Labour market reforms tracker - May 2015

Contents Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Labour market reforms tracker Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts The sovereign debt crisis has triggered labour market reforms across Europe over the past few years. In most cases, these reforms are intended to simplify hiring and firing and to stimulate employment. Changes in countries such as Spain and Italy are significant and will potentially influence how employers approach these markets. More reforms are expected around Europe as the region struggles to come out of the crisis. Similarly, pension reform is high on the agenda throughout Europe, with many member states looking at extending careers and postponing the legal retirement age. This March 2015 edition of our Labour market reforms tracker reports on planned and voted reforms in Belgium, France, Germany, Greece, Italy, the Netherlands, Portugal, Spain and the UK. Labour market reforms have triggered harsh reactions by employees, trade unions and other stakeholders, leading to decisions by local courts to invalidate some of the reforms. For example, the Portuguese Constitutional Court invalidated significant aspects of the reforms (see below page 28) and the Spanish Supreme Court invalidated one aspect of the reform of the collective bargaining agreement regime (see below page 33). The European Court of Justice was also called into the debate by a Spanish judge, without success this time (see page 36). Trade unions introduced a claim based on the European Social Charter and the European Committee of Social Rights recently concluded that a number of the changes brought to Spanish employment laws are not compatible with the Charter (see below page 36). If you are familiar with the tracker and only look for updates, important changes and additions have been marked as ‘update’ or ‘new’. As you will see there have been numerous changes since we last published our tracker in early 2014. The tracker only covers national reforms. For industry-specific changes (eg new remuneration rules in the financial industry) please liaise with any of us (see the contacts at the back of the publication). Introduction } Go to interactive map Thank you to Kyriakides Georgopoulos Law Firm and to FCB&A, who contributed the Greek and Portuguese chapters. Freshfields Bruckhaus Deringer LLP 3 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents Freshfields Bruckhaus Deringer LLP 4 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Belgium Contents Belgium has had a new federal government since October 2014. The socialist party is no longer part of the coalition which is impacting the approach to labour market and employment law. The new right wing government has announced a new set of reforms. Not all reforms announced have been turned into laws yet. Update Major changes in dismissal law – new notice periods for blue- and white-collar workers In 2011, the Constitutional Court found that certain laws discriminated between blue-collar and white-collar workers. But the Court decided to wait until 8 July 2013 to allow the Belgian legislator enough time to reconcile the differences on two counts (and two counts only): the notice period in case of termination and the lack of guaranteed salary for a blue-collar worker’s first day of sick leave. Other differences remain in place and one cannot speak of a full harmonisation between the two statuses, which continue to exist. Employer and trade union representatives negotiated a solution in July 2013, which the government then transformed in a draft law. The law was voted in late 2013 by the parliament and promulgated on 26 December. It came into force on 1 January 2014. It provides a new way of calculating the notice period for all workers. As expected, blue-collar workers will see their notice period (or the indemnity paid in lieu of notice) increase, and white-collar workers will see theirs decrease. This is the second significant change in Belgian dismissal law after the law of April 2011 that came into force in 2012, affecting employment contracts starting from 1 January 2012. The new notice period From 1 January 2014, a single regime is replacing all the previous ones. There is no longer a difference between blue-collar and white-collar workers’ notice periods. The length of the new notice periods depends solely on seniority. This means salary and position will no longer influence the termination package – high earners will be treated the same way as other employees. There are three phases Up to five years’ seniority } Two weeks’ notice for each quarter started during the first two years; then a total of 12 weeks during year three, 13 during year four and 15 during year five (so a bit more than three months from year five). From five years’ seniority } 15 weeks, plus three weeks for each additional year started. From 20 years’ seniority } Notice period continues to increase, but slowly. Employees get another two weeks for the 20th year of seniority, then one week for each additional year from the 21st year of seniority. So an employee with 25 years’ seniority will be entitled to a 67-week notice period or indemnity in lieu of notice. This is roughly 16 months’ salary, compared to four months’ for blue-collar workers and 25 months’ for white-collar workers under the previous regime. The new regime will only apply to seniority accrued from January 2014. For seniority accrued before 2014, old rules as in place on 31 December 2013 will apply. Freshfields Bruckhaus Deringer LLP 5 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents There is one important exception for white collar workers, that will make the calculation easier: employees earning more than €32,254 on 31 December 2013 (annual gross) will get one month per year of seniority accrued before 2014, with a minimum of three months. A white-collar worker who started in 2000, earns more than €32,254 gross a year and whose contract is terminated on 1 January 2015 will be entitled to 13 months’ notice for the period between 2000 and December 2013, plus three weeks for 2014. Blue-collar workers are treated differently. A system is being put in place for them to convert their pre-2014 years into white-collar years, in effect accelerating the transition. Other changes Another important change is that all notice periods are now producing effect the Monday following the week of the notification. It used to be the first day of the following months. The provisions on trial period have been removed (it indeed did not make sense to keep these as their purpose was to allow for shorter notice periods during the first few months of the employment relationship. As notice periods are now expressed in weeks and not months, these are not needed anymore). But existing trial period (included in contracts signed before 2014) will continue to produce effect until the agreed term. Blue-collar workers will get the guaranteed salary from the first day of sick leave. The new regime also provides for an obligation to motivate all dismissals, which is new for Belgium. This obligation has come into force on 1 April 2014 with national collective bargaining agreement No. 109 and applies to dismissals implemented as of this date. As a result, the provision on unfair dismissal for blue collar workers has been cancelled. Retirement age The minimum age for early retirement is gradually increased from 60 to 62 between 2012 and 2016. Normal retirement age remains 65 for now, but is anticipated to be increased to 67 by 2030. Career length requirements will also increase from 35 to 40 years. Exceptions have been foreseen to avoid exorbitant consequences on agreements that were already entered into with employees with a view to allowing them to retire. In calculating the career lengths for both early and normal retirement, several periods of inactivity were assimilated to normal worked time. For retirements that started on 1 January 2013, some inactivity periods will now weigh less in working out the career requirement; ie defined periods of unemployment, career breaks and bridging pensions. To incentivise employees to postpone their retirement, the Council of Ministers has approved a modification of the pension bonus system to make working longer more attractive. The law has yet to be enacted. Freshfields Bruckhaus Deringer LLP 6 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents Bridging pensions A bridging pension (BP) eases the career end of older employees and has been popular in Belgium over the past few decades. Dismissed employees who meet certain age and career length requirements may be entitled to unemployment allowances. And employers may have to pay an indemnity on top, which is subject to specific tax and social security contributions. This system, now called ‘unemployment with additional indemnity of the employer’, is being changed to reduce the number of people benefiting from BP and to encourage longer active careers. Also, the years of BP will now weigh less in calculating the career length requirement to be entitled to retire. The total cost of the BP regime for the employer has increased. As of 1 January 2015, further changes have entered into force. Classic BP now only possible at 62 The career length requirement increases to 40 years for men and 31 for women (the latter to be increased gradually to 40 in 2024). BP at 60 remains possible during a transition period, provided certain requirements are met. Derogatory regimes BPs at 60, 58 or 56 remain possible only under certain circumstances (long careers, serious illness, career including night shifts). The age requirements to access those derogatory regimes will be increased in the coming years, unless certain requirements are met. BP in companies in difficult economic situations or restructuring Originally, entitlement to BP in companies in difficult economic situations or restructuring could be lowered to age 50, 52 or 55. For those companies, the age requirement is now set at 55 and will increase year on year to reach 60 in 2020. On 28 March 2013, a new national CBA, No. 107, was entered into to complement the reforms of the regime. This CBA formalises the entitlement to the additional company allowance for employees who choose to crystallise their future entitlement to the regime based on the current conditions, although they do continue to work. The employer’s social security contributions that must be paid on the additional indemnity have been increased. Depending on the date and on the age of the employee when the system has been implemented, the social security contributions might amount to up to 100 per cent of the additional indemnity. The government’s aim is clearly to discourage the use of this system, except for specific categories of employees. Freshfields Bruckhaus Deringer LLP 7 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents New rules for career breaks Employees who meet certain criteria may be entitled to a career break and to a small state allowance during that break. As of 1 September 2012, the conditions to access the system and to benefit from the state allowance had been clarified in the new national collective bargaining agreement, CBA No. 103, and the amended version of the Royal Decree of 12 December 2001. The eligibility requirements to access the career break have not been modified. Conversely, as of 1 January 2015, the eligibility requirements to be entitled to the state allowance have been modified. The career break without grounds will no longer open the right to any state allowance. Career breaks based on grounds listed in the legislation (such as parental leave, children with handicap, following a recognised training, providing healthcare to relatives) will continue to open the entitlement to the state allowance for a duration of 36 to 48 months, regardless of whether the career break is taken full time or part time. Eligibility to career break for older employees also remains unchanged, but the age condition to be entitled to the state allowance has been increased to 60. Employees can still be entitled to the state allowance as of the age of 55 under certain circumstances, it being understood that the age of 55 will, as a rule, be gradually increased to 60 until 2019. Plan for the employment of older workers — new national CBA No. 104 As of 1 January 2013, companies that employ more than 20 employees have to have a yearly action plan to maintain or increase the employment of workers aged 45 and over. The action plan must include measures that are adapted to the company’s size and activity, to the extent it aims to maintain or increase the employment of older workers. These measures must spread over several years. Existing measures within the company may be included in the action plan. CBA No. 104 includes a sample list of measures, such as: } the selection and hiring of new employees; } training and career path; and } working time adaptations. Employees (and/or their representatives) must be informed and consulted before the action plan is implemented and may express an opinion on the proposed plan. At the end of the annual action plan, the employer has to inform the employees (or representatives) on the outcome of the measures provided for in the plan. The plan must be kept available for consultation by the relevant authority. A draft action plan is attached as an annex to CBA No. 104. Freshfields Bruckhaus Deringer LLP 8 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents Service agreements (eg outsourcing) more easily considered as prohibited posting of workers Under Belgian law, posting workers to companies outside the legal framework of interim employment and leading to the company exercising all or part of the employer’s authority on the posted workers is prohibited. Under a law enacted on 27 December 2012, service agreements whereby the service provider’s workers receive guidelines and/or instructions from the company will more easily be considered as a prohibited posting of workers. Indeed, the amount of instructions that the company may give to the service provider’s workers without these instructions being considered as the exercise of (part of) the employer’s authority, has been significantly restrained. It is now limited to: } instructions that relate to health and safety; and } instructions that are necessary for the proper performance of the service agreement entered into between the service provider and the company. In this respect, the service agreement must accurately set forth which instructions will be given by the company. Instructions or guidelines that would be given by the company to the service provider’s workers and that are not listed in the contract will be considered as the exercise of a part of the employer’s authority and, therefore, as prohibited. Furthermore, a company that enters into such agreement must inform its works council. At the works council’s request, the company must also hand over a copy of the clause in which the allowed instructions have been listed, failing which the contract is considered as non-existent for the application of the law – ie all instructions given by the company will be considered as the exercise of the employer’s authority and, therefore, prohibited. Freshfields Bruckhaus Deringer LLP 9 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts France Contents Many reforms have taken place since the presidential election in May 2012, including major changes to the labour code agreed by the social partners in early 2013. The pension reform as launched under the previous President went ahead. Update Acceleration of the pension reform Legislation adopted on 20 January 2014 extends contributions from 41.5 years to 43 years by 2035. It also increases social contributions. And it introduces special accounts for ‘hardship conditions’ at work. The age threshold is unchanged: the minimum pension age will be 62 by 2017, and the age to benefit from a full-rate pension will be set at 67 from 2022. As an exception, disabled workers may draw an unreduced pension at 62. The conditions for the number of quarters (ie three-month contribution periods) to be validated for pension entitlements are also being tightened, depending on the nature of the activity. Besides, special accounts for employees subject to hardship conditions at work (relating to criteria such as night work, work in alternation with successive teams and repetitive work) have been introduced from 1 January 2015. As from 1 January 2016, six additional criteria will be introduced, such as: manual handling, painful positions, mechanical vibrations, exposure to chemicals, extreme temperatures and noise. A decree published on 10 October 2014 establishes how the different criteria are converted into points. For example, an employee exposed to one of these criteria for a year gets four points. Accrued points will allow employees to manage the ends of their professional careers in three ways: learning new skills, working part-time and/or retiring earlier than the legal retirement age. These special accounts for hardship conditions will be financed by employers: all employers will have to pay a contribution capped at 0.01 per cent of the total pay of employees eligible for a special hardship account. In addition, employers who exposed employees to hardship conditions will have to provide a supplementary contribution of 0.1 per cent (in 2015 and 2016) of salary paid to employees exposed to hardship conditions, doubled for employees exposed to several different types of hardship conditions. This supplementary contribution will be capped at 0.2 per cent from 2017. Freshfields Bruckhaus Deringer LLP 10 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents Improvement in partial unemployment schemes Since the 2008 crisis, several partial unemployment schemes have been used to avoid collective redundancies in France. These measures allow companies experiencing difficulties (such as economic downturn, difficulties in raw material or energy supply, exceptional events involving damages or loss, restructuring or modernisation of the business, or any other exceptional circumstances) to reduce working hours temporarily or to close the business for a limited time and to rely on state contributions to help pay employees’ wages. The Job Security Bill dated 14 June 2013 has unified the existing partial unemployment schemes, which are now replaced by a so-called partial activity scheme. Contrary to the former unemployment schemes, partial activity should be authorised for up to six months, and is renewable once. In return, companies using partial activity will have to offer training programmes to the employees placed under this scheme. The companies’ commitments must be discussed with the Labour Authority. Climb in tax against fall in growth The Amending Finance Act for 2012 dated 17 August 2012 significantly increased the tax burden on stock options, free shares, severance indemnities and ‘top hat’ pension schemes. As of 11 July 2012, companies’ social security contributions on stock options and free shares increased from 14 per cent to 30 per cent. Employees’ social security contributions also increased by two points from 8 per cent to 10 per cent. Severance payments of more than 10 times the social security threshold – ie more than €380,400 in 2015 (instead of 30 times this threshold – ie €1,141,200) – are fully subject to social contributions from the first euro. As of 1 January 2013, employers’ social contributions owed on ‘top hat’ pension schemes (ie defined benefit pension schemes governed by article 39 of the French Tax Code) will be doubled (from 16 per cent to 32 per cent). Mutual termination agreement As of 1 January 2013, severance payments under a mutual termination agreement (Rupture conventionnelle homologuee) are subject to a specific tax (forfait social) of 20 per cent. This applies to the portion that is exempt from social security contributions. The exemption is capped at twice the social security threshold – ie at €76,080 in 2015 (Decree dated 26 November 2014). Creation of a ‘generation contract’ Following a bill dated 1 March 2013, companies employing at least 300 employees must conclude a so-called inter-generational collective agreement or implement an action plan providing for measures in favour of employment of young and older employees and the transmission of skills within the company. Such collective agreements or action plans will replace those implemented for older employees, which had been mandatory in companies with at least 50 employees since 1 January 2010. Freshfields Bruckhaus Deringer LLP 11 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents Companies, which are invited to analyse the employment of young and older employees before implementing such an agreement and/or action plan, must define targets regarding the recruitment of young employees under indefinite term contracts, the hiring of older employees and/or any measures aimed at keeping older employees at work. Failure to comply with these provisions before 30 September 2013 for companies employing at least 300 employees triggers a penalty corresponding to the higher amount between 10 per cent of the amount of their ‘Fillon reductions’ (these reductions are a discount on employer social security contributions on low salaries), and 1 per cent of their total wage bill. Companies employing fewer than 300 employees, which are not obliged to enter into such agreements or action plans, are eligible for annual subsidies if they voluntarily make commitments in favour of employing younger and older employees. Job security to boost French competitiveness Based on an agreement the social partners concluded on 11 January 2013, the job security bill dated 14 June 2013 aims to improve labour market flexibility and job security. The bill reviews labour code rules, improving, for instance, supplementary health coverage and implements new rules on unemployment benefits, training rights (creating a training account), internal staff mobility, procedures of information, consultation of employee representatives. The new bill amends the procedure for collective redundancies, in particular where companies with more than 50 employees plan to dismiss more than 10 employees within 30 days, triggering a job protection plan. Companies (or groups of companies) that are obliged to implement a job protection plan now have to define the dismissal procedure – that is, works council information and consultation procedure, selection criteria for order of dismissals, timing of dismissals, number of job cuts and professional categories concerned, redeployment measures. They have to either sign an agreement with the trade unions or implement a so-called unilateral document established by the employer, which, as the case may be, then has to be submitted to the Labour Authority. The consultation of the works council is now subject to a fixed deadline, further to which the works council will be deemed to have been consulted, even if it refuses to give an opinion. These new rules apply to any dismissal procedure started after 1 July 2013. The bill also modifies employment litigation rules: } reducing the statute of limitations from five to two years for claims relating to the performance or termination of the employment contract (three years for salaryrelated claims instead of five years); and } introducing minimum, lump-sum compensation for employees willing to settle at the conciliation hearing before the labour court in dismissal cases. Freshfields Bruckhaus Deringer LLP 12 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents Finally, a significant part of the redundancy procedure litigation is shifted to the administrative courts (except for claims disputing the absence of economic grounds). The main provisions of the bill (‘job security agreement’, ‘internal staff mobility’ agreement, reduced statute of limitations, etc) came into force in July 2013. Implementing decrees were published in the second half of 2013. Time limit within which to consult the works council on economic matters On 27 December 2013, the government issued an implementing decree pursuant to the law on job security of 14 June 2013, stating the time limits for consultations on economic matters. If an employer consults the works council on economic matters, the consultation is limited to a time frame agreed between employer and the works council. If no agreement is reached, the consultation is limited to one month from the date the employer makes the information required by law for the consultation available. The time limit is two months if an expert is appointed by the works council, three months if one or more health and safety committees is/are informed and consulted and four months if a co-ordination body for health and safety committees is set up. As drafted, these time limits are unlikely to be effective. The starting point of the applicable period (one to four months) will be debatable, since the works council can argue that it has not been given the necessary information. Social and economic database for the works council and staff delegates Under the job security law of 14 June 2013, the works council (or staff delegates), central works council, health and safety committees and trade union representatives must have access to a social and economic database. The database should hold information on investments, equity capital and indebtedness, components of compensation schemes for key executives and employees, social and cultural activities, financial flows for the company, notably public aids and tax credits, subcontracting, and commercial and financial transfers between companies. It should cover the last two years, the current year and the outlook for the next three years. Under the draft decree the government proposed on 11 October 2013, the content of the database will vary depending on whether the company employs at least 300 employees. The database may be in electronic format or hard copy. Before it is consulted, the works council must have access to the database. The works council must be consulted on the strategic policy of the company, defined by the board of directors or the supervisory board, and its consequences on the activity, employment, evolution of skills, labour organisation, use of subcontractors, temporary employment and internships. The works council’s opinion will then be submitted to the board of directors or the supervisory board, which has to reply. Freshfields Bruckhaus Deringer LLP 13 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents New Obligation to actively look for a potential purchaser before closing a business Legislation dated 29 March 2014 designed to ‘regain a real economy’ (known as the ‘Florange law’) completed the provisions of the law on job security of 14 June 2013 which created a new obligation to search for a potential purchaser in the event of a closure of a business. The following rules have applied since 1 April 2014 to collective dismissal procedures implemented by companies or groups having at least 1,000 employees. Informing the employee representatives A company or a group contemplating the closure of a business, establishment or company that would result in collective redundancies will have to inform the works council and provide details of the reasons for such closure at the latest at the start of the consultation of the works on the proposed dismissals. The employer must provide the works council with all relevant information regarding the project, and in particular (i) the financial, economic and technical reasons for it; (ii) the actions it intends to take in order to find a potential purchaser; and (iii) the possibility for the employees to purchase the business themselves. Obligation for the employer to search for a potential purchaser of the business: the company must actively search for a potential purchaser, notably by: } informing any potential purchaser(s) of its intention to close the business; } preparing an information document to the attention of such potential purchaser(s); } carrying out an environmental study, where applicable; } giving the potential purchaser(s) access to all necessary information on the business (except information that could to harm the company or its business); } considering every offer in detail; and } providing a reasoned reply to any offer received. Role of the works council The works council has to be informed of each purchaser’s offer within eight days from receipt of such offer and will be entitled to participate actively in the process, including by issuing an opinion, analysing and reviewing the purchase offers with the assistance of an expert paid by the employer, and participating in the selection process. End of the search period The works council will have to be consulted on any purchase offer that the seller intends to accept (including detailed reasons for accepting such an offer). If no offer has been received or if the seller has not accepted any offer by the end of the works council consultation process on the envisaged collective dismissals, the seller must prepare a report to the works council (which will be transmitted to the DIRECCTE) setting out the actions taken to find a purchaser, the offers received and, as the case may be, the reasons for not having sold the business to a potential purchaser. Sanctions for non-compliance Failure to comply with the above-mentioned obligations will result in a refusal by the labour authorities to approve the social plan, moreover the labour authorities can order the reimbursement of any State Aid received in the two years preceding the start of the consultation process. Freshfields Bruckhaus Deringer LLP 14 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents New Obligation for small companies to inform employees before sale Since 1 November 2014, where a majority shareholder in a small-to-medium French company that is not required to set up a works council (ie having fewer than 50 employees) wishes to transfer its shares to a third party, Law No. 2014-856 of 31 July 2014 requires that the company must inform its employees, two months in advance, of the proposed share transfer and of the fact that the employees have the right to make an offer to purchase such shares. A similar requirement applies if the company plans to transfer its business as a going concern. If the company does not comply with this requirement, the share transfer can be annulled at the request of any of the employees. Similar obligations apply in companies with fewer than 250 employees, unless the company’s turnover and balance sheet in its last accounting period exceeded certain thresholds. In this case, instead of the two- month notice period, the company must inform staff when it starts to consult its works council on the disposal. Freshfields Bruckhaus Deringer LLP 15 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Germany Contents With effect from 1 January 2015, Germany enacted the so-called Minimum Wage Act (Mindestlohngesetz) that provides for a nationwide minimum wage in Germany and leads to particular liability risks for companies. New German Minimum Wage Act (Mindestlohngesetz) For the first time in its history, Germany introduced a nationwide statutory minimum wage of €8.50 (about $10.10) per hour. The minimum wage level will be reviewed and adjusted by a commission on an annual basis (for the first time with effect as of 1 January 2017), whereby the development of tariff wages shall serve as a point of reference. Broad applicability of the Minimum Wage Act The minimum wage in principle applies to all employees working in Germany and across all sectors, including marginally employed employees (geringfügig Beschäftigte) – workers on short-term and low income employment contracts with a monthly wage threshold of €450 – irrespective of the employer’s domicile or the parties’ contractual choice of law. Some exceptions apply to certain categories of employees such as trainees, interns and long-term unemployed. Generally, wages must be in accordance with the Minimum Wage Act as from 1 January 2015. However, during a transitional period until 31 December 2016, collective bargaining agreements may – only in certain areas – stipulate deviating wages. As of January 2017, the statutory minimum wage will apply without any restriction. No employer in Germany is exempt from the obligations of the Minimum Wage Act as it can be expected that the labour courts will deem the minimum wage to be part of each contractual remuneration with the effect that the provisions also apply to those employers who already pay wages above the minimum wage. Employees who are employed by a foreign employer but temporarily work in Germany are in principle entitled to the minimum wage for the time worked in Germany. Mandatory nature of the Minimum Wage Act The provisions of the Minimum Wage Act are mandatory, ie any agreements that limit or exclude the application of the minimum wage are void. The entitlement to the minimum wage may in principle only be waived by way of a court settlement, but not eg by way of a mutual termination agreement or out-ofcourt settlement. Further, agreed forfeiture clauses or expiration periods often provided for in employment contracts do not affect the entitlement to the minimum wage. Therefore, it should be considered to expressly exclude minimum wages entitlements from contractual expiration clauses in order to avoid that the clause becomes ineffective in its entirety. Uncertainty about calculation of minimum wage It is not entirely clear which remuneration elements may be taken into account when calculating the minimum wage of €8.50 gross per hour. It is for example unclear if payments such as an end of the year bonus pay, Christmas or holiday pay or other annual benefits may be taken into account when assessing compliance with the minimum wage. Freshfields Bruckhaus Deringer LLP 16 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents Company’s liability for breaches of subcontractors and employee leasing agencies The Minimum Wage Act provides for a strict liability of a company for any failure of subcontractors and employee leasing agencies to comply with the obligations deriving from the Minimum Wage Act. Thus, if subcontractors do not pay the minimum wage to their employees, the latter may have a direct recourse to the contracting company without the possibility for the contractor to first refer the matter to subcontractors as their employers. To limit the risk of such strict liability, companies should include contractual protection in their service and work contracts with subcontractors and control the adherence of their subcontractors to the requirements of the Minimum Wage Act. Notification and documentation duties, particularly for employers based abroad Employers based abroad and those hiring out temporary staff must complete a written registration procedure and register with the relevant customs authorities the names and detailed employment information of any employees (even just temporarily) working in Germany in particular industry areas such as the construction industry, transport and related logistics industries, the travelling carnival industry, forestry or industrial cleaning companies. In registering, employers must assure that they are paying employees working within Germany a remuneration in accordance with the Minimum Wage Act. Further, for marginally employed employees and those employed in particular industries, every employer must log the beginning, end and duration of the daily time worked by each of these employees and store these data for at least two years. Finally, in the context of the implementation of the Minimum Wage Act also new rules for the documentation of the working conditions for interns (Praktikanten) were introduced. Interns must now be informed in writing (or it must be provided in their employment agreement) about the main conditions of the internship including training objectives, duration, remuneration and holiday entitlements. Enforcement and penalties Compliance with the employer’s obligation to pay the minimum wage is monitored by the German customs authorities, who, among others, are entitled to access the employment contracts and other business documents that might provide information on the adherence to the minimum wage and to enter the business premises and property of employers during the working hours. Violations of the Minimum Wage Act can be punished with penalties of up to €500,000. Further, non-compliance with the Minimum Wage Act can result in the exclusion from the awarding of public sector contracts. These consequences can also apply if a company is working with subcontractors or leasing agencies, although the company should be aware that the subcontractor or leasing agency is not in compliance with its obligations under the Minimum Wage Act. Freshfields Bruckhaus Deringer LLP 17 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Greece Contents The Greek parliament voted a new law 4093/2012, published on 12 November 2012, under the title ‘Approval of the Midterm Fiscal Strategy for 2013– 2016 – urgent implementation measures of law 4046/2012 and of the Mid-term Fiscal Strategy 2013–2016’, which provides for drastic amendments in retirement requirements, pensions, statutory minimum salary and severance payments, among other issues. Furthermore, law 4152/2013 implemented a new system where employers can file electronically all documents regarding employment (new hires, terminations, modifications of working schedules, annual leaves, etc). More changes to labour and employment laws are expected to take place following on the national elections which took place in January 2015 and the constitution of a left wing government. The most important 2012 and 2013 legal provisions are set out below. Increase of retirement requirements and reductions of pension amounts As of 1 January 2013, all age retirement requirements are increased by two years. Therefore, according to the new provisions, from 1 January 2013, employees will be able to receive full pension after the completion of the 67th year of age and minimum 15 years of service or after the completion of the 62nd year of age and 40 years of service (general requirements). Specific categories are exempted from these thresholds (eg parents of fully incapable children, employees who are on a labour reserve status, etc). And as of 1 January 2013, the monthly pension amount paid by any social security fund is reduced as follows. } 5 per cent for pensions totalling €1,000.01–1,500. } 10 per cent for pensions totalling €1,500.01–2,000. } 15 per cent for pensions totalling €2,000.01–3,000. } 20 per cent for pensions totalling more than €3,000. Statutory minimum salary The statutory minimum salary for employees of the private sector shall be determined by a ministerial cabinet act, which will be effective as of 1 April 2013. The national general collective labour agreements (CLAs) may only determine non-salary-related employment terms and conditions. The statutory minimum salary is determined as follows. } For white-collar employees over 25 years old €586.08 (monthly salary). } For blue-collar employees over 25 years old €26.18 (daily wage). } For white-collar employees under 25 years old €510.95 (monthly salary). } For blue-collar employees under 25 years old €22.83 (daily wage). Suspension of salary increases As of 14 February 2012, and until the unemployment rate falls below 10 per cent, the validity of law provisions, regulatory acts, CLAs or arbitration decisions that provide for increases in salaries or daily wages is suspended. Freshfields Bruckhaus Deringer LLP 18 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents Notice periods and severance amounts in case of termination As of 12 November 2012, the statutory notice periods as well as the legal severance amounts in case of termination of an indefinite-term employment agreement are reduced as follows. The new law has also amended the legislative provisions regulating severance for employees who have completed on the date of issue of the law (12 November 2012) more than 17 years of service in the same company, providing one additional monthly salary per year on top of the 12 monthly salaries and subject to a cap of €2,000 a month. Working hours The new law also provides for a minimum daily rest period of 11 hours between two working shifts. Completed years of service until 12 November 2012 Statutory notice period (months) Severance amount in case the statutory notice period is granted (monthly salaries) Severance amount in case no notice period is granted (monthly salaries) 1–2 1 1 2 2–4 2 1 2 4–5 2 1.5 3 5–6 3 1.5 3 6–8 3 2 4 8–10 3 2.5 5 10 4 3 6 11 4 3.5 7 12 4 4 8 13 4 4.5 9 14 4 5 10 15 4 5.5 11 16 4 6 12 17 4 6 + 0.5 12 + 1 18 4 6 + 1 12 + 2 19 4 6+ 1.5 12 + 3 20 4 6 + 2 12 + 4 21 4 6 + 2.5 12 + 5 22 4 6 + 3 12 + 6 23 4 6 + 3.5 12 + 7 24 4 6 + 4 12 + 8 25 4 6 + 4.5 12 + 9 26 4 6 + 5 12 + 10 27 4 6 + 5.5 12 + 11 28 and above 4 6 + 6 12 + 12 Freshfields Bruckhaus Deringer LLP 19 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents Signing of the new National General Collective Bargaining Agreement Law 4093/2012, which implemented the abovementioned measures of Law 4046/2012, provided that as of April 2013, the national minimum wage will be defined by the government, abolishing in practice the definition of minimum wages through collective bargaining. A new National General Collective Bargaining Agreement (NGCBA) was signed on 14 May 2013, having 1 January 2013 as a retroactive date of entry into force. Its most important provision is maintaining in force the marriage allowance regardless of gender. However, most private sector employees will not be bound by this, since the Greek Federation of Enterprises has not been a social partner in the negotiations leading to its signature. Finally, on 26 March, 2014 the current NGCBA was signed, which is effective as of 1 January 2014 and until 31 December 2014. According to this new agreement, the basic employment terms of previous agreements such as the marriage allowance and the Christmas/ Easter allowances (which correspond to the 13th and 14th months’ salaries) in the private sector are preserved. However, this agreement does not include any provision regarding minimum wages, since these are now determined unilaterally by the government. The new electronic system of the Ministry of Labour called ‘ERGANI’ The Ministry of Labour implemented a new electronic system where employers should submit all relevant notifications. Due to the above system crucial labour information is reflected. After the application of the ERGANI system, all notifications to the labour and social security authorities are made electronically, by the employer. All documents regarding hirings, termination, overwork, modifications of working schedule, annual leave, etc should be submitted electronically through the ERGANI system. Employers that do not follow the provisions of law regarding electronic submission to ERGANI face administrative sanctions. Freshfields Bruckhaus Deringer LLP 20 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents Collective dismissals: Troika calls for immediate amendment of the current legislative framework In current legislation (Law 1387/1983 as amended and in force), the collective dismissals procedure is triggered when – for reasons unrelated to the employees being dismissed – companies that employ more than 20 people exceed the following thresholds within a calendar month: } for companies with 20 to 150 employees, six dismissals in a calendar month; and } for companies with more than 150 employees, 5 per cent of the workforce and not more than 30 employees in a calendar month. If the company employs fewer than 20 employees, the thresholds do not apply. So the company may dismiss all employees. The procedure is strict and bureaucratic. There are two stages: information and consultation with the employees’ representatives and intervention of the public authorities. The obligation to inform and consult with the representatives includes the obligation to discuss the crucial issues related to the collective dismissals and both parties’ obligation to present solutions to avoid or cut the number of the dismissals or at least to ease their negative consequences. Copies of all documents must be submitted to the prefecture or the minister of labour as the case may be. The minimum duration of consultations between employees and employer is 20 days. This starts on the day after the employer’s invitation to the representatives. The period can be extended if both parties agree. The result of the negotiations is drafted in minutes, signed by both parties and submitted to the prefecture/ministry of labour in line with Law 1387/1983. If an agreement is reached, its terms and the measures to be taken must be set out in these minutes. If no agreement is reached, the reasons must be stated. If there is no agreement between the parties, the public authorities decide within 10 days of the final consultation minutes being submitted and can choose either to extend the period or to reject the dismissals in part or in whole. If again a decision is not issued, then the employer may proceed with collective dismissals either within the framework of the agreement between the employer and employees’ representatives or, without such agreement, within the employer’s initial plan. The company can carry out the collective dismissals to the extent defined by the decision of the public authorities referred to above. If the company does not comply with these legal provisions, then the redundancies carried out without following the correct procedure are invalid. The inconvenience of the collective dismissals procedure is that it can only work if the employer agrees with the employees’ legal representatives on the conditions of the termination, their time, the order of the redundancies and so on. In practice, if agreement is not reached, the prefecture/ministry of labour never authorises the employer to proceed to collective dismissals. The Troika has asked the government to amend the law so that no ministerial decision is needed to proceed to collective dismissals and to abolish the 5 per cent threshold, above which the collective dismissal procedure would be triggered. In this context, the International Labour Organisation’s (ILO) opinion has been sought. The minister of labour had confirmed that until the end of 2013, a new institutional framework would be implemented on collective dismissals. As of today, no new law has been published. Freshfields Bruckhaus Deringer LLP 21 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents In 2014 the Italian government has outlined a number of policies aimed at reforming Italy’s labour market through the enactment of different laws, some of which immediately effective, others which will become effective once the implementing decrees will be approved and then converted into law. New Jobs Act The main labour market reform, the socalled Jobs Act (Law no. 183/2014), enables the government to issue a series of laws over a period of six months (ie until June 2015) to amend Italian employment law. With reference to open-ended employment agreements, the Council of Ministers has approved the enabling decrees concerning both individual and collective dismissals and unemployment benefit schemes. The new set of rules will become effective soon. Reorganisation of contractual forms: the open-ended employment agreement Italian lawmakers provide for the reorganisation of the contractual forms introducing an open-ended employment agreement with progressive level of protection linked to the relevant employee’s length of service. This employment agreement shall create a ‘single employment contract’ regime (promoted by economic incentives) aimed at absorbing atypical forms of employment within a flexible type of permanent contract of employment. Even so, under the new regulation, fixedterm and project workers’ employment agreements are available. It is not clear if, when and how these forms of employment agreement will be abolished or reabsorbed into the open-ended contract. Individual dismissal The reform provides that, in case of dismissal, the newly hired employees under the open-ended employment agreement shall not have the same protection as the employees already in force (whose dismissal is governed by the previous regime). New rules provide for the following. } Uncapped damages and reinstatement in case of discriminatory dismissal, as in the previous regime. In such cases, the employee can opt for an indemnity in lieu of reinstatement equal to 15 months’ salary. } Damages up to 12 months’ salary and reinstatement in case of disciplinary dismissal, if the employer bases the action on facts that did not actually occur. In such cases, the employee can opt for an indemnity in lieu of reinstatement equal to 15 months’ salary. } An economic indemnity equal to two months’ salary per year of service (ranging from a minimum of four months to a maximum of 24 months), for all other dismissal cases (ie dismissal for objective justified reasons and for disciplinary-grounded reasons). } An economic indemnity between two and 12 months’ salary in case of dismissal notice in breach of procedural or formal requirements. Italy Freshfields Bruckhaus Deringer LLP 22 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents The new rules also introduce an alternative new fast-track settlement, which is not mandatory. This option allows the employer to offer the employee, within 60 days from the date of dismissal, a compensation equal to one month’s salary per year of service (ranging from a minimum of two months to a maximum of 18 months). If the offer is accepted by the employee, the dismissal shall not be challenged. The above-mentioned compensation is not subject to social security payments or taxes. Moreover, any dispute related to the openended employment agreement (including the dismissal) shall not be subject to the special urgent procedure provided for by the Law Reform of 2012. Collective dismissal The reform provides that the employee should have the right to demand reinstatement when a collective dismissal for redundancy is not communicated in compliance with the legal provisions (eg in written form). If the collective dismissal procedure is implemented in breach of procedural requirements or of the relevant selection criteria, an economic indemnity equal to two months’ salary per year of service (ranging from a minimum of four to a maximum of 24 months’ salary) shall be granted to the affected employees. No reinstatement is envisaged. Tasks and duties In the event of a corporate restructuring, as an alternative to redundancy, an employer will be allowed to unilaterally assign lower tasks and duties to an employee, even if the employee does not agree. Employees’ activity check The reform allows the employer to monitor its employees’ activity, under the conditions that such a monitoring is aimed at security, or other communication, fleet management or commercial efficiency purposes. Unemployment benefits The Jobs Act provides that unemployment benefits shall depend on the acceptance by the employee of other possible work opportunities and will be also extended to other categories of workers, such as project workers. The law provides for three kinds of unemployment benefits: } NASpI: starting from 1 May 2015 an employee who involuntarily lost his/her job shall be entitled to receive this monthly state payment (as long as he/she is unemployed and provided that he/she will take part in career guidance and will accept adequate job offers), for a maximum duration of two years, based on the social security contributions paid by the employee during the last four years. The amount will be linked to the salaries received by the employee during that period. } ASDI: starting from 1 May 2015, an employee who received the NaSpI for its entire duration but is nonetheless unemployed and is going through economic difficulties shall be entitled to receive this monthly state payment for a maximum period of six months. } The amount shall be increased based on the employee’s dependants and its payment shall be subject to the employee’s agreement to a personalised plan containing the obligations to register him/herself to the Unemployed employees’ list provided by the Local Labour Office (Centro per l’Impiego) and regularly participate in the relevant work search activities; the obligations to take part in career guidance and to accept adequate job offers. Freshfields Bruckhaus Deringer LLP 23 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents } Dis-Coll: from 1 January 2015 to 31 December 2015 (until the repeal of these forms of employment agreements), project workers shall be entitled to receive, for a maximum period of six months, a monthly state payment if they have unintentionally lost their job (and if they are not retired or self-employed workers with VAT). To receive this state payment they have to participate in career guidance and to register him/her to the Unemployed employees’ list provided by the Local Labour Office, regularly participating in the relevant work search activities. Social shock-absorber (Cassa integrazione guadagni – CIG) Other provisions are related to the social shock-absorber, and provide that this Statefunded resource (in favour of companies needing to put employment contracts on stand-by because of a corporate restructuring) can only be used as extrema ratio, when the company is unable to face a crisis resorting to other solutions (eg, reducing hours or holiday entitlement). However it shall not be used by companies that are in the process of shutting down their operations. Fixed-term Employment Agreement The Fixed-term Employment Agreement has been amended under some peculiar aspects by the Law Decree no. 34/2014, particularly: } all fixed-term employment contracts entered into after 21 March 2014 do not need to specify the reason justifying the limited duration of the contract; } thirty-six months is the maximum duration of a fixed-term employment contract; } the term of fixed-term employment contracts originally stipulated for a duration of less than three years can be renewed for up to five times over a total timeframe of 36 months, provided it refers to the same actual jobs function; } the percentage of fixed-term employment contracts compared to the percentage of contracts in force at the company cannot be higher than 20 per cent; and } an employee working for the same company under one (or more) fixed-term contract(s) for more than six months must have a priority right if the company, in the following 12 months, intends to hire new employees under an open-ended contract for the same tasks and duties performed by the employee. T.F.R. (Trattamento di fine rapporto) The T.F.R. is the severance pay to be paid in any case of termination of an employment relationship, even in the event of resignation or just cause for dismissal. Each annual T.F.R. accrual is calculated dividing the annual compensation by 13.5 and the relevant amounts are index-linked annually. The Budgetary Plan for 2015 includes a proposal, made by the government, for the employees to perceive part of the T.F.R. in their monthly salary. In fact, starting from 1 March 2015 until the end of June 2018, employees who have at least six months’ seniority in the company will have the possibility to ask to collect the accrued T.F.R. portions on a monthly basis. The employees’ wish to receive monthly payments of the T.F.R. will not be revocable until the end of June 2018. This amount will be subject to the ordinary income tax regime. The aim of the proposal is to provide the employees with more cash, however the obvious consequence of this measure is that companies will have less cash in the immediate future. Freshfields Bruckhaus Deringer LLP 24 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents On 10 June 2014, the Dutch Senate passed the new Dutch Work and Social Security Act (Wet werk en zekerheid, the Act), significantly reforming Dutch labour laws in two stages. On 1 January 2015 the first part of the Act came into force resulting in certain changes to the regime applicable to fixed term contracts. The second part, leading to significant changes to the Dutch dismissal system and the rules applicable to consecutive fixed term employment contracts (ketenregeling), will enter into force on 1 July 2015. Set out in the next column is a high level summary of the most important changes that are introduced by the Act. New Flexible labour relations (effective as per 1 January 2015) } Trial periods in fixed-term employment contracts of six months or less are void and thus unenforceable. } Fixed-term employment contracts may as a starting point not contain a non-compete clause, unless such clause is necessary because of compelling business or service interests. Such interest should be present both at the time when the clause is agreed upon and at the moment of invoking the clause. If no written reasons are included, the noncompete clause is voidable. } Employers must notify employees in writing ultimately one month prior to the expiry of a fixed-term employment contract of six months or more, whether the agreement will be continued upon expiry of the agreed term, and if so, on what terms. Non-compliance may make the employer liable for payment of compensation of up to one month’s salary. Consecutive fixed-term employment contracts (ketenregeling) (effective as per 1 July 2015) As of 1 July 2015, Dutch law allows at maximum three consecutive fixed-term contracts (no change compared to the current system) with a total duration of 24 months (currently 36 months). Consecutive fixed-term contracts for this purpose are contracts that come in succession to each other with an interval of less than six-months (currently three months). Fixed-term employment contracts agreed within these limits will terminate by operation of law at the end of the agreed term. If not, the last fixed-term employment contract entered into will by operation of law convert into an indefinite term employment contract. Any fixed-term employment contract entered into after 1 July 2015 will be governed by the new rule in terms of the applicable interval period and the maximum total duration. Netherlands Freshfields Bruckhaus Deringer LLP 25 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents Dismissal law (effective as per 1 July 2015) With effect from 1 July 2015, the reason for termination will determine the route that will have to be followed when terminating an employment. Applicable procedure In summary, this means the following. } The dual Dutch dismissal system, where employers can at their choice either ask a court to terminate an employee’s employment agreement or seek permission from the Dutch Labour Authorities (UWV) to serve notice of termination, will change with effect from 1 July 2015. } In case of a dismissal for business economic reasons or on account of long-term disability, the employer should obtain the advice from the UWV before being able to validly serve notice of termination. } In case of a dismissal for (other) reasons related to the employee and in case of a severely impaired employment relationship, the employer will need to ask the court to rescind the employment agreement. } In case of a negative advice from the UWV, the employer may ask the cantonal court to rescind the agreement. In case of a dismissal following positive advice from the UWV, the employee can challenge the termination in court and ask for reinstatement. } A consensual termination is still possible upon written agreement by the employee. The employee can withdraw his written consent within two weeks. } It will under certain conditions be allowed to deviate from the age-reflection principle (afspiegelingsbeginsel), which is to be applied to determine the order in which the employees should be selected for dismissal, so that terminations equally affect all age groups of the employed staff. Deviation from this principle is possible in respect of a maximum of 10 per cent of the employees who should be made redundant. Transition payment Employees who have completed 24 months of service and whose employment agreement is (involuntarily) terminated or not renewed, regardless of the dismissal route that is followed, are entitled to a transitional compensation. The transitional compensation amounts to, in short: } one third gross monthly salary per year of service for the first 10 years of service, and half gross monthly salary for every year of service thereafter; } at maximum €75,000 or, if the annual salary exceeds €75,000, not more than one annual salary; } for employees under the age of 18 and older than 50 years of age, special rules will apply until 1 January 2020; } cost for redeployment arrangements, training and education, etc paid by the employer, eg in the context of the dismissal, may be deducted from the transition payment; and } no transition payment is due in case the employee is seriously culpable for the dismissal. If the employer is seriously culpable for the dismissal, the court may, in addition to the transition payment, order the employer to pay an additional compensation. The new transition payment will apply to any termination that will take effect on or after 1 July 2015. Existing severance agreements (agreed between employer and employee or employer and trade unions) can if certain circumstances are met be set off against a transition payment due. Unemployment benefits The period during which an employee is entitled to receive unemployment benefits will, in the period from 1 January 2016 until 1 January 2019, be reduced (with one month per quarter), from the current 38 months to a maximum of 24 months. Social partners may in collective labour agreements agree on an extension of 14 months. During the first 10 years of service, employees will accrue one month of unemployment benefits per year of service and thereafter half a month for each year of service. Freshfields Bruckhaus Deringer LLP 26 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents New Pensions Recently, new Dutch pension legislation entered into force and several legislative proposals regarding changes to Dutch pension law are currently pending. Amongst others, as of 1 January 2015 the maximum pension accrual percentage for defined benefit schemes based on average pay (middelloon) is decreased from 2.15 per cent to 1.875 per cent. In respect of defined benefit schemes based on final pay (eindloon), the maximum pension accrual is decreased from 1.9 to 1.657 per cent from 1 January 2015. Furthermore, the pensionable salary of the employee is maximised at €100,000 gross; tax beneficial savings on supplemental pensions above this limit will no longer be facilitated. Also, it is proposed to increase the retirement age for state pension benefits (AOW) to 66 in 2018 and 67 in 2021. Freshfields Bruckhaus Deringer LLP 27 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents The Portuguese government has continued to try to make employment conditions in Portugal less onerous and more competitive for employers even after the end of the financial assistance programme in May 2014. Some of the measures that the Portuguese government had previously tried to implement, particularly those resulting from the Memorandum of Understanding with the ‘Troika’ (EU Commission, IMF and ECB), were declared unconstitutional by the Portuguese Constitutional Court. Two of the three most relevant changes introduced in Portugal in 2014 were related to issues that were previously declared unconstitutional. New New criteria for employees to be made redundant through an individual redundancy procedure The Portuguese Employment Code now establishes new criteria regarding the choice of employees to be terminated in case more than one is carrying out identical functions in the same company. As such, termination is permissible on the following grounds: } worst performance evaluation (according to specific and predetermined requirements and evaluation methods); } poor academic/professional capacities; } highest cost of position; } shortest length of service in the role; and } shortest length of service in the company. New Overtime The end of suspension of the rules of CBAs providing for overtime payment in excess of the amounts foreseen by the Portuguese Employment Code (initially set for 1 August 2014) was postponed to 31 December 2014. With effects from 1 January 2015 any rules on overtime payment and in excess of the Portuguese Employment Code became effective once again. Guaranteed Minimum Remuneration The amount of the Portuguese Guarantee Minimum Remuneration (GMR) was increased from €485 to €589 (as of January 2015). Other less relevant changes Collective Bargaining Agreements The duration of CBAs was reduced. CBAs can now also be suspended in case an employer is undergoing difficulties due to market, structural or technological reasons or in case of natural catastrophes. Portugal Freshfields Bruckhaus Deringer LLP 28 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents Holidays and Christmas Allowance Payment Since 1 January 2014 and during 2015 as well, employers must pay their employees Holidays and Christmas allowances in the following terms: 50 per cent of both allowances in 12 monthly instalments and the outstanding 50 per cent should be paid immediately before the employees enjoy their holiday period or until 15 December for Christmas allowances. Stimulus measures As in previous years, since 1 January 2015 some measures have been introduced to support employers hiring unemployed people and, provided certain requirements are met (eg no social security debts), employers may benefit from various subsidies including reductions to their social security contributions. Retirement age During 2014 retirement age was increased to 66 years of age if the employee decides to retire in 2015 and 66 years and two months if retirement occurs in 2016. Compensation for termination of employment For (non-fixed-term) employment contracts entered into before 1 November 2011, compensation shall be calculated as follows: } one month’s salary per year of service for services until 31 October 2012; } 20 days’ salary per year of service for services between 1 November 2012 and 30 September 2013; } 18 days’ salary per year of service for services between 1 October 2013 and 30 September 2016, if the employee had less than three years’ service on 1 October 2013; – if on 1 October 2013, an employee’s service was more than three years, compensation for work after 1 October 2013 shall be 12 days’ salary per year of service for services after 1 October 2013; and } 12 days’ salary per year of service for service rendered after 30 September 2016. The compensation calculated as described above for (non-fixed-term) employment contracts entered into before 1 November 2011 is subject to a minimum amount of  3 x reference base salary (RBS). For (non-fixed-term) employment contracts entered into after 1 November 2011, compensation shall be calculated as follows: } 20 days’ salary per year of service for services until 30 September 2013; } 18 days’ of salary per year of service for services between 1 October 2013 and 30 September 2016, if the employee had less than three years’ service on 1 October 2013; – if on 1 October 2013 an employee’s service was more than three years, compensation for work after 1 October 2013 shall be 12 days’ salary per year of service for services after 1 October 2013; and } 12 days’ salary per year of service for service after 30 September 2016. For (non-fixed-term) employment contracts entered into after 1 October 2013, compensation will be calculated on the basis of 12 days’ salary per year of service. Freshfields Bruckhaus Deringer LLP 29 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents The maximum amount of the reference base salary (RBS) for calculation of compensation cannot exceed 20 x guaranteed minimum remuneration (GMR) – currently set at €589/ month. The maximum global amount of compensation cannot exceed 12 x RBS or 240 x GMR. If compensation calculated until 31 October 2012 is equal to or more than 12 x RBS or 240 x GMR, the employee will be entitled to the full amount (including excess). But no additional compensation will be accrued for service after 31 October 2012. If compensation calculated for employment up to 31 October 2012 is less than 12 x RBS or 240 x GMR, the compensation will be capped at these amounts. For fixed-term employment contracts entered into before 1 November 2011, for services until 31 October 2012, compensation for expiry shall be twoor three-days’ salary per month of service, depending on whether the services lasted more or less than six months. For services after 31 October 2012, compensation shall be calculated on the same terms as for (non-fixed-term) employment contracts. For fixed-term employment contracts entered into after 1 November 2011, compensation shall be calculated on the same terms as for (non-fixed-term) employment contracts. Employer fund As expected, effective from 1 October 2013, the Portuguese government created a new employer fund aimed at subsidising half the amount of the employee’s final compensation. Employers must now start contributing to two different funds with a total amount of 1 per cent of the employee’s salary. This is not to be discounted from the employee’s monthly salary as it has to be paid by the employer. Elimination of four public holidays Corpus Christi, Assumption of Our Lady, Republic day and Independence day. Elimination of accrual of additional holiday Employees entitled to an accrual of three additional days of holiday (on top of 22 mandatory days) as a result of no absences from work in previous year, lose the accrual right. However, if any CBA foresees an accrual of additional days of holiday, employers must continue to follow the CBA and the elimination shall not apply. Change to holiday planning Saturdays and Sundays will be replaced as days of holiday when the employee has rest days in the working week. Changes to flexitime working hours bank The employer and employee will be allowed to agree on a working hours bank, by means of which the employee’s weekly working timetable could be increased to an average 50 hours a week. Changes to rest periods within working day Whenever the employee has a 10-hour daily working period, he may be required to render continuous work for a period not exceeding six hours instead of the previous five hours. Overtime (I) Reduction to payment: on working days, first hour get 25 per cent extra and subsequent hours 37.5 per cent (instead of previous 50 per cent and 75 per cent). On rest days, 50 per cent extra instead of 100 per cent. Any measures contained in CBAs or individual employment contracts in excess of this are suspended for two years. After 1 August 2014, any measures contained in CBAs in excess of this will become effective again. Freshfields Bruckhaus Deringer LLP 30 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents Overtime (II) Elimination of compensatory rest period, which created a ‘double’ compensation of employee for overtime provided except for work rendered on mandatory rest days. However, if any CBA that applies to employees foresees a compensatory rest, employers must apply the CBA. Unjustified absences Employees who were unjustifiably absent from work for one or half a day of work, which are immediately before or after a full or half day of rest or public holiday, will not be paid for the entire periods of absence as well as for all previous/subsequent full or half days of rest. Collective dismissals Simplification of procedural rules to make it easier for employers to carry out dismissals. Youth employment Since 1 September 2012 and with the fourth alteration to the Employment Code, minors under 16 years old are only allowed to do paid work, involving any autonomy, if they have either completed their compulsory schooling period or are attending secondary school. Such work must also be considered as light work, and they should be deemed fit to do this activity first. Services providers’ fraud To combat fraud and abuse on the use of services providers as employees, the Portuguese Working Conditions Authority was given the power to notify an employer to correct such situation within 10 days. It also has the power at the end of it, if nothing has changed, to notify the public prosecution to bring proceedings against the employer within 20 days. The proceedings will aim to recognise the services provider as an employee. Fixed-term employment agreements extraordinary renewal For fixed-term employment agreements that reach their maximum duration/renewals by 7 November 2015, a new and extraordinary renewal has been allowed. This renewal may itself be renewed once, if it does not exceed 12 months. Entry into force The special regime foreseen of compensation for termination of employment and Employers’ Fund entered into force on 1 October 2013. The reduction in the number of public holidays was effective from 1 January 2013. The rules on combat to fraud on use of services providers entered into force on 1 September 2013. The extraordinary renewal of fixed term employment agreements entered into force on 8 November 2013. All remaining changes entered into force on 1 August 2012. Freshfields Bruckhaus Deringer LLP 31 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents The 2012 labour market law reforms were aimed at shifting the balance of power between employers and the unions, increasing the flexibility of the labour market. Two years down the line, case law is limiting some of those effects. Law 3/2012, of 6 July, on urgent measures to reform the labour market, along with Royal Decree Law 4/2013 Royal Decree Law 5/2013 and Royal Decree Law 11/2013 are the reference texts. The main changes are set out below. Measures to improve internal flexibility Changes to terms and conditions of employment The employer may implement more easily both substantial modifications of employment conditions and geographical mobility since the necessary justifying economical, technical, organisational or production reasons (ETO reasons) for those modifications are now easier to satisfy. In addition, the law has made it possible to reduce salaries by changing employment conditions. The royal decree also defines ‘substantial changes’ as being collective or non-collective, which now depends on the number of employees affected by the measure. Temporary suspension or working time reduction Pre-administrative approval has been removed for the suspension of employment agreements and/or working time reduction due to ETO reasons (regardless of the number of employees affected), although the consultation period with employees’ representatives remains in force. Some social security benefits have also been introduced. If after 15 days from the last meeting of the consultation period the employer has not communicated its decision on temporary suspension of employment agreements and/ or working time reduction, the procedure will be considered expired. Measures to improve the labour market flexibility Combining retirement pension and employment On a general basis, the retirement pension shall be compatible with self-employment or paid-employment under the following terms and conditions. } The retiree shall have the legal retirement age (ie not applicable for early retirements). } The compatibility between retirement pension and employment triggers a reduction of 50 per cent of the pension. } The work to be carried out shall be full-time or part-time. } The social security contributions to be paid by the employer (or the retiree in case of selfemployment) shall be reduced to the amount corresponding to professional contingencies. Spain Freshfields Bruckhaus Deringer LLP 32 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents New early retirement rules There are two alternatives for early retirement: } early retirement for causes external to the employee’s will apply to employees who are at least four years before their retirement age and who have contributed to the social security system for over 33 years and request their early retirement in case of, among others, restructuring measures at their employer, such as collective or individual redundancies for ETO reasons; and } early retirement at the employee’s will apply to employees who are at least two years before their retirement age and who have contributed to the social security system for over 35 years. Amendment of the partial retirement rules It establishes a new schedule of application of the partial retirement rules according to the age of the employee and his or her years of contribution to the social security system, along with the reductions that shall apply to the retirement pension in case of partial retirement. Collective negotiation Although the general rule remains that all employers and employees party to a CBA are bound by its terms, whenever there are ETO reasons, it will be possible, provided that prior consultation with the employees’ representatives is carried out, to avoid applying the terms and conditions set out in the relevant sector or company CBA on various issues, including working time and salaries. As opposed to previous regulation on the matter, the content of company CBAs will have priority in their application over the relevant national or regional sector CBAs in various matters as well. CBA’s application The new legislation limits the application of an expired CBA to one year from the date the parties gave notice of expiry, so that if no agreement was reached or no arbitration resolution was passed, then, unless agreed otherwise, the previous CBA will lose its effect and either the relevant superior national or regional CBA or the Workers’ Statute will apply. Notwithstanding this, the Supreme Court in a judgment of 17 December 2014 has rectified this limit inserted by the new legislation: even if the relevant CBA has expired and more than one year has elapsed, the rights of the employees under such CBA will remain if during this one-year period a new CBA has not entered into force and there is no other CBA that might apply to the company (by sector or geography). Furthermore, if the employment agreement refers to the conditions set in the CBA, those conditions will be considered contractual and will remain even if the CBA has expired. To change such conditions, the employer will have to proceed according to law and for ETO reasons. Freshfields Bruckhaus Deringer LLP 33 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents Termination of employment relationships Among other things, the new legislation clarified the grounds for a termination based on ETO grounds. There will be economic grounds when an analysis of the results of the company shows a negative economic situation (ie where there are current or forecasted losses or a persisting decrease of the income or sales volume). A persisting decrease takes place when this occurs for three consecutive quarters by comparison with the same quarters of the previous year. The statutory severance compensation to be paid in case the end of the employment relationship is declared unfair is limited to 33 days of salary per year of service up to 24 months’ salary, with a transitional scheme for existing relationships (which, to some extent, keep the existing entitlement to 45 days of salary per year of service, up to 42 months). The employment authorities’ approval for collective redundancies is no longer needed. The rest of the procedure is similar to the existing one. Additional regulation on collective redundancies Further to the recent changes on collective redundancies, the government has finally enacted a regulation specifying certain issues about the procedure. The developing regulation, which implements Law 3/2012, contains certain rules on the development of the procedure, including: } information to be provided in case of collective redundancies based on economic grounds: – a memorandum explaining the negative economic situation; – annual accounts of the past two full years, and provisional accounts as of the date of the start of the procedure, duly signed by the governing body; – in case of forecast losses, information on the criteria used to estimate those losses, as well as a technical report on the volume of losses, and whether they are transitory or permanent; – in case of decrease of income or sales, tax or accounts showing the decrease, and showing the ordinary level of income or sales; and – if the relevant entity belongs to a group of companies, with the obligation to formulate consolidated accounts and provided that the parent/holding company has its corporate domicile in Spain, the audited accounts and management report consolidated of the holding company, of the past two full years, and provisional accounts as of the start date of the procedure, duly signed by the governing body, provided there are loans or credits with the relevant entity. If there is no obligation to consolidate accounts, accounts of other group companies in Spain that belong to the same sector of activity and have credits or loans with the relevant entity should also be provided; } only one negotiation committee with a maximum of 13 individuals representing each party (if the procedure only affects one work centre with no employees’ representatives – ad-hoc committee with maximum three members). Such committee should be incorporated before consultation process; } the minimum number of meetings, which depends on the size of the entity, and minimum and maximum periods between meetings; and } measures to be included in the social plan with the aim of avoiding or reducing the redundancies, or mitigating their consequences, and with specific reference to the outplacement. Freshfields Bruckhaus Deringer LLP 34 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents If the collective redundancy is declared null and void, such decision will be enforceable without need to go to individual claims, as opposed to what had to be the case before. Case law is being fairly strict when assessing whether the procedure has been duly followed, and sufficient information has been provided to the employees, otherwise declaring the redundancy null and void. According to information from the Supreme Court, out of 58 proceedings, only 31 collective redundancies have been ratified (ie half of them), and of the remaining 27, nine were considered insufficiently grounded, and 18 null and void. Accordingly, the planning, preparation and implementation of the consultation stage will be key for a successful procedure. Additional costs arising in case of collective redundancy – payment to the Treasury Background Historically, it has been usual for some big companies and financial institutions in Spain to carry out downsizings by means of pre-retirement schemes. This means that, to calculate the severance, rather than looking at the years of service of the employee, one looks at the years pending until the individual would be entitled to retire and obtain a pension from the state, and the severance is calculated to finance this period up to a certain percentage of the final salary, taking into account that, during the first two years, less money is needed as the employee would receive unemployment benefits. For example, the company agrees to pay the employee an amount such that, from the date of termination until the date of retirement, he would have monthly earnings of 85 per cent of his final aftertax salary. During the first two years, the company would pay only the amount needed to complement unemployment benefits up to the 85 per cent, rather than having to pay the full 85 per cent. Given that the social security system is in need of money, and to correct this practice, the government has legislated with the aim that companies with benefits finance all this severance on their own. The new rule Royal Decree law 5/2013 amends existing legislation and states that companies carrying out a collective redundancy that includes employees of 50 or more years, shall contribute to the Public Treasury, provided following circumstances are met: } that they are carried out by companies with over 100 employees, or by companies belonging to groups of companies that employ that number of employees; } that the percentage of employees affected by the redundancy over the age of 50 or more is higher than the percentage of employees over 50 or more in the company’s total staff; and } that, even if there are ETO grounds for the redundancy, the company (or its group) made profits in the two exercises before the one during which the employer starts the collective redundancy procedure; or that they made profits in at least two consecutive years from the year before starting the collective redundancy to four years later. Freshfields Bruckhaus Deringer LLP 35 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents The relevant amount is assessed yearly by applying a specific rate to the amounts paid by the Spanish Public Employment Service to the relevant employees as: } unemployment benefits for the former employees over the age of 50; } contributions to the social security system for the former employees; and } a fixed fee in case any of the former employees over the age of 50 runs out of unemployment benefits and is entitled to an additional subsidy. The applicable rate runs from 60 to 100 per cent of the payments made by the Spanish Public Employment Service, depending on the percentage of profits on revenue, the percentage of employees over the age of 50 affected over the total amount of employees affected by the collective dismissal, and the total number of employees in the company. New measures for ‘entrepreneurs’ and in favour of youth employment A new type of employment agreement is set out to support entrepreneurs – ie entities with fewer than 50 employees. The agreement will be indefinite, for fulltime employees, and it will be possible to provide for a probationary period of up to one year, during which the employee may be freely dismissed, without notice or compensation. Such employment contracts of indefinite duration may be concluded until the Country’s unemployment rate is lower than 15 per cent. The Spanish Constitutional Court has stated that this agreement is in accordance with the constitution (Judgment 119/2014). Asked by a Spanish court whether this provision is compatible with EU law, with the European Social Charter and other international employment law instruments, the European Court of Justice found itself without jurisdiction to answer the question. In a decision dated 5 February 2015 the ECJ indeed considered that it was not competent mainly because EU law does not regulate contracts of indefinite duration neither probationary periods. An attempt by the Spanish Court to requalify the yearlong probationary period into a one year fixed term contract converting itself into an open ended contract from year two was dismissed by the European Court having looked at the definition of what a fixed term contract is under directive 1999/70. The European Court also dismissed the reference to the European Social Chapter, reminding that it can only look at it for so long it relates to EU law regulated issues and open ended contract and probationary periods are not regulated by EU law. The Court did the same with the reference to ILO conventions. Freshfields Bruckhaus Deringer LLP 36 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents Other reforms Reduced social security contributions are set out to be applied to self-employed workers under 30 years old, or under 35 years old in the case of women, if they meet certain requirements – eg, if they register themselves for social security for the first time. It will be possible to combine the perception of unemployment benefits with self-employment activity when so established by employment promotion programs for groups with the greatest difficulties to enter into the labour market; and a self-employment is initiated by people under 30 years old. The possibility to apply for the capitalisation of unemployment benefits is extended to beneficiaries of unemployment benefits under 30 years old. Companies entering into part-time employment agreements for training purposes with unemployed young people under 30 years old shall be entitled, for a maximum of 12 months, to a 100 per cent reduction in the employer’s contribution to Social Security for each employee, in companies with fewer than 250 employees, or 75 per cent in companies with 250 or more employees, provided that employees meet certain conditions – eg no previous work experience. Companies entering into permanent employment agreements, whether fullor part-time, with unemployed young people under 30 years old shall be entitled to a 100 per cent reduction in the employer’s contribution to social security for each employee during the first year of the agreement and under certain conditions – eg not having more than nine employees working for the company. New Trade unions fight back against reforms Spanish trade unions called on the European Committee of Social Rights to look at some aspects of the reforms. The reports issued by the Committee on whether or not the considered country is in compliance with the articles that it has ratified have a particularly strong influence on subsequent actions taken, however they are not legally binding for national governments. Nevertheless non-compliance provides fertile grounds for trade unions to bring claims. In its conclusions issued in January 2015, the Committee found several provisions of the Spanish labour reform not in conformance with the 1961 European Social Charter on various grounds, namely: } weekly working times possibly exceeding 60 hours in flexible working time arrangements and for certain categories of workers; } no entitlement to appropriate compensatory measures for all workers exposed to risks for health and safety (such as reduction in working hours, exposure time or additional paid leave); } minimum wages for workers in the private sector and for contractual staff in the civil service not securing a decent standard of living; Freshfields Bruckhaus Deringer LLP 37 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents } no guaranteed increased remuneration or increased compensatory time off for overtime work; } no reasonable notice period to permanent and fixed-term employees in cases of expiry of the employment contract or realisation of its aims, death, retirement or winding up of the employer, termination of the employment contract for objective reasons; and } dismissal without notice of employees on probationary periods under entrepreneur support contracts. On the last point, the Committee said that the possibility to terminate someone during the up to a yearlong probationary period without notice and without compensation is a violation of article 4 of the Charter (which refers to the right of all workers to a reasonable period of notice for termination of employment). The European Court of Justice recently decided that it had no jurisdiction to rule on the interpretation of the Charter when being asked about the validity of the yearlong probationary period (see above for more information). Moreover, the Committee claimed that, also according to comments from the most representative trade unions, through the failure to consult trade unions and employers’ organisations in the drafting of Law 3/2012, which fundamentally affects the regulation of collective agreements and working conditions, the government failed to promote voluntary negotiation, violating the 1961 Charter provisions on collective bargaining rights. New New tax treatment of severances A new amendment to the law regulating the Income Tax (IRPF) limits the exemption to the severance payments to a maximum global amount of €180,000. This measure has entered into force on 29 November 2014 and is not applicable to severances for (i) dismissals implemented before 1 August 2014 and (ii) dismissals implemented after this date but produced under collective redundancy proceedings already approved on that date or when the opening of the consultation period has already been communicated to the labour authorities on that date. Freshfields Bruckhaus Deringer LLP 38 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents New ‘Family-friendly’ legislation The rules on leave for new parents continue to be subject to regular overhaul, with the aim of increasing flexibility for parents, and further change is in the offing. From 30 June 2014, all employees with 26 weeks’ service have been able to request flexible working arrangements. Employers are required to consider requests in a reasonable manner but will still be able to reject requests on business grounds. From April 2015, new parents will be able to share flexible parental leave. This means that a mother will be able to share her leave. After a mandatory two weeks off after the birth of her child, the mother can elect to end her maternity leave and share her remaining 50 weeks’ leave with the father/ her partner. Shared leave can be taken at the same time or in turns up to the maximum limit. New parents will be expected to give at least eight weeks’ notice of their intention to take flexible parental leave. New Holiday pay – new legislation will limit look back period for most unlawful deduction from wages claims In November 2014, the Employment Appeal Tribunal ruled in Bear Scotland v Fulton (and combined appeals) that holiday pay must include both guaranteed and non-guaranteed overtime (ie overtime which workers are required to work when it is offered by the employer but of which there is no guarantee). Until this ruling, employers in the UK had generally only included guaranteed overtime in holiday pay calculations. In response to this judgment and concern from employers’ associations about retrospective claims for holiday pay, the government has published the Deduction from Wages (Limitation) Regulations 2014. The Regulations impose a two-year look-back period on most unlawful deduction from wages claims which applies to claims issued on or after 1 July 2015. The impact of this on holiday pay claims is that any such claims for backdated holiday pay which are lodged on or after 1 July 2015 can only claim in respect of the period of two years prior to the complaint being lodged. The Regulations also amend regulation 16 of the Working Time Regulations 1998 to provide that it does not confer a contractual right to paid leave – this change came into force on 8 January 2015. This will mean that, in most cases, workers will not be able to avoid the two year limitation on wages claims by bringing a breach of contract claim in the civil courts. New Small Business, Enterprise and Employment Act The Act covers a number of areas of legislative reform, the aim of which is to reduce the hurdles small businesses encounter when seeking to grow or innovate. It includes a number of employment law provisions, the most significant of which are: } a restriction on the use of exclusivity clauses in zero hours contracts; and } provisions which will result in companies being required to publish data on their gender pay gap. These provisions will come into force in stages and will apply to companies irrespective of size. UK Freshfields Bruckhaus Deringer LLP 39 Summary Belgium France Germany Greece Italy Netherlands Portugal Spain UK Contacts Contents Austria Stefan Köck Partner T +43 1 515 15 112 E [email protected] Belgium Jean-François Gerard Head of Practice Development, International T +32 2 504 7697 E [email protected] Satya Staes Polet Principal Associate T +32 2 504 7594 E [email protected] France Emmanuel Bénard Partner T +33 1 44 56 54 05 E [email protected] Germany Timon Grau Partner T +49 69 27 30 86 70 E [email protected] Greece Effie Mitsopoulou Partner, Kyriakides Georgopoulos Law Firm T +30 210 817 1541 E [email protected] Contacts Italy Luca Capone Partner T +39 02 625 30401 E [email protected] Netherlands Brechje Nollen Partner T +31 20 485 7626 E [email protected] Portugal Pedro Guimarães Partner, FCB&A T +351 213 587 500 E [email protected] Spain Raquel Flórez Partner T +34 91 700 3722 E [email protected] United Kingdom Nicholas Squire Partner T +44 20 7832 7419 E [email protected] freshfields.com This material is provided by the international law firm Freshfields Bruckhaus Deringer LLP (a limited liability partnership organised under the law of England and Wales) (the UK LLP) and the offices and associated entities of the UK LLP practising under the Freshfields Bruckhaus Deringer name in a number of jurisdictions, and Freshfields Bruckhaus Deringer US LLP, together referred to in the material as ‘Freshfields’. For regulatory information please refer to www.freshfields.com/support/legalnotice. The UK LLP has offices or associated entities in Austria, Bahrain, Belgium, China, England, France, Germany, Hong Kong, Italy, Japan, the Netherlands, Russia, Singapore, Spain, the United Arab Emirates and Vietnam. Freshfields Bruckhaus Deringer US LLP has offices in New York City and Washington DC. This material is for general information only and is not intended to provide legal advice. © Freshfields Bruckhaus Deringer LLP, April 2015, 02958