HIGHLIGHTS

UK: Potential for significant increase in cost of holiday pay

The UK Employment Appeal Tribunal recently handed down judgment in the closely watched appeals in a number of cases concerning the calculation of holiday pay. The Court's decision will lead to higher wage bills for many employers in the future, but the judgment significantly limits the potential for back pay liability. Many elements of pay which are currently excluded from holiday pay must be included in future, but most claims for back pay will be limited to the last holiday year. Kate Hodgkiss, a partner in Edinburgh, provides further information on the current position in the UK. Click here to read more.

While the position in the UK is far from settled, and further developments are expected, employers need to be aware that this is not just a UK issue; it is possible that the effect of recent developments could impact on employers operating in other EU countries, to the extent that current law and practice does not require all elements of “normal remuneration” to be included in the calculation of holiday pay. As reported in October's Be Global, we have recently seen an example of this when the National Court in Spain ruled that certain shift allowances and premiums must be taken into account when calculating holiday pay, regardless of any provisions to the contrary in the relevant collective bargaining agreement provisions. We expect further, similar litigation to follow. For more information on the position across Europe, please speak to your usual DLA Piper contact, or email Judith Harris, International Practice Development Lawyer.

Ebola: Key employment issues for multinational employers

Employers the world over are looking to put in place plans to prepare in the unlikely event that an employee becomes exposed to or ill with the Ebola virus. Is your business prepared? Click here to view our Be Global Ebola special edition for multinational employers and click here to see our alert on six questions US employers should be asking about Ebola.

Trends in the language of global employment documents

Recent cases decided in the European Court of Justice, the German Federal Labour Court and in the Belgian Labour Courts hint that, across Europe, a greater degree of flexibility may be developing toward the use of language in employment documents. In an article recently published on Law360, Kai Bodenstedt from Hamburg, Ute Krudewagen from Silicon Valley and Victoria Richter from Chicago consider what global employers operating in multiple jurisdictions should do to manage their employment documentation effectively.Click here to read more.

Brazil: Franchisor not liable for franchisee's labour obligations

The Brazilian Superior Labour Court recently decided that a franchisor is not liable for the labour obligations owed by a franchisee to its employees. In the case in question, the judges established that the liability of a franchisor is different to that of the incoming service provider in an outsourcing situation. Priscila da Rocha Lago, Partner, and Thiago Ramos Barbosa, Associate, who have recently joined the Employment Team at Campos Mello Advogados in cooperation with DLA Piper, explain further. Click here to read more.

ASIA PACIFIC

Australia: Fair Work Commission - first six months of anti-bullying cases

The number of bullying cases brought to the Fair Work Commission during the first six months of the anti-bullying jurisdiction's operation has been released. The Fair Work Commission's 2013-2014 Report shows that the Commission received around 3,500 thousand telephone inquiries in relation to bullying, processed 343 applications and conducted 270 conferences and hearings. Of these applications, 21 proceeded to a hearing, with the rest withdrawn or resolved. The Commission stated that it was still too early in the life of the jurisdiction to be certain what its future workload under the anti-bullying laws would be. The figures suggest that there is a relatively high level of awareness among employees about the anti-bullying laws, given the number of telephone inquiries received.

In the latest decision in the anti-bullying jurisdiction, the Commission refused to make any orders on the basis that the behaviour of which the employee complained (including a performance management regime) was not bullying but an exercise of the employer's management prerogative.

Australia: Employee communications to the media not industrial action

The Federal Court of Australia has held that employees who go to the media with their employer's information are not engaging in any form of "protected" industrial action. The issue arose in the context of a protracted enterprise bargaining dispute in which ambulance service employees had voted in favour of taking industrial action, including releasing to the media the response times of ambulances. The Court's refusal to regard media communications as a form of industrial action means that employees who release their employer's information without authority may be exposed to other legal actions, including breach of contract claims and coercion under the Fair Work Act.

Australia: Sexual harassment case leads to AUD 700,000 damages award

An employee has been awarded more than AUD 700,000 in damages for systematic sexual harassment, intimidation and bullying in the workplace. The New South Wales District Court held that the employer had failed to provide a safe place of work and had exposed the employee to continuing harassment, bullying and intimidation. This is a high award of damages in the Australian context and reflects the Court's finding that the employee had suffered a serious psychiatric injury as a result of the conduct, which included persistent physical contact.

China: New minimum wage rates for Jiangsu and Hubei Provinces

The minimum wage rate increases that have been recently announced for Jiangsu and Hubei Provinces (see below) continue the trend of wage inflation in China. Despite the increases in these two provinces, Shanghai Province continues to have the highest minimum wage at RMB 1820 per month. We expect the Shanghai rate to be reviewed in March or April 2015, and it remains to be seen whether or not the rate will change. Further developments will be reported in Be Global.

Jiangsu Province (from 1 November 2014)

The following minimum wage (per month) applies to these cities:

  • Suzhou, Changshu, Kunshan - RMB 1680
  • Nanjing - RMB 1630

3 levels of minimum wage apply to other cities depending on how developed the location is:

  • Class 1 Location - RMB 1630
  • Class 2 Location - RMB 1460
  • Class 3 Location - RMB 1270

Hebei Province (from 1 December 2014)

The following minimum wage (per month) applies to these cities:
4 levels of minimum wage apply depending on how developed the location is:

  • Class 1 Location - RMB 1480
  • Class 2 Location - RMB 1420
  • Class 3 Location - RMB 1310
  • Class 4 Location - RMB 1210

Some examples for the cities in different locations:

  • Class 1 - Urban district of Shijiazhuang
  • Class 2 - Urban district of Handan
  • Class 3 - Jizhou, Shenzhou
  • Class 4 - Zanhuang county, Shunping county

Hong Kong: Reform of privity of contract: Contracts (Rights of Third Parties) Bill

The Contracts (Rights of Third Parties) Bill has been introduced into the Legislative Council in Hong Kong. If passed, Hong Kong will join other common law jurisdictions such as the UK in reforming the old common law principle of 'privity of contract'. Under the current law in Hong Kong, only the parties to a contract have the right to enforce the contract terms. Subject to certain exceptions, the Bill will give a third party the right to enforce (i) a term of the contract of employment against an employer (but importantly not an employee) and (ii) a term of an employment-related contract against a party to that contract. In order for this right to be conferred on a third party, the contract must either expressly provide for the right or the contract term must seek to confer a benefit on the third party. Under the Bill it is possible to contract out of the new law (i.e., agree that the new law is not applicable to the contract and a third party will not be able to rely on the new law and enforce the terms). Employers should, therefore, start reviewing their standard contracts, employee handbooks and other employment related documentation and consider inserting clauses to either maximise the enforceability of an agreement by a third party where this is preferred or expressly exclude the law where it is not.

Hong Kong: Discrimination Law Review

The Hong Kong Equal Opportunities Commission has launched its first comprehensive review of the four anti-discrimination ordinances relating to sex, disability, family status and race. As a first step, it has sought opinions from the public on its proposed extension of protection from discrimination and the public consultation concluded at the end of October. It is expected that a report with recommendations will be submitted by the EOC to the Hong Kong government around the middle of 2015. The key proposed amendments include:

  • unmarried couples should be protected from family status and marital status discrimination;
  • the Race Discrimination Ordinance should extend its protection to cover discrimination on the grounds of nationality, citizenship and residency status;
  • a duty to provide reasonable accommodation for persons with disabilities should be imposed (currently the concept of "reasonable accommodation" is just one of the relevant factors in determining whether the defence of "unjustifiable hardship" to disability discrimination is established);
  • the law should provide protection for sexual harassment in common workplaces where there is no employer/employee relationship, for example, an unlawful act of a non-employee on an employee at common workplaces;
  • there should be a defence for principals to liability from unlawful conduct of agents (the defence of taking reasonably practicable steps to prevent unlawful discrimination from happening currently only applies to employers); and
  • requests for information for a discriminatory purpose relating to sex, family status, race, marital status, etc should become unlawful (currently it is only requests for information for a discriminatory purpose in relation to disability which are prohibited).

Employers should keep track of the review as it progresses as the proposed amendments could have a significant impact on workplace policies and procedures.

EUROPE, MIDDLE EAST, AFRICA

Belgium: "Bring your own device" and benefits in kind

The National Social Security Office has recently added two allowances to its list of accepted lump sum cost allowances. As a consequence, an employer can grant any worker who uses their own PC (including hardware, software and accessories) and their own internet connection (including the subscription cost) for professional purposes, in a substantial and regular manner, a lump sum cost allowance of EUR 20 per month for the PC, and a lump sum cost allowance of EUR 20 per month for the internet connection. However, even if the National Social Security Office allows payment of these lump sums for the reimbursement of professional costs, the employer remains obliged to prove that the costs are actually incurred by the employee.

France: Caution when giving notice of termination at the end of a trial period

If an employer wishes to terminate an individual's employment contract during a trial period, a period of notice must be given. In a recent case, the French Supreme Court ruled that an employee's trial period cannot be extended by the notice period. As such, when an employee continues to work after the end of the trial period, during the notice period, a new indefinite-term employment contract will be deemed to have been agreed, which entitles the employee to benefit from the dismissal process. In view of this development, to avoid having to engage in a detailed dismissal process, employers should take steps to ensure that employment contracts are terminated at the end of the trial period at the latest. Another option for employers who are late in notifying the end of an unsuccessful trial will be to pay an indemnity in lieu of notice to compensate the employee for loss of salary during the unexpired notice period.

France: Final unemployment certificate must be delivered to the employee no later than on the termination date

The French Supreme Court confirmed recently that if an employer delivers the final unemployment certificate to an employee later than the date on which the employment contract terminates, the employee may automatically claim payment of damages by the employer. In this case, the employer modified the certificate several times before delivering the final version to the employee eight days after the end of the employment contract. The French Supreme Court decided that, in such circumstances and even if the employee did not prove any prejudice suffered because of the delay, the employer should nonetheless be required to pay damages as the Court took the view that the employee automatically suffered prejudice. Consequently, employers should be sure to provide the final certificate by no later than the termination date.

France: Moral harassment - gross misconduct dismissal may not always be required

In a recent case, the French Supreme Court decided for the first time that an employer which had found one of its employees guilty of moral harassment in the workplace did not have to automatically terminate the employment contract of the perpetrator of the harassment for gross misconduct (without notice) to prevent prejudice to other employees. "Moral harassment" can encompass different types of behaviours but typically involves psychological harassment. The Court indicated that dismissal, with notice, for real and serious cause may be sufficient, as long as the harassment was punished and preventative measures taken by the employer. The categorisation of the dismissal will depend on the circumstances of the case and, notably, on the seriousness of the misconduct committed by the employee. Dismissal for gross misconduct may still be possible if justified in the particular circumstances.

This decision seems to demonstrate that the French Supreme Court is prepared to exercise some flexibility in relation to the categorisation of a dismissal for moral harassment. However, further decisions are required to clarify the scope of the measures (such as suspension or management training) that would be judged sufficient to prevent harassment bearing in mind that an employer may be ordered to pay damages for not having complied with its obligation to take such measures.

Italy: Proposed labour law reforms for 2015

The Government recently approved a draft of the Budget Law for 2015 which contains several important new labour measures. The draft law will be considered by Parliament over the coming weeks before it gains final approval. The most relevant proposed measures are:

  • A reduction in the Regional Tax on Productive Activities (IRAP) by allowing employers to deduct employment costs;
  • Social contribution exemptions for new hires for a maximum period of 36 months and up to a maximum amount of EUR 8,060 per year per employee. To access this benefit, the employment contract must be entered into in the period between 1 January and 31 December 2015. The exemption will not apply to employees that have been working under an indefinite employment contract (with any employer) in the previous 6 months and who were employed by the same company or group under a fixed-term contract in the previous 3 months.
  • Introduction of an option for employees to choose to have their end-of-service allowance paid on a yearly basis instead of as a lump sum at termination. Such "extra" yearly payments would be financed by banks through suitable arrangements with employers.
  • The establishment of a public fund of EUR 2 million to alleviate the financial burden due to the implementation of the "Jobs Act" labour law reform which it is expected will, in the near future, (among other measures) reform the welfare system and introduce open-ended employment contracts with "increased protection" (such as compensation for unfair dismissal proportionate to length of service).

Note that the above measures are not yet in force as the final version of the law is still to be approved by the Italian Parliament.

Romania: New immigration laws in force 28 November 2014

On 28 November 2014, new immigration laws will come into force, amending the previous legislation in this area. The key changes are the introduction of several stricter requirements for obtaining an 'employment approval' document recording a foreign national's right to work in Romania; the introduction of a much shorter deadline for a company benefiting from a secondment arrangement to notify the relevant territorial labour inspectorate of the secondment; the introduction of a requirement that travel documents supporting a visa application have to have been issued within the past 10 years; and the introduction of the potential to obtain a short extension to a residency permit in several circumstances, including when unemployment benefits apply. Click here to read more.

Saudi Arabia: Increased minimum wage proposed for Saudi nationals working in the private sector

Saudi Arabia is considering proposals to increase the minimum wage for both Saudi nationals and expats in the private sector. The proposals (if implemented) have suggested increasing the minimum wage for Saudi nationals from SAR 3,000 (USD 800) to SAR 5,300 (USD 1,412) per month while the minimum wage for expatriates would only be SAR 2,500 (USD 666.26) per month. The measures purportedly aim to combat the perceived inequality in the salaries of Saudi nationals working in the private sector (as compared to the nationals of other GCC countries) and more importantly encourage Saudis to enter the private sector as part of the on-going Saudization process.

Qatar: Labour law reforms expected by end of 2014

Following extensive commentary in recent months regarding the significant numbers of migrant workers based in Qatar to assist with preparation for the World Cup in 2022, the Qatari authorities have promised to reform the kafala system (under which there are stringent exit provisions in place and workers are required to obtain their employer's permission both in order to change jobs and before leaving the country). They also have promised to do more to strengthen the rights of the migrant workforce in Qatar. This month the Qatari Minister for Labour and Social Affairs has announced a number of reforms expected to be in force in Qatar by the end of 2014. As part of the proposed measures, the Qatari government will look to ban outdoor work between 11.30 am and 3:00 pm during the hot summer months from mid-June until the end of August. The proposed new labour laws are also expected to limit the length of expatriate workers' contracts to five years instead of tying workers to one particular employer indefinitely. Further, using a system similar to the Wage Protection System (WPS) in the UAE, companies will be required to pay an employee's wages directly into their bank account. Such payment will be required to be made through the WPS within seven days of the date the payment falls due under the employee's contract of employment. Failure to pay employees properly through the WPS system could lead to sanctions being imposed on employers in Qatar. The government, however, has yet to specify what level of penalty could be expected to be imposed on those in breach. The government also intends to launch an electronic complaint system in order to further protect the rights of workers.

UK: Potential for significant increase in cost of holiday pay

The UK Employment Appeal Tribunal recently handed down judgment in the closely watched appeals in a number of cases concerning the calculation of holiday pay. The Court's decision will lead to higher wage bills for many employers in the future, but the judgment significantly limits the potential for back pay liability. Many elements of pay which are currently excluded from holiday pay must be included in future, but most claims for back pay will be limited to the last holiday year. Kate Hodgkiss, a partner in Edinburgh, provides further information on the current position in the UK. Click here to read more.

While the position in the UK is far from settled, and further developments are expected, employers need to be aware that this is not just a UK issue; it is possible that the effect of recent developments could impact on employers operating in other EU countries, to the extent that current law and practice does not require all elements of “normal remuneration” to be included in the calculation of holiday pay. As reported in October's Be Global, we have recently seen an example of this when the National Court in Spain ruled that certain shift allowances and premiums must be taken into account when calculating holiday pay, regardless of any provisions to the contrary in the relevant collective bargaining agreement provisions. We expect further, similar litigation to follow. For more information on the position across Europe, please speak to your usual DLA Piper contact, or email Judith Harris, International Practice Development Lawyer.

UK: New parental leave regime

As reported in September's Be Global, sweeping reforms to the UK's parental leave regime will come into effect on 1 December 2014. Although the Government has left publication of the final Regulations, official forms and relevant guidance until very late in the day, employers with UK operations are advised to progress an implementation strategy as soon as possible. In a recent article, Clare Gregory, a Partner in Sheffield, considers the top three areas of the new regime which are most likely to cause headaches for employers.Click here to read more.

AMERICAS

Brazil: Franchisor not liable for franchisee's labour obligations

The Brazilian Superior Labour Court recently decided that a franchisor is not liable for the labour obligations owed by a franchisee to its employees. In the case in question, the judges established that the liability of a franchisor is different to that of the incoming service provider in an outsourcing situation.

In Brazil, a franchise agreement exists where (i) a franchisor assigns to a franchisee the right to use its trademark or patent; (ii) a right is granted to the franchisee to distribute exclusively or semi-exclusively the products and services of the franchisor; (iii) there is direct or indirect compensation; (iv) there is no employment relationship; and (v) in some cases, the franchisee uses either technology to implement and manage the business and/or an operational system which have been developed and are owned by the franchisor.

Given these requirements for the existence of a franchise, the judges held that a franchisee is free to organize its business as it deems suitable. Although the franchisor may guide and provide the relevant technology to a franchisee, the franchisee is able to hire its own employees and bears the risks of its business activity. As such, the franchisee remains solely liable for payment of the labour debts owed to its employees.

Brazil: Reduction in limitation period for claims against severance pay funds

In a recent and innovative decision, the Brazilian Supreme Federal Court has ruled that the period for employees to claim credits from their Unemployment Guarantee Fund (FGTS) under the statute of limitation should be reduced. Prior to this ruling, courts usually proceeded on the basis that employees could seek payment of FGTS fund credits relating to the period of 30 years before the date of filing their claim. Based on the Supreme Court's decision, however, this limitation period is reduced to 5 years.

The Supreme Federal Court also implemented a transitional rule which will apply from the decision date onwards to enable individuals to become accustomed to the new limitation period.

The required FGTS deposit corresponds to 8% of an employee's monthly compensation and has to be deposited in specific blocked bank accounts. In case of termination without cause by the employer, an additional severance penalty corresponding to 50% of all the FGTS deposits must also be paid by the company.

From a practical standpoint, as a result of this reduction in the limitation period, employees who have worked for decades will nonetheless only be able to claim in respect of the 5 years immediately preceding the date of filing their lawsuit, provided that they sue the employer within 2 years from the termination date.

US: Game changer – the proposed joint employer standard

The U.S. National Labor Relations Board, Department of Labor and Equal Employment Opportunity Commission appear to have launched an all-out attack on businesses that use outsourcing, franchising, or sub-contracting. Employers need to follow these developments closely, because they will have far-reaching impact on business practices, business transactions and litigation. Clients should be advised to review their policies, procedures, business relationships and practice now to limit their risk. Marilyn A Pearson, a Partner in Chicago, considers this development in more detail. Click here to read more.

US: Employment implications of alter-ego company relationships

In the area of employment law, the National Labor Relations Board (NLRB) has often applied the "alter-ego" theory to hold that companies that are so substantially identical in terms of, for example, management, business purpose and customers, should properly be treated as interchangeable. This theory is not, however, the limited province of the NLRB and it is also applied under other employment statutes. Michelle Sumner, an Associate in Washington, DC explains further. Click here to read more.

US: SEC decides on extra-territorial reach of whistleblower bounty provisions

Under US laws, a whistleblower who provides original information to the Securities and Exchange Commission (SEC) regarding violations of the Securities and Exchange Act which results in sanctions exceeding USD 1 million is entitled to a monetary award of no less than 10% and not more than 30% of the monetary sanction collected in the action. The SEC has recently announced its largest-ever whistleblower award under this program: an award of over USD 30 million. What is particularly notable in this case, however, is that the whistleblower was a foreign national, living outside the US. The information provided related to an ongoing fraud that the SEC would have, otherwise, found very difficult to detect. In its decision, the SEC has made clear that it will apply the bounty provisions extraterritorially. The SEC's office has said, "This award of more than USD 30 million shows the international breadth of our whistleblower program as we effectively utilize valuable tips from anyone, anywhere to bring wrongdoers to justice. Whistleblowers from all over the world should feel similarly incentivized to come forward with credible information about potential violations of the U.S. securities laws.” It is expected that this decision will result in even more international leads, and resulting awards, in the future. This makes it more important than ever for companies to have in place stringent compliance programs as well as robust internal whistleblowing processes.