International Employment Law Alert – October 2024

EU

Platform Workers Directive. The Council of the EU formally adopted at first reading a Directive of the European Parliament and of the Council on improving working conditions in platform work on 14 October 2024 aiming to ensure that people working through digital labour platforms are granted the legal employment status that corresponds to their work arrangements. The Directive was approved by the European Parliament earlier this year and is now likely to enter into force in the coming month. We will be monitoring transposition of this across the European Member States over the next two years. Please contact our employment team for further detail on how this new Directive will affect digital platform employers across Europe.

Belgium

The abolishment of quasi-immunity for the auxiliary person. On 1 July 2024, the Act introducing Book 6 of the new Civil Code was published in the Belgian Official Gazette introducing new rules on extra-contractual liability which will have a direct impact for company directors.

Previously, directors were, in principle, shielded from liability claims from a contracting party of the company for faults made in the performance of the contract due to the quasi-immunity principle. The abolishment of quasi-immunity for the auxiliary person has a direct impact for directors of a company, as directors often act as the auxiliary person for the execution of contracts entered into by the company. Further to the adoption of the new Book 6, directors will now become exposed to the risk of direct liability claims by co-contracting parties of the company for faults in the execution of the contract, alongside the risk of directors’ liability towards the company of which they are a director.

Such increased risk should however be nuanced. As stated earlier, due to the principle of the double carry-over of contracts, directors shall benefit from protection mechanisms included in the contract between the company and the third party, as well as the contractual relationship between the director and the company, including the protective measures from the Belgian Code of Companies and Associations (hereinafter, the BCCA), which governs the “contract” between a company and its directors and which will have priority over Book 6 of the Civil Code.

The BCCA includes a set of rules with respect to the liability of directors, including several limitations on the liability of directors. Specifically, directors can only be held liable towards a third party for faults in the performance of their function to the extent the fault is of an extra-contractual nature. In addition, directors will only be liable for decisions or acts that are manifestly outside the scope of what can be reasonably expected from a normally prudent and diligent director in the same circumstances. Other than that, the BCCA provides for a maximum cap on the liability of directors for certain faults.

Although the BCCA puts limitations on the liability of directors, it should be noted that it explicitly states that the liability of directors cannot be limited to an extent beyond what is provided in the BCCA. It prohibits a company from providing a full exoneration of liability in advance to its directors, both in relation to liability towards the company and towards third parties.

Lastly, directors’ and officers’ insurances could play an important role in mitigating this increased risk of liability for directors under the new Book 6 (although renegotiations of such insurance may be necessary).

Mandatory occupational accident insurance for self-employed platform employees from 2026. A Royal Decree of 12 August 2024, published in the Belgian Official Gazette on 4 September 2024, concerning occupational accident insurance for self-employed employees working for digital platforms that place orders, aims to guarantee equivalence as close as possible to the protection applicable to salaried employees that is provided by the Act on Occupational Accidents.

With effect from 1 January 2026, operators of digital platforms that place orders will be obliged to take out an insurance policy for their employees who qualify as self-employed, to cover bodily injury suffered by the latter in the event of an accident occurring during performance of their platform work or on the way to or from that work. If they fail to take out such insurance, they will, where applicable, be civilly liable for such damage. The Royal Decree extends an insurance obligation for platform operators to include legal protection through legal protection insurance.

The Royal Decree will enter into force on 1 January 2026, with the exception of the provision relating to the revaluation allowance for which entry into force is scheduled for 1 January 2031, providing insurers and platform operators the time they need to introduce the appropriate mandatory insurance or, if already offered, to extend it in accordance with the new Decree.

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

England

Employment Bill published. The highly anticipated Employment Rights Bill was published on the 10 October 2024, just within 100 days of Labour coming into government in July 2024, together with Next Steps to Make Work Pay and Employment Rights Bill: supporting documents. This was followed by the publication of ten factsheets on proposed reforms. Much of the detail will be in secondary legislation and subject to consultation. On 21 October the government began publishing the first of these with four consultation papers on the SSP replacement rate for low earners, potential remedies in collective redundancy and fire and rehire claims, the application of zero hour contracts measures to agency workers and trade union reform. We will continue to monitor as further consultations and legislation are expected over the coming weeks. Our insight and comments on the headline points in the Bill that employers should note are available here.

Read our recent Employment Law Alerts covering recent cases and developments in the UK.

France

Employee saving schemes and pensions. On 6 July 2024, a new decree clarified the provisions in the “value sharing” law from 29 November 2023 detailing the processes, amounts and means of payment/usage of profit sharing payments.

The decree notably implements three new cases for anticipated use of profit sharing amounts, creates an obligation to include a public declaration “country by country” into the BDESE, and also provides new clauses to be included into the mandatory or non-mandatory profit sharing agreements.

As a reminder, companies employing at least 11 employees must implement a value sharing scheme from 2025.

Diversity at work. The French Data Protection Authority (also known as “CNIL”) has submitted draft guidelines for public consultation with a view of providing recommendations to companies that wish to implement diversity measurement surveys.

Through these guidelines, the CNIL recommends limiting as much as possible the amount of data collected through these surveys, and refraining from collecting prohibited data such as the employee’s ethnicity or race.

The CNIL also insists on the requirement to ensure the anonymity of the results, and the voluntary nature of the participation to the surveys.

The Data Protection Authority also includes in its recommendations several guidelines for the compliance with the GDPR for companies that implement these type of surveys (notably insights regarding the legal basis for data collection, the content of the information to be provided, and the use of a third party to conduct the survey).

We expect the definitive version of these guidelines to be published in the upcoming weeks.

Material Risk Takers – dismissal indemnities cap. A law adopted on 13 June 2024 implements a cap to the reference salary used for the calculation of the damages allocated to the Material Risk Taker by a Labour Court in case of unfair/null and void dismissal. According to this new law, for Material Risk Takers employed by a credit institution, a finance company, an investment firm, an insurance company or a reinsurance company, the monthly reference salary used by the Court cannot exceed a cap of €46,368 (amount applicable for 2024).

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

Germany

Remuneration for works council activities. On 25 July 2024, the Works Constitution Act (BetrVG) was amended to clarify the rules for remunerating works council members aiming to provide transparency and resolve existing uncertainties. The previous regulation already ensured that works council members' pay must not be lower than that of employees with similar qualifications and roles, and it prohibited any advantage or disadvantage for works council members.

The revised law specifies that the relevant date for determining comparability is when the works council office is taken over, with possible later redetermination if there is an objective reason. It allows employers and works councils to establish a procedure for determining comparable employees in a works agreement. The new law provides a more flexible benchmark for determining works council remuneration but requires that the works council member meets the necessary operational requirements and criteria to avoid abuse. Employers should consider a works agreement regarding the remuneration of works council members.

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

Hong Kong

Non-Chinese Hong Kong permanent residents now eligible for mainland China travel permit. With effect from 10 July 2024, the national Exit & Entry Administration will issue a permit (the “Permit”) for non-Chinese Hong Kong permanent residents, facilitating entry into the Mainland for investment, business, tourism and visiting relatives. Valid for five years, the Permit will allow multiple entries to the Mainland with each stay not exceeding 90 days. Previously, non-Chinese Hong Kong permanent residents had to apply for a visa to visit the Mainland and use their foreign passport, provide fingerprints and fill out entry cards each time they crossed the border.

Implied Terms: key takeaways from Yang v Nomura International (Hong Kong) Limited. In this case handed down on 27 August 2024, the Court of First Instance dismissed a former employee’s claim for over US$4million, related to discretionary bonus, base salary and unvested bonus awards. The employee’s claim was based on the employer’s alleged breaches of certain implied terms in the employment contract by issuing a warning letter, not awarding any discretionary bonus, terminating employment on the ground of redundancy, and forfeiting certain unvested bonus awards.

The court confirmed the law regarding the implied term of mutual trust and confidence, the implied anti-avoidance term, and the Braganza duty in employment contracts. Specifically the Court:

• confirmed that the implied term of mutual trust and confidence does not restrict an employer’s right to terminate an employee’s employment without cause by invoking the relevant contractual notice provision;
• confirmed the existence of an implied anti-avoidance term, i.e. an employer must not terminate employment for the purpose of preventing the employee from becoming eligible for or receiving a discretionary bonus; and
• held that the Braganza duty requires an employer to exercise its discretion in awarding bonuses in good faith, rationally and for proper purpose, and to avoid making decisions arbitrarily or capriciously.

The key takeaway for employers is a reminder that employers can terminate an employee’s employment without cause by giving notice or making a payment in lieu. Employers must ensure that where they exercise unqualified discretion in relation to employees, such as when making decisions about awarding bonuses, decisions must be made rationally and in good faith.

Please contact our Hong Kong team for further detail.

Italy

Compensation for damages in case of unlawful fixed-term employment contracts. The Law Decree no. 131/2024 (Decreto Salva Infrazioni), published on 16 September 2024, provides that in case of unlawful fixed-term employment contracts, in addition to the conversion of the contract to be a permanent one, the employee may be granted a compensation for damages exceeding 12 months’ salary (i.e. the maximum limit provided by law), if proved they suffered greater damages.

Hiring of people under 35 years old and of disadvantaged women. From 1 September 2024 to 31 December 2025, employers who hire employees under 35 years old, who have never been employed on a permanent basis, will receive a 100% social contribution exemption with the limit of €500.00 per month per employee (increased to €650.00 if the relevant employee is hired in the following Italian regions: Abruzzo, Molise, Campania, Basilicata, Sicily, Puglia, Calabria or Sardinia), for a maximum period of 24 months. Furthermore, employers who hire women who have been unemployed for at least 24 months on a permanent basis will receive 100% social contribution exemption with the limit of €650.00 per month per employee for a maximum period of 24 months.

Resignation due to unjustified absence. A draft law is currently under discussion before the Italian Parliament, which provides inter alia that any employee who is absent from work without a justified reason, for a period equal to the one provided in the NCBA applicable to the employment relationship or, in any case, exceeding 15 days, will be deemed to have voluntarily resigned and not entitled to the payment of the unemployment allowance (Naspi).

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

Netherlands

“Pseudo self-employment” enforcement moratorium to be lifted from 1 January 2025 onwards. The Dutch Tax Authorities’ enforcement moratorium regarding pseudo self-employment (schijnzelfstandigheid) is to be lifted. Currently, organisations that make use of the services of self-employed persons (zzp’ers) have faced a risk, both from a civil law and a tax perspective, that agreements entered into with those that are pseudo self-employed will be requalified as employment agreements. The tax-related risk associated with this has been severely mitigated due to the enforcement moratorium in place. However, from 1 January 2025 this moratorium will be lifted. Consequently, employers in the Netherlands are well advised to: (i) map the number of self-employed persons currently performing work for their organisation in the Netherlands, (ii) assess whether the contracts with those individuals might be at risk of requalification and, (iii) where such risk is identified, consider whether contracts should be renewed beyond 1 January 2025 and, if so, on what contractual basis. Please contact our Dutch team for further detail on any of the above.

People’s Republic of China

Gradual delay of the statutory retirement age. On 13 September 2024 the government officially passed the decision on the gradual delay of the statutory retirement age. This decision includes the following key provisions:

• Delayed statutory retirement age. Starting from 1 January 2025, the statutory retirement age will be delayed by one month every four months, gradually increasing the retirement age to 63 for men and 58 for women whose current retirement age is 55. For female employees whose current retirement age is 50, the statutory retirement age will be gradually extending to 55 years by one month every two months.
• Increase in minimum contribution period for basic pension. From 1 January 2030, the minimum contribution period will be gradually increased from 15 years to 20 years, with an annual increase of six months. Employees who have reached the statutory retirement age but have not met the contribution requirements will need to delay retirement by extending their contributions or making a lump-sum payment, and will receive a monthly basic pension.
• Voluntary flexible early retirement. Employees who have met the minimum contribution period can voluntarily choose flexible early retirement, with the earliest retirement option not exceeding three years before the original statutory retirement age of 50 for female employees, (55 for female employees who are in managerial positions or employed as technicians) and 60 for male employees. Employees who reach the statutory retirement age, after reaching mutual agreement with the employers, can opt for flexible delayed retirement, with the latest retirement option not exceeding three years. The policy must respect employees’ preferences and cannot involve compulsory or de facto compulsory retirement.
• Extension of unemployment insurance benefits. For those who are receiving unemployment insurance benefits and are less than one year away from the statutory retirement age, the duration of receiving unemployment insurance benefits will be extended until the statutory retirement age. During the period of implementing the gradual delay of the statutory retirement age, the unemployment insurance fund will pay pension insurance contributions for these individuals according to regulations.
• Early retirement for special occupations. Employees engaged in special occupations, such as those working underground at high altitudes, in high temperatures, or in particularly strenuous physical labour, as well as those working in high-altitude areas, may be eligible to retire earlier.

In addition, the State Council may supplement and refine the policy implementation based on actual needs. We will continue to monitor and update accordingly.

Zhejiang Province has officially extended its statutory marriage leave. On 27 September 2024, the Zhejiang Provincial Regulations on Marriage Leave (the “Regulations”) were passed. Under the Regulations, employees who legally register their marriage are entitled to 13 days of marriage leave, an increase from the previous three days. The Regulations take effect immediately upon the announcement. As the duration of statutory marriage leave can vary by region, the Regulations in Zhejiang Province and the extension of the marriage leave will have an impact on local employees and employers.

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

Singapore

High Court rules on discretionary bonuses. A recent High Court ruling was handed down in BGC Partners (Singapore) Limited and GFI Group Pte Ltd v Sumit Grover [2024] SGHC 206. This dispute emerged from the termination of an employee, notably a former leading broker in the Indian Rupee non-deliverable forwards market. The employee was lavished with loans in the form of a signing-on bonus and funds to resolve a dispute with a previous employer, but the relationship eventually soured. The core issues revolved around the employer's demand for repayment of loans extended as part of the employee's remuneration package and the refusal to grant bonuses following termination.

Crucially, the court addressed the contentious matter of discretionary bonuses, affirming that such bonuses are not inherently guaranteed and that the employer had lawfully exercised its discretion in their withholding. Nevertheless, the court underscored that although these bonuses are discretionary, employers are under a contractual obligation to exercise their discretion within reasonable limits. The case highlighted that courts can restrict the exercise of contractual discretion through implication of a term that such discretion be exercised in an objectively reasonable manner, or that it should not be executed arbitrarily, capriciously, or irrationally, subject to the caveat that the courts will not intervene in the exercise of such discretion lightly. This decision serves as a crucial reminder to employers about the importance of the need for careful contract drafting and the judicious exercise of their discretionary powers. It reaffirms the principle that while employers possess a degree of discretion in awarding bonuses, this discretion is not unfettered and must align with the principles of fairness and reasonableness.

For contact our team in Singapore for any further detail.

Spain

Gender equality – a new law. The new Organic Law 2/2024, which came into force on 22 August 2024, introduces significant changes to labour law to ensure equal representation and a balanced presence of women and men in administrative, representative, and governing bodies across various sectors. The law mandates that the presence of each sex in these bodies should not exceed 60% or be less than 40%, unless justified otherwise, and applies to trade unions and employers' organisations. It also establishes the role of a company equality officer to promote and monitor gender equality, outlining specific qualifications for this position. Additionally, the law enhances protections for victims of sexual violence, including rights to reduced working hours and protection against dismissal. However, it has sparked controversy by removing the automatic nullity of dismissals for employees requesting workday adjustments for conciliation or taking family leave, which means such dismissals can now be deemed fair, void, or unjustified depending on the circumstances.

Sexual orientation discrimination – a new Decree. A Royal Decree has been approved and published, taking effect immediately and setting forth comprehensive guidelines to achieve equality and non-discrimination for LGBTI individuals in the workplace. Companies with over 50 employees are required to negotiate LGBTI equality measures, while for smaller companies, this negotiation is optional. The decree outlines detailed procedures for negotiation, including the formation of committees and deadlines, ensuring that all companies, regardless of size, work towards creating a fair and inclusive work environment. If no measures are specified within three months, default measures from the Royal Decree are adopted, emphasising the importance of compliance and proactive action. Please get in touch with our Spanish team if you require further information on this new Decree.

Non-binding ruling on long standing complaint regarding unfair dismissal compensation. The European Committee of Social Rights (ECSR) has ruled on a complaint by the Unión General de Trabajadores (UGT) regarding compensation for unfair dismissal. The decision, adopted on 20 March 2006 and published on 29 July 2006, found that the Spanish legislation, which caps compensation at 24 monthly payments of 33 days' salary per year of service, does not adequately cover the damage suffered by the victim or deter employers, thus breaching Article 24 of the European Social Charter. The ECSR concluded that the Spanish law fails to comply with the Charter's provisions, despite some Spanish courts occasionally awarding additional compensation. However, this decision is non-binding and does not constitute a jurisdictional ruling.

For further information on the above, please see our September Employment Flash or contact our Spanish team.

UAE / ADGM

UAE Labour Law amendments. From 31 August 2024, the UAE has introduced pivotal amendments representing a significant enhancement to the protection of employees’ rights whilst imposing stricter penalties for employer breaches. Employers should take steps to review their current practices and ensure that they are fully compliant with the new regulations which may include updating employment contracts, ensuring proper documentation and authorisation for all employees, and reviewing internal policies and procedures to prevent any breaches of the UAE Labour Law. We provide an overview of the key changes and implications for employers here.

UAE introduces a Charter for the Development and Use of AI. On 30 July 2024, the UAE's Artificial Intelligence, Digital Economy and Remote Work Applications Office introduced the Charter for the Development and Use of Artificial Intelligence. It forms part of the UAE Strategy for AI, which aims to transform the UAE into a global hub for developing and adopting AI. The charter emphasises creating a safe, private and trust-enhancing environment for AI applications, promoting societal benefits and inclusivity. It sets out principles for safe and fair AI development, aiming to strengthen human-machine relationships, enhance AI awareness, ensure equitable technological access and comply with relevant laws, marking a significant step towards enhancing the UAE's digital landscape and global AI partnerships. We will be monitoring this, for further detail please contact our team in the Middle East.

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