Employment Law Alert International – April 2024

See below for an update on the transposition of the EU Pay Transparency Directive across our European network.

Belgium

The EU Pay Transparency Directive - transposition overview

Belgium has not yet started implementing the EU Pay Transparency Directive. It is expected that the EU Directive will have an impact on a number of pay transparency related obligations under current Belgian law. Currently, Belgium has a two-year pay reporting obligation for private sector companies with at least 50 employees, which will be expanded significantly by the EU Directive for companies with 150 or more employees. Belgian law does not currently provide employees with the right to information on pay levels, which will change significantly with the implementation of the EU Directive. In relation to access to justice, Belgian law already provides a number of possibilities for victims of discrimination so the impact of the EU Directive may be more limited in this regard.

Developments this quarter:

Calculating the 50 employee threshold for a whistleblowing reporting channel. On 8 February 2024 a new Act has clarified that from 1 January 2025 employers must calculate the average number of employees annually over the four quarters of the previous calendar year, (1 January – 31 December) to determine whether they meet the threshold for implementing a whistleblowing reporting channel. Any company with at least 50 employees will be obliged to implement internal reporting channels for whistleblowing. However, this obligation will also apply for employers with fewer than 50 employees who are within the scope of the “financial services industry”.

New obligation for employers invoking medical force majeure: contribution due to the "Return to Work Fund". From 1 April 2024, an employer who terminates an employee's employment contract for medical force majeure no longer has to make an outplacement offer, but must pay a contribution of €1,800 to the "Return to Work Fund" and send a notification with certain details (i.e. identification of the employer and the employee concerned) to the National Institute for Sickness and Invalidity Insurance. In return, the employee can then apply for assistance from the Return to Work Fund, which uses specific services to help reintegrate people into the job market. Failure to comply with this obligation exposes the employer to an administrative fine (from €200 to €2,000) or a criminal fine (from €400 to €4,000). These fines are multiplied by the number of employees affected.

New rules on non-contractual liability. On 1 February 2024, the Chamber of Representatives approved a draft Act containing an "Extra-Contractual Liability" of the Civil Code, which abolishes the quasi-immunity of the executing agent (such as employees, company directors or contractors) against possible claims from third parties (i.e. customers) and therefore, has a direct impact on directors and employees. This is expected to come into effect on 1 January 2025 and will apply to facts giving rise to liability after this date. Under the new Act, employees and directors can no longer avoid liability for direct claims by invoking the quasi-immunity of the executing agent. However, employees are still only liable to third parties for fraud, serious fault, or repeated minor fault, while directors may potentially be held liable by third parties if the conditions for such liability are met. The new draft act will allow an employer's contracting party to be able to seek compensation directly from the employee based on the employee's extra-contractual liability, but the liability is limited to cases of fraud, serious fault, or repeated minor fault. For directors, this extra-contractual liability means that, in addition to the grounds for directors' liability, they may potentially be held liable by third parties (such as their principal's contracting party.) if the conditions for such liability are met. The new rules are complementary and only apply if no other contractual agreements have been concluded between the parties. Employers should consider renegotiating existing contracts and be cautious when concluding new contracts to address both contractual and extra-contractual liability and also assess the possibility of renegotiating directors' and executives' insurance policies, excluding the possibility for direct claims against employees based on civil liability in contracts with third parties.

Please contact our Belgian team for further detail on any of the above.

England

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

France

The EU Pay Transparency Directive - transposition overview

France has yet to transpose the EU Directive on Pay Transparency. The stipulated deadline for this transposition is 7 June 2026. While the Directive is expected to have a marginal effect on gender equality obligations, given that French law already mandates the publication of a gender equality index for companies with a minimum of 50 employees, it could have an influence on obligations associated with disclosing starting salaries or salary ranges to job applicants, which is not a current requirement in France.

Developments this quarter:

Acquiring paid leave during sick leave. Following the ruling of the French Supreme Court back in 13 September 2023, the French Parliament enacted an amendment on 10 April 2024 to align French legislation with EU law regarding paid leave acquisition. The main impact of this amendment, effective upon its publication (subject to possible referral to the Constitutional Council), is the extension of the right to acquire paid leave during all sick leave, and not only occupational sick leave.
The amendment also introduces several additional measures to balance the impact on employers, which includes:

• Employees on non-occupational sick leave will accrue two working days of paid leave per month, compared to two and a half days for other employees, with a yearly cap of four weeks.
• A 15-month carry-over period for employees who cannot use their accrued paid leave due to illness or accident. Unused leave will be forfeited after this period.

In addition to the above, employers will be required to inform employees, within one month of their return to work after sick leave, about the number of accrued leave days and the timeframe within which they can use them.

The law retroactively encompasses all sick leave from 1 December 2009, meaning any current or former employee has the right to claim their paid leave entitlements (with a two-year period for current employees and a three-year period for former employees to make their claims).

Supreme Court rules on the right to evidence. In a recent landmark decision, the French Supreme Court has ruled that evidence obtained disloyally, such as unauthorised audio or video recording, is permissible if it is essential for proving a case where no other means of evidence is available. This decision sets a precedent that eases evidence submission for employees and employers, such as recording pre-dismissal meetings, or submitting evidence related to a discrimination/harassment claim, etc.

Please contact our French team for further details on any of the above.

Germany

The EU Pay Transparency Directive - transposition overview

The EU Remuneration Transparency Directive will require significant changes to the Pay Transparency Act, which came into effect in Germany in June 2017. Even though the Directive has not yet been implemented into German law, the Federal Labour Court has shown a willingness to strengthen employee rights. The Court found in a recent case that the fact that the pay of a woman was lower than that of a male comparator gave rise to a (rebuttable) assumption of discrimination on the grounds of gender. Further, in another decision. the Federal Labour Court did not allow an employer to rely on the freedom of contractual negotiations with the higher paid male employee to rebut the assumption of gender-related pay discrimination. These developments should be monitored.

Developments this quarter:

Employment contracts via email. On 21 March 2024, the German government decided to abolish the paper copy requirement for employment contracts, which was previously mandated by the German Evidence Act during implementation of the EU Transparency Directive. The intended bill (not yet available) aims to reduce bureaucracy and is pending approval by the German parliament. Once approved, employers will only need to provide employment contracts in soft copy, such as via email, unless a paper copy is requested by the employee. This change will alleviate the administrative burden on employers, although they are advised to continue obtaining confirmation of the contract terms from employees for their records, e.g. by returning a scanned copy of the countersigned employment contract. This simplification is intended to also apply to employment references. However, paper copy requirements will persist for specific employment contract types, including fixed-term and post-contractual non-competition agreements, as well as for termination letters and cancellation agreements. Read more here.

New parental allowance regulations from 1 April 2024. Amid controversy and much debate, in order to meet saving targets set by the Federal Ministry of Finance new parental allowance regulations came into force from 1 April 2024. This is intended to reduce the number of people entitled to parental allowance by lowering the income limit, above which parents are no longer entitled to parental allowance, to €200k taxable income for both couples and single parents (was previously €300k for couples and €250 for single parents), applicable for births from 1 April 2024. From 1 April 2025, this will be further reduced to €175k. We provide further detail for employers to note.

Minimum wage increases. From 01 January 2024, the minimum wage is € 12.41/ hour. From 01 January 2025, the minimum wage will increase to €12.82/hour. Employers should note that minimum wage violations can be penalised with a fine of up to €500,000.

Please contact our German team for further details on any of the above.

Hong Kong

Relaxation of the “continuous contract” requirement under the Employment Ordinance. The Labour Advisory Board has reached a consensus to relax the “continuous contract” requirement by using the aggregate working hours of four weeks as the basis of determination and setting the four-week working hour threshold at 68 hours. It is expected that this new rule will allow more employees who work shorter hours to be regarded as being engaged under a “continuous contract”.

The eMPF Platform expected to commence operation in June 2024. Currently, there is no centralised administration platform for Mandatory Provident Fund (MPF) schemes. As such, each MPF trustee adopts a different set of software and hardware, operating procedures as well as data standards, which makes the administrative process cumbersome. To standardise, streamline and automate the administrative process, the eMPF Platform will be launched to provide a one-stop, centralised electronic platform for all scheme members and employers to manage the MPF accounts. It is expected that trustee onboarding will commence in June 2024, with full implementation of the platform in 2025. Employers are recommended to liaise with their MPF trustees to ensure a smooth transition of the administrative process to the new platform. Training should be provided to HR personnel on the use of the platform for management of the MPF accounts.

Please contact our Hong Kong team for further details on any of the above.

Italy

The EU Pay Transparency Directive - transposition overview

The EU Pay Transparency Directive must be transposed by 7 June 2026. As yet there is no draft decree transposing the aforementioned directive and the current trend is for companies is to take a “wait and see” approach.

Developments this quarter:

New hires and social contribution exemptions for employers. Employers who hire employees under 30 years old on a permanent or fixed-term basis will receive a 50% social contribution exemption, with the limit of €3000 per year, for the duration of 36 months.

In addition, employers who hire women over 50 years old who have been unemployed for more than 12 months will receive 50% social contribution exemption which is not capped. Furthermore, from January 2024 to December 2026, 100% of social contribution exemption up to €8,000 is granted to employers who will hire women “victims of violence” on a permanent basis (up to a maximum of 24 months), on fixed-term basis (for a maximum of 12 months) or in case of transformation of the relevant employment contract from a fixed-term basis to a permanent basis (for a maximum of 18 months). Employers can apply online to submit the application to the National Social Security Authority (INPS).

Parental leave for 2024. Solely for the year 2024, parental leave taken by both parents within the first six years of their child's life will be paid at the rate of 80% of normal basic salary for the first two months (provided that maternity or paternity leave has been taken by 31 December 2023). From the year 2025, parental leave taken by both parents within the first six years of their child's life will be paid at the rate of 80% for the first month and at the rate of 60% of the normal basic salary for the second month. Employers will need to amend family friendly policies to reflect these amendments.

Remote working. From 1 April 2024, an individual remote working agreement is also required for employees at higher risk of being infected with Covid-19 and employees with children under 14. Therefore, those categories of employees will no longer be subject to the exceptional rules applied during the Covid-19 period.

Please contact our Italian team for further details on any of the above.

Netherlands

The EU Pay Transparency Directive - transposition overview

Ultimately on 7 June 2026, the EU Pay Transparency Directive (“the Directive”) will have to be implemented in Dutch legislation. In July 2023, in a response to questions from several members of the House of Representatives, the (outgoing) Minister for Social Affairs and Employment suggested they expected to bring a legislative proposal for an act implementing the Directive during the second half of 2024. However, please note that formation talks (for a new Dutch government) are currently ongoing and, at this point in time, it is unclear whether a new government will be formed and installed within the next few months. It is likely that this may cause further delay in the implementation process.

Developments this quarter:

The legislative proposal for the Equal treatment in Recruitment and Selection (supervision) Act rejected. After much debate over the course of the last few weeks, this legislative proposal was rejected by the Senate on 26 March 2024. If the Act had been adopted, then, among other things, employers would have had to draft and apply a written procedure aimed to combat labour market discrimination.

The legislative proposal for the Clarifying Assessment of Labour Relations and Legal Presumption Act. A proposed new Act is under consideration clarifying when to work as an employee or when to be self-employed. The Act intends to combat false self-employment and introduce a legal presumption under which workers paid lower than €32.24 an hour are deemed to be performing their work under an employment contract. We are actively monitoring further updates on this proposal, but due to a large consultation response and possible split to the proposal, we expect discussion to be pushed back (at least several months). It is yet unclear how this might impact the expected date of entry into effect.

Taxation for foreign employees. Recently passed legislation may further reduce the 30% ruling (allowing foreign employees to pay less tax over part of their salary) with a step-by step reduction to the maximum period that this may apply (from 30% in the first 20 months, to 20% in the following 20 months and 10% during the remaining period). Transitional provisions may apply with the capping of the 30% ruling not applying until 1 January 2026.

Minimum wage. From 1 January 2024, the minimum wage per hour is €13.27 (for employees aged 21 and over). This amount shall be amended bi-annually (with the first amendment expected on 1 July 2024).

Please contact our Dutch team for further detail on any of the above.

People’s Republic of China

Two-week visa free entry for Switzerland, Ireland, Hungary, Austria, Belgium and Luxembourg. On 7 March 2024, the Ministry of Foreign Affairs of the People’s Republic of China announced that China will expand the scope of visa-free countries and implement a visa-free policy on a trial basis for holders of ordinary passports from six countries, including Switzerland, Ireland, Hungary, Austria, Belgium and Luxembourg. During the period from 14 March to 30 November 2024, holders of ordinary passports from the above-mentioned countries who come to China for no more than 15 days for business, sightseeing and tourism, visiting relatives and friends, and transiting will be granted visa-free entry.

Clarification of standards relating to the protection of women's rights. On 18 February 2024, The Beijing Municipal Human Resources and Social Security Bureau’s website published a newly revised version of the “Beijing Municipal Human Resources and Social Security Administrative Punishment Discretionary Benchmark Table”. The updated table introduces over twenty new penalty discretionary benchmarks, addressing matters such as the protection of women’s rights and the administration of human resources service agencies. It explicitly outlines the detailed penalty provisions for employers who refuse to hire women based on gender during the recruitment process, as well as those who reduce the benefits of female employees due to pregnancy, maternity leave, and other reasons.

The PRC update has been provided by May Lu, Managing Partner at Shanghai YaoWang Law Offices.

Singapore

Tripartite Guidelines for Non-Compete Clauses. On 6 February 2024, the Minister of Manpower announced that guidelines concerning the reasonable use of non-compete or restraint of trade clauses in employment contracts are set to be published in the second half of 2024. The enforceability of these clauses is currently governed by common law, with the courts considering on a case-by-case basis whether there is a legitimate proprietary interest to protect and the reasonableness of the clause’s scope. These guidelines are a response to concerns about the restrictive nature of such clauses, highlighted in recent case law (including in a High Court case where we acted for the plaintiff company in seeking to enforce a non-compete clause against a former employee). The guidelines aim to balance the protection of legitimate business interests with employees' rights to find new employment after retrenchment or termination, with the Minister stating that the guidance will aim to educate employers and shape norms. The Ministry of Manpower is working with Tripartite partners to finalise these guidelines, which will also address the forfeiture of unvested restricted stock units (RSUs). The guidelines will complement existing advisories on retrenchment and are part of Singapore's balanced approach to fair employment and retrenchment practices. Ahead of their implementation, businesses should review these clauses in their current employment contracts to ensure they are reasonable and justified.

Statutory Retirement Age Rise. The Ministry of Manpower announced on 4 March 2024 that there will be an increase in the ages for retirement and re-employment (whereby companies are required to offer re-employment or employment assistance to eligible staff) from 1 July 2026 to 64 and 69, respectively, following the last rise in July 2022 to the current ages of 63 and 68, respectively. This is part of the ongoing process of raising the retirement age to 65 and the re-employment age to 70 by 2030. The timely announcement is in order to give businesses and workers enough time to prepare for the change. The move is part of efforts to boost business productivity and create fair and inclusive workplaces, as well as addressing age discrimination, which accounted for 24% of discrimination complaints between 2018 and 2022. The Ministry of Manpower provides financial incentives to employers for hiring and training older workers, however, the Singapore National Employers Federation has called for more help for employers to adjust, including extending the existing Senior Employment Credit scheme which provides wage offsets for Singaporean workers aged 60 or above, which is set to expire in 2025.

Increase in Employment Pass Qualifying Salary. The Minister of Manpower announced on 4 March 2024 that the minimum monthly qualifying salary for Employment Pass applicants will increase from S$5,500 to S$6,200 for financial services and from S$5,000 to S$5,600 for all other sectors, from 1 January 2025 for new applicants and from 1 January 2026 for renewals. This minimum qualifying salary will also continue to increase with age as it does currently. The increases are designed to maintain a skilled foreign workforce while promoting good job opportunities for Singaporeans and encouraging innovation in local enterprises. Despite the changes, businesses with existing Employment Pass holders have until potentially 2028 to adapt due to the validity period of Employment Passes and renewals, and the majority of existing Employment Pass holders are already earning above the new thresholds so will not be impacted by the changes.

Advisory Guidelines on Artificial Intelligence. The anticipated guidelines on the use of personal data in AI recommendation and decision systems were issued by the Personal Data Protection Commission (PDPC) on 1 March 2024 and are intended to provide clarity on how the Personal Data Protection Act 2012 (PDPA) applies to the use of personal data for developing and deploying AI systems that embed machine learning models. Although not legally binding, it is likely that the guidelines will be highly persuasive as they will likely be referred to by the PDPC. With the use of AI increasing in the employment and HR contexts, although meaningful consent is required under the PDPA, the new guidelines provide that the business improvement exception can be relied upon to negate the need for consent to be obtained under the PDPA for using personal data to develop AI systems used for activities such as recommending potential job candidates for vacancies, automatically assigning jobs to platform workers and conducting bias assessments.

Spain

The EU Pay Transparency Directive - transposition overview

In recent years, Spain has enacted a series of regulations related to equality and pay equality, with notable emphasis on Royal Decrees 901/2020 and 902/2020. The latter, in line with European strategy, is based on two principles: equal pay for equal work and pay transparency. However, the transposition of the EU Directive will bring about new adjustments, expanding the scope of application, establishing disclosure and information obligations, reducing thresholds for justifying the gender pay gap, and modifying consequences for non-compliance and prescription periods. Additionally, consideration will need to be given to the potential role of representative organisations. The legislative changes must occur before the transposition deadline in 2026, imposing new legal obligations on companies.

Developments this quarter:

Salary deductions as non-competition compensation found to be invalid and unenforceable. The Supreme Court has ruled that a salary deduction labelled as compensation for post-contractual non-competition do not qualify as adequate compensation if the salary remains unchanged from the initial offer. This makes the non-competition clause invalid, and the company cannot enforce reimbursement for its breach after contract termination. The court emphasised the clause's lack of clarity and lawfulness, as it essentially repurposes part of the agreed salary without offering true additional compensation for the restriction.

No automatic damages for null dismissals without evidence of discrimination. In this Supreme Court decision from December 2023, the dismissal of a pregnant worker was found to be null and void due to the lack of justification and a specific legal provision protecting pregnant workers. However, the court required evidence of discriminatory intent linked to the pregnancy to justify additional compensation for damages. Since such evidence was not presented, additional compensation was not awarded despite the dismissal being declared null and void. This underscores the principle that the mere fact of a dismissal being null due to a worker's pregnancy does not automatically result in compensation for damages. Evidence of discrimination related to the pregnancy must be provided to claim such compensation.

New LGTBI protocols: fostering workplace equality and safety. A new LGTBI law, effective from 2 March 2024, mandates companies with over 50 employees to create an LGTBI Plan, including a protocol for addressing harassment or violence against LGTBI individuals. This plan is a proactive measure to foster genuine equality and safeguard against discrimination, with a clear legal framework and sanctions for rights violations. Although detailed regulatory norms are awaited, it is clear that the protocol to address harassment or violence against LGBTI individuals is an immediate requirement.

For further detail on any of the above, please contact see our recent Spanish Employment Flash.

UAE / DIFC

DIFC enacts new employment law amendments affecting GCC national employees. The amendments introduce new provisions requiring employers in the DIFC to make top-up payments for eligible GCC national employees into a Qualifying Scheme, such as the DIFC Employee Workplace Savings plan (DEWS), in addition to their pension contributions. This is to address any discrepancies between the General Pension and Social Security Authority (GPSSA) contributions and the Qualifying Scheme contributions that non-GCC national employees receive.

This amendment to DIFC Employment Law came into force immediately on 8 March 2024 although the commencement date for the purposes of this amendment is from 1 April 2024. Although not explicit, we understand that employers have until the 21 May 2024 to make the required top-up payments calculated from 1 April 2024. There is a potential fine of USD 2,000 for employers who fail to comply. Our article on this topic can be viewed here.

ADGM: Consultation paper issued for new Whistleblowing Framework

On 7 March 2024, the Abu Dhabi Global Market (ADGM) released a Consultation Paper proposing the Whistleblower Protections Regulations (2024), which aim to expand whistleblower protections. The Proposed Regulations require ADGM entities to establish and regularly update policies to protect whistleblowers, ensure confidentiality, and handle reports properly. They also grant whistleblowers immunity from retaliatory actions and mandate entities to maintain disclosure records for six years. Non-compliance could result in sanctions including penalties or license revocation. Entities are invited to review and comment on the Consultation by 30 April 2024. Our article on the topic can be viewed here.

For further detail on the above, please contact our team in the Middle East.