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Employment Trends Europe – September 2019

A summary of events affecting employment law during May to September 2019 in Belgium, England, France, Germany, Italy, the Netherlands and Spain.

24 September 2019

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  • UK – Autumn Legal Update – 16/17 October 2019

Belgium

Measures introduced to boost employment

Due to a substantial shortage in the labour market and to vacancies that are difficult to fill, a number of measures have been introduced to give employment in a boost. The key measures are set out below:

  • Starting remuneration for young employees – In order to make the employment of young employees (18 – 21 years) more attractive, employers have been allowed, since 01 July 2019, to reduce their gross remuneration by a certain percentage. To ensure that the employees do not experience any financial disadvantage, they receive additional compensation, which is exempt from tax, on top of their gross remuneration.
  • Exemption from performance during notice period - When parties agree that an employee is not required to work during the notice period, the employer must inform the employee in writing that he/she is obliged to register with the regional employment services within one month after the exemption of work (this can be done in the settlement agreement). This obligation entered into force on 29 April 2019.
  • Continuation of employment after retirement age - An employee dismissed as from 1 January 2022 will be entitled to convert a maximum of one third of his/her severance indemnity into a training budget. Employees wishing to do so will be obliged to inform the employer of the exact percentage of indemnity they want to spend on training. This information must be provided before the payment of the severance indemnity.

The training budget must be spent by the end of the 60th month following the termination of the employment agreement at the latest.

The employer must pay a solidarity contribution equal to 25% of the training budget to the National Social Security Office.

England

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

France

Macron sliding scale of damages for unfair dismissal: resistance of Employment Tribunals

The 2017 Macron Reforms implemented a sliding scale of capped damages to be awarded to employees by the courts in cases of unfair dismissal. The purpose of the scale is to provide employers with visibility on the potential costs when dismissing employees. As many dismissed employees have challenged whether the scale complies with international conventions, some Employment Tribunals (which are generally speaking in favour of employees) have refused to apply the scale, although it is mandatory by law.

As a result, the French Supreme Court rendered an opinion in July 2019, validating the Macron sliding scale.

Nonetheless, whilst the opinion of the Supreme Court gives more weight to the scale, several Employment Tribunals still refuse to apply it.

The situation therefore remains unclear in the Employment Tribunals (first instance courts with non-professional judges), but it is anticipated that the Courts of Appeal (with professional judges) would comply with the Supreme Court’s opinion.

Recent changes

  • Secondment of employees: the provisions of the “Law on the freedom to choose one’s professional future” on secondment are now fully in force. The new law reduces administrative formalities for certain types of secondment (including short-time secondment, recurrent secondments, secondment for own account). Depending on the circumstances, the employer may be exempt from declaring the secondment to the Labour Administration or designating a representative in France.

  • “Loi Pacte”: the new “Law on company’s transformation and growth” (“PACTE”) was published on 22 May 2019. Some provisions are already in force but many others will come into force on 01 January 2020, such as new headcount thresholds, modifications on mandatory and voluntary profit-sharing and provisions on retirement savings account (see ETE November 2018).

Reminders

  • Social and Economic Committee (“CSE”): this is the new body replacing the Staff Delegates (“Délégués du personnel”) and the Works Council (“Comité d’entreprise”). Elections must be organised before 31 December 2019 in companies with at least 11 employees (if not already done).

  • Gender pay: new mandatory tool to measure gender pay. The final result must be published by 01 September 2019 for companies between 251 and 999 employees (if not already done), and by 01 March 2020 for companies between 50 and 250 employees.

Germany

New view on the status of managing directors

Legal representatives of a company do not qualify as employees, because they represent the employer vis-à-vis the workforce. Therefore, they do not enjoy the same protection as employees. However, the Federal Court of Justice recently ruled that the legal representatives of a company can qualify as employees at least within the meaning of the General Equal Treatment Act (“Allgemeines Gleichbehandlungsgesetz”). In this case, the legal representatives are protected against discriminatory terminations.

Effectiveness of a limitation period clause

If an employment contract contains a limitation period, claims made by the employee or the employer must be submitted to the other party within a certain period of time in text form (eg via e-mail or fax; a signed letter is not necessary). Otherwise, the respective claims lapse.

The Federal Labour Court has now ruled that mere negotiations between the employer and the employee do not extend the expiry of the limitation period. Thus, employers and employees should at least bring forward their claims in text form to avoid expiration during the negotiations.

Italy

Court ruling on unauthorised use of trade secrets

The Court of Ancona recently ordered a former managing director of a German multinational company to pay his former employer €4.5 million in damages after he was found guilty of making unauthorised use of the company’s trade secrets.

The decision, which will presumably be appealed, relates to events dating back to 2012 after the individual left the company. Following his exit, the company got wind of his doing business Asian markets and had (documented) suspicions that he was using the company’s patented chemical formulas with the aim of soliciting his former employer’s clients.

The court decided that the former employee had used the company’s confidential technical data to save time and costs in starting up his business after his exit and thus violated trade and technical secrets. The court emphasised that this was a matter of unfair competition because a company’s confidential information constituting its know-how is protected as intellectual property.

The court calculated the damages award based on royalties that the company would have made in granting use of its know-how.

Gender pay gap: new bill

The Italian parliament is discussing a new bill that aims to reduce the gender pay gap and incentivise the hiring of female employees. The related proposals include social security contribution savings for employers that hire female employees under permanent employment contracts; increased rights for women with family responsibilities to benefit from part-time work arrangements; and tax benefits for employers that set up workplace nurseries, preschools, and after-school childcare.

Netherlands

The Balanced Labour Market Act

The Balanced Labour Market Act will now enter into force on 01 January 2020.

The key changes include:

  • An employee will be entitled to the transition payment from the start of the employment agreement and even if the employment agreement is terminated during the probationary period or if the fixed term employment agreement is not extended by the employer.
  • An employee will receive one third of a gross monthly salary for each year of service, also for the years of service above 10 years (currently in principle half a monthly salary).
  • Under the new Act, a cumulation of dismissal grounds will be possible (currently each separate ground must be fully satisfied). Dismissal may follow if there is a combination of two or more grounds. However, cumulation of grounds in relation to business economic reasons or long-term illness are excluded. If the employment agreement is dissolved on the basis of cumulated dismissal grounds, the court can award the employee an extra payment, on top of the transition payment, which may be up to a maximum of half of the transition payment an employee is entitled to.
  • The period to conclude fixed-term employment agreements will be extended from two to three years.

Recording of time and periods of rest

On 14 May 2019, the European Court of Justice (the “Court”) has ruled that companies need to record the hours worked by its employees. This case was initiated by a Spanish trade union, stating that it was difficult for employees employed by the Spanish branch of Deutsche Bank to prove that they had been working overtime because their working hours were not recorded. According to the Court ruling, EU countries must oblige its companies to record the daily working time in a reliable and accessible manner, which obligation is based on the fundamental right of employees to work a maximum number of hours and to have sufficient periods of rest. These rights can only be maintained if the number of hours worked are properly recorded.

Under the Working Hours Act (Arbeidstijdenwet) (the “WHA”), the obligation to keep a proper record of the working hours and periods of rest already existed. Therefore, the Court ruling will not result in any legal changes other than increased awareness in this respect.

The recording of time can be seen as proper if it is possible (for the Social Affairs and Employment Inspectorate (Inspectie Sociale Zaken en Werkgelegenheid)) to monitor the compliance of the WHA. This would in any event entail the recording of the actual start and end of the individual employees’ working hours and periods of rest. The Working Hours Decree (Arbeidstijdenbesluit) stipulates that the data and documents relating to the registration of working hours and periods of rest must be kept for at least 52 weeks, counting from the date to which the data and documents relate.

If the WHA is not being complied with, the Social Affairs and Employment Inspectorate can impose a penalty. The standard penalty amount is €10,000 and can be adjusted upwards or downwards on the basis of the specific circumstances of the matter (number of employees employed by the company, recidivism, proportionality, etc.).

The obligation to record working hours and periods of rest does in principle not apply to employees who, on an annual basis, earn at least three times the minimum wage (€62,850 gross as per January 2019), unless the employees work on night duty or carry out high risk work. Certain other categories of work are also excluded (in part or in full) from the scope of the WHA, the most important of which being voluntary workers, resident domestic personnel, professional sports persons, scientific researchers and medical or dental specialists.

Spain

Collective Bargaining Agreements

Given that Spain has not yet been able to form a government, the current interim cabinet has not promoted and/or approved regulations of any kind. However, in the meantime, Unions and Corporate Associations have kept on negotiating the contents of Collective Bargaining Agreements (CBAs), provided that government approval is not required for such cases. In this regard, a few relevant CBAs have been recently approved introducing soft law novelties, such as the Madrid Offices and Firms CBA or the Madrid Metal Industry CBA. These new regulations, applicable “erga omnes” within their sectors (even if the employer has not subscribed the CBA), include interesting novelties such as forced retirement, equal pay measures or extended paternity rights, among other provisions.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.

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