Global Employer Horizon Scanner - Europe, Middle East and Africa Overview

EUROPE, MIDDLE EAST AND AFRICA OVERVIEW In 2018, employers across the EU rushed to come to grips with enhanced data protection obligations under the GDPR, and while the May 25, 2018 compliance deadline feels like the distant past, the EU is still in the "goal vs. reality" phase of GDPR execution and employers can expect increased investigations into their data privacy practices in 2019. Meanwhile, Brexit was never far from the headlines across the region, as negotiations intensified between the UK and the EU about the terms of their future relationship following the UK's departure from the Union. Global mobility experts foresee a number of challenging developments once the UK has finalized its exit from the EU, likely in 2019. Contingency planning will be vital for employers and organizations will need to plan for change, particularly in relation to the threatened recruitment shortage in the UK. On June 21, 2018, the Council of the European Union approved the revised Posted Workers Directive, bringing changes in three main areas: the remuneration of posted workers, long-term postings and temporary agency workers. After its entry into force, Member States will have two years to adapt their legislation to comply with the directive. The impact of the new rules will depend on how far Member States have already gone toward implementing the current Posted Workers Directive. However, global organizations must bear in mind that in two years’ time, local legislation may apply when seconding employees within and to Europe. As the workforce continues to evolve across the region, employers are facing increasing challenges. Misclassification claims by gig economy workers were on the rise in 2018, with landmark judgments being delivered in France, Spain, the UK and Italy, and employers can expect this to continue into 2019, with the potential for regulatory reform to protect gig economy workers. Meanwhile, measures and legislative changes have been implemented in Germany, Spain and the Netherlands to curtail the unnecessary use of fixedterm employment contracts. Elsewhere, in South Africa, the risks associated with the misuse of agency workers were highlighted in a landmark case, while German regulators have been clamping down on putative independent contractors working under labor leases. As digitalization continues to grow, so do challenges associated with digital working practices. With flexible and teleworking practices on the rise, and increased use of portable electronic devices to carry out work tasks, the concept of "taking your work home" has never been so literal. This has resulted in a rise in 'right to disconnect' laws, particularly across France, Belgium and Spain. However, it remains to be seen how these rights will be implemented or enforced. Gender pay and pay practices remained hot topics across the region in 2018, with Germany introducing pay transparency legislation and Spain proposing potential gender pay obligations. Employers in the UK had until April 2018 to publish their first year's gender pay data and France and Switzerland were also proactive in this area, with pay reporting obligations and pay audits applicable from 2019. Pension changes were also implemented across the region, with legislation in Germany creating greater certainty for employers allowing the possibility of purely defined contribution commitments with limited liability, and in the UK, measures to facilitate consolidation of defined benefit schemes are expected to be considered by Parliament in 2019. Meanwhile in Spain, increases to pension contributions to align with the Consumer Price Index were introduced, and in Poland, a new pensions system was implemented to supplement devaluing pension schemes. 2019 is likely to see further developments in this area, as rumors circulate about comprehensive pensions reform in Italy and employers in the UK come to grips with equalization of benefits between women and men with guaranteed minimum pensions. Use the navigational buttons below to skip straight to countries of interest. 1 THE GLOBAL EMPLOYER MAGAZINE | 2019 Horizon Scanner THE GLOBAL EMPLOYER MAGAZINE | 2019 Horizon Scanner 2 EUROPE, MIDDLE EAST AND AFRICA REGIONAL OUTLOOK SPOTLIGHT ON: UK 2018 was a year of political upheaval for the UK, with a general election and Brexit overshadowing political discussions culminating in a draft Brexit deal being announced in November 2018 and subsequently rejected in January 2019. Westminster was sent into turmoil with seven ministers resigning and no confidence motions in PM Theresa May and her government being scheduled and defeated. As the Brexit date looms, the world will be watching to see whether the UK government can secure a deal or whether it faces a "hard Brexit." Meanwhile, UK companies were also hurrying to "get ready" ahead of the May 2018 GDPR deadline to avoid strict penalties for non-compliance with the introduction of more stringent data protection laws, and a landmark decision in the gig economy was delivered by the court of appeal in December 2018, where the majority found that drivers working in the gig economy had "worker" status and were not self-employed. The online platform has been given permission to appeal the outcome, and any decision by the Supreme Court on this issue could be potentially ground-breaking. As in 2017, a tougher regulatory environment for defined benefit (DB) pensions was a key theme in the pensions arena, where we saw enhanced incentives for DB pension scheme consolidation and a continuing trend for DB consolidation, as well as a government white paper and further consultation on strengthening the UK Pensions Regulator's powers to protect DB pension schemes. Horizon Scanning in 2019: The outcome of the Brexit negotiations still hangs in the balance, with growing uncertainty as to what will happen on "Brexit day," i.e., March 29, 2019. No major changes to UK employment law, however, are anticipated as a result. Nevertheless, skill shortages due to changing immigration rules may present immediate challenges. With ongoing spotlight on the gig economy, we are likely to see further cases on the employment status of gig economy workers. The government has set out its plan for implementing the recommendations made by the Taylor Review of Modern Working Practices. The government will (with effect from April 2020) repeal the so-called Swedish derogation relating to agency workers, upgrade the requirements relating to written statements and introduce 52-week averaging for holiday pay purposes for all employees with variable pay. There are plans to introduce a number of other reforms, including introducing state enforcement of holiday pay for low-paid workers. The government also promises legislation to clarify employment status, although there is little detail on this crucial issue at this stage. 3 THE GLOBAL EMPLOYER MAGAZINE | 2019 Horizon Scanner Interest in the gender pay gap is showing no signs of slowing down as 2019 is likely to see a continued focus on pay transparency. The government is also consulting on extending pay reporting obligations to encompass the ethnicity pay gap. There are new regulations that will require listed PLCs with more than 250 UK employees to publish the ratio of the CEO’s pay to that of their median UK employee, and to the UK employee at the 25th and 75th percentile. The first reports will be due from January 1, 2020. Other requirements will require companies with more than 250 UK employees to detail in their directors' report how the directors have engaged with employees. Furthermore, an increased focus on compliance with the national minimum wage will be in the spotlight in 2019 in relation to the nuances around the impact of salary sacrifice and uniform policies. In the wake of the #MeToo movement, scrutiny of NDAs and calls for change to the rules surrounding their use for the purposes of covering up sexual harassment are likely to intensify, with a tangible push for cultural change in how such allegations are dealt with by employers and for regulatory intervention. We are also likely to see an increase in data protection claims against employers following a recent court of appeal judgment which found a major supermarket vicariously liable for the deliberate and extensive misuse of employee data. This may increase the scope for pursuing data protection claims against employers, even where the employer has not itself breached data protection legislation. Additionally, a material change to the taxation of personal service companies is set to take place in April 2020, while separately, 2019 is expected to see enhanced scrutiny by competition authorities of perceived anti-competitive activity in the recruitment and reward space. Comprehensive changes to the UK pensions landscape are anticipated as a Pensions Bill is expected to be laid before parliament in 2019, with measures to strengthen the regulator's powers and facilitate DB consolidation. Employers will also be getting to grips with Guaranteed Minimum Pensions (GMP) equalization following the landmark decision in Lloyds Banking Group Pensions Trustees Limited v. Lloyds Bank plc toward the end of 2018, meaning employers with DB schemes containing GMPs will need to start working with their trustees and advisors to agree to a method to adjust benefits to ensure equal treatment of men and women, and an appropriate back payment strategy. A further court hearing is expected in the summer to address the treatment of historic transfer payments and other related issues. THE GLOBAL EMPLOYER MAGAZINE | 2019 Horizon Scanner 4 Following the introduction of the Feasible and Manageable Work Act on March 15, 2017, flexible working became a hot topic in Belgium throughout 2018 with the new legislation bringing in a number of changes aimed at making flexible working arrangements more achievable. These changes included simplification of part-time work, "floating schedules," and an adjustment to overtime rules and calculation of working time. Horizon Scanning in 2019: • The continued rise of the gig economy through increased use of online platforms. • Greater discussion regarding the right to disconnect as employers focus on "techno stress" suffered by employees. • The cap on national salary increases for the year 2019-2020 is unlikely to rise significantly from 2018-2019, with an increase of 1.7% predicted. However, as a result of the federal election in 2019, compliance with this cap is likely to be more closely monitored, with employers facing severe fines of between EUR 250 and EUR 5,000 per employee for non-compliance. Key themes in 2018 included tackling the low employment rate by using the country’s new and evolving workforce, and ensuring compliance with the GDPR. Horizon Scanning in 2019: 2019 will see an increase in the minimum wage and potential movement in the following areas: • The end of unpaid sick leave is being contemplated in a legislative proposal under which employers will have to pay employees from the first day of sickness, creating a significant financial burden for employers. • Vacation pay may undergo change, with a proposal to revise vacation entitlement from calendar days to hours. • A legislative proposal for shared job positions allowing employers to employ multiple employees for the same role on a part-time basis. BELGIUM CZECH REPUBLIC 5 THE GLOBAL EMPLOYER MAGAZINE | 2019 Horizon Scanner The primary focus of 2018 was on changes implemented by President Macron's executive orders of September 22, 2017. The cap on unfair dismissal resulted in a decline in terminationrelated litigation in 2018. While there was an increase in discrimination and working-time claims, the overall volume of employee litigation decreased, with increasing numbers of employees negotiating settlement agreements. Similarly, employers saw an increase in requests linked to the new right to work from home and in relation to the transition to the new Social and Economic Committee. In November 2018, misclassification claims under the gig economy were under the spotlight when the French Supreme Court declared food delivery cyclists of the French company Take Eat Easy were employees due to the extent the platform monitored and sanctioned the cyclists. Similarly, on January 11, 2019, the court of appeal held that a gig economy driver was an employee on the basis that the driver signed a registration partnership agreement which did not allow him to set the rate or select clients. Uncertainty over the HR implementation of GDPR was also a key theme for 2018. Horizon Scanning in 2019: • Introduction of personal income tax withholding from January 1, 2019. • Increase of gender pay-related requirements given the recent laws and in particular law No. 2018-771 of October 5, 2018, which introduces the need for employers to disclose the difference in pay levels between female and male employees. The law came into effect in January 2019 for companies with 250 employees, extending to companies with 50 employees by 2020. We anticipate that the number of investigations by the labor authority will also continue to rise. • Increased risk of misclassification claims from workers in the gig economy. There are ongoing investigations currently being undertaken by the French social security authority and it has been reported by the French media that the Paris prosecutor is investigating a gig economy delivery company for concealment of work following a report from the Labor Inspector. • An increase in compliance issues linked to the implementation of the recent Sapin II anti-corruption law and the increase in controls by the new anti-corruption agency, Agence Française Anti-Corruption. FRANCE THE GLOBAL EMPLOYER MAGAZINE | 2019 Horizon Scanner 6 GERMANY The use of freelancers was high on the agenda for German regulators and has become a major element of corporate compliance management. Regulatory authorities have increasingly been monitoring the use of independent contractors with the aim of combating the issue of individuals purporting to be selfemployed, but in reality working under a labor lease. In the event of violations, substantial sanctions may be imposed, including fines of up to EUR 10 million for companies and EUR 1 million for board members and managing directors. In April 2017, labor leasing under German law became limited to a maximum period of 18 months. In 2018, employers reached the upper limit (September 30, 2018), rendering non-compliant employers ineligible to apply for a labor leasing license, liable for fines of up to EUR 30,000, and the temporary workers being deemed employees of the user company. Employers should be aware that once the 18-month maximum period has been exhausted, a cooling-off period of three months will need to be observed before the particular worker can be assigned to the same company again. Since January 2018, the German Occupational Pension Act has allowed for purely defined contribution commitments. Under such DC commitments, employers only have to make contributions to external pension providers and are not secondarily liable for future pension payments (so-called "pay and forget principle"). It is yet to be seen whether employers' associations and labor unions will begin to enter into collective agreements providing for the option of pure DC commitments in 2019. The Occupational Pension Enforcement Act established a legal basis for employers to introduce an opt-out scheme with regard to deferred compensation. This means, as a rule, the employer can defer a part of the remuneration in order to invest in a pension scheme and the employee will have the right to object within a certain time limit (so-called opt-out). Since February 1, 2018, employees working in establishments with more than 200 employees have the right to request information on pay criteria based on the Transparency of Pay Act which came into force in July 2017. The act also requires companies with more than 500 employees to file gender equality/pay equity reports and encourages such companies to voluntarily conduct pay audits. The new law still remains unclear in respect of the specific consequences in cases of non-compliance or how jobs are to be assessed as being equal or of equal value. This legal uncertainty is creating difficulties for employers dealing with claims for salary adjustment. See more information on the Transparency of Pay Act here. Horizon Scanning in 2019: • Part-time working. As of January 1, 2019, employees have the right to request "bridge parttime work," allowing them to work part-time for a period of one to five years and return to fulltime work after the part-time period has expired. • Minimum wage. As of January 1, 2019, minimum wage increased to EUR 9.19 gross per hour and will increase to EUR 9.35 in 2020. • Proposed changes to fixed-term contract arrangements. Changes have been proposed that will result in the maximum duration of "fixed-term employment contracts without valid reason" reduced from 24 months to 18 months. It has been proposed to reduce the number of times fixed-term contracts can be renewed from three to one. There is a plan to limit the maximum duration of the fixed-term contract to five years. Details of timings for these proposed changes are not yet available. • Impact of Brexit. The German government introduced a proposal to reduce dismissal protection for high-earning bank employees to attract more UK and US banks to Frankfurt post-Brexit. The Finance Ministry introduced a draft act, stipulating limited applicability of the German Termination Protection Act for bank employees whose annual base salary is higher than EUR 234,000 by classifying them as executive employees. • Skilled immigrants. In an effort to combat skills shortages, the German government intends to remove the restriction stipulating that those coming from outside the EU can only be employed in Germany if there is no German or EU citizen available to do the job. The new regulation would not be limited to sectors where there is an acute shortage. 7 THE GLOBAL EMPLOYER MAGAZINE | 2019 Horizon Scanner 2018 saw a revolutionary gig economy ruling from the Turin Employment Tribunal, when an action brought by six Foodora riders claiming employment status failed as they were deemed to be independent contractors due to the company's lack of control and organizational power over the performance of their work. In addition, the Dignity Decree provided for changes to flexible forms of employment with reformed regulation over fixed-term employment contracts. Rules on economic relief for employees hired after March 7, 2015 in cases of unlawful termination also changed when the Italian Constitutional Court overturned the formula previously used to calculate termination indemnities for such employees. Horizon Scanning in 2019: • Litigation arising out of the reform of flexible employment arrangements. • Additional measures to encourage employment of the younger workforce (such as tax advantages and social security relief) and other disadvantaged employees in economically depressed areas. • A major pensions reform is currently in the pipeline and will be ready to go live in 2019. ITALY 2018 continued to see significant labor shortages in Hungary and employers continue to face the increasing challenge of recruiting and retaining those with key skills. Engineers, IT and medical workers are in particularly short supply. In the meantime, employers have also been benefiting from flexibility through atypical employment relationships. Horizon Scanning in 2019: • Tax reforms mean that non-salary fringe benefits — known in Hungary as "cafeteria" — including money received to spend on meals, tickets, child daycare, etc. will be partially terminated in 2019. • The "SZÉP card," for use in the local tourism industry, will continue to qualify as a fringe benefit with preferential tax treatment, in addition to tickets to sport and cultural events. • Challenges await employers facing fresh labor claims in 2019, following the introduction of the new Code on Civil Procedure in 2018. While the requirements for filing a lawsuit increased, rules relating to defending claims need significantly more preparation with stringent deadlines for submitting responses, including a strict timeframe of 15 days to respond to petitions for reinstatement. • As of January 1, 2019, the mandatory minimum wage payable to full-time employees is HUF 149,000 (monthly basis), HUF 34,260 (weekly basis), HUF 6,860 (daily basis), and HUF 857 if paid on an hourly basis. The guaranteed minimum wage for employees employed in positions requiring a secondary school diploma or advanced vocational training, or higher, is HUF 195,000 (monthly basis), HUF 44,830 (weekly basis), HUF 8,970 (daily basis), and HUF 1,121 (hourly basis). • A significant and publicly disputed amendment was made to the Labor Code as of January 1, 2019. The annual amount of extraordinary working time remains 250 hours, but the employer and the employee may agree in writing that another 150 hours of extraordinary working time can be ordered by the employer. In the case of a collective bargaining agreement, a maximum of 100 voluntary extraordinary working hours above the 300 hours of extraordinary working time may be ordered by the employer annually. • The work reference period has been increased from 12 months to 36 months. HUNGARY THE GLOBAL EMPLOYER MAGAZINE | 2019 Horizon Scanner 8 Historical risks associated with the termination of employment contracts in Kazakhstan continued to pose challenges for employers throughout 2018. Horizon Scanning in 2019: No major changes to labor law are predicted for 2019. However, amendments to legislation regulating activities undertaken by manpower agencies are expected. This will be helpful as the current lack of regulation is creating challenges for employers. KAZAKHSTAN The most significant issue of 2018 was the continued evaluation of the Work and Security Act (Wet Werk en Zekerheid), which resulted in a new legislative proposal being submitted to the House of Representatives (the Labor Market in Balance Act). If passed, this will bring significant changes for employers. Horizon Scanning in 2019: The act is due to enter into force on January 1, 2020, so the focus in 2019 will be on the changes proposed by the act, which largely intend to reduce differences between indefinite and fixed-term employment. Notable changes include: • The entitlement to “transition payments” paid upon termination of employment is extended to all employees regardless of length of employment (previously two years' service was required), meaning employees on short or temporary contracts, and those on probation, will also receive payment. Changes to the level of entitlement will also be introduced. • Successive fixed-term contracts over a period of three years (previously, two years) will result in the final successive contract converting to an indefinite-term contract. Temporary employment contracts are regarded as successive if they succeed each other within an interval of six months or less. • Probationary periods of five months may be agreed in indefinite-term contracts, and three months in fixed-term contracts of two or more years. • WW premiums (social contributions) paid by employers under the Employment Act will be lower for employees under indefinite-term contracts than for those under fixed-term contracts. • A ninth ground for dismissal will be introduced under the act, known as the "cumulation ground," which permits dismissal when certain multiple circumstances exist, rather than reliance on one of the current eight grounds for dismissal. Cumulation dismissals also involve enhanced transition payment and cannot be used in the event of dismissal for business economic reasons or in the event of long-term incapacity for work. • Compliance is likely to be a hot topic in 2019, as further to a successful inspection project in 2018, the immigration authorities and the labor inspectorate will continue to strengthen their cooperation and joint efforts to crack down on employers not abiding by rules relating to the hiring of highly skilled migrants. Companies sponsoring these workers in the Netherlands are advised to review the relevant requirements with care. THE NETHERLANDS 9 THE GLOBAL EMPLOYER MAGAZINE | 2019 Horizon Scanner Changes to immigration legislation were a major focus for 2018, with the introduction of a prohibition on foreign employees registering with immigration authorities at their employer's office address, if staying at another address. Moreover, as of January 16, 2019, legal entities are subject to administrative fines of up to RUB 500,000 (USD 8,333) if they employ foreign nationals who fail to adhere to the rules of their stay in Russia. In addition: • Russia introduced criminal liability for unjustified dismissals of, or refusal to hire, persons who are within five years of reaching pension age. As of January 1, 2019, pre-pension and pension age employees are also entitled to two days' paid leave per year to undergo health checks. • The Russian parliament passed a law introducing additional obligations for companies using vehicles. The obligations vary depending on the type of activities a company performs when using corporate cars. • Employees who have three or more children under the age of 12 can now take annual paid leave at a time convenient for them. Horizon Scanning in 2019: • Adoption of a draft bill under which certain employment documents can be filed or acknowledged by permanent employees electronically. • Anti-corruption measures are likely to be enhanced as parliament is reviewing a draft bill imposing additional obligations on employers with regard to protecting whistleblowers who report corruption. • Increased liability if employers delay salary payments. • Additional protection for pregnant women and women with children under the age of three in accordance with a draft bill which prevents employers from unilaterally changing their terms and conditions of employment on the basis of technological or organizational changes within the employing entity. • Companies with more than 250 employees may be required to introduce a quota stipulating that 2% of the workforce must be young professionals who: • are between the ages of 18 and 25; • have graduated after studying under a full-time program; • have not entered into a profession related to their qualifications. RUSSIA Implementation of the GDPR was a major focus in 2018 and employers planning to introduce monitoring practices through use of CCTV or email monitoring were required to set out the scope and method of monitoring in collective bargaining agreements (CBAs), work regulations or a relevant notice to employees. 2018 also saw the introduction of the voluntary Employees' Capital Plans (PPK) system, designed to supplement pension schemes in response to pensions decreasing in value. It includes any social security contributor, regardless of whether a person is employed under an employment contract or any other type of employment agreement. The Trade Unions Act dated May 23, 1991 was amended on January 1, 2019, permitting self-employed individuals to join trade unions, increasing representation, and to be protected from dismissal in certain circumstances. In line with the global move toward more flexible working arrangements, the practice of teleworking became more widely used irrespective of whether regulations or agreements had been reached with trade unions. There were developments in the minimum working age which was reduced to 15 years old on September 1, 2018. Horizon Scanning in 2019: • GDPR. Further regulatory developments in response to the GDPR can be expected in 2019. • Unionization. It is also likely that there will be focus on the outcome of the unionization of selfemployed persons. • Remunerations' payment. As of January 1, 2019, the basic remunerations' payment method is now a transfer to the employees' bank account. However, the employee may still, upon request, receive remuneration in cash. POLAND THE GLOBAL EMPLOYER MAGAZINE | 2019 Horizon Scanner 10 2018 saw a big drive by the Department of Labor to clamp down on the enforcement of labor laws with the appointment of 483 new labor inspectors. In July 2018, the risks associated with the misclassification of agency workers became real for many employers when South Africa's highest court, the Constitutional Court, handed down its long-awaited judgment in the case of Assign Services (Pty) Limited v. National Union of Metalworkers of South Africa [2018]. This case concerned the interpretation of the much-debated section 198A(3)(b) of the Labor Relations Act regarding dual or deemed employment by the client. The court held that agency workers who earn below the annual earning's threshold (presently ZAR 205,433.30) and are placed with a client for three months or more are deemed the sole employees of the client. There were also a number of amendments to South Africa's labor law in 2018, including a new national minimum wage, the introduction of strike ballots and significant changes to statutory leave entitlements. Horizon Scanning in 2019: The 2018 amendments to labor legislation will come into force in 2019. • The National Minimum Wage Act came into effect on January 1, 2019, establishing a minimum wage of ZAR 20 (USD 1.40) per hour with exceptions for farm and domestic workers, and workers in the expanded public works program. The Commission for Conciliation, Mediation and Arbitration has jurisdiction to adjudicate any alleged breaches that constitute an unfair labor practice. • The Labor Laws Amendment Act came into force on January 1, 2019. The Act amends the Basic Conditions of Employment Act 1997 by providing for parental, adoption and commissioning parental leave to employees. It provides parental leave cannot be reduced by collective agreement for 10 consecutive days for adoptive parents. The Labor Laws Amendment Act also introduces the right to claim parental and commissioning parental benefits from the Unemployment Insurance Fund. • The Labor Relations Amendment Act came into force on January 1, 2019, introducing measures to address protected strikes that commence in the absence of picketing rules. The act establishes an advisory arbitration panel to resolve disputes relating to violent strikes and/or lockouts. • The Employment Equity Amendment Bill of 2018 will set affirmative action measures in each economic sector to address dissatisfaction with the pace of progress toward achieving diversity in the workplace. The Amendment Bill proposes to empower the Minister of Labor to identify national economic sectors for the purposes of the Employment Equity Act and set numerical targets for designated groups, that can be the subject of affirmative action measures, in each economic sector. This is a significant change from the current employment equity regime, which currently allows designated employers to set their own numerical targets and to take measures to achieve those self-set targets. The Department of Labor no longer views these self-imposed targets as sufficient. SOUTH AFRICA 11 THE GLOBAL EMPLOYER MAGAZINE | 2019 Horizon Scanner The introduction of the GDPR and the new Personal Data Protection and Digital Rights Act meant 2018 was a year of change to infrastructure and data protection policies in Spanish companies, as they come to grips with the new obligations under the legislation. This led to considerable activity for HR departments, necessitating a process of adapting their policies and internal procedures to ensure compliance with the new regulations. In terms of labor law, such new data protection regulations also entailed changes to digital working practices, including the right of employees to disconnect from work-related electronic communications, and amendments to privacy rights associated with the use of digital devices in the workplace. Labor inspectorate scrutiny and misclassification litigation in the gig economy also ramped up, with judicial outcomes split between findings of ordinary employment and genuine independent contractor arrangements. As throughout the rest of Europe, there has been heightened interest from Spanish multinationals on the potential impact of Brexit negotiations on global mobility, European Works Councils and other employment matters. The Council of Ministers passed several important employment law changes, effective from January 1, 2019. These measures include: • Increase to the Guaranteed Minimum Wage by 22.3% for 2019. • Repeal of so-called "entrepreneurial contracts" (contrato de emprendedores) and other incentives linked to an unemployment rate in excess of 15%. The repeal does not affect any contracts already in force prior to the effective date of the Royal Decree. • Reestablishment of the mandatory retirement option. Collective bargaining agreements may include clauses that make it possible to terminate employment contracts once the employee has reached the legal age for retirement, provided certain requirements are met (e.g., the employee in question meets the requirements established by Social Security to receive 100% of the ordinary pension, etc.). • Inclusion of unpaid internships in Social Security. Training carried out in companies, institutions or companies included in training programs, as well as non-occupational internships in companies or external academic internships, entitles the individual to inclusion in the Social Security system (with the exception of unemployment benefits), irrespective of whether or not such training or internships were paid. The government has a term of three months to pass the specific regulation that will regulate such training and internships. • It is now a criminal offense, punishable with a fine of EUR 3,126 to EUR 10,000, if a company notifies Social Security that it is deregistering a person as its employee and it is subsequently discovered that the individual continues to carry out the same activities for the company on a self-employed basis as a "fake self-employed worker." • Changes to Social Security contributions for 2019 include: • Increase of the maximum contribution base to EUR 4,070.10 per month. • Increase of the minimum contribution base to EUR 1,050 per month. • Updated rates for the contribution due to occupational contingencies, the minimum being now 1.5%. • Contribution for temporary contracts with a term of up to five days: the surcharge on the employer's contribution for common contingencies has been increased from 36% to 40%. In addition, if the contracts are temporary full-time contracts, each day worked counts as 1.4 days, with regard to contribution. • Suspension of reduced contribution for decreased workplace accidents. SPAIN THE GLOBAL EMPLOYER MAGAZINE | 2019 Horizon Scanner 12 2018 saw the introduction of the New Swedish Trade Secrets Act, introduced to implement the EU Trade Secrets Directive. Legislative changes were also made to employers' rehabilitation obligations to assist injured employees returning to work after long-term sick leave. The Swedish labor courts began adopting a much stricter view on the validity of post-employment non-solicitation clauses. Horizon Scanning in 2019: • Employers will continue to implement the Trade Secrets Act and we are likely to see a growing number of data subjects exercising rights to access their personal data. • Effective management of sexual harassment claims following the #MeToo movement will continue to be a priority for employers, with an increased focus on the psychosocial impact of the issue on the work environment. • We expect flexible working and the gig economy to continue to develop and remain hot topics in Sweden in 2019. SWEDEN SPAIN Horizon Scanning in 2019: Significant labor law reforms have been proposed by the current government. However, the support of other political parties will be vital in securing the majority of changes proposed, which may prove difficult. Watch this space in relation to: • Measures to further limit the use of fixed-term contracts to reduce their ratio in comparison with indefinite-term contracts, and the requirement to register ordinary working hours of full-time employees to further control use of overtime. • Equalization of pay and other working conditions between employees of subcontractors and those of client companies. • A switch to sector-level collective bargaining agreements having supremacy over company-level CBAs in relation to certain issues (including salary amount, working hours, overtime, etc.). • Increased expiration period of collective bargaining agreements (currently one year from the day any of the signatory parties denounce the agreement, unless otherwise agreed). • Extending family rights. Paternity leave will be put on equal footing with maternity leave and, starting in 2019, gradually increased to a duration of 16 weeks by 2021. • An increase to pension contributions by 3% to align with the Consumer Price Index and potential changes to social security contributions for overtime pay. • Implementation of gender pay reporting obligations, including the introduction of mandatory due diligence with regard to salaries between genders in companies with more than 250 employees, with the presumption of discriminatory practices where the salary gap is 25% or above. 13 THE GLOBAL EMPLOYER MAGAZINE | 2019 Horizon Scanner The spotlight was on the gig economy in 2018, as taxi drivers’ lobbying activities against the largely unregulated operations of apps culminated in a number of gig economy vehicles being impounded and some drivers being fined by the police. The Ministry of Trade subsequently announced a commitment to reviewing and regulating this issue, while the Institution of Public Supervisory (Kamu Denetçiliği Kurumu) also recognized that there is a "legal gap" with respect to the practices of these platforms. The Institution proposed that such practices be legalized pursuant to the principle of legal certainty under Article 2 of the Constitution of the Republic of Turkey. Separately, amendments to legislation introduced a ban on payments in foreign currencies in employment agreements executed between Turkish residents. Exemptions were later announced and employers were required to convert the monthly salaries within 30 days of September 13, 2018. Horizon Scanning in 2019: • Expect an increase in data privacy inspections - the local data protection law is originated from the EU Data Protection Directive, and requires adherence to general data processing principles and grounds in addition to notification to employees of employer's data processing activities. The officials at the local data protection authority have announced that Turkish practice will follow the provisions under the General Data Protection Regulation. Therefore, we expect that investigations into employers' workplace practices may increase as a result. • The current economic and political climate in Turkey may lead to a decrease in the number of foreign national employees seeking to travel to Turkey. TURKEY Since July 2018, Swiss employers are obligated to register open positions in professions with high unemployment rates with relevant regional unemployment centers. A position can only be advertised elsewhere after five working days of registration. This requirement was introduced as a result of the approval of an "anti mass immigration" initiative by Swiss voters. Violations will be reported to the criminal prosecution authorities and the individuals can be found personally liable for a fine of CHF 40,000. There was also increased scrutiny on compliance with Swiss rules on maximum work time and work-time tracking in 2018. Horizon Scanning in 2019: No major changes are currently contemplated in 2019, however, watch out for these potential developments: • Employers with more than 100 employees (excluding apprentices) will be required to undertake independent audits of their employees' salaries every four years. The audit must assess whether there is equality of pay between men and women. The results of the audit must be disclosed to employees and repeated every four years unless the audit reveals that salary equality exists. The law will enter into force in 2020 at the earliest. • Explicit protection of whistleblowers is currently under review. • Liberalization of the rigid working time rules. • Increasing number of industries having binding minimum salaries as a result of collective bargaining agreements having more general application. SWITZERLAND THE GLOBAL EMPLOYER MAGAZINE | 2019 Horizon Scanner 14 EUROPE, MIDDLE EAST AND AFRICA TOP TIPS CZECH REPUBLIC Watch out for, and ensure compliance with, the new paid sick leave regime and vacation pay calculations likely to be introduced in 2019. Take advantage of flexibility offered by new legislation permitting shared job positions. FRANCE Take proactive measures to prepare for gender equality rules strengthened in September 2018 and the mandatory gender equality criteria from January 2019. Prepare for transition to the new Social and Economic Committee. Larger companies should be prepared for compliance with additional anti-corruption requirements. BELGIUM Focus on the wellbeing of employees and ensure a good work-life balance by introducing increased flexibility. Initiate discussions with employees about disconnecting from technology. Ensure salary increases are in line with statutory caps following stricter monitoring. GERMANY Ensure compliance with minimum wage increases and availability of "bridge part time work" from January 1, 2019. Establish a comprehensive compliance policy to prevent illegal external staff deployments and to ensure compliance with social security and tax obligations and take steps to minimize damage where violations have occurred. Review labor leasing contracts to ensure compliance with the 18-month maximum period to avoid incurring penalties. Conduct internal audits of remuneration systems and actual compensation paid in light of gender equality objectives. Review all fixed-term contracts and their duration and consider potential risks associated with long-running contracts in light of proposed changes. HUNGARY Prepare for extensive fringe benefit and tax reforms in 2019. Be aware of the new litigation deadlines if defending against newly issued labor claims. Ensure compliance with increases to minimum wage and changes to levels of extraordinary working time under the Labor Code from January 1, 2019. ITALY Watch out for new laws and regulations in the pensions arena and make sure all contracts and policies are up to date and comply with legal reforms. Watch out for changes to parental leave and flexible employment arrangements coming into force in 2019. 15 THE GLOBAL EMPLOYER MAGAZINE | 2019 Horizon Scanner SPAIN Comply with Guaranteed Minimum Wage increases and changes to Social Security Contributions from January 1, 2019. Be aware of the proposed legislative and judicial developments in 2019, especially on gender pay reporting obligations, obligations to register daily work hours, and extension of paternity leave rights. Expect ongoing misclassification claims in the gig economy. Review the potential impact of equalization of pay and other working conditions between employees of subcontractors and those of client companies. KAZAKHSTAN Kazakhstan employment law is typically employee-friendly, employers should ensure all employee paperwork is up to date and employees have been familiarized with all internal company policies. POLAND Monitor changes in data protection legislation and discuss flexible working arrangements with employees. RUSSIA Monitor developments regarding the protection of whistleblowers and electronic documents. Where appropriate, make preparations for any planned State Labor Inspectorate inspections. Ensure compliance with new migration legislation and employment quotas. SOUTH AFRICA Ensure compliance with the National Minimum Wage Act and changes to parental leave rights from January 1, 2019. Ensure introduction of systems to track compliance with any affirmative action measures set out in legislation. Substantive compliance may have an impact on employers' ability to do business with certain entities, specifically listed companies and governmental bodies. Evaluate the need for, and proactively manage use of, temporary employment services (TES). Where possible, employers should avoid using low-income TES employees for longer than three months to avoid a direct employment relationship being established. EUROPE, MIDDLE EAST AND AFRICA TOP TIPS THE NETHERLANDS Review successive fixed-term contracts in light of the new Work and Security Act. Review immigration policies to ensure compliance with the rules concerning employment of highly skilled migrants. THE GLOBAL EMPLOYER MAGAZINE | 2019 Horizon Scanner 16 SWEDEN Review existing post-employment nonsolicitation clauses and ensure clarity over what constitutes confidential material/trade secrets following the introduction of the Trade Secrets Act in 2018. Provide enhanced training to HR personnel on questions relating to GDPR and data subject access requests. Investigate any claims of workplace sexual harassment and implement relevant policies to manage the issue. Expect further expansion of atypical working arrangements. SWITZERLAND Ensure data regarding salaries for the past four years is available in anticipation of equal pay laws. Ensure changes to working time legislation remain on the radar and employees are updated as necessary. Update whistleblowing policies while protection of whistleblowers is unclear. Conduct an analysis of pay and ensure compliance with any minimum salary requirements. TURKEY Update data protection policies to ensure they are in line with the GDPR. Localize GDPR-compliant data protection notices to reflect mandatory changes under the Turkish Data Protection Law. • Ensure all salary payments under employment contracts between Turkish residents are in Turkish lira (unless the employment contract falls within the list of exemptions). UK Ensure robust measures are in place to protect employee and customer data and consider taking out insurance to cover any potential liability arising out of misuse of data by employees. Continue to scrutinize the gender pay gap and start considering the potential extent and drivers of any ethnicity pay gap. Monitor developments in pension law and identify opportunities in relation to pension scheme consolidation. Employers with occupational pensions schemes should be aware of the potential increased risk of regulator invention. 2019 may see changes in the typical employment hiring models, with the options available and risk profile of each changing as a result of new regulation or case law. The process for hiring individuals from the EU is also likely to change as a result of Brexit and employers should be prepared to amend their hiring strategy accordingly.