Australia: Increase to minimum wage from 1 July 2015
The Fair Work Commission has raised the minimum wage by 2.5%. With effect from 1 July 2015, the new weekly minimum wage will be AUD 656.90 (or AUD 17.29 an hour).
Australia: New annual leave rights for award employees
As part of its four-yearly review of modern awards, the Fair Work Commission has amended annual leave provisions in modern awards in two important respects. Employees will be allowed to cash-out annual leave to a maximum of 2 weeks' leave in a 12 month period. The new cashing out capability is subject to record keeping requirements, parental approval in writing for under 18s, and the already existing prohibition on undue influence or misrepresentation by employers.
A complementary change will allow employers to direct employees to take annual leave where "excessive" leave has been accrued. For shift workers, excessive leave is an accrual of 10 weeks, and for non-shift workers, eight weeks. A direction to take leave may not result in the employee's balance dropping below six weeks, and the employer must first try to agree steps with the employee to reduce the accrual before making any direction.
Australia: Costly parental leave policy
An employer which mistakenly denied unpaid parental leave to a father has been ordered to pay AUD 170,000 in unpaid wages and redundancy pay. Under the employer's policy, unpaid parental leave was said to be available only to a primary care-giver. This contravened the Fair Work Act which does not restrict parental leave only to a "primary" caregiver. Unaware that the policy contradicted the Fair Work Act, the employee was not permitted to take 12 months' unpaid parental leave, and when he took other types of leave, was allowed to return to work only in a part-time position, rather than to resume in his former capacity. A year later his position was made redundant. The Federal Circuit Court held that the employee was entitled under the Fair Work Act to unpaid parental leave, and that the failure to grant this leave had the consequence that he lost the protection the Act also provides by allowing a person who has been on parental leave to return to the same job. The damages awarded reflected the difference between his part-time salary and the full-time salary of the job to which he would have returned, had he been given the right to take parental leave. It also took into account the difference between the severance pay that was due to him as a part-time employee, as distinct from the severance pay that would have accrued to him as a full-time employee in his former role. This case highlights the importance of regularly reviewing and updating policies for compliance with current legislation.
China: Severance pay in Beijing
It was announced in early June 2015 that the average monthly salary in Beijing for 2014 was RMB 6,436 (approx. GBP 667) which means that the cap on severance pay has now increased to RMB 19,389 (approx. GBP 2,010).
China: Labor inspections in Beijing on the rise?
We are aware that a number of international businesses have been subjected to labor inspections by the District Labor Bureaux in Beijing recently. These appear to be random inspections, and it is not clear whether this indicates a trend towards increased inspections, but it serves as a reminder to all businesses operating in the PRC that they should be ready to respond to an inspection request at any time. The District Labor Bureau will initiate the inspection by sending a notice to the company requesting employment and/or social security related documents and inviting company representatives to attend a meeting at the Labor Bureau so that the documents can be inspected. All business operating in Beijing in particular should ensure that their documentation is in good order in case an inspection notice is served. For more information about labor inspections in the PRC and their consequences, please speak to your usual DLA Piper contact or email Johnny Choi, Of Counsel in our Beijing office.
China: New rules on salary payments issued for consultation in Guangdong Province
Guangdong Province has published new draft amendment regulations on salary payments for public consultation. The draft regulations deal with the mechanism for making salary payments: for instance, the frequency of salary payments, the method of payment and the date on which payments must be made. As and when the regulations are adopted, they will provide welcome clarity on some practical payroll issues for all businesses operating in Guangdong Province. The implementation date is as yet unclear.
EU Wide: AG’s opinion: travelling time counts as ‘working time’
In a case referred to the European Court of Justice by the Spanish Court, the Advocate General has recently given the opinion that travelling workers who have no fixed or habitual workplace should be able to count the time spent travelling from home to the first customer and from the last customer back to their homes as ‘working time’ under the Working Time Directive. According to the Advocate General, for such ‘peripatetic workers’, travelling is an integral part of the work and is a necessary means of providing services to the customers, meaning that it should be regarded as forming part of the workers’ activities. The European Court which will give its full judgment in the case later this year.
Denmark: Bill on restrictive covenants revoked
We previously reported (Be Global, October 2014) that the Danish Government was considering changes to the rules on non-competition, non-solicitation and "job" clauses. The bill which had been introduced with a view to implementing rules restraining and regulating the use of restrictive covenants in employment contracts, has, however, now been revoked due to the recent call for parliamentary elections in Denmark. It is anticipated that the bill will be reintroduced by the new government later in 2015.
France: Macron Bill update
The Business friendly economic reforms proposed by Economy Minister Emmanuel Macron (reported in the January and May editions of Be Global) are still a hot topic and the subject of intense debate before the French Parliament. On 16 June 2015 the Prime Minister engaged the Government's prerogative to allow adoption of the Macron Bill without the need for a vote and at the same time added 36 amendments to the Bill. The Bill has now been sent for the last time to the Senate for a final review (scheduled to take place between 30 June and 6 July) before its final adoption by the Assembly which is expected to occur by 14 July at the latest.
France: Update on draft bill proposing changes to staff representation regime
On 2 June 2015, the French General Assembly voted in favour of the new law proposed by the Government which aims to improve social dialogue and employees' collective involvement. The Bill will be discussed before the Senate after 22 June 2015. For further information, see May's Be Global.
France: Extension of welfare portability to all companies as of 1 June 2015
With effect from 1 June 2015, all companies must maintain welfare guarantees (prévoyance) for their former employees on the same basis as they are required to maintain complimentary health coverage (i.e. up to 12 months and free of charge for the employees). This entitlement to temporary complimentary health and welfare portability must be referred to in the work certificate which is provided to an employee on termination of their employment.
France: Failure to consider complaint of sexual harassment constituted gross misconduct
The French Supreme Court recently held that a manager's failure to act in response to a complaint raised by an employee about sexual harassment amounts to gross misconduct and can justify the early termination of a fixed-term employment agreement. An employee complained about sexual harassment by a client of the restaurant she worked for, in front of her manager and another employee. She was examined by a doctor and made a formal complaint to the police. The manager's failure to react, other than shrugging his shoulders, qualified as gross misconduct justifying early termination of the manager's fixed-term employment contract. This ruling would also apply to an indefinite term employment contract. The result of this case means that, in practical terms, employers should be extremely cautious and should start investigating as soon as they are informed of any complaint of sexual or moral harassment.
France: Employer's duty of safety applies to passive smoking
The duty to maintain a safe workplace requires an employer to take all necessary measures to protect employees' mental and physical health. In a recent judgment, the Supreme Court confirmed that this duty gives rise to a strict obligation with respect to passive smoking.
An employee, who had been assessed as disabled by the occupational health doctor, was dismissed in the absence of any alternative position being available. She brought a legal action against her former employer, claiming inter alia damages for exposure to passive smoking. The Appeal Court rejected her claims stressing that she had not raised this issue during her periodical assessment and was satisfied with her work conditions other than having raised an issue in relation to noise. It was also noted that she used to accompany her colleagues during smoking breaks which she was not obliged to do, her physical presence on the employer's premises had been limited and her absences from work had been due to another illness unconnected to passive smoking.
The French Supreme Court reversed this decision on the basis that the employer could not be exonerated from its responsibility with regard to passive smoking exposure. The case was referred to a second Appeal Court for a ruling on the merits of the question of passive smoking and the employer's potential failures in this regard. This decision stresses the increasing responsibility on employers to ensure their employees' health and safety at work which requires positive action and, in some cases, taking action in respect of employees who are freely and deliberately exposing themselves to potential danger.
France: Dispute about non-compete provision can result in annulment of mutually agreed termination
The French Supreme Court has held that a mutual termination agreement was null and void where the employee's consent was obtained improperly. After having guaranteed the employee, during various meetings prior to signature of a termination agreement, that he would be paid financial compensation due in respect of his non-compete undertaking (2/3 of monthly net salary for twelve months), the employer eventually waived the undertaking after the termination agreement had been signed and approved by the Labor Administration. In practice, nothing prohibits an employer from unilaterally releasing an employee from a non-compete undertaking after signing a mutual termination agreement (and therefore not paying the related financial compensation). However, this case shows that an employer who assures the employee, before execution of the mutual termination agreement, even if this is only done orally, that they will be paid the non-compete financial compensation, meaning that the non-compete clause will not be waived, risks the mutual termination agreement being void if the commitment is not honoured. The employee is likely to argue that the employer's assurance was intended to persuade him or her to sign, and was thus a condition of his or her agreement. In practice, to avoid this risk, we recommend that the non-compete issue should be specifically addressed in the termination agreement which should be signed by the parties before the actual termination of the employment contract.
Germany: Social selection and age: when can dismissal be challenged?
In large-scale redundancy exercises for operational reasons the employer may carry out social selection required by law in such a way that the social selection will be conducted within specific previously identified age groups. In this way, not all employees of the company are considered together in the context of social selection. Instead, employees in certain groups (e.g. all 31 to 40 years olds, 41 to 50 years olds etc.) are pooled. This ensures that the existing age structure within the company is maintained and will not alter significantly as a result of collective redundancies.
In this context, the Federal Labor Court recently ruled that the employer – when conducting social selection based on age groups – is obliged to “thin out” each age group equally. This means terminations need to be equally proportioned in each age group.
The question then arises, whether the employer is also obliged to “thin out” each age group equally in cases where the employer and the works council created a reconciliation of interests with a list of names.
In cases of collective redundancies, section 111 of the Works Constitution Act generally applies. Accordingly, the employer must try to negotiate a reconciliation of interests with the works council while the works council may demand a redundancy plan. If a reconciliation of interests with a list of names has been created, it is presumed under the Protection against Dismissal Act, that the termination of the employees listed is justified by urgent operational requirements. In addition, the social selection may only be reviewed by the labor court for serious mistakes.
Therefore, the question arises whether a disproportionate termination quota in the different age groups will still be illegal where there is a reconciliation of interest with a list of names. In other words, is the disproportionate allocation of terminations among age groups a serious mistake under the Protection against Dismissal Act? If it is not, the disproportionate terminations would be legal.
In the case at hand, a 55 year old employee was terminated in the course of collective redundancies due to operational reasons. Her employment relationship had lasted for 16 years. Her complaint referred to the fact that a higher percentage of older employees had been terminated. In her opinion, her termination was illegal, although the employer acted in accordance with the reconciliation of interest and the list of names.
The Federal Labor Court upheld the employee’s claim. According to the Protection against Dismissal Act, a balanced personnel structure needs to be secured, but not implemented. Therefore, the termination quota (e.g. 20 %) must be applied to each age group proportionally if the employer is carrying out a social selection based on age groups. If the employer allocates the terminations quota unequally in the different age groups, a “serious mistake” is made in the social selection and although there is a reconciliation of interests with a list of names, a dismissal may be unlawful.
Germany: Further clarification of minimum wage
In a welcome decision for employers, the Düsseldorf Labor Court recently decided that a performance bonus awarded by the employer may be credited to the legal minimum wage. The decision indicates that not only components of the salary which compensate the “regular work performance” of the employee form the minimum wage amount, but also all payments related to the work performed by the employee may be included in the minimum wage.
The German Minimum Wage Act came into force on 1 January 2015 and generally guarantees a minimum wage of EUR 8,50 per hour. The decision of the Labor Court is another step in clarifying the controversial question of whether special payments made by the employer may be included in the minimum wage.
In the Labor Court decision, an employee was claiming payment of the minimum wage. Before the Minimum Wage Act became effective, the employee earned EUR 8,10 per hour. The company operated a bonus scheme which provided an optional bonus for special performance of a maximum of EUR 1,00 per hour. The plaintiff argued she was entitled to the minimum wage of EUR 8,50 per hour and that the performance bonus must be paid on top of it. The employer argued that the plaintiff’s salary was EUR 8,10 per hour as provided in her employment contract but as a performance bonus of EUR 0,40 per hour was paid in accordance with the corporate bonus scheme, her total remuneration would be EUR 8,50 per hour.
The employee based her argument on the widespread and controversial point of view that the minimum wage amount only covers the “regular work performance” of the employee; awards and bonuses granted for special work performance should be paid on top of it. The Labor Court did not follow this point of view. It ruled that any payment of the employer related to the employees’ work performance may be credited to the minimum wage. The only condition for crediting additional payments is the relationship between the special payment and the work conducted by the employee. Only those payments which are not connected to the work performed may not be included in the minimum wage amount. Since a bonus for special performance is related to the work performed it may form part of the minimum wage amount.
This decision means that companies can probably justify the inclusion of special payments in the minimum wage on the basis of this decision. Nevertheless, an appeal is possible. It remains to be seen whether the employee will file an appeal and if the appellate court, the Higher Labor Court of Düsseldorf will confirm the Labor Court’s point of view.
For more information on the development of the law on the national minimum wage, visit the Employment Germany blog.
Ireland: New employment claims structure in effect 1 October 2015
The Workplace Relations Act 2015 was recently signed into law and will come into effect on 1 October 2015. The Act introduces significant reforms to the way in which workplace disputes are resolved and employment law is enforced in Ireland.
Further details of these changes will be provided in a future edition of Be Global.
Italy: Supreme Court considers validity of social media dismissal
The Supreme Court has recently considered the validity and lawfulness of a dismissal of an employee who used Facebook, his mobile phone, and a tablet for private purposes, during his working hours. The Supreme Court found that this type of behavior can interfere with normal work activity and cause damage to a company's business. It is interesting to note that, in order to investigate the behavior, the company created a fake Facebook account in order to discover the employee's misconduct. In this respect the Supreme Court stated that the company's conduct did not violate the employee's privacy and was not against the basic principles of good faith applying to the employment relationship.
In Italy, court precedents are only binding for those who are party to the proceedings. However, court judgments (especially judgments issued by the Supreme Court) have a strong authoritative weight on other judges deciding similar cases.
Netherlands: New Rules Effective 1 July 2015
As reported in January's Be Global, new rules on the conversion of fixed-term contracts into indefinite term contracts and reforms to dismissal procedures and severance payments come into force on 1 July 2015.
- Succession of fixed-term employment contracts - The provisions on the conversion of fixed-term employment contracts into indefinite term contracts will be amended. From July, the last fixed-term contract in a chain will be considered permanent if: (i) that contract is the fourth contract in the chain; or (ii) the total duration of the chain of fixed term contracts exceeds a period of two years (unless the chain of consecutive contracts is broken by a six month break).
- Dismissal law - Currently there is a "dual dismissal system". If it is not possible to terminate with mutual consent, an employer can terminate by giving notice after receiving permission from the Dutch Employee Insurance Agency (UWV) or Cantonal Court. The amendments to this system will be:
- New compulsory proceedings (Court or UWV) will apply depending on the reason for termination. A dismissal on business economic grounds or based on long-term illness will be handled via the UWV, a dismissal for personal circumstances via the Court.
- The Cantonal severance formula will be replaced by a "transition payment". The amount of the transition payment is based on the employee's length of service and is capped at EUR 75,000 (or one year's salary if higher). In exceptional cases, judges can allow compensation over the transition payment cap, for example where the employer is to blame for an unworkable situation and it is "unreasonable" to only pay the transition allowance. Case law following July will dictate what circumstances will qualify as "unreasonable".
Netherlands: Flexible working
It is anticipated that on 1 July 2015 a new law that allows employees to work more flexibly and from home will come into effect.
When the law comes into place, the following will be the case:
- All employees who have worked with the employer for over 26 weeks can request to work from home or request to work less or more hours/week or request to shift their working hours (ie not working 5x8, but 4x10, for example);
- The request must be made two months before the anticipated start date (however, if the employer is willing to agree on an earlier start date, this is not prohibited);
- The employer must decide on the request at least one month before the requested start date. If he does not, the employer will be taken to have impliedly agreed with the request;
- The employer can only refuse a request if the change is not possible because of the compelling interests of the company.
Poland: Changes to fixed-term contracts and garden leave on the horizon
The Polish regime governing the use of fixed-term contracts is expected to change in late 2015. Among the proposed changes will be :-
- the introduction of a maximum duration of a fixed-term contract and limit on the number of successive fixed-term contracts;
- new rules on notice periods for terminating fixed term contracts; and
- a new requirement to justify the termination of a fixed-term contract.
Changes are also expected with regards to garden leave, so that it will be possible to place an employee on garden leave during the notice period, regardless of the type of employment contract; the employee will retain the right to receive remuneration until the termination date. This change is also expected to come into force in late 2015.
Further details of these changes will be provided in a future edition of Be Global.
Russia: New data protection law in force from 1 September 2015
A new Russian Data Protection Law will come into force on 1 September 2015 which introduces game changing rules for most companies operating in Russia-
- A new obligation will be imposed on data operators to ensure that the personal data of Russian citizens is recorded, systematized and stored with the use of databases located in the territory of the Russian Federation;
- This appears to suggest that foreign companies will not be permitted to process personal data of Russian citizens on servers located outside of the jurisdictions;
- Because of the uncertainties about the meaning of the new law, to date, most companies have taken a wait-and-see approach but this approach will need to change as the implementation date grows ever nearer.
Saudi Arabia: Major labor law reforms to be implemented in October 2015
The significant amendments to the Saudi Labor Law, which were published in the Official Gazette in April 2015, will be implemented on 24 October 2015. Included in the amendments are changes to leave entitlements, notice periods and penalties for violations. Click here to read more.
UK: When must collective redundancy consultation begin?
An issue of major practical importance to employers engaged in a collective redundancy exercise is when the obligation to begin consultation with the employee or union representatives is triggered. Employers need this knowledge to ensure they comply properly with their consultation obligations and avoid potentially significant liabilities for protective awards. Unhelpfully, however, the law on this issue has been uncertain for some time following conflicting case law. The Employment Appeal Tribunal has recently considered this issue. Click here to read more about the EAT's decision.
UK: Transparency in supply chains: the Modern Slavery Act 2015
The Modern Slavery Act 2015, which recently received royal assent, will require larger businesses with a certain level of turnover derived from their UK operations to publish an annual slavery and human trafficking statement. This legislation, together with other developments expected at EU level, mean that worker welfare in global supply chains is back on the agenda. Click here to read more.
UAE: Final regulations published for Abu Dhabi Global Market free zone
Final Regulations have now been published for the new Abu Dhabi Global Market free zone which has been set up to provide a broad-based financial services hub for local, regional and international institutions (see January's Be Global). The Regulations contain some changes from the draft version published earlier in the year.
Most notably, the Regulations now explicitly allow parties to enter into settlement agreements waiving statutory employment rights, something which is not permitted under UAE Labor Law or in the Dubai International Finance Centre (DIFC) Employment Law. The new Regulations also expressly prohibit discrimination on the grounds of age and impose duties on employers to make reasonable adjustments for disabled employees. Again, these are provisions which do not appear in UAE Labor Law or under the DIFC Employment Law. Despite discussions during the consultation phase regarding putting a cap on damages for discriminatory conduct, no such cap has been included in the final draft which could lead to a "claim culture" in the ADGM particularly if a separate employment tribunal system is established as has been suggested. Other provisions relate to family-friendly rights (including more favorable maternity leave rights than under the UAE Labor Law and the introduction of 5 days' paternity leave), working hours, annual leave, notice, part-time workers, sick pay and data protection. Full details will be published in a future Be Global.
Middle East: Summer working hours' restrictions
With the summer time months approaching and the temperature and humidity continuing to rise, the annual restrictions on summer working time hours will soon be implemented in GCC countries to protect the health and safety of employees working outdoors during certain hours of the day. Employers found by the Labor inspectors to be breaching the summer working hours' restrictions could face severe penalties which vary depending on location but can include fines, a ban on obtaining new work permits, and closure of the establishment in severe cases. Click here for full details.
Canada: New federal legislation on genetic discrimination
With genetic testing being used increasingly in health care, there is a growing concern in regards to “genetic discrimination”. On 9 June 2015, the Government of Canada introduced the Protection Against Genetic Discrimination Act, a new legislation that addresses this new, but rising issue of genetic discrimination. Click here to read more.
Canada: Employees and independent contractors
Organizations are increasingly retaining the services of individual contractors rather than hiring employees in order to increase the organization’s flexibility and obtain special expertise on an as-needed basis. Case law over the past ten years suggests that the classic distinction between employees and independent contractors is becoming blurred. Click here to read more.
US: Accommodating religious practice - three steps for employers
Following a recent Supreme Court decision which held that knowledge of an employee's religious practice is not a prerequisite to liability, our US practice suggest three steps employers should take to accommodate religious practice in the workplace. Click here to read more.
US: Guidance on food allergy accommodations under disability legislation
Julia DiPrete from our New York office considers what guidance is available for employers on managing employees with food allergies in compliance with the Americans with Disabilities Act. Click here to read more.