GLOBAL EMPLOYMENT LAW DEVELOPMENTS
US: Whistleblowing developments
A recent decision by the Fifth Circuit Court of Appeals has confirmed that the anti-retaliation provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act only confer protections to whistleblowers who report conduct to the Securities and Exchange Commission. In another case, the Southern District of New York also concluded recently that Dodd-Frank?s anti-retaliation protections do not apply to conduct outside of the United States. Further details are in our US alert.
US: Misclassification Issues Increasingly the Focus of Federal and State Enforcement Initiatives
In the U.S., the issue of misclassification of workers ? i.e., whether a person is an independent contractor or employee or whether an employee is exempt from overtime requirements ? is the focus of substantially increasing enforcement activity and litigation. The United States Department of Labor (DoL) has made these issues a priority under its recent ?strategic enforcement? initiative. Under this initiative, DoL has moved away from an investigative process based on complaints, and instead is initiating wide ranging investigations of the top employers in identified industries. DoL considers these employers to be the primary beneficiaries of the misclassification of employees. The industries on which DoL is focused include residential construction, hotels/motels, restaurants (especially fast food), healthcare services, home healthcare services, janitorial services, moving companies/logistics providers, agricultural products, grocery stores, retail (department) stores, and landscaping/horticultural services.
The DoL strategic enforcement initiative has been bolstered, and the risk for employers increased, by agency cooperation agreements between DoL and the United States Internal Revenue Service (IRS), as well as DoL and various state agencies. For example, DoL has implemented a Misclassification Initiative under which it has partnered with the IRS and several states to share information and coordinate their efforts to eliminate independent contractor misclassification. Fifteen states have each signed a memorandum of agreement to partner with DoL and engage in joint enforcement action on the independent contractor issue. DoL?s various ?transparency? projects and committees, such as the DoL?s Center for Faith-Based and Neighborhood Partnerships, increasingly are putting information gathered by DoL in the hands of plaintiffs? lawyers and social activists that may have their own agenda. The potential liability under the Affordable Care Act creates a new forum for enforcement actions.
It appears that the significance of the misclassification issue will continue to grow in the coming years. DoL continues its characterization of misclassification errors as ?wage theft.? In the Wage and Hour Division?s FY2013 Congressional Budget Justification, the agency stated that it will continue to focus on worker misclassification issues and will explore options for additional memoranda of understanding to increase the coordination and sharing of information with other stakeholders. In September of this year, President Obama nominated the architect of DoL?s strategic enforcement initiative, Boston University Professor David Weil, to head the Wage-Hour Division. As the Wall Street Journal has observed, and Weil?s strategic enforcement papers make clear, Weil is a proponent of bringing about change through aggressive litigation strategies.
Australia: New anti-bullying measures from 1 January 2014
From 1 January 2014, any employee or contractor who is covered by the federal industrial relations system in Australia and who reasonably believes that he or she has been bullied at work will be able to lodge a complaint with the Fair Work Commission.
This is an entirely new jurisdiction created under the Fair Work Act 2009 (Cth). It creates the opportunity for employees and contractors to take action not only against colleagues, as alleged bullies, but also against employers and principals. The Fair Work Commission does not have the power to award a monetary amount as a consequence of any bullying complaint. The Commission may, however, make any order it deems appropriate to prevent further bullying. This new power clearly creates the potential for the Commission to intervene directly in the workplace and to affect or restrain managerial actions, including performance management. Before making any order, the Commission must take into account the availability of internal complaint mechanisms and any final or interim outcome of any internal process.
Therefore it will be vital for employers to have comprehensive, effective and up-to-date anti-bullying policies and complaints procedures, not only to minimise the risk of bullying, but also as a matter to demonstrate to the Fair Work Commission as it contemplates whether to make orders. Although the Commission cannot award an amount of money as compensation for bullying, and has recently stated that it will not encourage the settlement of complaints through the payment of money, it should be noted that where any anti-bullying order is breached, a civil penalty may be imposed of up to $10,200 for an individual (including the alleged bully) and up to $51,000 for a corporation, such as the employer or principal. For further details, please see our bulletin.
Australia: New whistleblowing protection for public officials from 14 January 2014
The Public Interest Disclosure Act 2013 will come into force on 14 January 2014. The Act protects “public officials” who make prescribed disclosures. The concept of public official covers not only federal government public servants but also the defence force, staff and directors of “Commonwealth companies”, statutory office holders and staff of Commonwealth-contracted service providers. (A “Commonwealth company” is one to which the Australian corporations law applies and which is controlled by the Commonwealth). The category of “Commonwealth-contracted service providers” is particularly broad as it extends to any companies which are parties to contracts with the Commonwealth by which they provide goods or services to the Commonwealth, as well as the subcontractors to that contractor. The Act confers immunity to the discloser from civil, criminal and administrative liability, including disciplinary action, for making the disclosure. This immunity is subject to the discloser having made the disclosure to an authorised officer or the discloser’s supervisor.
China: New administration, new labour policy
China’s new president, Xi Jinping, has outlined sweeping reforms that the new administration plans to pursue over the next 10 years. Full details have yet to be announced, but the areas likely to impact labour policy include:
- An expected increase in the retirement age (currently, 60 for men and 50 or 55 for women) to reduce the pressure on the social insurance fund;
- A relaxation of the “one child” policy for couples where one parent is an only child, to address problems with an ageing population and shortage of labour;
- Greater emphasis on the role of trade unions, in particular with respect to collective wage bargaining;
- A plan to narrow the income gap by limiting excessive salaries, identifying and eliminating sources of illegal income, increasing the minimum wage and tax reforms; and
- A reduction in employer social security contributions to reduce labour costs and increase competitiveness.
We will report further as more details are announced. We expect these reforms to come into force over the next 3 to 5 years.
India: New sexual harassment legislation puts non-compliant employers at risk
New rules prohibiting sexual harassment against women in the workplace came into force on 9 December 2013 (The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act and Rules 2013). The new law seeks to protect women in the workplace from harassment – unwelcome acts or behavior of a sexual nature – and requires employers to, amongst other things: set up an internal complaints committee at each workplace employing at least 10 employees to address sexual harassment complaints; organize workshops and awareness programmes; post information about harassment; and initiate criminal action against the perpetrator where appropriate. The law also provides for interim relief and compensation to aggrieved woman, and punishment to the accused. Employers who fail to comply risk fines of INR 50,000 and in the case of subsequent convictions, fines can be increased and employers risk losing licences/de-registration.
Employers operating in India must now implement a new sexual harassment policy that reflects these new rules, and/or review any existing policies to ensure compliance, and set up an internal complaints committee.
Japan: Foreign LGBT executives and Japanese immigration law
Recent months have seen significant advancement of same-sex marriage rights in the US as a result of two significant Supreme Court rulings. However, in Japan, same-sex couples currently enjoy few legal protections. Immigration laws mean that the same-sex partner of a person being transferred to work in Japan will not qualify for a dependant’s visa. For further details see our bulletin, ‘Is Japan over the rainbow?’.
EUROPE, MIDDLE EAST AND AFRICA
EU: EU agrees Gender Directive regarding women on boards
The EU Parliament has voted in favour of the legislative report on the EU Gender Directive which will require member states to ensure that companies take effective and binding measures to adopt clear and transparent appointment procedures in order to attain at least 40% female non-executive directors by 1 January 2020. This is an ambitious and challenging timeframe as, in 2013, only 17.6% of non-executive board members of the EU?s largest companies were women.
The Directive will apply to EU-incorporated companies with more than 250 employees which are listed on any EU regulated market and which have an annual worldwide turnover of more than 50 million euros. Where candidates are equally well qualified in terms of suitability, competence and professional performance, priority should be given to the candidate of the under-represented sex (unless an objective assessment of all the criteria tilts the balance in favour of the other candidate). MEPs propose that companies which fail to introduce such procedures should face penalties, including exclusion from public calls for tenders.
The Directive requires the approval of the European Council in order to become law. However, this now appears more likely as opposition from the German government is likely to be weakened as Germany considers its own legislative measures on gender equality in top level management.
Belgium: Major employment law changes from 1 January 2014, to harmonise the status of blue and white-collar workers
On 1 January 2014, the employment law landscape in Belgium will fundamentally change, as new rules come into force to eliminate the difference in treatment as between blue- and white-collar workers. The changes will, in particular, impact notice entitlements and and what is known as the “waiting day” (the unpaid first day of absence due to sick leave or incapacity) which was declared incompatible with the constitutional principles of equality and non-discrimination by the Belgian Constitutional Court in July 2011. The impact will particularly be felt on termination of employment. For further details see our Special Be Aware.
France: Extension of Syntec collective bargaining agreement Bill of Amendment and impact on annual working time schemes (forfait jours)
As we reported in May’s Be Global, the French Supreme Court ruled on 23 April 2013 that the terms of the forfait joursscheme under the Syntec CBA are incomplete and do not sufficiently protect employees’ rights. The Court stressed that the CBA does not provide a means of guaranteeing that an employee’s daily range of work and workload are reasonable and / or of ensuring good organization of their working time and as such failed to ensure the protection of employees’ health and safety. As a result, the forfait jours scheme within the Syntec CBA was altered by an amendment dated 19 February 2013 which has now been extended by an order dated 23 October 2013 (effective 1 November 2013) to all companies under the scope of the Syntec CBA. Although the extension order has validated the terms of the February 2013 amendment, the order is still subject to certain restrictions in particular with regard to guaranteeing an employee’s daily volume of work and holding a compulsory individual meeting annually.
Despite the improvement which the October order represents, in the absence of a company-wide CBA remedying these shortcomings, applying the forfait jours scheme under the Syntec CBA still exposes an employer to the risk of an annual working time scheme being invalid, the risk of having to make overtime payments and the risk of “hidden” work.
France: Draft Finance Act for 2014 proposes 50% “exceptional solidarity tax” on high remuneration
Pursuant to Article 9 of the draft Finance Act for 2014, all remuneration (including salaries, corporate fees, profit-sharing, stock-options, restricted stock units etc) paid by companies operating a business in France which exceeds EUR 1 million gross per annum will be subject to an “exceptional solidarity tax” to be paid by the employer of 50% of the amount exceeding the EUR 1 million threshold. The draft Act provides, however, that the tax is limited to a cap of 5% of the turnover of the company for the year the tax is owed.
During debates on the draft Act before the French Senate, on 25 November 2013, the Senators rejected this measure which would affect approximately 470 companies and 1,000 employees and officers in France. The debate is on-going.
France: Implementation of the Law on Securing Employment
In our August Be Global and our October Be Global we reported on the implementation of the new Law on Securing Employment which includes new procedures for collective dismissals. The Government published on 1 August 2013, a timeline for the publication of decrees implementing the new Law and, to date, the following decrees have already been adopted:
- Decree No. 2013-551 of June 26, 2013 on short time working;
- Decree No. 2013-552 of June 26, 2013 on the Health, Safety and Working Conditions Committee (“CHSCT“) and the coordination body;
- Decree No. 2013-554 of June 27, 2013 relating to collective redundancy procedures.
There has been some delay in the timeframe set by the French Government for the publication of the remaining four decrees, which are expected to enter in force before the end of this year:
- Decree relating to the specific timeframe within which a works council must give its opinion (“avis“);
- Decree relating to the content of the economic and social database accessible to staff representatives;
- Decree relating to the timeframe within which a technical expert or an accountant appointed by the works council must present their report;
- Decree relating to the minimum expenses covered by healthcare insurance due to the extension of the complementary collective healthcare system to all employees from January 1, 2016.
Germany: Coalition agreement heralds new national minimum wage from 2015, plus other employment measures
On 27 November 2013, the Christian Democratic Union party (CDU), their allied Christian Social Union party (CSU) and the Social Democratic Party (SPD) signed a coalition agreement. The approval by SPD members of the agreement was confirmed on 14 December.
Key employment aspects of the agreement include:
- A nationwide hourly minimum wage of EUR 8.50 (GBP 7.11; USD 11.55) will come into force for the first time in 2015.
- The pension age will be lowered for some employees. From July 2014, employees who have paid social security contributions for 45 years will be able to retire on a full pension at 63, two years earlier than is currently the case.
- Restrictions on use of temporary workers for a maximum period of 18 months (see below).
Germany: More certainty for employers using temporary workers
According to the German Temporary Employment temporary employment agencies need to hold a license in order to lease out employees. If the temporary employment agency does not hold such license and temporary workers are supplied nonetheless, an employment relationship is deemed to have been established between the agency worker and the company leasing this worker. The German Temporary Employment Act further provides that temporary workers must not be leased out permanently, but only on a temporary basis, but does not specify the difference between permanently and temporarily leasing out employees or provide for sanctions which would apply if a temporary employment agency in fact leases out employees permanently.
As reported in the March edition of Be Global a recent ruling of the Regional Labor Court (Landesarbeitsgericht, LAG) of Baden-Wuerttemberg stated that an employment relationship is concluded with the company hiring the temporary workers in case of a permanent lease. The Regional Labor Court argues that the license of the temporary employment agency does not cover permanent leasing and, therefore, the temporary employment agency does not hold a valid license. Under the ruling of the Regional Labor Court the temporary employment agency needs to be treated as if it possesses no license at all. This had the potential to lead to severe consequences of companies who frequently and permanently use temporary workers. However, the German Federal Labor Court did not share this opinion. In its ruling dated 10 December 2013 (docket number 9 AZR 51/13) the German Federal Labor Court argued that an employment relationship is only concluded with the company leasing the temporary workers if the temporary employment agency does not hold a license for leasing out employees at all. If the company leasing out employees in fact holds a license and leases out employees permanently, no employment relationship would be established between the company leasing the employees and the respective temporary worker.
This ruling creates more legal certainty for the temporary work industry. Nonetheless, a prudent company should still pay close attention to the length of the lease term and opt for short periods of time because the ruling does not provide further clarification regarding the definition of a ?temporary? lease. However, as the parties planning to form the new administration have agreed in their coalition agreement to adopt a statutory maximum lease period of 18 months, this question may lose much of its importance in the near future.
Italy: Recording colleagues’ conversations may damage the relationship of trust with the employer and be a valid cause for dismissal
In a very recent case (Supreme Court, no. 26143 of 21 November 2013) the Supreme Court confirmed the lawfulness of the dismissal of a hospital doctor who had recorded colleagues’ conversations without their knowledge in order to establish evidence of alleged bullying behaviour by his superiors. In particular, the Court said that recording the colleagues’ conversations in violation of their privacy rights, caused irreparable damage to the relationship of trust between the employee and his colleagues which had the potential to jeopardize the normal supply of health care services, and therefore also damaged the trust between the employee and the hospital.
Netherlands: Taxation of severance pay
Under Dutch law, lump sums paid as severance pay on the termination of employment are currently exempted from immediate taxation, provided that the lump sum is paid through a periodic payments arrangement. From 1 January 2014 this exemption will no longer apply and severance payments made after that date will immediately be taxed at normal tax rates. The current favourable tax regime will continue to apply to terminations which take effect during the first half of 2014 provided that the date of dismissal is agreed upon and a termination agreement concluded before 31 December 2013. As such, many Dutch employers and employees are rushing to agree severance arrangements before the 31 December deadline. Further details are in the attached alert.
Netherlands: Financial services bonus cap
The Dutch Government recently published a consultation proposing legislation that would cap bonuses in the country’s financial sector at no more than 20% of an employee’s fixed annual pay. The legislation, if implemented, would apply to all financial undertakings located in the Netherlands and covered by the Dutch Financial Supervisory Act. The proposed implementation date is 1 January 2015, but the legislation is yet to pass through the parliamentary process.
Poland: Working time and parental leave
Both parental leave and working time have been affected by recent changes to Polish labour laws. In terms of parental leave, parents can now use the leave until a child’s fifth birthday (a year longer than before); they may divide the leave into five, not four, parts and will have the benefit of their full annual holiday entitlement when they begin and end a period of parental leave in the same annual leave year. As to working time, if employees agree and there is an objective justification, employers may now implement 12-month calculation periods for their working time schemes. They may also implement “flexible working hours” allowing variations to the start and finish times of the working day. For further details see our Labour Law – the most recent changes: working time legal alert and our parental leave legal alert.
Romania: Changes in meal tickets legislation, effective mid-February 2014
Under Romanian legislation, employers may choose to grant meal tickets as an employee benefit. The meal tickets can be exclusively used as a meal allowance (i.e. to pay for daily meals or buy food from certain restaurants, supermarkets etc). Currently, meal tickets can only be granted in a specific printed form. However, pursuant to a recent amendment to the law, as of mid February 2014, employers may choose between printed meal tickets and electronic meal tickets (EMT). EMT are expected to work in a similar way to printed meal tickets. The main differences, however, are that: less information is required to be inscripted/stored on the EMT, and, as opposed to the printed meal tickets which do not allow the employee to receive change in cash, where the price of the purchased product is less than the value of the meal ticket(s), EMTs permit the debit of the exact price of the acquired food. Note that EMTs do not represent bank debit/credit cards and cash withdrawals from the EMTs are expressly prohibited. Further details are in the attached Legal Update.
South Africa: Significant changes to South African employment legislation coming soon
South African Employment legislation is balanced on the brink of a major overhaul, with the vast majority of the process leading to enactment of amendment legislation already completed.
The three existing statutes to be amended are the Labour Relations Act 66 of 1995 (LRA), the Basic Conditions of Employment Act 75 of 1997 (BCEA) and the Employment Equity Act 55 of 1998 (EEA). Two new pending statutes are the Employment Services Bill 38 of 2012 (ESB) (it will (amongst other things) impact materially on the manner in which foreigners are employed in South Africa) and the Employment Tax Incentive Bill 46 of 2013 (ETIB) (a youth incentive initiate).The BCEA amendments have already been approved and published, and a date for the amendments to take effect will be published shortly. The EEA and ETIB only require approval by the President, before it too can become effective. The bill amending the LRA was returned to the Portfolio Committee on Labour in the National Assembly on 5 November 2013 for consideration of proposed amendments affected by the National Council of Provinces. If the National Assembly approves it in its current form, it will be sent to the President for signature, whereafter an effective date will be published. The ESB remains the furthest from implementation, with approval by the National Council of Provinces still pending.
Switzerland: Executive remuneration
In late November 2013, the Swiss Government held a nationwide referendum on whether or not the salaries of company executives should be capped at no more than 12 times the salary of the lowest paid employee in the company. The outcome of the vote saw 34.7% of voters vote in favour of the cap and 65.3% vote against. Employers had attacked the proposal claiming it would undermine Switzerland’s competitiveness, cut tax revenues and give the State an unwelcome role in employee relations. Supporters argued that savings in executive pay could be redistributed among lower paid employees. The November referendum followed a referendum in March 2013 in which the majority of Swiss voters supported the ability for company shareholders to veto executive pay proposals as well as a ban on executives receiving compensation “in advance” or “on departure” (i.e. golden hellos or handshakes).
UAE: New health insurance law
After a period of 4 years in the making and bringing Dubai into line with the practice in Abu Dhabi, there has now finally been a Health Insurance Law passed by the ruler of Dubai which demands compulsory health insurance for all employees in Dubai and requires their spouses, dependents and domestic staff to be covered for at least a basic package at no expense to the employee. The requirements will start to come into effect from 2014 but, due to the numbers of uninsured employees involved (currently only one third of the 3 million strong population are insured), implementation will necessarily be carried out in phases between 2014 and 2016. Coverage is expected to cost employers approximately 1.5% of employees’ salaries with the employer having the option to then top up the basic insurance package.
UK: Government reveals further details of proposals for parental leave reform
On 29 November 2013, the Government issued its response to consultation on the administration of shared parental leave and pay. The substance of the proposal remains unchanged from what was announced in 2012. From April 2015, parents will be able to choose to share all but two weeks of the maximum 52 week period of shared parental leave, either by taking separate periods of leave or by taking leave at the same time. The policy is simple, but the procedural arrangements required to implement it are complex. Full details are in our Be Alert.
UK: Changes to TUPE due to come into force in January 2014
The Government has published amending regulations to make a number of changes to TUPE. The regulations will come into force on 31 January 2014. The main changes implemented by the regulations are widening the scope for employers to validly vary contracts of employment post-transfer; changing the rules on dismissal; and allowing transferees to commence redundancy consultation before the transfer. Further details are in our Be Alert.
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