Employment Trends Europe - November 2018

France

Statutory developments

The freedom to choose one’s professional future

On 01 August 2018 legislation was introduced with a view to granting employees "the freedom to choose one’s future career". This included the following new measures:

Real equality between women and men

Important measures have been introduced which aim to eliminate the gender pay gap for companies with over 50 employees, including:

• the obligation to annually publish processes and actions implemented in respect of removing the gender pay gap
• adequate correction measures must be taken if the gender pay gap is above a certain threshold
• a three-year time limit to implement wage equality, and 
• a financial penalty in case of non-compliance.

Secondment of employees

New legislation now provides for different types of secondment in certain cases such as short secondments, or secondments for specific activities.

The French administrative authority has extended powers with respect to seconded employees and possible fines have increased up to €4,000 per employee if unlawfully seconded (the fine is €8,000 per employee in case of a repeated offence).

A “Name & Shame” list will also be set up, with a list of sentenced companies.

Draft bill on company’s transformation and growth (called “PACTE”)

The draft PACTE bill is currently being discussed in Parliament and will presumably enter into force during Spring 2019. It provides for new measures in the following areas:

• New durations to assess applicable headcount thresholds: a new threshold would be applicable only if reached for a period of five consecutive years.
  However, in cases of decreases, if a threshold is not met for one year it will no longer be considered applicable.
• Higher thresholds: regarding the obligation to implement internal regulations, this would rise to a threshold of 50 employees instead of the current threshold of 20 employees.
• Material risk takers remuneration: remuneration awarded to material risk takers (subject to “CRD4” regulations) could be reconsidered in the event of infringement of the rules regulating financial risks without it being a prohibited pecuniary sanction. Dismissal indemnity of material risk takers would not take into account variable remuneration of material risk takers, such variable remuneration could also be reduced or refunded to the employer.
• Employee incentives: the draft bill provides for a certain number of new potential employee incentives. For example; voluntary profit sharing for employees; specific incentive arrangements which can be linked to company performance objectives and results as well as individual objectives, encouraging employees to contribute to the company’s growth on a long term basis.
• Retirement saving accounts: there are a number of measures in the draft Bill regarding retirement saving accounts, notably in order to make the transfer of funds between retirement and saving accounts easier.

Recent cases

• Responsibility of the parent company in case of redundancies: employees made redundant in the framework of a court-ordered liquidation of a company, can obtain damages from the parent company before court if the said company contributed to its subsidiary’s insolvency.
• 13th months premium exclusively awarded to a category of employees: A 13th month premium can be exclusively awarded to senior managers only (holding the “executive” status under French law) without infringing the principle of equality of treatment between employees. The High Court considered that senior managers and other employees are not placed in the same situation with respect to work accomplished and can therefore be treated differently.
• Binding force of the A1 certificate: According to a recent decision of the European Court of Justice, the A1 certificate (assessing social security coverage by the country of origin in case of secondment), which is delivered by a European Member State is binding as long as it has not been withdrawn by the State which delivered it. This is the case even if such certificate has been contested by the competent administrative authority receiving it and even if the coordination of social security system committee considered that it should be withdrawn. The Court also states that such certificate can have a retroactive effect, even if the Member State in which the employee is working has already decided that such employee should be affiliated with the mandatory social security regime of this said Member State.

Germany

The legality of monetary strike-breaking rewards paid by an employer

The Federal Labour Court has ruled that the payment of strike-breaking rewards to employees who do not strike is legal. This case concerned an employee who went on strike and therefore, did not qualify for strike-breaking rewards (€200 per day for the first day, €100 per day thereafter, far exceeding daily earnings of the employee). The employee claimed that payment of strike-breaking rewards violated equal treatment under law. The Court agreed that there was unequal treatment of those employees on strike and those not striking, however, the judges ruled that the unequal treatment was justified as an instrument to be used in a labour conflict.

Video surveillance of business facilities open to the public used as evidence in court proceedings against employees

Another Federal Labour Court ruling in favour of the employer. Here the Court has ruled that employers may use legally obtained video surveillance material in labour court proceedings against employees if the business is open to the general public. Video surveillance material is only legally obtained if there is a valid reason for it (such as potential theft) and is conducted in an open manner, so that employees are made aware of it.

In this case, the employee had been terminated after the employer had reviewed surveillance video footage due to missing stock and observed that the employee had not put cash in the registry on two occasions, more than six months ago. Even though keeping video surveillance footage for this length of time may be considered problematic from a data protection point of view, legally obtained footage was found to be admissible evidence and the Court could find no data protection laws that led to its inadmissibility.

Italy

Employment Law Reform: Dignity Decree

The Dignity Decree came into force in August 2018 with three key provisions of interest; contracts (fixed term and temporary), bonuses and unfair dismissal indemnities.

Netherlands

The Balanced Labour Market Act

The proposed Balanced Labour Market Act (Wet arbeidsmarkt in balans) (the “Act”), is currently under consultation. The purpose of the Act is to reform the labour market and to reduce the number of fixed-term contracts and increase the number of permanent contracts. This is expected to come into force on 01 January 2020. Different amendments to employment law have been proposed in the Act including, amongst others, the following proposals:

The transition payment:

Currently, an employee must be employed for two or more years before employment is terminated in order to be eligible to receive a transition payment. Under the Act, an employee will be entitled to the transition payment from the start of the employment agreement (also during the probationary period). Furthermore, the calculation of the transition payment will be amended (resulting in 1/3 monthly salary per years of service) and the years of service used to calculate the transition payment will be prorated based on the full duration of the employment agreement (ie no longer rounded per six months).

Reasonable ground to terminate the employment agreement:

Currently, an employee employed on the basis of an indefinite employment agreement can only be terminated if the employer can demonstrate that there is a reasonable ground for dismissal. There are eight statutory reasonable grounds and these grounds are exhaustive. As a result, thereof, currently termination of an employment agreement is only possible if the employer can demonstrate that one of the dismissal grounds is fulfilled. Under the Act, a cumulation of grounds will be possible. Dismissal may follow if there is a combination of two or more grounds. The grounds of redundancy due to economic circumstances and long-term disability or illness are excluded from the cumulation of grounds. If the employment contract is dissolved on the basis of different cumulated dismissal grounds, the court will be able to award the employee with an extra payment (on top of the transition payment) that amounts to a maximum of half of any transition payment an employee is entitled to.

Other amendments:

Other amendments included in the Act are:

1. extension of the probationary period for permanent contracts from two to five months and fixed-term contracts of two or more years from two to three months
2. extension of the period to conclude fixed-term contracts from two to three year
3. more favourable regulations for on-call employees, for example, the employee will only have an obligation to work if the employer calls four days in advance and the employer will be obliged to pay wages over the hours that would have been worked if the call is withdrawn within that period, and
4.  new definition for payrolling (ie an employee is formally employed by a payroll agency but is in fact working (permanently) for a third party), whereby payrolling will not be qualified as temporary agency work (uitzendewerk) and payroll employees will be entitled to the same terms of employment as the employees who work directly for the hirer.

Spain

Five-month gap does not preclude TUPE transfer

 In a Spanish case heard by the ECJ, it has been determined that a five-month cessation of activities did not preclude the possibility of a transfer of an undertaking.

The case involved a music school which was owned by a local administration and outsourced to a music company, Musicos y Escuela. Due to a reduction in students and unpaid sums, the local administration terminated the contract and Musicos dismissed its employees. The premises, instruments and resources were returned to the administration. Some five months later, the administration appointed a new company In-pulso to run the school, but it did not employ any of the former Musicos employees.

In a preliminary ruling, the ECJ found that it could amount to a transfer in the circumstances, particularly as the activity was asset reliant. The ECJ did, however, find that the dismissals were probably for an ETO reason, provided the delay wasn’t a deliberate measure to circumvent the rules.

Not compensating legal salary increase is not an acquired right

On 20 September 2018, the National Court determined that it is not an acquired right to receive a salary increase every year. The ruling concluded that a Company that repeatedly did not make salary increases has not prevented future use of the right.