Be Global is DLA Piper's snapshot of key global employment law developments designed to help you identify legal hotspots across your global operations and assess the impact on your employment practices and procedures.

HIGHLIGHTS

EU Wide: European Court decides that commission must be included in calculation of holiday pay

The European Court of Justice (ECJ) has handed down judgment in a case which could mean that employers in the UK, and potentially elsewhere in Europe, face significant liabilities for holiday pay. Click here to read more.

Germany: The ins and outs of Germany holiday pay

Vacation regulations in Germany are not straightforward. In a recent blog post, our German employment team provide an overview for employers of German vacation rules. This helpful summary covers issues such as the extent of an employee's entitlement to paid time off, carry forward of untaken holiday and holiday rules for a-typical workers. Click here to read more.

Netherlands: employment law reforms delayed to 2015

As reported previously, the Dutch Government has legislated to implement a number of important changes to employment law, some of which were scheduled to come into effect on 1 July 2014. It has now been announced that the reforms will in fact be implemented on two dates in 2015. Click here to read more.

China: Employers in Beijing and Hubei Province must file plans to demonstrate compliance with 10% dispatch labour cap by end of August 2014

Rules have been published which require employers currently engaging more than 10% of their workforce via labour dispatch, to file details of how they plans to comply with 10% cap. Click here to read more.

Russia: New law regulating secondments will come into force in January 2016

A new law placing substantial restrictions on the use of secondment arrangements is now scheduled to enter into force on 1 January 2016. Click here to read more.

ASIA-PACIFIC

Australia: FWC gives two judgments in the new anti-bullying regime

The Fair Work Commission has made a ruling in the new anti-bullying jurisdiction which clarifies the nature of the behavior which may be subject to a complaint of bullying, as well as the meaning of "reasonable management action", which is excluded from the definition of bullying. It found that:

The requirement for behavior to occur "repeatedly" in order to constitute bullying does not require a specific number of incidents, provided there is more than one occurrence; nor is there a requirement that precisely the same behavior be repeated; 

The test of whether behavior is "unreasonable" is objective; 

The behavior must also pose a risk to health and safety, although the it need not be the only cause of the risk and it is sufficient if the behavior posed the "possibility" of danger to health and safety;

"Reasonable management action" means everyday action to direct and control the way work is carried out;

A course of action may be reasonable even if particular steps are not;

Management actions do not have to be perfect to be considered reasonable, but nor can they be irrational, absurd or ridiculous;

It may be relevant to consider whether management actions failed to follow employer policies and procedures in assessing reasonableness.

A separate FWC decision has clarified that after an employee has been dismissed, there is no basis on which to entertain a bullying application to the FWC because there is no risk of continued bullying at work. It should be noted, however, that if an employee is dismissed for having made a bullying complaint, this would allow them to bring an adverse action claim.

Australia: Adverse action case heads to the High Court

The Construction Forestry Mining and Energy Union (CFMEU) has been given leave to challenge a decision of the full Federal Court. The full Federal Court held that an employer, BHP Coal, did not take adverse action against an employee when it dismissed him because he had displayed a "scabs" sign on a union picket line while undertaking protected industrial action. The employer dismissed the employee on the basis that the sign breached its good conduct policy. The High Court of Australia will now hear the union's appeal.

In a separate development, the Fair Work Commission has allowed the CFMEU to represent two of its members before the Commission in unfair dismissal claims, even though the rules of the union did not allow the members in question to be covered by the CFMEU. The employer unsuccessfully argued that because the union rules did not allow the applicants to be covered by the union (due to the nature of the jobs they performed) the union should not be permitted to represent them

Australia: Annual leave and enterprise agreements

The full bench of the Fair Work Commission has clarified that it is contrary to the Fair Work Act to seek to incorporate annual leave entitlements in forms of pre-payment, such as a loading applied to rates of pay, or incorporating the entitlement into an hourly rate of pay. There had been previous contradictory decisions by single members of the Commission on this point. The decision of the full bench means that an enterprise agreement which provided for annual leave in this way will not be approved by the Commission.

Australia: round-up 

The Fair Work Commission has set the new weekly minimum wage from 1 July 2014 at AUD 640.90 per week or AUD 16.87 an hour. This is a 3% increase on the previous year's minimum.

The Australian Bureau of Statistics has released figures which show that union membership in Australia, measured at August 2013, stands at 17% across the economy, a decrease of 1.2% in the previous 12 months. There continues to be a stark difference between private sector union membership (12%) and the public sector (41.7%).

China: Employers in Beijing and Hubei Province must file plans to demonstrate compliance with 10% dispatch labour cap by end of August 2014

In February's Be Global, we reported on new rules regulating the use of dispatch workers including the introduction of a 10% cap on the number of dispatch workers a hiring company may engage as a percentage of its overall workforce. Two regions: Beijing and Hubei Province, have now published rules requiring employers currently engaging more than 10% of their workforce via labour dispatch, to file detailed plans to demonstrate how they will meet the 10% cap. The information must be completed on a template form provided by the relevant authority, together with an acceptable plan, by the end of August, 2014. We anticipate that other cities or provinces may follow suit in due course.

China: Average monthly salary for Beijing announced: Relevant to severance payments

In May's Be Global, we reported that the average monthly salary (calculated based on published social insurance rates) for Shanghai has increased to RMB 5,036 (approximately USD 824). The figure for Beijing is now available: RMB 5,793 (approximately USD 930), which represents an 11% increase on last year's average. The average salary figure is relevant to employers as it forms part of the calculation for severance pay in China. Severance pay is calculated based on an employee's monthly salary multiplied by years of service, with monthly salary capped at three times the relevant local average salary. The new salary will apply from 1 July 2014 in relation to the calculation of severance pay and social insurance contributions.

China: Interim measure to converge urban and rural pension insurance systems takes effect on 1 July 2014

This interim measure was jointly issued by the Ministry of Human Resources and Social Security and the Ministry of Finance on 24 February 2014, with a view to unifying different types of pension insurance schemes in the PRC. Two of the major pension insurance schemes, the urban employee pension insurance ("UPI", the most common pension scheme, into which both the employer and employee contribute) and the rural residents pension insurance ("RPI", contributed to by free-lancers/self-employed/other workers not in a labour relationship with an employer), used to be unrelated to each other. In the past, to enjoy the pension, an individual would have had to have contributed into either one for over 15 years. For example, if an individual had contributed to both for 10 years each, they would not be able to enjoy either pension. Moreover, if the individual achieved 15 years of contributions into one of the pensions, the contributions to the other would have been disregarded for the purpose of pension calculation. This new regulation remedies that disconnect and now all contribution years will be taken into account. Since February 2014, around 15 provinces (or municipalities) including Shandong, Yunnan, Shanghai, Sichuan and Tianjin have completed the merger of urban and rural pension schemes, and the remaining regions must comply by 1 July 2014.

China: Regulation on the Personnel Management of Public Institutions

The Regulation on the Personnel Management of Public Institutions, adopted by the State Council on 26 February 2014, will come into force on 1 July 2014. Whilst clearly relevant to public institutions, this could also be relevant to private employers acquiring a public institution whose employees may be, or may claim to be, covered by the regulation.

Unlike employees of private companies, the employment relationship between public institutions (such as schools and hospitals) and many of their employees is governed by this regulation (PI Employee). The regulation governs all aspects of the employment relationship, including: recruitment, duration of employment, employment contracts, trial periods, training, wages and benefits, social insurance, the handling of personnel disputes, as well as the position on legal liability. In relation to duration of employment, the term of employment contracts concluded between a public institution and PI Employee shall generally be not less than three years. Where the term of a contract of a PI Employee recruited for the first time into a public institution is three years or more, the probationary period shall be 12 months (longer than that of employees of private companies). PI Employees who have worked in the public institution for over 10 years and with less than 10 years to retirement, shall be offered a contract with the retirement age as the expiration date. Retirement age is 50 or 55 for women (55 for those in management positions) and 60 for men.

India: Employee secondment may trigger permanent establishment

Multinationals with operations in India should take note of the recent decision of the Delhi High Court in which it upheld a ruling of the Authority for Advance Rulings that an employee secondment that brings global affiliate employees to India may give rise to a permanent establishment in India. Further details can be found in our International Tax News bulletin. Click here to read more. Our international tax and employment groups have extensive experience of advising in this area. For further information contact your usual employment contact or our tax experts Lynda Finan or Dharmesh Pandya.

South Korea: Scope of good faith defense extended in ordinary wage litigation

Under Korean law, various statutory entitlements, such as overtime pay and severance pay, are calculated based on the "ordinary wage". Until recently, the ordinary wage was understood to exclude bonuses paid at intervals of two months or more. In various cases decided since 2012, however, the Supreme Court has recognized that regular bonus payments may have to be included in the calculation of the ordinary wage. Although this development has placed employers at risk of having to make significant back payments based on the expanded definition of ordinary wages, potential relief was provided by the Court in the guise of a good faith defense. This defense is available where (i) it was the employer's established practice to exclude regular bonuses from ordinary wages or there was a labour/management agreement to this effect and (ii) payment of back-pay would result in serious managerial difficulty for the employer. This defense has been considered by the Supreme Court in a recent case and its scope has been expanded by the Court broadening its interpretation of "serious managerial difficulty". In this most recent case, the Court held that the significant additional financial liability arising from dramatically increased rates of ordinary and actual wages, which were not anticipated by the employer when negotiating pay rates, may cause serious managerial difficulty. Further, the net profit of the company was not explicitly considered in assessing the potential for serious managerial difficulty, as it had been in previous cases. Further case law developments are expected but, for now, this apparent expansion of the scope of the good faith defense is positive news for employers.

EMEA

EU Wide: European Court decides that commission must be included in calculation of holiday pay

The European Court of Justice (ECJ) has handed down judgment in a case which could mean that employers in the UK, and potentially elsewhere in Europe, face significant liabilities for holiday pay. The issue has arisen because of an apparent conflict between UK and European law as to how holiday pay should be calculated and in particular whether commission should be included. The ECJ said in its ruling that commission must be included as otherwise the financial disadvantage suffered might deter workers paid on a commission basis from taking leave. The implications of this decision are particularly stark for employers in the UK where the law does not include commission in the calculation of holiday pay. The impact in other member states will depend on how they have implemented the requirement under the Working Time Directive to provide paid annual leave. In some states, for example Germany, commission is already included when calculating holiday pay. The UK courts will have to decide in a series of appeals due to be heard this summer whether, as a result of this and other recent ECJ decisions, overtime should also be included in holiday pay. If so, UK employers could face liabilities for unpaid holiday pay going back several years. Click here to read more.

France: Extension of "portability rights" partially in force from 1 June 2014

An employee whose employment contract is involuntarily terminated is currently entitled, except in case of willful misconduct, to continue enjoying the health and welfare schemes they benefitted from while employed, provided that they continue to fulfill the relevant scheme conditions. This mechanism is known as portability (portabilité). It is either funded jointly by the ex-employer and the ex-employee, or relies on a mutualized system organized by collective agreement, whereby the cost is borne by the company and its active employees.

The June 2013 Law on Securing Employment has extended portability rights in several respects, in particular by making it free for ex-employees - meaning, in practice, that the cost must be borne by the company and its active employees - and by extending the duration of the portability mechanism from a maximum of 9 to 12 months beyond the termination of the employment contract.

The new provisions have applied since 1 June 2014 to health plans (i.e. those covering sickness, maternity and accidents) and will apply from 1 June 2015 to welfare schemes (i.e. those covering death, work incapacity and disability). Unfortunately it is unclear whether the health plan extension only applies to terminations which are notified as of 1 June 2014, or also to terminations notified before then but where the notice period ends as of 1 June.

The Law on Securing Employment also provides that employers are must refer to the existence of these benefits in the work certificate (which is given to an employee on termination). From 1 June 2014, the obligation to provide this information applies in relation to health plans, and will apply from 1 June 2015 in relation to welfare schemes. In addition, companies must inform their insurance companies where an affected employment contract is terminated. In the absence of any further regulatory details or case law on the scope of the information to be provided in the work certificate, employers are recommended to include general wording which, at the very least, mentions the start date of the portability mechanism, whether the mechanism covers welfare and/or health and the maximum duration of the portability rights.

Employers who fail to provide for the maintenance of health and welfare schemes in the work certificate may face claims for damages from affected employees.

France: Guidance on implementation of a centralized social and economic database

By 14 June 2014, companies with at least 300 employees were required to establish a centralized database to provide social and economic information for their employee representatives. This obligation will apply from 14 June 2015 to companies with between 50 and 299 employees. In a Circular issued on 24 March 2014, the French Administration clarified the terms for establishing, giving access to and the content of such a database. The Circular specifies that the database has to be implemented at "economic and social unit" (UES) level which, for these purposes, equates to the level of the entire undertaking. This means that, despite the French Supreme Court recently doubting the legal personality of the UES, this unit nonetheless retains a degree of legal existence to be taken account of by an employer. This obligation, as clarified in the Circular does, however, leave a number of practical questions unanswered; in particular, must employers consolidate the data available for each company which forms part of the UES or is acceptable to provide the data for each company separately?

Germany: The ins and outs of Germany holiday pay

Vacation regulations in Germany are not straightforward. In a recent blog post, our German employment team provide an overview for employers of German vacation rules. This helpful summary covers issues such as the extent of an employee's entitlement to paid time off, carry forward of untaken holiday and holiday rules for a-typical workers. Click here to read more.

Germany: Validity of works council decisions

According to the Works Constitution Act, works council meetings are called by the chairman of the works council. The chairman must draw up the agenda and notify works council members of the meetings in good time and provide information about the agenda. Based on previous decisions by the Federal Labour Court, it used to be the case that if a decision was taken on a topic not included in the agenda or where no agenda was provided to the members of the works council with the invitation, the decision on that matter was void unless the fault in the process was remedied by the presence of all members of the works council and a unanimous decision was taken. However, the First Senate of the Federal Labour Court changed this position in a decision reached in April. Now, to fix a faulty invitation, it is sufficient that (i) all members of the works council have been invited in a timely manner, (ii) enough members are present to constitute the quorum (i.e. at least one-half of the members of the works council) and (iii) the members of the works council attending the meeting vote unanimously vote on the topic.

Although this decision increases the potential for valid decisions to be taken even where there are procedural faults, employers should carefully review compliance with the formalities especially in cases where decisions are taken with a view to observing statutory time limits or to initiate court proceedings. The consequences of not observing proper procedure can be serious, and it will not always be possible to fix the breach.

Netherlands: employment law reforms delayed to 2015

As reported in previous editions of Be Global, the Dutch Government has legislated to implement a number of important changes to employment law. It was anticipated that some of these reforms would come into effect on 1 July 2014. However, as the legislation has only recently completed its passage through the legislative process, the reforms will now be implemented on two dates in 2015.

The changes coming into effect on 1 January 2015 are:

New rules on the use of non-compete restrictions in fixed-term contracts (see April's Be Global);

New rules on probationary periods in fixed-term contracts and the requirement to notify a fixed-term employee of non-renewal (see May's Be Global).

The changes coming into effect on 1 July 2015 are:

New rules on conversion of fixed-term employment contracts into indefinite term contracts (see February's Be Global);

Reforms to Dutch dismissal procedures and severance payments which will be reported in a future edition of Be Global.

Russia: New law regulating secondments will come into force in January 2016

A new law regulating secondments will come into force on 1 January 2016. The law introduces, for the first time, the concept of a 'secondment' into the Russian Labour Code, but it then goes on to place substantial restrictions on the use of secondment arrangements. Secondments will only be permitted (i) by private employment agencies; or (ii) between related persons, including affiliates, parties to shareholders' agreements, and joint stock companies if the assigning party is a party to a shareholders' agreement with the other participants in the company. Private employment agencies must comply with certain requirements established by law to receive accreditation. Also, private employment agencies may only second workers to carry out temporary work in another company in circumstances expressly provided for in the legislation (for example, to cover temporary absences). At this stage, it is too early to surmise how the new law will be interpreted by the courts but employers who plan to introduce, or to continue, secondment arrangements in Russia would be wise to keep abreast of developments.

Russia: New law requires dual citizens to notify the Russian authorities about their status

A controversial new law has recently been making its way through Russia's State Duma. The new law requires all Russian citizens holding citizenship in another country, or any right to habitual residence in a foreign state, to file a special notification with the Russian authorities within 60 days of the law coming into force on 3 August 2014. There is an exemption for Russian citizens who live permanently abroad. The burden should not be too onerous for individuals; however, the sanctions for failure to comply are serious. A failure will be a criminal offence and may lead to a penalty of up to RUB 200,000, or a fine of up to an equivalent of an individual's annual salary, or up to 400 hours' community service.

South Africa: Employment guide to the 2014 labour law amendments

The legislative process leading to amendment of the primary South African labour legislation is almost complete. Only the legislative process in respect of the Labour Relations Act (LRA) remains incomplete (although the remainder are still awaiting publication of commencement dates). The Labour Relations Amendment Bill (Bill) is currently awaiting signature by the President, whereupon it will be published in the Government Gazette and will move from a Bill to an Amendment Act. Some of the most important amendments introduced by the Bill relates to employees employed through a Temporary Employment Service (TES) and fixed term employees.

These employees will in future enjoy far greater protection than what is currently available to them, with concomitant limitations placed on employers to utilise such employment structures. The new protections are limited in some respects; for instance, they only apply to persons earning below a statutory income threshold (currently ZAR 193,805 per annum), and in the case of fixed term employees, some smaller and start-up employers may be exempted. The amendments are primarily intended to limit the use of these employees to true short term contracts (three months or less; to replace another employee who is temporarily absent; or in categories of employment lawfully characterised as suitable for such employees). Failure to abide by the limitations will result in the employees becoming permanent employees (fixed term employees), or being deemed to be employees of the client (TES employees).

Further information can be found in our Guide to the 2014 Amendments. Click here to read more. 

South Africa: Amendments to immigration legislation

On 26 May 2014, radical amendments to South Africa's existing immigration laws came into effect. These amendments will have a major impact on the requirements for the different kinds of work visas and the procedure for obtaining such work visas. Some important changes include:

The introduction of Visa Facilitation Services Global (VFS), the company that has taken over the administrative mandate of the Department of Home Affairs (DHA) in terms of the acceptance of visa/permit application. VFS will open offices in each of South Africa's nine provinces.

The legislation makes a clear distinction between "visas" and "permits". The only permit a foreigner can obtain is a permanent residence permit, thereby differentiating between temporary visas and long-stay permits.

Applicants for General Work Visas will need to apply for a certificate from the Department of Labour (DoL) which ultimately confirms that the respective employer was unable to find a suitable South African citizen or permanent resident for the position.

Quota Work Permits and Exceptional Skills Work Permits have been repealed. The legislation has replaced these permits with a new type of work visa called a Critical Skills Work Visa. In order to qualify, the respective applicant will need to demonstrate that he/she falls within a defined occupation that is considered to be "critical" and in the national interest.

Intra-Company Transfer Work Visas (ICT Visa) can now be granted for a period of up to four years. Only employees with a service history of 6 months or longer are eligible to apply for an ICT Visa. All ICT Visa applications must be accompanied with a Skills Transfer Plan.

Employers who regularly expatriate employees to conduct work in South Africa will need to consider the new Immigration legislation and its impact on their current recruitment and employment practices. There have also been major changes to visitor's visas with the authority to conduct working activities.

UK: Right to request flexible working extended to all employees

Currently in the UK, the right to request flexible working (for example, part-time work or a job share arrangement) applies only to the carers of children under age 17 (18 if disabled) and carers of certain categories of adult. With effect from 30 June 2014, this right is being extended to apply to any employee who has been continuously employed for at least 26 weeks. Employees may make up to one written request in any 12 month period; the employer must deal with the request within three months; and it can refuse the request on any one of eight specified business grounds. The maximum compensation available where the employer fails to deal properly with a request is eight weeks' pay. 

AMERICAS

US: New incentive for buyer of a business to assess labour obligations

The National Labor Relations Board, which can obtain a temporary injunction to stop unfair labor practices while a complaint is being litigated, has recently warned that it has a particular interest in seeking injunctions in successor cases, where there has been a transfer of corporate ownership. The indication is that the Board will now pay increased attention to situations where a successor business refuses to recognise and bargain with an incumbent union or discriminatorily refuses to hire its predecessor's employees. Dianne Rose LaRocca, Katharine Liao and Maria Rodriguez have considered this development in a recent US Employment Alert. Click here to read more.

Puerto Rico: Proposed implementation of anti-bullying/anti-harassment laws

The Puerto Rican legislature has recently approved a workplace anti-harassment bill. If approved by the Governor, this legislation will oblige employers to prevent and remedy unjustified workplace bullying and harassment. The proposed laws define and give specific examples of workplace harassment; make employers vicariously liable for the actions of supervisors, co-workers and clients; and contain anti-retaliation protections. Both private and public sector employers would be affected by the legislation which could expose them to the risk of significant financial penalties for non-compliance.