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.
Saudi Arabia: Further changes to the Nitaqat System
In the last couple of years the Government in Saudi Arabia has been increasingly engaged with the issue of employment and creating opportunities for Saudi nationals. This led to the creation of the Nitaqat system back in 2012 which has been implemented in order to ensure that companies operating in Saudi are focussed on increasing their Saudization percentage. Recent changes have been announced to the system. Click here to read more. If you would like access to a DLA Piper webinar on the Nitaquat system, please contact firstname.lastname@example.org
Spain: National Court issues first judgment on the calculation of vacation pay
The Spanish National Court has issued its first decision on which elements of pay should be taken into account in calculating holiday pay following the significant recent judgment of the ECJ in Lock v British Gas Trading Ltd. The Court decided that premiums, such as those for night-work and Sunday work, must be included in the calculation of holiday pay.Click here to read more.
Australia: High Court rules on whether termination due to industrial action
By narrow majority, the High Court of Australia has held that the termination of an employee for holding up a "scab" sign while engaging in lawful industrial activity did not breach the Fair Work Act 2009 (FWA). The Court's reasoning demonstrates the importance for employers of carefully and specifically setting out reasons for termination, especially where there is a risk of a claim of adverse action under the FWA. Click here for further details.
Australia: Company's tolerance of bullying meant dismissal unfair
A recent decision of the Fair Work Commission has held that the dismissal of employees with a history of bullying behaviour was nevertheless unfair. Despite having a valid reason to dismiss employees for bullying behaviour, it was held that the employer gave up its right to dismiss them summarily as the employer had full knowledge of the bullying behaviour but continued to retain them and had taken no disciplinary action. The Commission noted that the employees had not been afforded an opportunity to respond to all of the reasons for dismissal.
Australia: Royal Commission into Trade Union Governance and Corruption
The deadline by which the Royal Commission into Trade Union Governance and Corruption must deliver its final report has been extended by 12 months to December 2015. An interim report is to be delivered on 14 December 2014.
Australia: Government adopts 457 visa review recommendations
The Federal Government has responded to last month's report by the review panel into Australia's 457 visa program by signalling its intention to make changes to the program including:
- Streamlining the processing of sponsorship, nomination and visa applications to reward low risk applicants and refocus compliance and monitoring activities on high risk applicants;
- Increasing the sponsorship approval period from 12 to 18 months for start-up businesses (to give start-ups more time to make their businesses sustainable);
- Providing greater flexibility in relation to English language testing and skill requirements for 457 applicants; and
- Retaining Temporary Skilled Migration Income Threshold at AUD 53,900.
China: New regulations on collective bargaining in Guangdong Province
New regulations on collective bargaining in Guangdong Province are due to come into effect on 1 January 2015. Employers will be required to respond to requests for collective bargaining when:
- more than half of the employees or more than half of the employee congress request/s collective bargaining, and the union asks the employer to establish a collective bargaining system; or,
- If there is no union represented at the employer level, and the employees ask the regional union to request collective bargaining.
After receiving a written collective bargaining request, the employer must respond in writing within 30 days. The employer is not obliged to accept the request, but a refusal could negatively impact employee relations. If collective negotiations go ahead, these should normally be completed in 3 months (from the date that the request of either party is delivered). If necessary, the period can be extended for additional 60 days.
Collective bargaining can be requested in relation to the following issues:
- Working time
- Work safety
- Insurance and benefits
- Protection for female employees and employees between 16 - 18 years old
- Breach of the collective agreement
- Any other aspect of the employment relationship for which collective bargaining is deemed necessary.
Collective bargaining negotiations should be attended by representatives from the employees and the employer. The employer will be required to provide relevant information and data relating to the issue to enable the representatives to take part in the negotiations. The representatives will be required to keep such information and data confidential (and there will be civil or criminal liability penalties if they do not do so).
Employers entering into collective bargaining are prohibited from retaliation; obstructing collective negotiations; or refusing to enforce a collective agreement. Employees are prohibited from refusing to perform their duties; violating company policy; soliciting or requiring other employees to do the above; blocking the company’s gateway or traffic thoroughfares; stopping any person or material from entering or leaving the worksite; or anything else which may affect the operation order of the employer. On this basis, a strike may be unlawful.
If either party's activities taken to obtain a better collective bargaining position affect the public interest, the Government could intervene to stop any such activity, and this may also have the effect of restricting a strike.
Hong Kong: Possible amendments to proposed paternity leave legislation
Hong Kong is currently awaiting new legislation providing for three days' paternity leave (paid at 4/5ths of an employee's average daily wages) for male employees. However, amendments were proposed at the Bills Committee stage which, if passed would increase the period of paternity leave to seven days. These amendments have been passed by the Bills Committee and now will be put before the Legislative Council for consideration. In practice, this may make the passing of the revised legislation more unlikely given the increased cost to employers.
Japan: Action to increase number of female managers
An advisory committee to the Minister of the Ministry of Health, Labor and Welfare (MHLW) has been discussing how to increase the number of female workers in managerial positions in Japan since 7 August 2014. On 30 September 2014, the advisory committee issued its final report to the Minister outlining its findings and recommendations. Based on the report, the MHLW prepared a draft bill as a temporary statute with a 10 year term on 7 October 2014 and intends to have it introduced to the Diet for consideration shortly and enacted within this fiscal year.
The draft law includes a requirement on employers with more than 300 employees (employers with less than this are encouraged) to audit the current working conditions with respect to female employees (for example, percentage of female new hires, length of employment when compared to male employees, working hours and percentage in managerial positions). Once employers have carried out this audit, they will be required to analyse the issues they find, set goals and create an action plan for increasing the percentage of female managers. The action plan must be made public and filed with the relevant labor authority.
The new law would also give labor authorities power to require employers to submit reports upon the authority's request and allow the authority to give guidance/recommendations or advice to employers. Employers who do not follow such guidance/recommendations or advice or who fail to submit a report could be subject to penalties.
The law is still an initial draft and, therefore, may change. Employers should, therefore, keep track of the draft law as it progresses and understand the potential obligations it will impose if it is enacted.
Belgium: Delay to extension of sick pay period
The statutory period of sick pay under Belgian law is currently limited to a maximum of 30 days. Employers are nonetheless free to continue paying sick pay during a longer period of absence, and some employers enter into insurance policies which guarantee their employees payment of remuneration during a longer period of sick leave (for example 3 months).
A Government declaration issued by the new Federal Government had stipulated that the maximum period of sick pay would be extended to two months. The declaration did not, however, include specific detail of the change. For instance, when the new legislation would enter into force and whether the amount paid by the employer during the second month of illness would be considered to be remuneration, and hence, subject to the same taxes and social security contributions as normal remuneration.
Now, due to protests by the employer's federation, the Government has announced that this extension of sick pay will be postponed for one year.
Belgium: European Commission challenge to dock workers legislation and collective bargaining agreement
Under Belgian legislation, only registered dock workers are allowed to perform dock work in the Belgian sea ports. Each port (Antwerp, Zeebrugge, etc) also has a separate joint subcommittee for dock work, which negotiates collective bargaining agreements for the port's dock workers.
According to the European Commission, the Belgian legislation on dock work is contrary to European law in several respects. On 9 October 2014, the Belgian Minister of Employment issued a press release stating that discussions with the European Commission on this subject are still pending. In the meantime, according to the press release, the Belgian Government will not take a public position on this subject, and the European Commission will not start proceedings before the European Court of Justice.
Denmark: Changes to sickness benefits
An amendment to the Sickness Benefits Act has been adopted according to which employees who have reported in sick and cannot obtain an extension of their sickness benefits under existing rules, must now enter a job clarification procedure and receive benefits with no time restriction. This benefit is almost equal to the level of cash benefits and is not means tested.
Denmark: Possible amendments to rules on post-termination restraints
The next six months may introduce some interesting changes to current rules on non-competition, non-solicitation and "job" clauses. The Government's growth plan from May 2014 suggests that the current rules on non-competition and non-solicitation clauses will apply to all employees in the future and not only to salaried employees, and the Government further suggests that the term of such clauses should be a maximum of 12 months. The plan also suggests that the compensation rules will be amended with the result that employees are compensated more the longer a restraint applies. It is further suggested that there will be a prohibition on so-called "job" clauses (non-solicitation of employees). Such clauses are, in certain circumstances, entered into between two companies to prevent the employment of each other's staff.
France: New obligation to inform employees two months before share sales and business transfers (the “Hamon” Law)
A new law adopted on 31 July 2014 imposes on small and mid-size companies an obligation to provide information to employees about a sale of the business. The purpose of this measure is to enable the employees to make an offer for the shares or the business. A small company is one with less than 50 employees and a mid-size company is one with fewer than 250 employees AND an annual turnover of less than EUR 50M or a balance sheet of less than EUR 43M.
Where a share deal or business transfer is contemplated, the employer must inform its employees about the contemplated share deal/business transfer at least two months before a proposed sale of 50% or more of the shares or business. The employees will then have two months in which to respond and to make an offer to acquire the shares/business. They must keep the information given to them confidential. This new obligation does not impose a priority, preferential or pre-emption right for the employees where they do make an offer to purchase.
If all employees respond before the end of the two month period to confirm that they are not interested in making an offer, the employer may complete the transaction with a third party before the end of the two month period.
This new obligation will apply to transactions closing on or after 1 November 2014. A failure to comply could result in the share sale/business transfer being held to be null and void. This new law follows, and is in the same vein as, the "Florange law" which was implemented in April 2014 and which requires any employer intending to shut down a site to try to find a buyer before the closure. For further details of the Florange law click hereto see May's Be Global
France: Notice of pregnancy within 15 days of dismissal notice annuls dismissal
Under the French Labor Code, a dismissal must be annulled if an employee proves, within 15 days from the dismissal notice, that her pregnancy started before date on which dismissal notice was given. The French Supreme Court decided recently that a dismissal must also be annulled if the employee concerned sends a medical certificate, proving that she is pregnant, within 15 days after the notification of the dismissal, even if the pregnancy started after notification of the dismissal. In this case, the employer gave notice of dismissal on October 15, then the employee provided a medical certificate indicating that she had been pregnant since 16 October at the earliest (i.e. the day after the dismissal notice). The employer argued that at the time it gave notice, the employee was not pregnant. However, the French Supreme Court did not accept this argument and decided that the dismissal should be reversed.
France: Retailer prohibited from employing staff to work night shifts
There has been much publicity recently in relation to the employment implications of late night shopping in a major perfume retailer's store on Paris's famous Champs-Elysées. In the latest, and probably last, chapter in this particular saga, the French Supreme Court has confirmed that, under current regulations, the retailer's activity is not such that it is permitted to have recourse to night work because the activity of a perfumer is not of an exceptional type requiring night work. The Court decided that neither the commercial benefit of the store on the Champs-Elysees generating 20% of sales after 9 p.m., nor the need to deliver the retailers products at night, could justify opening the store to customers after 9 p.m. The Court's decision thus forces the retailer in question to close its store at 9 p.m. while at the same time reaffirming for all employers the exceptional nature of night work. Interestingly, this decision also comes as the same time as the proposal for a new bill supported by Emmanuel Macron, the new Minister of Economy, to allow wider scope for Sunday working and also relaxing rules on night work.
France: Mutually agreed termination was possible when the employment was suspended due to an occupational accident
The Supreme Court has recently decided that the mutually agreed termination of an employment contract is possible even where the employment contract of the affected employee has been suspended as a result of an occupational accident. In the case in question, the employee had resumed work without being subject to a "return-to-work" medical examination so that, from a legal perspective, her employment contract was still suspended. After entering into an amicable termination agreement with the employer, she sought to have the termination recognized as null and void. She based her argument on the Article L. 1226-9 of the French Labour Code which states that during a period of suspension of the employment contract, the employer may terminate only on the grounds of gross misconduct or because it is impossible to continue the employment for a reason unrelated to the accident. The Court dismissed the claim, holding for the first time that an employment contract may be terminated by agreement even while it is suspended as a result of an occupational accident or disease, in the absence of fraud and provided the employee's consent was valid. So, it appears Article L. 1226-9 concerns only the unilateral termination of the employment contract. However, the position is at odds with the with the position of the Administration. It also remains to be seen if the Supreme Court will adopt the same approach in case of maternity leave.
Germany: Notice periods may be tied to years of service
In a recent judgment, the Federal Labour Court ruled that seniority-related notice periods are not discriminatory on grounds of age. This judgment settles a long-term bone of contention with regard to the impact of equal treatment law on dismissal protection provisions. For more information on recent developments in Germany visit our Employment Germany Blog.
Israel: Representation of disabled people in the workplace
The Equal Rights for Disabled Persons Law 1998 requires employers not to discriminate against disabled individuals and to make reasonable accommodation to allow people with disabilities to be employed, including providing proper access and facilities. Since this statute requires affirmative action, it states that an employer should engage in efforts to achieve "proper representation" of disabled individuals among its employees, but does not define what this means. In September 2014, an expansion order was issued which provides such a definition - from September 2015 an employer will be deemed to have "proper representation" if 2% of its employees have disabilities, and from September 2017, 3%. A disability includes permanent or temporary physical, mental and cognitive deficiencies that inhibit functioning in one or more essential area of life.
It is worth noting that the requirement of the statute is to advance proper representation and it does not impose a requirement that this goal be achieved or impose sanctions if it is not. The expansion order simply sets a standard as to what such representation means. That said, a failure to act in accordance with the requirements of the law (ie. a failure to act to advance proper representation) could expose the company to criminal sanctions (for actual discrimination) or a civil claim by an employee, potential employee or organization representing disabled persons.
The expansion order only applies to employers in the private sector with 100 or more employees and excludes the public sector and small businesses
Italy: Unlawful dismissal: Reinstatement may be restricted
The Italian Government is currently considering, within the scope of a wider reform of labour law, whether to change the potential consequences of dismissing unlawfully for companies which employ more than 15 employees. The intention of the Government is to limit the sanction of reinstatement to specific cases only, namely dismissals which are found to be discriminatory or where the alleged disciplinary ground is not proven. Social parties are still discussing the scope of the changes but any legislative change is expected to be adopted within coming months.
Netherlands: Changes to Fixed Term Employment Rules and Dismissal Legislation come into force on 1 January 2015 and 1 July 2015
As reported in previous editions of Be Global, significant employment law changes will come into effect in the Netherlands in 2015.
First, new rules on fixed term contracts relating to a requirement to notify of renewals and the use of non-compete restrictions and probationary periods will apply from January.
- Duty to notify - Employers will be obliged to inform fixed term employees with contracts of six months or more of any decision whether or not to extend and under what conditions one month before the end date. If the employer does not, they will have to pay up to one month's salary as compensation (reduced pro-rata if the required notice is given late).
- Probationary periods - It will not be lawful to include a probationary period in a fixed term employment contract which is entered into for six months or less. It will be prohibited to deviate from this by a Collective Labour Agreement ("CLA"). The old legislation regarding probationary clauses will still apply to employment contracts which have been entered into prior to January 1, 2015. Probationary periods which are not in line with the new legislation, but were included in a CLA valid on January 1, 2015, will be respected for a transitional period until July 1, 2016 (or the end date of the CLA if earlier).
- Non-competes – Non-competes will be prohibited in fixed term contracts entered into after January 1, 2015 unless they are necessary to protect a substantial business interest. A non-compete clause can only be included if the employer expressly states that it is required due to compelling business or service interests and this is disclosed to the employee. If the rationale is not convincing, the court will be able to test the justification. If the court finds no legitimate interest, it may declare the restraint void.
Second, new rules on the conversion of fixed-term contracts into indefinite term contracts and reforms to dismissal procedures and severance payments come into force in July.
- Succession of fixed-term employment contracts - The provisions on the conversion of fixed-term employment contracts into indefinite term contracts will be amended. From July, the last fixed term contract in a chain will be considered permanent if: (i) it is the fourth contract in the chain; or (ii) the total duration of the chain of fixed term contracts exceeds a period of two years (unless the chain of consecutive contracts is broken by a six month break).
- Dismissal law - Currently there is a "dual dismissal system". If it is not possible to terminate with mutual consent, an employer can terminate by giving notice after receiving permission from the Dutch Employee Insurance Agency ("UWV") or Cantonal Court. The amendments to this system will be:
- New compulsory proceedings (Court or UWV) will apply depending on the reason for termination. A dismissal on business economic grounds or based on long-term illness will be handled via the UWV, a dismissal for personal circumstances via the Court.
- The Cantonal severance formula will be replaced by a “transition payment”. The amount of the transition payment is based on the employee’s length of service and is capped at EUR 75,000 (or one year's salary if higher). In exceptional cases, judges can allow compensation over the transition payment cap, for example where the employer is to blame for an unworkable situation and it is “unreasonable” to only pay the transition allowance. Case law following July will dictate what circumstances will qualify as “unreasonable”.
Saudi Arabia: Further changes to the Nitaqat System
In the last couple of years the Government in Saudi Arabia has been increasingly engaged with the issue of employment and creating opportunities for Saudi nationals. This led to the creation of the Nitaqat system back in 2012 which has been implemented in order to ensure that companies operating in Saudi are focussed on increasing their Saudization percentage. The Nitaqat system places companies into a band ranging from platinum to red depending on the number of Saudi nationals employed by the company relative to the size of the business in Saudi and the nature of the activities they carry out. The Nitaqat system is constantly evolving and changes have been announced recently to confirm that companies falling into the yellow zone will not be able to renew visas and work permits (Iqamas) for their expatriate employees who have been working in Saudi for more than 4 years. Also, going forward, companies falling into the low green category will be banned from applying for new visas and will further be prevented from employing expatriates (by transferring their employment) from the local Saudi market. Both of these changes will be coming into effect starting from the new Islamic/Hijiri year towards the end of October 2014. A further change which is expected to be implemented shortly is an extension to the period of time for which a Saudi national must be employed before they count as part of a company's Saudization percentage for Nitaqat purposes. This period is anticipated to increase from 13 weeks to 26 weeks by December 2014.
Spain: National Court issues first judgment on the calculation of vacation pay
On 17 September 2014, the Spanish National Court (Audiencia Nacional) issued its first judgment on the calculation of vacation pay after the recent ECJ decision in Lock v British Gas Trading Ltd. This ruling is significant as it follows the Lock case which considered which components of pay should be taken into account when calculating vacation pay.
This case, unlike Lock, did not concern the issue of commission. However, the case did have to consider what other elements of pay should be taken into account in circumstances where the applicable CBA may expressly exclude certain payments such as night work premiums, banking-day premiums, Sunday hours premiums and split-shift allowances. Taking into account the ECJ case law, the National Court found that, regardless of what is set out in the CBA, these types of premiums must be included when calculating the correct amount of vacation pay. This decision may be appealed to the Supreme Court.
Commission is normally already included by employers in the calculation of vacation pay; however payments relating to bonuses and overtime are not, and a case has yet to be brought before the Spanish courts to test whether this is lawful in light of the ECJ case law.
UK: October 2014 employment law changes
Various employment law changes came into force in the UK on 1 October 2014 including:
- An increase in the national minimum wage rates. The rates now in force are a standard adult rate of GBP 6.50 per hour; GBP 5.13 per hour for workers between age 18 and 20; GBP 3.79 per hour for workers under age 18; and GBP 2.73 per hour for apprentices.
- A power for Employment Tribunals to order a business to carry out an equal pay audit where the employer has been found to have breached equal pay law.
- A new right for employees to take unpaid time off work to accompany a pregnant woman with whom they have a "qualifying relationship" to up to two antenatal appointments. The maximum time off allowed is up to six and a half hours for each appointment. The definition of "qualifying relationship" means that the new right largely covers the woman's husband or partner or the child's father.
- The Government has published a new list of "prescribed persons" to whom a whistleblower may, in certain limited circumstances, make a disclosure about wrongdoing in the workplace. At the same time, a period of consultation has recently come to an end in relation to Government proposals to impose new obligations on regulators to publish an annual report with information on whistleblowing allegations received. The outcome of the consultation is now awaited.
US: "No hire" agreements - when is their use appropriate?
No hire agreements have recently been making headlines in Silicon Valley. In a recent article on our Labor Dish blog, Ankoor Bagchi from the Chicago office, considers the distinction between blanket restrictions negotiated between competitors and targeted restrictions negotiated between a supplier company and its customers. Click here to read more.