Employment Law Alert International – July 2023

Belgium

Succession of fixed term employment contracts. On 8 May 2023 a new Article 11 of the Employment Contracts Act of 3 July 1978 came into force, aiming to extend job security to workers employed under a succession of so-called “precarious contracts”. The Act will extend the application of the rules that existed until now in the case of a succession of fixed-term contracts, contracts for clearly defined work or replacement contracts, as well as the combined succession of these different contracts. If a two-year period is exceeded, the rules of the open-ended employment contract will be applied. Attention must be paid to not exceeding a maximum total duration of two years in the case of an alternating succession of different “temporary” employment contracts (e.g. two fixed-term contracts followed by a replacement contract) and if the two-year period is exceeded, the rules of the open-ended employment contract will be applied (including severance payment rules and other related regimes). Our Belgian employment team can provide more information on the new Act, including exceptions that may apply.

Maximum notice period for resigning employees. From 28 October 2023, 13 weeks will be the maximum notice period in case of resignation by blue-collar workers already employed by their employer on 1 January 2014. In Belgium, a transitional arrangement exists for employees who have been employed since before 1 January 2014. For these employees, the notice period will be calculated by the sum of the notice period based on their seniority until 31 December 2013 on the one hand, and the new standardised notice periods as from 1 January 2014 on the other hand. From 28 October this year, the new Act states that the new standardised notice periods (with a maximum notice period of 13 weeks) will apply to all employees.

Social Penal Code to be updated. The Council of Ministers have approved a draft bill concerning adjustments to make the Social Penal Code more effective and the level of penalties will be modified with the Code to include prison sentences for the most serious breaches of social legislation. Administrative and/or criminal fines at lower levels will also be increased. Other points to note are that:

• the promise to offer work against payment to a foreigner for his or her activity in Belgium is now punishable by imprisonment;
• imprisonment is now possible in cases of harassment or sexual harassment, or when the worker's health is at risk;
• social dumping (using cheaper labour than usually available, i.e. moving work to a low-wage country or area or using poorly-paid migrant workers), now clearly defined, is added to the fifth level of sanctions.

A scientific committee will be established to give advice and make recommendations in the field of combating social fraud or social dumping. These opinions will make it possible to refine the actions and strategies of the inspection services.

England

Read our Employment Law Alert affecting employers in the UK over recent months.

France

Abandonment of position. A recent law provides that in case of an employee abandoning their position (i.e. unjustified absence) the employer can treat the employee as if they have resigned, which deprives the employee of the chance to receive unemployment benefits. On 05 June 2023, the Ministry of Labour confirmed that the employer is not obliged to use this presumption of resignation and can still decide, instead, to engage into a procedure for disciplinary dismissal.

Whistleblowing. In a ruling dated 01 June 2023, the French Supreme Court (“Cour de cassation”) asserted that whistleblower protection applies to employees who report or testify to facts likely to constitute a misdemeanour (“délit”) or a felony (“crime”), and that the employer could not legitimately claim to be unaware that the employee was reporting such facts. The report must therefore be quite specific in order for the individual to benefit from the protection and judges, when assessing whether the protection should be granted, should analyse it carefully.

Welcome/Sign-on Bonus. In a ruling dated 11 May 2023, the French Supreme Court (“Cour de cassation”) ruled that claw-back or malus provisions in relation to a welcome or sign-on bonus (“prime d’arrivée”) are fully enforceable as the purpose of such bonus is to retain the employee. It is therefore possible to revoke or reduce the bonus in case of resignation of the employee before a certain date. This solution is different from the rules applied to performance bonuses, which cannot, in principle, be subject to a condition of presence beyond the period of reference.

For further details please contact our French team.

Germany

Whistleblowing Protection Act. The German law implementing the EU Whistleblowing Directive, the Whistleblower Protection Act (Hinweisgeberschutzgesetz, “HinSchG”), finally entered into force on 2 July 2023 – one month after its publication in the Federal Gazette early June – with only minor changes to the draft law as of December 2022. This means that, after a considerable delay, the EU Whistleblowing Directive has now been fully implemented in Germany. All legal entities employing more than 50 employees in Germany and all financial institutions, regardless of the number of employees, are therefore now obliged to maintain an internal reporting system that meets the requirements of the HinSchG as of 2 July 2023. Please see our feature on this transposition of the Directive here.

Redundancies: age as ambivalent criterion for social selection. The Federal Labour Court has ruled that the age of employees close to retirement can be considered to their disadvantage in the social selection process if they will be entitled to receive statutory pension payments without deductions within two years of the envisaged termination date. This suggests employers can take into account employees that are close to retirement but is not obliged to do so providing the employer some flexibility in the social selection process. Further discussion on the reasoning of the court and the effect this will have on practice for employers available here.

Hong Kong

Implementation of Phase 1 of the Mandatory Reference Checking Scheme (MRC Scheme). Authorised Institutions (AIs) were expected to have implemented phase 1 of the MRC Scheme by 2 May 2023. The MRC Scheme seeks to address the “rolling bad apples” phenomenon in the banking sector. Phase 1 requires AIs to obtain references from prospective employee’s former and current employers when recruiting for certain specified positions.

Repeal of Provisions relating to COVID-19 Vaccination under Employment Ordinance (EO). Starting from 16 June 2023, the COVID-19 vaccination related provisions under the EO, which were introduced in June last year, have been repealed. Non-compliance with a legitimate COVID-19 vaccination request will no longer be a valid reason under the EO for dismissal of employees or variation of their contracts.

Adjustment to Visa Application Procedures. With effect from 19 June 2023, dependents, foreign domestic helpers, imported workers, students or those who wish to enter Hong Kong for training or a working holiday will be required to declare whether they have any criminal convictions when applying for entry visas or entry permits.

Italy

Fixed Term Employment Agreement. From 5 May 2023 a new Decree (“Labour Decree”) is in force amending the obligation for employers to declare the reason why they need to use a fixed-term contact. A fixed-term contract may exceed 12 but not 24 months:

• for the reasons specified in the National Collective Bargaining Agreement (NCBA) or company-level agreements signed by a company's respective employer/employee trade union;
• if not agreed otherwise under the applicable NCBA, due to technical, organisational or production reasons until 30 April 2024;
• to substitute employees.

Companies will continue not to have to declare the reason for needing a fixed-term contract if they do not exceed a term of 12 months. After 30 April 2024 (unless extended), employers will need to refer to one of the reasons specifically provided for by the relevant NCBA for the use of fixed-term contracts. No changes have been made to the rules regulating the extension.

However, as for the renewal of fixed-term contracts, amendments to the Labour Decree recently approved by the Parliament that a fixed-term contract can be renewed without written business reasons for the first 12-mounths period, thus applying the same rules as for the extension.

EU Pay Transparency Directive: The European Parliament has approved the new EU Pay Transparency Directive which provides for the obligation on employers to disclose the salary offered from the outset, before making a job offer to a prospective employee. Companies will be required to share information about how much they pay women and men for work of equal value and to take action if their gender pay gap exceeds 5%. The approach provided by the EU Directive is unusual for Italian standard practice and most Italian job postings do not mention salary specifics. The current trend is for companies to take a ‘wait and see’ approach. The deadline is three years to transpose the Directive into national legislation, i.e. April 2026.

Remote working: The simplified remote working arrangements for vulnerable employees and parents with children under 14 has been postponed until 31 December 2023. Hence, it is sufficient to notify the implementation of remote working to the employee and the Ministry of Labour, even if the individual agreement is not in place and a medical certificate confirming vulnerability is required.

Netherlands

Mandatory Confidential Advisor Act. On 23 May 2023, the Bill on the Mandatory Confidential Advisor Act was adopted by the House of Representatives (the “Bill”) obliging employers with at least 10 employees to appoint a confidential advisor within the company or externally. The purpose of the Bill is to reduce undesirable behaviour in the workplace and create a safe working environment for all employees by providing a legal right for employees to consult a confidential advisor along with rules strengthing the legal position of condifidential advisors within the company. Currently, the Bill is under consideration by the Senate but if passed, it is expected to take effect in stages, providing smaller organisations with more implementation time.

Mandatory reporting on CO2 emissions. With aims to reduce CO2 emissions and combat climate change, from 1 January 2024 the Dutch government will require employers with at least 100 employees to report data on the CO2 emissions of their employees’ commuting and business travel within the Netherlands. Initially, employers will have to report on the 2024 data no later than on 30 June 2025.

Equal Opportunity in Selection and Hiring Act. On 14 March 2023, the Bill on the Equal Opportunity in Selection and Hiring Act was adopted by the House of Representatives. The Dutch Labour Inspectorate (Inspectie SZW) will have the authority to impose fines and make the violation public in case of non-compliance with the law. The Bill obliges employers and intermediaries to establish an internal procedure aimed at preventing discrimination in employee recruitment and selection; employers with at least 25 employees will have to establish such a procedure in writing, and the policy will have to indicate, among other things, that the employers’ recruitment procedure is based on previously established job requirements relevant to the position. Currently, the Bill is under consideration by the Senate, therefore, the effective date is uncertain at this time.

PRC

Representative cases on flexible employment. On 25 May 2023, the Ministry of Human Resources and Social Security, and the Supreme People’s Court jointly issued the representative cases of labour and employment disputes, which will act as a new guide for flexible work and new employment patterns. These representative cases provide some guidelines for the comprehensive consideration of the degree of labour management, which focus on the criteria for determining the circumstances that meet the establishment of labour relations.

Shanghai Employment Promotion Regulations. On 1 March 2023, the Shanghai Employment Promotion Regulations came into effect, which stipulated some rules on policy support, entrepreneurial support, fair employment, flexible employment, etc. One of the issues that deserves attention is that the Shanghai Regulations clearly put forward that except as otherwise provided by laws and administrative regulations, the employer shall not seek information from employees/candidates about their medical treatment records, medical test reports, and criminal records, etc. Given these new local requirements in Shanghai as well as other laws in protecting employees or candidates’ personal data, employers are advised to take a more cautious approach when conducting background checks or investigations of employees.

Singapore

Enhanced Medical Insurance Coverage. In a move to better support employers and to reduce their financial strain, the Singapore government implemented new enhancements to the mandatory insurance regulations applicable to certain categories of foreign employees requiring insurers to co-pay medical expenses up to a higher annual claim limit up to S$60,000, from S$15,000 previously. The implementation will be rolled out in phases beginning from 1 July 2023 and 1 July 2025.

Overtime Pay Beyond 72 Hours. A recent decision by the Singapore High Court in Hossain Rakib v Ideal Design & Build Pte Ltd [2023] SGHC 166 clarified that eligible employees are entitled to claim overtime pay even where the overtime cap as prescribed under the Employment Act 1968 has been exceeded. The court determined that the relevant statutory provision (s 38(5)) which seemingly restricts overtime pay to 72 hours does not serve as an absolute bar to such claims as, amongst other things, the legislative purpose is to afford protection to employees against onerous overtime work hours.

Expanded Leave Benefits for Working Parents. From 1 January 2024, working fathers of Singaporean children will be eligible to four-weeks’ government-paid paternity leave, doubling the current two-week entitlement. In addition, parents with children under two years of age will be eligible to twelve days of unpaid infant care leave per year, an increase from the previous six days.

Spain

Work-life balance. The Royal Decree-Law 5/2023 entered into force on 30 June 2023 aiming to extend social protection and advancing work-life balance rights for families, with full legal recognition now provided for different types of families.

New features to note are:

1. The right not to be discriminated against for exercising work-life balance rights.

2. Adaptation of working hours (art. 34.8 Spanish Workers’ Statute (WSA)):

• The right to request an adjustment to the working day is extended to expressly include those employees who need to care for children over the age of 12 or dependents living in the same household and who, due to their age, accident or illness, are unable to look after themselves.
• The post-application negotiation process with the employee is reduced from 30 to 15 days.
• The employee has the right to return to their previous situation at the end of the agreed or planned period, or when the circumstances that led to the request disappear.

3. Parental leave:

• A new unpaid parental leave article (art. 48 bis WSA) in force, for those who have cared for a child or foster child for a period exceeding one year, until the child reaches the age of eight.
• The duration of leave shall not exceed eight weeks, be taken in continuous or separate periods and on a full or part-time basis.

4. New grounds for nullity of dismissal.
Extensions to articles 53.4 and 55.5 of the WSA increase the causes to make a dismissal null and now include:

• Those on parental leave.
• Those who request Carer’s leave under article 37.3 b WSA (now been extended to five days).
• Employees that have applied for or adapting their working day as set forth in article 34.8 WSA (2 above).

Please contact our Spanish team for further information on amending policies where required and implementation of these new protections.

EU Directive on Transparent and Predictable Working Conditions. Legislation has been issued in draft form and is currently being reviewed by the different ministers affected. Some employers are adapting their template employment contracts to the Directive, but only in regard to the ‘minimum content’ requirement, having assumed that the Spanish legislator will not deviate from the Directive in this respect. The implementation of the Directive has to be approved by the Spanish Parliament and is expected during the following months.

Public pension reform. On 16 March 2023 a new law was passed aiming to tackle imbalances in the public social security system and the need to increase revenue due to an aging population. A series of measures was introduced including:

• automatically updating the maximum ceiling for contribution bases for employees and employers
• introducing a “finalist contribution”, an intergenerational equity mechanism
• updating the formula for calculating the retirement pension
• increasing gender gap supplement
• various reforms for long term sick
• part time contracts to be taken into account for the purpose of crediting the contribution periods necessary to qualify for public benefits including retirement from 1 January 2023, and
• new registration and contribution rules for interns.

Please contact our Spanish team for further information on amending policies where required and implementation of the reformed pension contributions.

UAE

Expanded Emiratisation rules in the UAE private sector. The UAE government has prioritised the increased employment of Emiratis in the private sector announcing an ambitious target of the creation of 75,000 new jobs in the private sector by 2025.

UAE onshore companies with 20 to 49 employees will be required to hit an Emiratisation quota for the first time, hiring at least one UAE citizen in 2023 and another in 2025. Previously, only firms with 50 or more employees need to meet targets on hiring UAE citizens.

The fines for non-compliance with these Emiratisation rules are significant and the authorities are taking action against non-compliant companies. These requirements currently only apply to UAE onshore companies and not to companies in the UAE free zones (which include the DIFC and ADGM free zones).

Please feel free to reach out to our UAE employment team if you have any questions and whether the Emiratisation rules apply to your business.

UAE Involuntary Loss of Employment (ILOE) Scheme. The purpose of the Scheme is to provide income for employees for a period of three months upon termination of their employment due to redundancy until a new job is found. The ILOE scheme has been expanded and is mandatory for employees to register and pay the premiums for the Scheme in onshore UAE and now also including the free zones, with the exception of employees in the DIFC and ADGM financial free zones, but employees in these free zones may register on a voluntary basis. After initial confusion as to whether the ILOE would apply to the DIFC and ADGM an announcement was made confirming that it would apply, then the statement was retracted and finally confirmed that the ILOE scheme is not mandatory for employees in the DIFC and ADGM.

ILOE applicable employees must register by 1 October 2023 to avoid fines (the initial deadline of 30 June 2023 was extended).

Employees have different obligations and compensation rights depending on which of the below two categories they fall under:

1. Employees in the “first category” and earning a basic salary of AED 16,000 per month or less will need to pay AED 5 (plus VAT) per month (AED 60 plus VAT annually) and their monthly compensation is capped at a maximum of AED 10,000 per month up to 3 months.

2. Employees in the “second category” and earning a basic salary exceeding AED 16,000 will need to pay AED 10 (plus VAT) per month (AED 120 plus VAT annually) and their monthly compensation is capped at a maximum of AED 20,000 per month up to 3 months.