Australia: Contractual effect of employer policies
A recent Queensland Court of Appeal decision has provided important guidance on the potential contractual effect of employer policies. A former employee of Queensland University argued that various policies of the employer constituted binding terms of his contract of employment. The Court did not accept the majority of these arguments, including for the reason that certain policies used merely aspirational, or advisory language, rather than the language of contract. However, the Court did accept that the university's Senior Staff Disciplinary Policy had a binding contractual effect. The matters the court took into account were the policy's detailed procedures for the management of allegations of misconduct, and its provision for specific outcomes, including dismissal. The Court held that the policy operated as a promise by the university to the staff member that allegations of misconduct would be dealt with in accordance with the policy.
The decision is a reminder that employers need to consider carefully the language in which policies are couched in light of their potential contractual effect.
Australia: Including casual employees in vote on enterprise agreements
A full Federal Court has decided that a university employer was not entitled to include all the casual employees it had employed during the previous academic year when defining the group of employees eligible to vote on its proposed new enterprise agreement. The vote went in favour of the agreement in question, but the National Tertiary Education Union subsequently challenged its validity. Although the Fair Work Commission accepted that the university could include in the group all the employees "usually" employed by it, the Federal Court found that this approach was incorrect. The correct approach would have been to determine whether the employees eligible to vote were employed "at that time" of the vote. As a consequence, the Commission could not have been properly satisfied that a majority of the eligible employees had voted in favour of the agreement.
The decision is particularly relevant to employers and industries which have a large turnover in casual staff. When determining the eligible voting cohort for an enterprise agreement, employers must be prepared to demonstrate that any casual staff who are voting are employed at that time.
China: New regulations on corporate mobile devices
Regulations, in force since September 2013, require that every user applying for a new mobile device SIM card should register their identity with the SIM vendor. Users who obtained a SIM card before that date are also encouraged to register. In terms of mobile devices/SIM cards provided by an employer for an employee's use, the company is required to specify who will actually use the SIM card, and report any changes from time to time.
The importance of this requirement has recently been further emphasized and promoted by a notice issued by the Chinese authorities. Following publication of this notice, we have contacted SIM vendors to check their experience of enforcement of the original regulations and the recent notice. We have been told that, in practice, vendors are not strict in requiring employers to provide details of actual SIM card users immediately, but do encourage them to do so. No penalty will be imposed on a company for failing to update a registration. Therefore, for clients who provide company mobile devices and SIM cards, no immediate action is required, but for those who wish to be fully compliant, they should contact their SIM card vendor to check if action should be taken as a result of the recent notice.
Hong Kong: Mandatory Provident Fund - What is on the horizon?
Legislation was passed in January 2015 to amend the Mandatory Provident Fund Schemes Ordinance and its subsidiary legislation, which contain the rules governing Hong Kong's mandatory retirement savings scheme. Some of the major changes include enabling mandatory provident fund benefits to be withdrawn on terminal illness and by instalments from MPF schemes. To find out more about the issues arising from this change that are new and in debate, and their implications for employers, click here.
Hong Kong: 3 September 2015 designated as general and statutory holiday
Hong Kong's Legislative Council has designated 3 September 2015 on a one-off basis as an additional general holiday and statutory holiday. All employers should arrange for their employees to take that day as a statutory holiday (in most cases, with holiday pay).
Hong Kong: Tribunal orders claimant to pay security money
Following the changes made to the Labor Tribunal Ordinance in December 2014, the Labor Tribunal now has power to order either the employer or the employee to provide security for payment of an award. The High Court recently decided that a Tribunal can also order a claimant to give security where they have abused the Tribunal's process. Click here to read more.
Hong Kong: Data Privacy - Guidance Note on collection & use of biometric data
Hong Kong's Privacy Commissioner's Office has issued a Guidance Note in July 2015 on collection and use of biometric data. This Guidance Note addresses:
- the need for caution in handling sensitive biometric data, such as handwriting pattern, typing rhythm, gait and voice pattern;
- justification for collecting such data;
- how to minimize the risks;
- the need for privacy impact assessment;
- the need for free and informed choice when collecting the biometric data; and
- the privacy requirements for dealing with the biometric data collected.
To access the Guidance Note, click here.
EU wide: Shareholder voting on directors' pay
The draft revised Shareholder Rights Directive, which will empower shareholders to vote on directors’ remuneration, was recently considered by the Legal Affairs Committee of the European Parliament. Under the draft law, the director’s remuneration policy of any listed company will have to state clear criteria for awarding fixed and variable remuneration, including all bonuses and benefits, as well as the main contract terms, including details of supplementary pension or early retirement schemes. A provision enabling shareholders to vote at least every three years on a company’s remuneration policy, was backed by the Committee. However, the Committee did not support the requirement that the policy must state maximum remuneration. The policy will, however, be required to explain how the pay and employment conditions of the company's employees are taken into account and how it contributes to the long-term interests of the company. Also “relevant stakeholders”, including employees, will be entitled to express their views, via their representatives, on the remuneration policy. Discussions will now take place with EU Member States on the wording of the draft Directive and further changes to its provisions are expected. It anticipated that the finalised Directive will have to be implemented by Member States in around mid-2017.
EU wide: Commission withdraws stalled maternity leave proposals
The revision of the Maternity Leave Directive, including a longer period of leave and more rights for mothers, was proposed in 2008 by the European Commission. Since then, the European Council and European Parliament have been unable to come to an agreement to adopt the proposed legislation. The Commission has, therefore, recently announced the withdrawal of its proposal with a view to opening the way "for a fresh approach to meet the policy objectives of improving the protection of mothers, better reconciling professional and family life and facilitating female participation in the labor market". Click here to see further information in the European Commission press release.
France: Macron Law before the Constitutional Council as opponents' last resort against implementation
The Macron law (which aims to promote growth, activity, and equality of economic opportunity) had its third and final reading in the National Assembly on 9 July 2015 and is now being reviewed by the Constitutional Council, which is the last recourse available to the Republican senators and deputies who oppose it. The Council must issue its ruling within one month, which means the law will not be endorsed before 15 August 2015, at the earliest. In the event that a number of its provisions are vetoed, the law may be returned to Parliament for further review, which would again delay its implementation. Although the law has not yet been enacted and is still subject to Constitutional Council approval, the principal changes are now clear - click here to read more.
Germany: Union tariff uniformity law
German President Joachim Gauck has signed the law on tariff uniformity. This was announced by a spokeswoman for the presidential office on 6 July 2015. With the execution by the President and the announcement in the Federal Gazette, the law will come into force.
Smaller unions have become more and more influential ever since the German Federal Labor Court abolished the principle of tariff uniformity in 2010. Under this rule established by case law, only one collective bargaining agreement could apply to the same kind of employment relationships in an operation. This meant that, for example, if two unions represent the same categories of workers in an operation, only the agreement concluded by the union with the highest number of members in the operation was effective. Following a recent series of strikes organized and led by competing unions of train conductors and pilots, there were calls for legislative action in order to limit the power of a few to shut down services important to the public. The new law restores the principle of tariff uniformity. Minority union rights are ensured by certain procedures which include the option to co-sign the collective bargaining agreement concluded by the majority union.
Smaller unions criticize the law for undermining their constitutional right of forming and working in a coalition. Accordingly, several unions have already announced that they will challenge the law at the Federal Constitutional Court. We will keep you updated on whether the law is held to be constitutional and on any new developments.
Germany: Preconditions for amendment of occupational pension plans
Whenever pension plans need to be amended, several general principles for the protection of employees must be adhered to. These include respecting justified levels of trust and the expectations of employees in the grant they have received earlier, as well as the principle of proportionality of the intervention.
According to the established case law of the Federal Labor Court, there are three categories of reasons that justify intervention in an existing pension plan:
- compelling reasons;
- reasonable motives; and
- objectively proportionate reasons.
Depending on the category, the degree of alteration which is permitted to grants given and thus to existing entitlements varies (the so-called ‘three-level-theory’ of the Federal Labor Court). The least protected component of pension grants are those which are not yet earned, i.e. which still have to be accrued during future tenure. Changes relating to such future accrual of pension entitlements require ‘objectively proportionate’ reasons only.
In its ruling of 9 December 2014, the Federal Labor Court reiterated what the requirements are for such ‘objectively proportionate reasons’. The parties were in dispute which of two pension plans was relevant for the plaintiff. Initially, there was a pension plan that had been established in the year 1997. In 2004, this pension plan was replaced by a new pension plan.
The Federal Labor Court ruled that the pension plan of 2004 only affects pension accruals which are not yet earned. Hence the level of protection for the initial grant lies (only) on the third level of the ‘three-level-theory’ mentioned above. Therefore, there have to be objectively proportionate reasons in order to justify the pension plan amendment. The court ruled that this is always the case when the measures taken are appropriate and reasonable in the light of the unfavorable economic development of the employer or the group. The plan change should not be disproportionate, meaning that the change must be part of an overall concept aiming to improve the economic state of the firm. However, it is not necessary that all other possible measures to reduce costs are exploited first.
Germany: ECJ referral on collective agreements
Depending on the industrial sector, German employment contracts sometimes refer to collective bargaining agreements. In such cases, the provisions of the collective bargaining agreements apply to the employees even if the employer and/or the employee are not members of the respective body. Therefore, the employees can claim additional benefits such as a longer notice period, dismissal protection, higher remuneration etc. that are provided for in the collective bargaining agreements.
Some employment contracts contain so-called “dynamic reference provisions” which refer to the collective bargaining agreement "applicable from time to time". Thus, the collective bargaining agreement applicable to the employment may change, eg if they are replaced or if a new collective bargaining agreement applies because the business scope of the employer changes.
According to the Federal Labor Court, where there is business transfer according to German law, in principle the dynamic reference provisions continued to apply after the transfer of the employee to the new employer. For a new employer, this may trigger uncertainty since at the time of the business transfer it will be impossible to foresee which collective bargaining agreements will apply in future and – as a consequence – which benefits the transferred employees will be entitled to. Earlier this month, the Federal Labor Court decided to submit an inquiry to the European Court of Justice whether its stance violates European law. Depending on the outcome of the case at the European Court of Justice, in the future dynamic reference provisions may “lose” their dynamic effect. After a business transfer only the collective bargaining agreements which applied prior to the transfer would apply to the employment agreements of transferred employees.
Italy: "Jobs Act": New legislative decrees approved
The Government adopted two legislative decrees which came into force on 25 June 2015. The decrees implement provisions which (i) amend contact types and improve an employer's ability to change employee duties; and (ii) address the balance between employees' caring, living and working needs. The main provisions of the decrees are as follows:
Freelance/project work agreements
- With effect from 25 June 2015, freelance/project work agreements can no longer be used. A freelance/project work contract is one which falls between pure consultancy contract and an employment contract and the result of this reform is that this "middle" option is no longer available. Individuals must either be retained on a consultancy contract or an employment contract.
- Existing freelance/project work agreements can continue until 31 December 2015, but from 1 January 2016 any such agreement which is still in place will be presumed to be an employment contract.
The decree introduces more flexibility for employers to change employee’s duties unilaterally. There are three options provided:
- For duties which fall within same classification/category as the employee's existing role, an employee's duties can be changed without any limit at any time;
- Duties may be modified unilaterally in the case of an organisational restructure; this includes the possibility for an employee to be demoted but this can only be to a contractual level immediately below the one the employee is on and the employee's salary must be protected;
- A change to a lower salary must be mutually agreed before an union official in order to certify the employee's consent.
Part time work
- An employer can require part-time workers to increase their working hours by up to 15% and an employee cannot refuse such a request. However, such an increase in hours must be compensated by an equivalent (15%) wage increase.
- Employers may now enter into agency worker contracts for an indefinite period of time without having to justify its reasons for doing so. Unless otherwise provided for in a collective bargaining agreement, agency workers must make up not more than 20% of the workforce.
New rights for parents
The decree introduces:-
- A new right for parents to request to transform parental leave to part-time work at 50% of pay;
- An extension of the age of children in respect of which the six month period of parental leave can be requested. The leave can be taken -
- for children up to age six years for those willing to take leave at 30% of salary; and
- for children between age eight and 12 years for those prepared to take unpaid leave.
This change has been implemented on an experimental basis so that if financial coverage for this measure is lacking in 2016, the system will revert back to the previous regime.
Other elements of the "Jobs Act" are still to be approved by formal decree and these elements will be reported in future editions of Be Global as and when they are enacted.
Russia: Notifying reason for non-selection and fixed-term contracts of pregnant employees
Certain amendments to the Labor Code of the Russian Federation, which may be of importance when hiring employees and entering into fixed-term employment agreements, came into force recently. Pursuant to the newly effective legislation, an employer must now provide a candidate with a reason for not being hired within seven business days following receipt of a request from the candidate.
Previously, the statutory requirements did not set a deadline for giving such information.
Other recently introduced amendments relate to the extension of a fixed-term employment agreement with a pregnant woman. If a fixed-term employment agreement expires during a woman's pregnancy, the employer is required, on receipt of the woman's written notice and the provision of a medical certificate confirming the pregnancy, to extend the term of the employment agreement until the end of the maternity leave (provided that the employee takes such leave). Previously, a fixed-term employment agreement was only extended until the end of the pregnancy.
UAE: New anti-discrimination law enacted
Late July saw the enactment of significant new anti-discrimination law in the UAE, which aims to stamp out discrimination on the basis of religion, caste, creed, doctrine, race, color or ethnic origin.
Although, at first glance, this is criminal legislation which does not relate specifically to employers (rather it relates predominantly to steps being taken to prevent incitement of racial hatred and misuse of social media), there may be potential implications for employers in due course.
It appears the new law has not yet been released (even in Arabic) and so, at this point, the full implications for employers are somewhat unclear. This development will be covered in more detail in a future edition of Be Global, once the new law is published.
UK: Eighteen month limit on carry forward of holiday entitlement
The Employment Appeal Tribunal has handed down a helpful decision for employers managing employees on long term sick leave. In its decision, the court has confirmed in UK law the 18 month limit on carry forward of holiday entitlement, which is the maximum limit specified in the relevant International Labour Organisation convention. Click here to read more.
UK: Inclusion of voluntary overtime when calculating holiday pay
The Northern Ireland Court of Appeal has recently decided that voluntary overtime can, in principle, be included for the purposes of calculating holiday pay in Northern Ireland. Although decisions of the Northern Ireland court are not binding on the Courts in the rest of the UK, this judgment will undoubtedly be of highly persuasive authority and, as such, employers in Great Britain should be aware of the potentially wide-reaching implications of this recent case. Click here to read more.
UK: Gender pay gap consultation published
The Government has recently published an initial consultation on legislation which will implement gender pay gap reporting for organisations with 250 or more employees. Although final legislation in this area is some way off, employers may, nonetheless, decide to get their houses in order before being exposed to public scrutiny. Employers who will be affected by the proposed regulations can use the lead in period before implementation to conduct an audit of pay arrangements to identify potential problem areas and help the organization to manage and present information meaningfully and in context. Click here to read more.
UK: Government releases details of Trade Union Bill
In mid-July, the Government published a Trade Union Bill which sets out proposals for reform of the UK's strike laws. These proposals are in response to a number of strikes in recent years which have arguably caused significant disruption to business and consumers, despite, on the figures, not being supported by a majority of the particular workforce. This situation has arisen because a lawful strike needs only the support of a majority of the workers voting, meaning that very low turnouts of voting workers can still result in legitimate industrial action. Click here for more information on the proposed changes.
Brazil: New option for companies in financial difficulties: reduction in working hours and salary
On 7 July 2015, Provisional Measure 680 implemented the “Program for Employment Protection” which permits employers to temporarily reduce working hours, with a corresponding salary reduction. The main conditions of the program are: (i) the reduction of salary/working hours must be limited to 30%; (ii) collective negotiation with the labor union is required; (iii) only employers which have complied with their labor/tax obligations can apply; and (iv) the reduction in working hours/salary can encompass a whole company or a sector and is limited to six months, with an option to extend for an additional six months. Companies that apply the program must comply with certain administrative measures, which are detailed in Labor Ministry Order 1,013 and Resolution 2, both of which were published on 22 July.
Canada: Self-reporting drug use policies; Union financial disclosure; Mandatory retirement
The July 2015 newsletter from our Canadian team considers whether self-reporting drug use policies might be discriminatory; explains the new law which will require private and public sector unions to file financial information annually; and considers a recent British Columbia case which permits mandatory retirement for many employers. Click here to read more.
US: California: paid sick leave law clarified and revised family rights in force
California employers have stepped up to comply with the 1 July 2015 deadline for the new California paid sick leave law, but now additional changes have arrived that may help clarify the law. These changes are the result of California's Governor signing into law an urgency measure which further explains which workers are covered and how the paid time off is accrued, and sets out protections for employers that already provide paid sick leave. This measure is effective immediately. For more information about the urgency measure and a four step action plan for employers, click here.
On 1 July 2015, changes to California's family rights regulations also came into effect. These changes mean that employers should revise policies and practices in this area, as well as update training for human resources staff and supervisors. For more information, click here.