ASIA PACIFIC

Australia: Proposed Changes to Parental Leave

The federal government has announced proposed changes to paid parental leave (PPL) in its 2015 budget.  The changes are proposed to take effect from 1 July 2016 and would meant that employees would be unable to access both the government-funded minimum PPL entitlement as well as any more generous entitlement that is made available by their employers, for instance under an employer's PPL scheme. The current government-funded scheme entails payment of 18 weeks at the minimum wage. The proposed changes would treat this payment as a safety net only and would no longer apply to employees whose employers offer a more generous entitlement.

PRC: Extra National Holiday Granted on 3 September 2015 - Are Employees Entitled to be Off Work? 

China's State Council has declared 3 September 2015 a national holiday to mark the 70th anniversary of the end of the Second World War.   The exact status of the holiday is, however, unclear.  The Government has not declared the day a public holiday (when employees are entitled to be off work or receive 300% of daily pay if they are required to work), so it is not clear whether employers are required to give employees the day off and, if they do not, whether overtime will be payable.  The consensus view at the moment seems to be that employers should allow employees to take the day as holiday but if they are unable to reschedule their operations such that they require employees to work that day, they should provide a day off in lieu.   We will keep you posted if there is any further clarification of the position.

EMEA

Belgium: Salary Freeze Regulations 

Legislation was enacted in late April 2015 which stipulates the maximum permitted wage increases for 2015 and 2016. The legislation generally confirms the agreement previously reached by the social partners and means that:

  • no salary increases are allowed in 2015,  save for those explicitly authorized by law under the salary freeze measures;   and
  • salary increases will be possible again as of 2016.  The legislation refers to an increase of 0.5% of the gross wage cost, including all employer contributions, and an additional increase of 0.3% of net wage cost, excluding employer contributions.    Contrary to the agreement reached between the social partners, the legislation does not specify what type of benefits/ premiums these increases can apply to (eg if the increases can apply to benefits granted at sectorial level or only to those granted at the employer's sole discretion). For the time being it remains to be seen how the legislation will be implemented into practice.

France: Draft Bill Proposing Significant Changes to Staff Representation Regime

On 22 April 2015,  the French Government proposed a new law which aims to improve social dialogue, to value union membership and employees' collective involvement, to improve quality of life at work and to ensure better employee representation.    Under the proposed law, staff representation would be significantly modified by:

  • the creation of regional commissions for companies with less than 11 employees;
  • the creation of a unified employee representative body for companies with 11 to 300 employees;
  • the introduction of an option for all employee representatives (excluding trade union representatives) to group together in one body for companies with more than 300 employees;
  • a reduction in the number of subjects for obligatory employee consultation;
  • a reduction by mutual consent of the number of mandatory annual meetings; and
  • simplification of the process for annual consultation on salaries.       

The bill is expected to be enacted in the coming months and further developments will be reported in Be Global.

France: Update on the "Macron Bill" on Growth and Economic Activity

As reported in January's Be Global, the Macron Bill includes measures (i) relaxing rules on Sunday and evening working;  (ii) incentivising the introduction of employee profit-sharing schemes; and (iii) modifying the rules which apply in economic redundancy situations.

On 12 May 2015, France's conservative-led Senate approved this pro-business economic reform Bill.   The Bill will now be discussed by a commission composed of representatives from the Senate and the National Assembly. If the commission fails to reach an agreement, the National Assembly will have the final say. The final version of the Bill is expected to be voted on in the course of next month and the new provisions will be considered in a future edition of Be Global.

France: Supreme Court Decisions on Working Time;  Non-Compete Indemnities and Compensation for Staff Representatives

  • To be classified as an executive employee (cadre dirigeant) and thus not be subject to working time rules, the law requires an individual (i) to be entrusted with significant responsibilities and be autonomous in their work schedule organization; (ii) to have autonomous decision making powers; and (iii) receive one of the highest salaries in the company.   These requirements have now been expanded by a recent decision of the French Supreme Court which ruled that to qualify as cadre dirigeant, genuine participation of the employee in the company's management is also required.  This decision is expected to reduce the scope for including individuals within the cadre dirigeant category and thus limit the opportunity for employers to disapply working time rules to senior employees without the risk of liability.   
  • In France, a contractual non-compete clause must provide for payment of compensation to the employee, and if there is no such provision, or the indemnity amount is derisory, the clause will be null and void. In a recent case, the contractual provision set an indemnity of 25% of salary for dismissal and 10% for resignation, but the employment was terminated by mutual agreement. The Court of Appeal decided that the employee was entitled to the 10% indemnity but the Supreme Court disagreed, holding that he amount of the indemnity cannot vary depending on the type of termination.  Any restraint under which the indemnity amount varies depending on the type of termination will not be binding and the employee must receive the higher amount provided by the clause.    
  • When a staff representative is dismissed without prior authorization of the labour inspector, the dismissal is void and the employee can seek reinstatement or compensation equivalent to the salary due from the date of dismissal to the date on which their tenure as a staff representative would end.    Since staff representatives (in particular, works council members and staff delegates) are commonly appointed for 4 years, previous case law had determined that a staff representative could benefit from a maximum indemnity of up to 48 months' salary, with an additional 6 months' salary added to represent the further 6 month period beyond the end of their appointment for which staff representatives benefit from special protection.

The French Supreme Court recently ruled that an unlawfully dismissed staff delegate was entitled to an indemnity capped at 30 months' salary, even though this was lower than the remaining period of protection (40 months in total).  In justifying its decision, the Court relied on the fact that it is possible (and lawful) to reduce the period of appointment of a staff delegate to 2 years by way of a collective bargaining agreement.  This therefore meant the legal minimum period for the appointment was 2 years and, once the extra 6 month protection period was added to this 2-year minimum, the Court was entitled to decide the employee was entitled to a maximum 30-month indemnity.

By virtue of this decision, the Supreme Court appears to be aiming to harmonize its stance on compensation for protected employees to ensure consistency irrespective of the duration of the representative's appointment.

Germany: National Minimum Wage Case Round-Up

Since the nationwide statutory minimum wage of EUR 8.50 per working hour came into force on 1 January 2015, court cases dealing with minimum wage issues are slowly starting to trickle in.  The Berlin Labour Court recently held that the dismissal of employees on grounds of their insistence on being paid the minimum wage is unlawful. Meanwhile the Aachen Labour Court decided that employees are not entitled to claim additional payment for working hours spent on stand-by duty.

In the Berlin case, a janitor was dismissed after having claimed the statutory minimum wage of EUR 8.50. According to his contract, the employee regularly worked for 14 hours per week, for which he received a monthly wage of EUR 315.00. This amounted to an hourly wage of EUR 5.19. When the janitor claimed the statutory minimum wage, he was instead offered a reduction of working hours to 32 hours per month while increasing his monthly wage to EUR 325.00, corresponding to an hourly wage of EUR 10.15. When the employee refused to accept these new conditions, he was dismissed. The labour court held this dismissal invalid, holding that it was an illegal retaliation practice under sec. 612a of the German Civil Code under which employees may not be discriminated against or suffer a disadvantage because they exercise their legal rights.

The Aachen court case dealt with an emergency services worker. The employment relationship was subject to a collective bargaining agreement. Hours spent on stand-by duty were deemed to be compensated by the monthly wage. The employee, however, claimed that due to the new minimum wage provisions, his current contract could no longer be considered valid in this regard. In particular, he claimed that the hours spent on stand-by duty would have to be remunerated on an hourly basis, with a minimum wage of EUR 8.50 per hour. The court reject this claim. As the employee’s wage exceeded the sum required by the hourly statutory minimum wage, the court held that the employee was sufficiently remunerated.

Germany: Protection of Confidential Business Secrets – Sharing Sensitive Company Data Among Works Councils of Group Companies

Passing on business secrets by employees to third parties may be a criminal offence and therefore potentially justify an immediate dismissal for cause. In a recent ruling,  the regional labour court in Schleswig-Holstein decided that sharing sensitive company data among works councils of group companies may not always justify a dismissal.

The plaintiff was employed as direct marketing manager of the defendant and was granted full access to its business management (SAP) system. He was also a recently elected works council member, and upon instruction of the defendant, he was trained by and collaborated with the works council of another group company. Both group companies were located in the same building and shared – in parts – the same management. In the SAP system, the plaintiff came across invoices from a law firm which the defendant engaged on the company’s labour law matters. Access to the invoices was not restricted and the invoices were not expressly marked as confidential business secrets. The plaintiff printed the invoices and forwarded them to a works council member of the other group company. After the other works council member raised concerns, the plaintiff immediately destroyed the printouts and requested a restriction of his access to SAP. When the defendant became aware of this incident, it dismissed the plaintiff with immediate effect.

The court ruled this dismissal void due to the lack of cause. Under German employment and labor law, in principle, works council members may only be terminated for cause. Generally, leaking confidential business secrets could justify a dismissal for cause. However, the employer must expressly identify the relevant information as confidential business secrets. Here, the law firm invoices were freely accessible in SAP for the works council member and were not expressly marked as confidential business secrets. The court also considered that the sensitive documents were shared with a works council of a company that belongs to the defendant’s group. Furthermore, the defendant encouraged the collaboration of the two works councils. Finally the court found that the plaintiff had learned from his mistakes and therefore held that a warning letter would have been an adequate and permissible sanction.

Netherlands: Clampdown on Contractor Arrangements from 1 January 2016

The Government's Finance Department recently announced new legislation regarding contractor agreements. Parties working under contractor arrangements usually do not want to be engaged in an employment relationship. This means that the client pays the fee (+ VAT) to the contractor. Where the contractor is an individual, they have the obligation to pay income tax on the fees - not the client. Over the years the number of individuals working on the basis of a management/contractor agreement has increased from around 25,000 in 2000 to 1,000,000 in 2015. The Dutch Government previously announced that it intends to reduce this number and also indicated a suspicion that the majority of these self-employed individuals are actually de facto employees.

If the Dutch Tax Authority considers the contractor arrangement to be a de facto employment agreement, it views the payment (fee + VAT) as a net payment to an employee. The DTA can then seek to recover the income tax due on the wage from the de facto employer and is entitled to seek outstanding tax from the previous five years. To limit this risk, the contractor can apply for a tax-indemnity (VAR). When a client works with a contractor who has a valid VAR, the DTA cannot recover the income tax from the client.

Under the recently announced legislation, from 1 January 2016, the DTA will no longer provide VAR tax indemnities. However, the DTA will provide template contracts for various client-contractor relations. When the client and contractor work on the basis of such a template, AND the de facto working relationship is in line with the provisions of the contract, the DTA will be unable to recover income tax from the client.  It will also be possible to develop individual contracts and have these assessed by the DTA. However,  the key issue will be that,  even when parties work on the basis of a template contract or a contract that has been approved by the DTA, the DTA still can recover income tax from the client where he DTA decides that the factual circumstances point to an the existence of an employment, rather than a genuine management/contractor relationship.

Spain:  ECJ Says Spanish Collective Redundancy Law Contravenes EU Law

In the Spanish case of Rabal Cañas v Nexea GestiónDocumental SA, Fondo de Garantía Salarial, which was heard by the ECJ at the same time as the UK Woolworths and Lyttle cases (reported in April's Be Global),  the ECJ has declared that the definition of collective redundancy under Spanish law is contrary to EU law.   The ECJ decided that the Spanish legislation's use of "undertaking" (company level) rather than "establishment" (local work site) as the trigger point for information and consultation is contrary to the Collective Redundancies Directive where the effect is to preclude information and consultation when dismissals would have met the definition of ‘collective redundancy’ under the Directive had the reference point been the establishment.  In light of this decision, the obligation to follow a collective dismissal procedure will now have to be analyzed considering not only the workforce and affected employees at a company level but also at a work center level, so that if the legal thresholds are reached in the relevant work center, a collective dismissal procedure will have to be followed.

UK: ECJ Says UK Collective Redundancy Law Compliant With EU Law

Following its decision in the important collective redundancy case arising out of the administration of the Woolworths chain of shops (see April's Be Global), the ECJ has now also handed down its decision in the related case of Lyttle & Others v Bluebird UK Bidco 2 Limited in which DLA Piper represented Bluebird before the ECJ.   As in the Woolworths case, the ECJ was asked to consider whether the word "establishment" in the Collective Redundancies Directive (CRD) means the entire business or the local employment unit.  Unsurprisingly, the judgment takes the same approach as in Woolworths, holding that the establishment is the local employment unit to which employees are assigned to carry out their duties.   As such,  the UK legislation which implements the CRD is compliant with EU law.

UK: Employment Law Regulation Under New Conservative Government

Following the election of a Conservative Government in the 7 May general election, implementation of a number of policies with implications for employment law which were set out in the Conservative Party election manifesto has already begun:

  • the banning of exclusivity clauses in zero hours contracts so that individuals on such contracts cannot be tied to one employer came into force on 26 May;
  • the repeal of the Human Rights Act 1998 and its replacement with a British Bill of Rights was referred to in the Queen's Speech on 27 May;  and
  • the Queen's Speech also announced a Trade Union Bill which will implement significant changes to strike laws, including the introduction of a minimum turnout requirement for strike ballots in essential services, a requirement that strike action cannot be called on the basis of historical ballots and allowing the use of agency workers to cover striking employees.

AMERICAS

Brazil: Controversial Debate on Outsourcing Rumbles On

The Brazilian National Congress is currently debating the very controversial subject of an outsourcing bill of law that proposes to lift restrictions on outsourcing in Brazil.  However, the bill has been met with opposition including from President Dilma Rousseff and the labour unions.   The outcome of the discussions is being watched closely as it is likely to have a very significant impact on businesses operating in Brazil who rely heavily on outsourced labour.  We will keep you posted on further developments. 

Brazil: Waivers in Voluntary Dismissal/Incentive Termination Programs Declared Valid by the Supreme Federal Court

In a positive decision for employers, the Supreme Federal Court has declared that waiver provisions in voluntary dismissal or incentive termination programs (PDI/PDV) that provide a full release from rights and claims arising from the employment relationship are lawful and valid when set out in collective bargaining agreements that set up the PDI/PDV programs and other related documents signed by the employees.

This decision reviewed Precedent 270, of the Superior Labor Court, which dates back to 2002 and which restricted any waiver given by employees related to PDI/PDV programs to the monies and amounts described in the termination payment form.   As a result, labor courts regarded any full waiver of rights or claims as unenforceable and labor lawsuits filed by employees related to terminations under such programs were therefore accepted by the courts, regardless of whether a waiver had been given.

This is a very significant decision from the highest Court in the country recognizing the enforceability of terms negotiated with unions, resulting in collective bargaining agreements, with important social repercussions.  More than 2000 lawsuits waiting to be heard in lower courts will now be decided in the light of the Supreme Court’s decision.

For over a decade, companies that implemented PDI/PDV programs, which often establish substantial and favorable severance packages, have been faced with labor lawsuits from ex-employees who had left with substantial severance payments.   The employers were unable to deduct the specific special severance payment awarded under such programs from any compensation awarded to such employees by the courts.   As a result, companies were discouraged from implementing such programs.    This important ruling may well change the approach and encourage companies to now look at offering PDI/PDV programs with benefits for all the parties involved.

US: NLRB Holds Franchisor is Not a Joint Employer

In an opinion that caught close observers by surprise – particularly given the contemporaneous statements from the National Labor Relations Board’s General Counsel at a Senate hearing on May 14 – the NLRB’s Division of Advice has opined that Freshii was not a joint employer with one of its franchisees.   Click here to read more.

US:  Court Can Review EEOC Pre-Litigation Conciliation Efforts

The United States Supreme Court has unanimously held that courts can review conciliation efforts by the Equal Employment Opportunity Commission (EEOC) before the agency sues an employer. Click here to read more about what employers should do in view of the closer scrutiny on conciliation efforts.

US: EEOC Rules on Disability and Wellness Programs

The US Equal Employment Opportunity Commission (EEOC) has recently issued proposed rules describing how the Americans with Disabilities Act (ADA) applies to employer wellness programs that form part of group health plans.  These proposed rules would be in addition to – and in some cases inconsistent with – regulations issued by the  US Departments of Labor, Health and Human Services, and the Treasury in 2013 governing wellness programs under the Affordable Care Act. Click here to read more

US: California: New Family Rights from July 2015

New amendments to the California Family Rights Act (CFRA) Regulations will take effect on 1 July 2015. Click here for further details regarding these amendments, but, in short, employers will need to:

  • revise their policies and practices
  • train human resources and supervisors and
  • distribute the new CFRA notice in the spoken language of 10 per cent or more of the workforce.

US: Los Angeles: Minimum Wage to Increase to 2USD 15.00 Per Hour by 2020

Los Angeles City Council has voted to raise the minimum wage from USD 9.00 per hour to USD $ 15.00 per hour by 2010.   The new law will come into effect on 1 July 2016 and will be phased in over five years.   Click here to find out more about six recommended action steps for affected employers.

US: New York: Using Credit History to be Unlawful From September 2015

A bill was passed recently which makes it unlawful for New York City employers to use an employee’s or applicant’s credit history for employment purposes.  The law, which amends the New York City Human Rights Law (NYCHRL), makes it an unlawful discriminatory practice for an employer to use or request an employee’s or applicant’s consumer credit history, except in certain enumerated circumstances.  The law will go into effect on 3 September 2015.   Click here to read more.