowing dismissals), compensation is uncapped. Reinstatement or reengagement is possible but rare. From April 5, 2014 possible for tribunal to award a payment for “aggravating features” of between £100 and £5,000. This is paid to the government. FAILURE TO INFORM AND CONSULT Redundancy equals up to 90 days’ pay; TUPE equals up to 13 weeks’ pay. CRIMINAL SANCTIONS Failure to notify the Secretary of State about mass layoffs is a criminal offence (although prosecution is rare). Otherwise, criminal sanctions are not generally a concern. *The laws are slightly different in Scotland and Northern Ireland, although the main rights are similar. 199Guide to Going Global • Employment UNITED STATES LEGAL SYSTEM, CURRENCY, LANGUAGE Combination of federal statutory law, state statutory and common law, and local statutory law. Regulations vary significantly from state to state. U.S. Dollar (USD). English language. CORPORATE PRESENCE REQUIREMENTS & PAYROLL SET-UP A foreign entity can engage employees to do business in the US subject to certain business and tax considerations and registration as an entity qualified to do business in any state where it is engaged in business. All US employers are required to obtain a federal Employer Identification number, to pay applicable payroll taxes and withhold certain tax contributions from its employees. Employers may be required to register employees with the specific state in which they are employed (regulations vary from state to state). PRE-HIRE CHECKS REQUIRED None, except in certain regulated industries which may require fingerprinting, background checks and/or drug/alcohol screening. PERMISSIBLE Laws vary from state to state. Reference and education checks are common. Criminal background and credit checks generally may be performed in accordance with applicable federal and state law. Medical examinations and drug and alcohol screening are generally permissible if conducted post-offer and in accordance with applicable law. IMMIGRATION All employers must complete a Form I-9 upon the commencement of the employment relationship (but not pre-hire) and employees must provide documents demonstrating they are legally authorized to work in the US, whether by citizenship, permanent residence (“green card”) status or a valid visa (which often requires sponsorship by the employer). HIRING OPTIONS EMPLOYEE Indefinite, fixed-term, full-time or part-time, temporary or seasonal. Generally the nature of employment relationship is governed by the parties’ agreement. 200Guide to Going Global • Employment INDEPENDENT CONTRACTOR Independent contractors can be hired directly as individuals or through an entity (e.g. LLC, LP). Contractors must be truly independent and not be closely directed by the principal. There are multiple factors utilized (on both the federal and state level) to determine whether an individual is properly classified as an independent contractor. AGENCY WORKER Employees may provide services through an employment agency or professional employer agency (PEO). For many purposes of potential liability under various employment laws, both employer and the agency may be deemed “joint employers.” EMPLOYMENT CONTRACTS & POLICIES EMPLOYMENT CONTRACTS Contracts are not required and if used are not required to have any specific terms. In most states, absent an agreement to be employed for a fixed period of time, the relationship is for an indefinite term and deemed to be “at will” (i.e., either party may terminate the employment relationship at any time, with or without cause, and with or without notice). PROBATIONARY PERIODS Permissible, but unnecessary in a typical “at will” relationship, unless something about the terms or conditions of employment (such as right to accrue vacation or participate in group health benefits) will change following the expiration of the probationary period. POLICIES Policies vary from state to state. Employers are required to post notices about employee rights under various federal and state laws. Anti-harassment policies are highly recommended and may serve as a defense against claims of harassment. Certain government contractors are required to implement affirmative action plans. Most employers have employees sign an acknowledgment of the “at will” employment policy. THIRD-PARTY APPROVAL None required. LANGUAGE REQUIREMENTS Certain documents and notices are required to be posted or provided in the language known to be the primary language of a certain percentage of the workforce or of specific employees, if other than English. “English-only” policies in the workplace may be subject to legal challenge as discriminatory unless there is legitimate business purpose for the rule. 201Guide to Going Global • Employment MINIMUM EMPLOYMENT RIGHTS EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS Most employers are covered by the Fair Labor Standards Act (FLSA) which guarantees minimum wage and overtime pay for non-exempt employees. The most common exemptions are for executive, administrative, professional, outside sales, or computer professional employees. To qualify for an exemption, an employee must meet a “duties” test and generally must be paid on a salary basis. Some states require more generous benefits than the federal minimum. WORKING HOURS No federal limit on number of hours per day or per work an employee over the age of 16 can work. There are restrictions on child labor and in certain professions (e.g., airline pilots), and hours may be limited by a collective bargaining agreement (with a trade union). In some states, certain employers are required to give their workers one day off each week. OVERTIME Generally, non-exempt employees must be paid at one and a half times their regular rate of pay for all hours worked in excess of 40 hours per week. Overtime must be calculated on a weekly basis and cannot be “averaged” over a period of two or more weeks. In some states (such as California), additional overtime is required in certain circumstances (e.g., more than eight hours per day). WAGES All non-exempt employees must be paid at least the federal minimum wage, which presently is US$7.25/hr. Some states have higher minimum requirements. There is proposed legislation to raise the federal minimum wage to US$10.10. VACATION There is no statutory requirement to provide paid vacation or holiday to any employees. SICK LEAVE & PAY There is no federally mandated right to paid sick leave. Employers with 50 or more workers generally have to provide eligible employees unpaid leave for a serious medical condition of themselves or a family member under the Family and Medical Leave Act (FMLA) for up to 12 weeks in any given year due to a serious health condition of them or their family members or for a qualifying exigency arising out of the fact that a family member is a military member or active duty and for up to 26 weeks to care for a family member who is a military member. Certain states and local jurisdictions have imposed more generous leave requirements. Employers also may be required to provide unpaid leave as a reasonable accommodation to a qualified employee with a disability under the Americans with Disabilities Act (ADA). MATERNITY/PARENTAL LEAVE & PAY Employers with 50 or more workers generally have to provide eligible employees unpaid leave for the birth or adoption of a son or daughter for up to 12 weeks in any given year. Certain states and local jurisdictions have more generous leave requirements. In certain states, employees who are temporarily disabled for medical reasons, including pregnancy and childbirth, are eligible to receive partial wage replacement in the form of temporary disability insurance benefits. 202Guide to Going Global • Employment DISCRIMINATION Federal law generally protects employees from discrimination, harassment or retaliation based on: race, color, religion, sex, national origin (Title VII); age (over 40) – Age Discrimination in Employment Act (ADEA); disability – Americans with Disabilities Act (ADA); genetic information – Genetic Information Non-discrimination Act (GINA). State and local protected categories vary and are often broader and include: creed, sexual orientation, marital status, partnership status, military status, domestic violence victim status, arrest record, conviction record, alienage, citizenship status, and unemployment status. BENEFITS & PENSIONS The Affordable Care Act (ACA, or Obamacare) will require certain employers to provide insurance for their employees or pay a penalty. By state law, employers generally must maintain workers’ compensation insurance for on the job injuries and unemployment insurance to provide benefits to former employees in the event of a qualified involuntary termination of employment. No retirement benefits or pensions are required. DATA PRIVACY Certain states restrict the use of employees’ social security numbers for any identifying purposes. Medical information must be maintained separately from personnel files and kept confidential. Otherwise, employers generally are entitled to monitor or search corporate emails of their employees and internet traffic accessed by their computer systems on the premise that employees do not have an expectation of privacy in the use of their employer’s computer systems or corporate emails (especially with a policy that says so). Jurisdictions vary as to an employer’s ability to search or monitor personal email addresses and websites accessed from an employer’s computer or premises. RULES IN TRANSACTIONS / BUSINESS TRANSFERS None, except if it results in a plant closing or mass layoff, in which case employees are generally entitled to at least 60 days’ notice if feasible. In an asset sale, employees can be transferred through termination or rehire. EMPLOYEE REPRESENTATION Trade unions are common in certain sectors. Private sector unionization rate of 6.7 percent. Employees’ rights to organize and engage in “concerted activity” regarding their terms and conditions of employment are protected under the National Labor Relations Act (NLRA), whether or not they belong to a union or work in a unionized workplace. 203Guide to Going Global • Employment TERMINATION GROUNDS Generally, absent a contract or union agreement to the contrary, an employer can terminate an employee for any non-discriminatory, non-retaliatory reason at any time, with or without notice and with or without cause. EMPLOYEES SUBJECT TO TERMINATION LAWS All employees. Certain government employees who are parties to a collective bargaining agreement have greater protections as dictated by their contracts. RESTRICTED OR PROHIBITED TERMINATIONS Employers cannot terminate employees based on any protected category, in retaliation for a complaint of discrimination or harassment based on any protected category or for engaging in protected whistle blocking. Greater protection may be afforded by collective bargaining agreements or individual contracts. THIRD-PARTY APPROVAL FOR TERMINATION None. MASS LAYOFF RULES? Under the Worker Adjustment and Retraining Notification Act (WARN), employers with more than 100 employees generally must provide 60 days’ notice to affected employees and certain government agencies of a plant closing or mass layoff. Some states have “mini-WARN” acts with more far-reaching requirements (i.e., applicable to employers with fewer employees and provide for longer notice period). NOTICE Generally, no notice is required for a termination of employment, unless otherwise required by contract or the termination involves a plant closing or mass layoff (see above). STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR GARDEN LEAVE Other than the right to notice under the WARN Act or its state equivalents, or as provided by contract, there is no right to pay in lieu of notice or garden leave (because no notice is otherwise required). SEVERANCE Other than as provided by contract or in an employer’s severance plan or policy, there is no statutory right to severance pay under federal or state law. POST-TERMINATION RESTRAINTS Permissible restraints are generally governed by state law (statutory and common law) and vary significantly from state to state. In most states restrictions which are reasonably necessary to protect employer’s legitimate business interests will be enforced. 204Guide to Going Global • Employment NON-COMPETES Varies from state to state. 6 months generally deemed reasonable, more than 2 years generally unreasonable, except in connection with the sale of a business. California prohibits non-competes in the employment context by statute. CUSTOMER NON-SOLICITS Varies from state to state. Generally permissible if employee was involved with customer and employer aided in developing relationship or if employee obtained confidential information from or about customer. Prohibited in California. EMPLOYEE NON-SOLICITS Varies from state to state. Generally permissible. WAIVERS Generally enforceable in exchange for valuable consideration. Waivers of certain statutory rights (such as federal age discrimination claims under ADEA) are only valid if they meet specific statutory requirements, including consideration and revocation period. REMEDIES DISCRIMINATION Damages vary depending on statute. Federal caps exist for certain claims. Others allow for unlimited compensatory damages, including front pay, back pay, emotional distress and attorneys’ fees. Many allow for the recovery of punitive damages. UNFAIR DISMISSAL Claim generally does not exist, unless it constitutes a discriminatory or retaliatory dismissal. FAILURE TO INFORM & CONSULT Claim generally does not exist, unless it constitutes a discriminatory or retaliatory dismissal, or is a dismissal covered by the WARN Act or its state equivalent. CRIMINAL SANCTIONS Employers may be criminally liable for certain violations of wage and hour laws. In limited circumstances, employers may be vicariously liable for the criminal acts of their employees. Employers may be liable for monetary statutory penalties (such as double or treble damages) for violations of wage and hour and other laws. 205Guide to Going Global • Employment Australia Andrew Ball DLA Piper [email protected] Austria Stephan Nitzl DLA Piper [email protected] Belgium Eddy Lievens DLA Piper [email protected] Brazil Priscila Lago Campos Mello Advogados [email protected] Canada George Waggott McMillan LLP [email protected] China Pattie Walsh DLA Piper [email protected] Julia Gorham DLA Piper [email protected] Finland Jani Syrjänen Borenius [email protected] France Bijan Eghbal DLA Piper [email protected] Germany Bernd Borgmann DLA Piper [email protected] Hong Kong Pattie Walsh DLA Piper [email protected] Julia Gorham DLA Piper [email protected] India Pattie Walsh DLA Piper [email protected] Indonesia Pattie Walsh DLA Piper [email protected] Country Contacts 206Guide to Going Global • Employment Ireland Bryan Dunne Matheson [email protected] Georgina Kabemba Matheson [email protected] Israel Benjamin Sandler Yigal Arnon & Co [email protected] Italy Giampiero Falasca DLA Piper [email protected] Fabrizio Morelli DLA Piper [email protected] Japan Pattie Walsh DLA Piper [email protected] Luxembourg Anne Morel Bonn Steichen & Partners [email protected] Mexico Luis Alvarez DLA Piper [email protected] Netherlands Marnix Holtzer DLA Piper [email protected] Poland Agnieszka Lechman-Filipiak DLA Piper agnieszka.lechman-filipiak@ dlapiper.com Poland Agnieszka Lechman-Filipiak DLA Piper agnieszka.lechman-filipiak@ dlapiper.com Russia Vladislav Mazur DLA Piper [email protected] Saudia Arabia Neil Crossley DLA Piper [email protected] Singapore Pattie Walsh DLA Piper [email protected] 207Guide to Going Global • Employment South Korea Pattie Walsh DLA Piper [email protected] Spain Pilar Menor DLA Piper [email protected] Sweden Johan Sundberg DLA Nordic [email protected] Switzerland Aurélien Witzig Schellenberg Witzig [email protected] Vincent Carron Schellenberg Witzig [email protected] Taiwan Pattie Walsh DLA Piper [email protected] Julia Gorham DLA Piper [email protected] Turkey Melek Onaran Yuksel YükselKarkınKüçük [email protected] United Arab Emirates Neil Crossley DLA Piper [email protected] United Kingdom Sandra Wallace DLA Piper [email protected] United States Mike Sheehan DLA Piper [email protected] 208Guide to Going Global • Employment This publication is a general over view and discussion of the subjects dealt with and is up to date as of April 1, 2014. It should not be used as a substitute for taking legal advice in any specific situation. DLA Piper or its Employment Group accepts no responsibility for any action taken or not taken in reliance on it. If you have finished with this document, please pass it on to other interested parties or recycle it; thank you. www.dlapiper.com DLA Piper is a global law firm operating through various separate and distinct legal entities. Further details of these entities can be found at www.dlapiper.com. A list of offices can be found at www.dlapiper.com. Please note that as a foreign law firm, and not with standing the fact that we have offices in Shanghai and Beijing respectively, DLA Piper UK LLP (like all other foreign law firms with offices in the PRC) are not permitted under existing PRC law to advise on the laws of the PRC. In view of this, this publication would, insofar as the laws and regulations of the PRC are concerned, necessarily be based on our own research, experience and the advice of our correspondents in the PRC. DLA Piper Singapore Pte. Ltd. is a foreign law practice, which means that we can only provide foreign law legal services and are not in general authorized under Singapore laws and regulations to advise on Singapore Law. Where advice on Singapore Law is required we can recommend a suitable Singaporean law firm to provide the required Singapore legal advice separately. Copyright © 2015 DLA Piper. All rights reserved. | JAN15 | 2669856 ABOUT THE EMPLOYMENT GROUP DLA Piper’s Employment group is a market-leading global practice with a strong reputation for delivering solutions-based advice and supporting clients in the day-to-day management of their people legal issues and risk. It includes over 300 specialist lawyers working globally, on a strategic and operational level, on both contentious and non-contentious matters across the private and public sectors. The group advises on all areas of employment, including trade union and employee relations, discrimination and diversity management, global mobility and data privacy. We also advise on the legal, tax and regulatory aspects of remuneration, employee share incentives and other benefits, and we assist clients generally in designing and delivering their reward strategies. Our Pension lawyers cover every aspect of pension provision, including the creation, operation, regulation and restructuring of all types of pension funds in the private and public sectors, as well as the management of pension disputes. Chambers Global demonstrates our continued success, having been ranked tier 1 in the Employment category for 2010, 2011, 2012, 2013 and 2014. “Highlighted for its widespread international presence as well as the consistently excellent quality of its advice on the employment aspects of global transactions.” Chambers Global 2014 209