Be Global – March 2015
- Italy: Implementation of Further Labour Reforms
Significant changes to the rules governing dismissals came into force earlier this month, under the provisions of the Italian “Jobs Act”. Click here to read more.
- Germany: Gender Quota in Boardrooms From 2016
German lawmakers have recently passed a law requiring companies to give 30 per cent of seats on a supervisory board to women as of next year. Click here to read more.
- Five Tips on Global Compensation Plans
Multinationals are increasingly looking to take pay, bonus and benefits plans global. That can be tricky. Cautionary tales include hefty fines for neglecting to translate documents into a local language and court rulings holding discretionary language lost due to verbal commitment. Victoria Richter, from our Chicago office, offers five tips on global compensation plans. Click here to read more.
- Australia: Change to Gender Equality Reporting 2015-2016
The Workplace Gender Equality Act 2012 requires private sector employers with 100 or more employees to report annually to the Workplace Gender Equality Agency in relation to Gender Equality Indicators, including the gender composition of the workforce and of governing bodies, equal remuneration between men and women and other measures.
The Government has announced that it will lessen gender reporting requirements, saying this will cut compliance costs by more than a third. However, the new rules do not take effect until the 2015-16 reporting period. The reporting requirements for 2014-15 will not change.
From next year, employers will not be required to report data on:
- remuneration of chief executive officers or equivalent, key management personnel above the chief executive officer and managers employed on a casual basis;
- workers engaged on a contract for services basis, such as independent contractors who run their own business and negotiate their own fees;
- annualised average full-time components of total remuneration;
- information on the number of applications received and interviews conducted;
- the number of requests made, and approvals granted, for extensions to parental leave.
The reporting requirements for non-manager employee categories will continue.
- China: Electronic Signatures: Do They Work in the PRC?
In Feb 2015, the final People’s Court printed its Interpretation on the use of the Civil Procedure Law from the People’s Republic of China, that confirmed (among other activities) that electronic signatures are admissible in evidence in civil litigation. However, we don’t think that this can immediately alter the current practice that wet signatures and original documents are preferred.
The Final Court Interpretation further defines the groups of evidence admissible in civil litigation, including “electronic data”, understood to be the data created or kept in electronic media by means of e-mails, electronic data interchange, online chatting records, blogs, microblogs, short messages, electronic signatures and domains.
However, observe that theoretically a minimum of, it has been the positioning under existing laws and regulations and rules for a while. For instance, under Article 11 from the PRC Contract Law, an itemized contract features a contract that’s created digitally. Under Article 14 from the PRC Electronic Signature Law, a dependable electronic signature shall have a similar legal effect as seal or signature by hands.
Although the legality of electronic signatures continues to be specifically recognized not less than ten years and you will find reported cases by which electronic signatures are recognized, used, a document signed in paper form is considered as increasing numbers of reliable than the usual document signed digitally. For instance, a celebration counting on the electronic signature might be needed to demonstrate that just the signatory has control of the electronic signature during the time of signing which any changes towards the electronic signature or even the items in the document is going to be detectable, and the entire process of showing these things could be complicated.
It remains seen if the latest Top Court Interpretation will take away the practical difficulties of counting on contracts which are signed digitally and also the bias in support of manual signature. In our opinion, such changes won’t occur overnight and can likely take a moment.
- China: Minimum Wage Increases in Shanghai and Shenzhen
Shanghai’s minimum monthly wage increases from RMB 1820 to RMB 2020 (approx. GBP 219) as of April 1, 2015, which represents a rise of more than 10 per cent. Shenzhen has also raised its minimum monthly wage to RMB 2,030 (approx. GBP 220), but note that the Shenzhen rate includes an amount in respect of statutory social insurance and housing fund, which is unusual, as in most other cases (including Shanghai), the minimum wage rate is payable after the deduction of social insurance.
- China: Dispatch Workers: Further Clarification for Shanghai
We have previously reported on the new law relating to dispatch workers (June Be Global & July Be Global). In December 2014, the Shanghai High Court provided some further clarification on how the rules apply in Shanghai through a meeting minute. The meeting minute generally repeats the previous regulation published at national level, but what is new and noteworthy is that:
- It states that disputes regarding ratios and types of positions do not fall to be considered as labor disputes. Therefore, dispatch workers cannot claim compensation on the basis that the end-user has exceeded the ratio of dispatch workers or has hired the individual into a position prohibited for dispatched workers, nor can they claim that to be a direct hire on either of these grounds.
- Despite the national regulations published in March 2014 stating that staffing agencies carrying out outsourcing should also be restricted under the labour dispatch rules, the meeting minute is actually less onerous on these staffing agencies. For example, the minute provides that (i) if an entity receiving outsourcing services partially exceeds its authority to manage outsourced workers without materially changing the nature of the legal relationship, a worker’s claim that this is a labour dispatch (rather than outsourcing) will be rejected; (ii) if an entity receiving outsourcing services partially manages outsourced workers in areas such as fire and production safety, product/service quality and workplace orders, the dispute should be dealt with carefully according to the facts, instead of simply deeming that it is not outsourcing. As such, the minute appears to encourage staffing agencies to convert to outsourcing arrangements and provides that the courts should not easily deem an outsourcing arrangement to, in fact, be a labour dispatch arrangement.
- Japan: Maternity Harassment
The Japanese Supreme Court has issued its decision in a case brought by an employee alleging that she suffered detrimental treatment, in the form of demotion, because she requested lighter duties due to her pregnancy. This is the first case in which the Supreme Court has set out the specific criteria required in cases of “maternity harassment”. The Court specifically ruled that:
- any act in violation of Article 9 of the Equal Employment Opportunity Act (which prohibits disadvantageous treatment by reason of marriage, pregnancy or childbirth) is void;
- demotion as a consequence of transferring a female worker to lighter activities during pregnancy in principle constitutes a violation of Article 9;
- by way of exception, a demotion may not be a violation of Article 9 if (i) there is an objectively reasonable reason that shows the worker freely consented to the demotion; or (ii) it was difficult for the employer to transfer the worker without demoting her due to operational necessity.
Going forward, it seems likely that the courts and labour authorities will adopt a strict interpretation in cases of this type and will follow the criteria established by the Supreme Court.
- Japan: Proposed Amendments to the Labour Standards Act
The Labour Policy Council has recently made a number of proposals in relation to Japan’s labour laws which, once enacted, will result in the most significant amendments to the Labour Standards Act seen in recent years. The proposals include:
- Eliminating the exemption on the application of additional overtime rates to extra work hours exceeding 60 hours per month for small and medium-sized companies;
- Enhancing the direction and guidance given by labour authorities regarding overtime work for the purpose of ensuring workers’ health;
- Encouraging the taking of annual paid leave;
- Re-examining the flex-time system;
- Re-examining the discretionary working hours system;
- Establishing a specific highly specialized work and results type labour system (advanced professional labour system); and
- Enhancing voluntary efforts by labour and management within a company.
It is expected that the majority of the anticipated changes will be implemented with effect from April 2016.
- South Korea: Supreme Court Decisions on Worker Dispatch
The Supreme Court recently decided three cases regarding subcontracted workers, addressing, in particular, the factors that should be considered in determining whether a subcontracting arrangement is a worker dispatch, potentially resulting in an illegal dispatch relationship in which the relevant workers will then be recognized as actually having ’employee status’. In two of the three cases, the Supreme Court recognized the ’employee status’ of the workers of the service providers, holding that the arrangement between the service provider and service recipient was in fact that of a worker dispatch. In the third case, however, the Supreme Court refused to recognize a worker dispatch relationship between the a train crew and service recipient railroad company, holding that the train crew were in fact employees of the service provider.
- EU Wide: Advocate General’s Opinion in Key Collective Redundancy Cases
The Advocate General of the European Court of Justice (ECJ) has recently handed down his opinion in three key collective redundancy consultation cases. If the Advocate General’s opinion is followed by the ECJ, this would mean that collective consultation is only required where an employer proposes to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less; establishment meaning the local employment unit. Click here to read more.
- Germany: Gender Quota in Boardrooms From 2016
At the beginning of March 2015, German lawmakers passed a law requiring companies to give 30 per cent of seats on a supervisory board to women as of next year. It is intended to increase this quota to 50 per cent from 2018 onwards. The new rules apply to listed companies with a co-determined supervisory board, i.e. where shareholder and employee representatives make up the supervisory board. About 100 of Germany’s biggest listed companies will be directly affected by this when filling seats on the supervisory board from next year. In the event of non-compliance, the election will be null and void. If a vacancy arises and a company has not met the quota requirement, either a woman will have to be appointed or the seat will have to be left empty.
Companies that are listed and/or co-determined at the supervisory board level will be obliged to set targets in order to increase the ratio of females in supervisory boards, executive boards and at high management levels. It is estimated that 3,500 companies will be affected by this new rule. These companies are also required to publicly report about the set targets and whether or not they have achieved their goals. A minimum target has not been set. However, if the female ratio at management level is below 30 per cent, the target may not be set below the status quo. The time period allotted in order to reach the goal may not be longer than until 30 June 2017.
- Germany: National Minimum Wage: There’s No Way Round It
As the nationwide statutory minimum wage of EUR 8.50 has been in force for a good two months now, the first court cases dealing with minimum wage issues start rolling in.
According to a recent decision by the Berlin labour court, additional vacation pay and annual additional payments will not count towards the minimum wage entitlement.
In this case, the employee earned an hourly wage of EUR 6.44 plus additional payments relating to performance and shift work. She also received additional vacation pay as well as a yearly additional payment, the amount of which was tied to years of service. Late last year, when the Minimum Wage Act was passed, her employer terminated the employment contract and offered her continued employment with altered conditions. Under these altered conditions, she was to receive an hourly minimum wage of EUR 8.50 (as required by the Minimum Wage Act), but she would not be granted the additional payments previously granted for performance, vacation and long service. The Berlin labour court found the dismissal invalid. According to the court, additional payments that are not intended to compensate employees for their work may not be counted towards the minimum wage. A dismissal and offer of continued employment under altered conditions for this purpose was therefore invalid. As a result, the employee will continue her employment with the employer and is entitled to an hourly wage of EUR 8.50 plus any additional payments as before.
If would like to know more about the new statutory minimum wage in Germany, please refer to our Employment Germany Blog. Click here to read Part I and Click here to read Part II.
- Ireland: Annual Leave During Sickness Absence
The Irish employment law framework is set to be substantially revised shortly once the Workplace Relations Bill is enacted. Among the provisions of this Bill are various measures which will bring the legal position in Ireland in relation to annual leave during sickness absence into line with the case law of the European Court of Justice. The Bill provides a right for an employee on long-term sick leave to continue to accrue statutory annual leave, subject to a maximum carry-over of 15 months from the end of the year in which the leave accrued.
- Italy: Implementation of Further Labour Reforms
On 7 March 2015, further provisions of the “Jobs Act” (which is introducing significant labour reforms in Italy) came into force. The changes to the current rules governing dismissals are significant and can be summarised as follows:
New rules on the consequences of unfair dismissal for new hires or those who are re-employed under a new contract (on or after 7 March 2015).
The law now sets a prescribed level of damages (except in certain specified cases) which can be awarded in unfair dismissal cases where the employee was hired after the date of implementation of the new law. Under the previous regime, a judge could award a range of damages between a set minimum and maximum. The damages a judge may award now will be proportionate to the employee’s length of service.
For companies with more than 15 employees, the sanction of reinstatement plus compensation for damages for unfair dismissal is limited to specific cases only, namely (i) discriminatory dismissals; or (ii) when the material facts forming the basis of a disciplinary dismissal are not proven.
Employees employed, or with new contracts, after 7 March 2015 will therefore only be entitled to a set level of financial compensation, which increases depending on the length of service: 2 months’ salary for each year of service (from a minimum of 4 months’ salary for the first two years of work, to a maximum of 24 months).
In addition, companies with more than 15 employees, who dismiss an employee are able to offer the employee a settlement agreement equal to 1 month’s wage for each year of service, with a minimum of 2 months’ salary to a maximum of 18 months’. This amount is exempt from taxes and contributions.
Companies with fewer than 15 employees, who unfairly dismiss an employee may be liable for minimum compensation ranging from 2 – 6 months’ salary.
The new rules also apply to damages for unfair dismissal in a collective redundancy process (5 or more employees dismissed in a period of 120 days).
Note that the above measures apply only to employees hired after 7 March 2015. The old regime will still apply to employees employed up to this date.
These provisions do not apply to executives (“dirigenti“). Compensation for damages for unfair dismissal is instead governed by the applicable collective bargaining agreements.
Claims for unfair dismissal by new hires or those who are re-employed under a new contract (after 7 March 2015)
The “fast-track” procedure for cases of unfair dismissal will not apply to employees hired after 7 March 2015. These employees will have to follow the ordinary procedures before the Labour Courts.
Unemployment benefits and redundancy funds
In the event of involuntary unemployment, uniform benefits will be granted to all employees, based on their social security contributions. In relation to the wage integration fund (CIG): (i) the “extraordinary” wage integration fund (CIGS) will no longer be granted to companies which are going to cease, totally or partially, their business; and (ii) the relevant administrative formalities will be reduced and simplified.
- Poland: Medical Examination of Employees
On 1 April 2015, an amendment to the Polish Labour Code on the referral of new recruits for medical examinations will come into effect. Changes in relation to fixed-term employment contracts are expected later this year. Click here to read more.
- Saudi Arabia: Significant Increase in Workplace Inspections
A large scale new campaign to target employees working without the correct immigration permissions has been announced in Saudi Arabia (KSA). This campaign is being led by the Ministry of Labour and Ministry of Interior with the aim of ensuring that all employees working in Saudi Arabia are in compliance with Labour and Immigration Laws. It is expected that the dedicated teams assigned by the authorities to this campaign will be checking that employees have the correct profession recorded on their Iqama (work permit), that they are working for the company which sponsors their Iqama and ensuring that anti-fronting laws (preventing foreign businesses from entering into illegal side arrangements with KSA nationals) are being properly adhered to. The campaign has commenced immediately since notification and has been announced throughout Saudi Arabia via the Ministry of Labour website, in the news and via SMS to all mobile telephones across Saudi Arabia. It is, therefore, crucial that employers doing business in Saudi Arabia ensure that all their employees are on the correct immigration permissions at the earliest opportunity and that evidence of this can be made immediately available should an inspection occur without warning. The Ministry of Labour has indicated that, in the event that an expatriate employee is found to be working for an employer other than his sponsor, this could lead to fines, imprisonment (of the employee and potentially the company’s General Manager) and the employee is likely to be deported.
- Saudi Arabia: Restriction on Transferring Sponsorship
The Ministry of Labour in Saudi Arabia has recently taken the view that a number of entities are being issued with more work permits than the entities actually need. This is due to the fact that in Saudi Arabia, large numbers of sponsorship transfers have been taking place for expatriate employees. Accordingly, we have seen reports that the Ministry of Labour is considering whether to impose restrictions on transferring sponsorship that will be linked with the Nitaqat programme. The indications we have received are that the number of sponsorship transfers should not be permitted to exceed 20 per cent of the workforce for small entities (9 or less employees), 10 per cent for entities with 10 to 499 employees and 5 per cent for entities with more than 500 employees.
- Saudi Arabia: Wage Protection System (WPS)
As of 1 April 2015, companies with more than 240 employees will be subject to the requirement to pay employees through the WPS system in KSA. The Ministry of Labour has also announced that a fifth stage of WPS has been launched to target companies with more than 320 employees. The requirement to pay employees through the WPS is being implemented to protect employees and ensure that their salary is being paid correctly although this means less flexibility for employers in terms of salary payments to be made to employees (i.e. it is more difficult to pay expatriate employees via their home country payroll).
- South Africa: Putting the Pieces Together: Employment Law Amendments Considered
For information on the effect of the recent and pending amendments to employment legislation in South Africa, a series of articles can be found here.
- UK: Decision in Key Holiday Pay/Commission Case
The employment tribunal has handed downs its decision in Lock v British Gas Trading, one of the cases in the continuing holiday pay saga which was previously considered by the European Court of Justice. The employment tribunal in Lock has confirmed that commission must be included in the calculation of holiday pay. Click here to read more.
- UK: Access to Information about Criminal Offences
On 10 March 2015, a previously dormant provision of the Data Protection Act 1998 came into force, rendering it a criminal offence to conduct “enforced subject access requests”. This is the practice whereby an employer, who would not otherwise be able to access criminal records information, requires a job applicant or an existing employee to obtain a copy of their criminal records by means of a subject access request, which they are then required to supply to the employer in connection with their recruitment or continued employment. The sanction where an offence is committed is an unlimited fine in England and Wales.
- UK: National Minimum Wage Rates
The Government has recently announced that the national minimum wage will increase by 3 per cent to GBP 6.70 in October 2015. For apprentices it will increase by GBP 0.57 an hour to GBP 3.30, and the rate for 16 to 17-year-olds will be GBP 3.00. The Government will also launch a consultation with businesses on the future of the rate for apprentices.
- Brazil: Limit on Employer Obligation to Deduct Union Dues
The Brazilian Supreme Court has recently enacted Binding Precedent no. 40, which states that union support contributions are only payable by those who are affiliated to the union. According to Supreme Court Precedent, requiring union support contributions as a general duty for all members of a represented category, regardless of their union affiliation, violates the right to freedom of association.
In Brazil, union representation is statutory and both employers and employees are automatically represented by their respective unions, based on the category into which their business or professional activities fall. Besides union representation, a member of a category can choose to become affiliated to a union or not. Every year unions representing a given business activity negotiate the terms of a collective agreement setting out employment conditions and the annual salary increase to be brought in force. As a result of negotiations, it is common to have clauses setting the union support dues that must be paid by all represented workers and/or companies, regardless of their union affiliation. These clauses commonly impose on an employer an obligation to deduct the relevant contribution from their employees’ salaries and transfer the collected amounts to the union, and this triggers a liability for the employing company. The recent Binding Precedent enacted by the Supreme Court, which must now be observed by Courts all over the country and also by the public administration, gives more scope to employers who wish to refuse to agree to a clause requiring union support dues for all represented employees, regardless of their affiliation, and should they decide not to make the deduction in respect of those employees who are not affiliated to the union.
However, we still recommend that the best course of action is for employers who have a union dues clause in their collective bargaining agreements to communicate this fact to their employees and invite any employees who are not union members and who do not wish the deduction to be made, to write to the company setting out their objection.
- Brazil: New procedural code in force from March 2016 could impact on labour litigation
A new litigation procedural code is due to come into force in Brazil in March 2016. Whilst the code applies to Brazil’s general litigation system, and not specifically to labour disputes, it is nonetheless likely to have some impact on the labour litigation system. We will report further on the implications for labour disputes as more information about the changes is released.
- US: Procedures for Handling Whistleblower Retaliation Claims
The United States Department of Labor has issued a Final Rule regarding procedures for handling employee whistleblower retaliation claims under the Sarbanes-Oxley Act of 2002 (SOX) and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. In our recent Employment Alert, Daniel Turinsky, Rachel B Cowen and Amanda Grace Tomney explain further. Click here to read more.