Employment Trends Europe - January 2018

Upcoming events

Calls and seminars in the next month which might be of interest include:

• Beyond the data: Gender pay narratives and actions to promote diversity - 01 February 2018
• Employment Essentials: GDPR and sexual harassment - 20 February 2018
• Hard Brexit vs Soft Brexit: Less than 12 Months to go - how to plan for different outcomes? - April 2018

Further details of breakfast briefings, conferences and telephone conference calls covering developments in employment law are available here.

Belgium

Employer’s Social Security Contributions further reduced as of 01 January 2018

The Belgian Government’s plans to shift tax pressure from labour to capital (“Tax Shift”) entered a new phase on 01 January 2018. As of this date, the percentage of the base contributions and wage moderation contributions will be further reduced from 30% in total to 25% (after having undergone a first reduction from 32.40% to 30% on 01 April 2016).

The base contributions and the wage moderation contributions are the most important components of the employer’s “social security contributions”. These employer’s social security contributions are a kind of tax which companies employing staff in Belgium need to pay to the Belgian Social Security Office. They are calculated on the gross salaries companies pay to their employees and are consequently an important factor for employers to help determine the total salary cost of the staff they employ in Belgium.

As of 01 January 2018, the employer’s social security contributions will be as follows:

• for white collar employees: approximately 27% calculated on 100% of their gross salary, and
• for blue collar employees: approximately 43% calculated on 108% of their gross salary.

The employer’s social security contributions are not only due on the monthly salaries paid out to the employees, but also on a number of other payments, for example, cash bonuses, termination indemnities in lieu of notice, non-compete indemnities and eviction indemnities for sales representatives. Consequently, the Tax Shift also impacts companies’ budgets with respect to these payments.

Employers should note that a number of other “special” contributions that need to be paid by employers (eg contributions to the Welfare Fund) and the percentage of employee’s social security contributions of 13.07% are unaffected by the Tax Shift.

England

Working Relations, our quarterly newsletter, reviews the most important cases and developments affecting employers in the UK.

Recent changes

An overview of changes in employment law in England & Wales over the last 12 months is available here.

France

Macron Ordinances

The new ordinances provides for a major reform of labour law in France, amongst their many provisions, the following should be highlighted:

General simplification of dismissals and costs

• Mandatory sliding scale capping damages for unfair dismissal: The new Macron Ordinances provides for a mandatory sliding scale which caps the indemnity that can be awarded to an employee when his/her dismissal is judged unfair by Court. Such scale provides for damages from 0.5 to 20 months of average salary.

  Prior to the ordinances, such indemnities were not capped and the employee was able to claim for as much as he was able to justify. The purpose of such a mandatory scale is to allow companies to quantify the cost of a possible challenge of dismissal before Court.

• More flexibility on dismissal grounds: It is now possible to detail and/or complete the dismissal letter sent to an employee within 15 days after it has been sent. The employee may also spontaneously require details on the dismissal grounds.

  Prior to the ordinances, the company was bound by the grounds detailed in the dismissal letter at the moment of the dismissal and could not add any other element at a later stage.
  Furthermore, in case the motivation in the letter is insufficient, damages awarded are now capped at 1 month salary.

• Reduction of time limits to bring a Court action: Legal actions against termination of the employment agreement on individual grounds were time-barred after two or five years whereas the dismissals on economic grounds were after time-barred one year. This time limit is now unified and any claim made to challenge a termination should be brought within one year.

  Reduction of the scope to assess of economic grounds: Economic ground is now assessed within companies of the Group, engaged in the same business sector in France only. Prior to the publication of the ordinances, the economic grounds had to be assessed within companies of the Group in the same business sector at a worldwide level.

Single employees’ representatives body

• Creation of the Social and economic council (SEC): The new SEC is a single employee representative body that merges the Works Council, the Health and Safety Committee and staff delegates. Such single body aims at simplifying social dialogue within the company. However, in companies with 300 employees and more, a Health and Safety Commission will still have to be implemented.

  The SEC will have to be implemented at the latest on 31st December 2019, depending of the term of office of the current representatives. Terms of office expiring between 01 January and 31 January 2018 may be extended by agreement, for a maximum of one year.

Case law

• Stock options - they should not be taken into account for the calculation of dismissal indemnities:

When a premium is paid to an employee in the form of stock options, such premium should not be taken into account for the calculation of the indemnity provided in a social plan (i.e. mass redundancies), even if it is a method of payment of a cash bonus.

Pursuant to this case, awarding stock options does not constitute the payment of an amount of money, nor the award of an immediate benefit but a right for the beneficiary to waive or not an option.

By analogy, this solution can be extended to indemnities or damages for unfair dismissal, although the decision does not formally refer to these.

Prior to this decision, case law was unclear on whether such stocks should be taken into account for calculation of dismissal indemnities, such clarification was therefore welcomed.

• Variable remuneration - objectives set in English are enforceable if a translation is provided for afterwards

French judges are known to be very strict on this subject: objectives should be set in the French language in order to be enforceable. When objectives are not enforceable, variable remuneration is due in full to the employee.

In a recent case, objectives were given to an employee in English and later on made available in French on the company’s intranet. The French Supreme court held that objectives provided in this way are enforceable provided that the translation is made available soon after the English version.

This marks a step forwards for French judges to more flexibility regarding working documents issued in English.

• Moral harassment - Nullity of the dismissal cannot be awarded if the employee did not qualify the alleged moral harassment

When an employee is dismissed after having made allegations of moral harassment to his employer, he is entitled to ask for the dismissal to be overturned and to be reinstated (which triggers payment of all unpaid salaries from the dismissal up until the decision of the court).

A recent case reinforced the courts approach by requiring that the employee had made allegations of moral harassment in order for him to ask for the dismissal to be overturned.

In this case the employee only referred to destabilising and unfair treatment by his employer, without entering into details. The case should be interpreted as requiring that the employee makes an allegation with precise facts, even without qualifying them properly, in order for him to possibly ask for the dismissal to be overturned.

Germany

Sexual harassment at work

Inappropriate touching of a colleague justifies a termination according to a recent decision of the Federal Labor Court. This also applies if the touching is not sexually motivated.

In the relevant case, an employee in a steel plant touched a temporary worker in an inappropriate manner and made rude remarks. The Federal Labour Court qualified this action as an intervention in the physical sphere of intimacy. Whether the act was sexually motivated was not relevant. Intentional inappropriate touching - even without sexual intention - could therefore justify a termination.

Minimum wage as basis for surcharges

The amount of continued remuneration on public holidays is determined by the provisions of the Continued Remuneration Act in conjunction with Section 1 Minimum Wage Act, unless there is a higher compensation entitlement agreed in a collective bargaining agreement or employment contract. The Federal Labour Court clarified in a recent decision that a night work surcharge agreed in a collective bargaining agreement has to be calculated on the basis of at least the minimum wage.

In the relevant case an employee claimed a higher payment of the night work surcharge and holiday payment according to the regulations of a collective bargaining agreement. The collective bargaining agreement provided a surcharge of 25% for night work and 150% for a holiday payment based on the actual hourly earnings. The employer calculated this additional compensation on a lower hourly wage instead of the minimum wage. In addition the employer charged the holiday payment to the minimum wage of the employee. The judges made clear that these payments have to be calculated on the basis of the minimum wage as actual hourly earnings of the employee. The employer is not allowed to use a lower hourly wage as the basis for the calculation. In addition, the accounting of the holiday payment to the total amount of the minimum wage was inadmissible as the collective bargaining agreement provided the employee with an independent claim and the payment cannot be considered as salary for performed work.

Italy

Termination of Service Agreement grounds for dismissal

The Supreme Court recently decided that an employer is entitled to make redundant personnel working on contracted activities if the underlying service contract is terminated for whatever reason. In practice this means that the employer is entitled to dismiss whatever staff they had specifically recruited to provide the services provided under the terminated service agreement.

Normally with an individual redundancy, the employer applies selection criteria when identifying the employee(s) to be made redundant. Although this is not expressly required by law, in accordance with the majority of court precedents, it is deemed fair if the employer applies the selection criteria that would usually come into play for collective dismissals, so: i) the company’s production and organizational needs; ii) number of dependents; and iii) employee length of service.

On the basis of this latest Supreme Court decision, however, where a service agreement is terminated, employers will be able to go ahead with the required individual dismissals on the simple basis of dismissing those who had been recruited specifically to work on the activities that were part of the now terminated service agreement, without having to apply selection criteria.

Netherlands

Solely submit UWV form A prior to informing employee of redundancy

Under Dutch law an employer cannot terminate an employment agreement by simply giving notice. The employer will need to have a reasonable ground to terminate the employment agreement and depending upon the reasonable ground, the employer will either have to obtain prior approval to give notice from the governmental body (the “UWV”) or request the cantonal court to dissolve the employment agreement.

Business economic reasons (such as reorganization, poor financial performance, decrease in work, organizational and/or technological changes, termination of (a part of) the activities, relocation of the company and/or the termination of wage cost subsidy) can be a reasonable ground for dismissal, and applications for dismissal on account of business economic reasons are to be sent to the UWV for review.

The employer will have to submit the request for dismissal due to business economic reasons by uploading three digital forms on the employers’ portal of the UWV (form A consists of general employer’s details, form B consists of the employee’s details and form C consists of a substantiation of the business economic reasons). However, only after the employer has uploaded all three forms and the UWV has received all relevant information and documentation, will the impacted employee be informed of the application for dismissal and be able to submit a statement of defense.

In light thereof, it is recommended to first solely submit form A prior to informing the employee of his redundancy. This approach ensures that if the employee reports in sick after having been informed by the employer of his redundancy, his sickness will not prevent the employer from terminating the employment agreement. Conversely, if an employee reports in sick prior to the employer submitting form A, this will in principle constitute a prohibition for termination (as Dutch law in principle provides that employees are protected against dismissal during the first two years of illness). Therefore, it is important to first submit form A prior to informing the employee of his redundancy and/or starting settlement negotiations with the employee.

Employers should note that although the approach to first submit form A prior to informing the employee of his redundancy is currently permitted by all legal departments of the UWV, this approach will most likely be reviewed in the future, to ensure that both sides are heard fairly.

Spain

On 25 October 2017 the law 6/2017 on Urgent Reforms of Self-Employment was published in BOE. This new law has introduced several relevant amendments to self-employed work in Spain which basically affect contributions and deductible expenses for the self-employed, as well as measures to encourage hiring and family reconciliation. It is also important to point out that not all the measures included in the new Law on Self-Employed Workers enter into force immediately; some of them will be starting later in 2018.

Some of the most relevant measures are:

• The current applicable flat rate of €50 for the Social Security contribution will be extended from six months to a year.
• Self-employed women will be able to benefit from the flat rate of €50 on their return from maternity leave, so they don’t have to wait two years since they were last self-employed to qualify for the flat rate.
• Food expenses may be deducted, up to €26,57 per day or €48,08 when abroad. However, it must be justified by invoices and payment must be made only by electronic means.
• When a self-employed person has a car accident returning from his or her place of work this will be considered to be an accident at work.
• When working from home, self-employed people will be able to deduct the cost of electricity, telephone, water, internet and gas.
• Self-employed workers will only pay Social Security quotations for the actual days worked of each month (vs. mandatorily paying the whole month).

Finally, and in reference to our last ETE Newsletter of June 2017 about registration of working time in Spain, the Spanish Congress has just passed a bill/draft law, which not only aims to establish as mandatory daily working time registration (in order to curb the abuse of unpaid overtime) but also proposes to raise the qualification of this infringement from “minor” to “serious”.

Although the Supreme Court had clarified that daily recording of working time is not currently mandatory in Spain, this might change in the near future if the bill is approved by the Spanish Legislator.

Decisions of the European Court of Justice

Failure to consider breastfeeding worker’s individual circumstance can amount to direct sex discrimination

Ramos v Servicio Galego de Saude - ECJ

The CJEU decided that the hospital's standard risk assessment process for breastfeeding mothers was not appropriate, and amounted to direct discrimination.

The CJEU held that there must be a specific and ongoing assessment into the individual situation of the worker under Article 4 of the Pregnant Workers Directive, rather than a general risk assessment of roles.

The decision also calls into question section 13(7) of the EqA 2010 which prevents a woman from bringing a claim for direct sex discrimination under UK law where she has suffered a detriment because she has breastfed at work.

TUPE transfer: new security contractor takes over equipment but not staff

Securitas v ICTS Portugal - CJEU

The CJEU stated that where activity is based on manpower, the identity of an economic entity cannot be retained if the majority of the employees are not taken on by the alleged transferee. However, if the activity is based on equipment, the fact employees are not taken on (as in this case) does not prevent a transfer occurring. This case will now return to the Portuguese courts to decide whether ICTS transferred (directly or indirectly) equipment or tangible or intangible assets to Securitas for the purpose of carrying out security guard activities. If the equipment transferred is essential to the services that have been taken over, then there is a transfer of an undertaking or service, and the employees should have transferred.

Weekly rest can be given at any time in seven-day period

Maio Marques da Rosa v Varzim Sol - Turismo, Jogo e Animação SA (C 306/16) - ECJ

The CJEU has held that the 24-hour weekly rest period in Article 5 of the Working Time Directive (2003/88/EC) may be granted on any day in the seven-day reference period.

Surveillance Cameras and Privacy at Work

Antovic and Mirkovic v Montenegro - CJEU

Article 8 of the European Convention on Human Rights protects the right to respect for private and family life. The Dean of the School of Mathematics installed video surveillance in a public lecture theatre at a Montenegro university to “protect the safety of property, people and students.” It also recorded lectures.

The data was protected by codes known only to the Dean and kept for one year. The Personal Data Protection Agency ordered the removal of the cameras.

The European Court ruled that although the University is a public sphere, private life encompasses business and professional activities and that Article 8 had been breached.

Holiday pay

King v Sash Windows - CJEU

Mr King was believed to be self-employed and his “employer” therefore did not give him paid holiday. But a tribunal held that he was a worker and thus entitled to 5.6 weeks’ paid annual leave. The employer argued that the Working Time Regulations 1998 provide that if paid holiday is not taken in a leave year, then it is lost.

It was ruled that in circumstances where an employer has not provided a worker with paid leave, the right to paid leave carried over until he has the opportunity to exercise it and on termination of employment the worker has the right to payment in lieu of what remains outstanding. It was incompatible with EU law to require a worker to take annual leave before being able to ascertain whether he will be paid for it.

Other articles of interest

Withdrawal of VAT insurance exemption for pension fund management provided by insurers - 27 October 2017
Extending the Senior Managers & Certification Regime: our response to the Consultation Paper - 10 November 2017
Acas issues new guidance to prevent further pregnancy and maternity discrimination in the workplace - 21 November 2017
UK Budget 22 November 2017- Simmons & Simmons’ expert commentary - 22 November 2017
Newsflash Sapin II: Last call for the implementation of professional whistleblowing systems in 2018 - 28 November 2017
HMRC’s new policy on VAT and pension schemes - 28 November 2017
Digital Health: Wearables in the workplace - 01 December 2017
Supplies of pension fund management not exempt insurance - 04 December 2017
New Luxembourg circular on stock option plans - 05 December 2017
FCA releases three more SMCR Consultation Papers - 13 December 2017
Sustainability and stakeholders: the proposed revision to the UK Corporate Governance Code - 15 December 2017
“Whistleblowing”: protecting employees reporting unlawful conduct - 18 December 2017
“Whistleblowing”: la tutela del dipendente che segnala illeciti - 19 December 2017
Sexual harassment and anonymous complaints - 19 December 2017
Forcing employers on Gender Pay Reporting: closing the gap - 27 December 2017