Europe
News, commentary and legal updates from Fisher & Phillips attorneys
who assist employers with cross border employment matters.

Employers With International Operations Must Take Care to Protect Employee Data

June 26, 2013 05:50
by Danielle Urban

When is the last time your company reviewed its data protection policies?  If your company employs any international employees, it may have obligations under foreign laws to have specific safeguards in place.  Failure to observe a jurisdiction’s data protection laws can result in staff penalties and unwelcome press coverage.  Although the European Union is leading the way with a proposed comprehensive new data protection law,  other countries from China to the United Kingdom, South Africa, Qatar, Dubai, and several Latin American countries are developing, or have already enacted, their own data protection laws, with many based on the European model. 

The European Union

On May 31, the European Union released proposed regulations to strengthen data protection in the EU, which propose to strengthen the 1995 Data Protection Directive.  Among other recommendations, the Proposal for Regulation of the European Parliament and the Council on the Protection of Individuals with Regard to Processing of Personal Data and on the Free Movement of Such Data (General Data Protection Regulation) provides for the right of individuals to be “forgotten” and not be profiled based on their personal data and also governs the transfer of information regarding EU citizens outside of the EU.  The pending bill also proposed the creation of a data protection authority to assist with enforcement of the new regulations.  Although the regulations have not yet been enacted, it is expected the final version will be ambitious in scope and among the most comprehensive in the world.  It would be prudent for any multinational employer with European operations, customers or employees to consider the proposed regulations when drafting data protection policies.

South Africa, Qatar and Dubai are considering adopting similar measures, using the EU proposal as a template for their own regulations.
 
China

An American multinational company made news earlier this year when its offices in The People’s Republic of China were raided and the company was criminally charged for improperly collecting personal data from individuals and selling or disclosing that data to third parties.  Although there is no single, unified data protection law in the PRC, there are a number of national and provincial laws covering data protection.  In 2008, the Regulation on Employment Service and Management was implemented nationally, and requires employers to keep personal employee data confidential, and specifically requires employers to obtain written consent before disclosing personal data. 

Also on the national level, the Guidelines for Personal Information Protection Within Information System for Public and Commercial Services came into effect February 1, 2013.  Although not law, the Guidelines are expected to be followed by most businesses, including multinational employers.  The Guidelines set out specific requirements for employers regarding employee data collection, use, transfer, retention, and destruction.  Multinational employers should note that many provinces also have implemented or are considering implementing personal data protection regulations.  For example, early in 2013, Jiangsu Province enacted comprehensive data protection regulations, and penalties for violating the regulations are significant.

Steps for an Employer to Take Now

Employers without a data protection policy in place may want to consider developing a policy to protect employee and customer data.  Employers with operations or employees abroad should be mindful of any data protection laws or regulations that may apply in the countries in which they operate, and should stay informed regarding the changing international data protection landscape.  To that end, many multinational employers have appointed data protection compliance officers to manage policy compliance.  Policies should be drafted broadly to cover not only current employees and customers, but also applicants and former employees and customers.  The policies should specify the types of personal data that will be held, how it will be stored, how and under what circumstances it will be transferred, shared with third parties, and destroyed or deleted.  At a minimum, the data protection policies should address security measures that will be taken to safeguard personal information.  Employers may also want to consider designing a grievance procedure for employees who feel that their personal data was mishandled or misused, to enable the employer to deal promptly (and internally) with any concerns.  Finally, employers should remind all employees that they should not expect privacy in their use of company  IT systems, such as email, internet, mobile devices and the telephones, and that routine monitoring may occur, to the extent permitted by national or local law.

China | Europe | European Union | South Africa | Data Protection

Europe’s Largest Ethnic Minority Group Likely To Turn To European Courts To Combat Discrimination In Coming Years

May 23, 2013 01:24
by Roland De Monte

For more than 1,000 years, the Roma (still more commonly known in the English-speaking world as “Gypsies,” although this term is now outdated and considered to be derogatory) have lived on the fringes of the societies of the European nations in which they reside.  This is true in spite of the fact that the Roma, also known as the Romani, are the single largest minority group in Europe.  Indeed, in some countries Roma (which for the purposes of this article is meant to include Romani peoples of various distinct, but generally related, subgroups such as the Sinti of Central Europe, the Kale of Spain and Wales, and the Travellers of Ireland and Scotland, to name a few) make up approximately 10% of the population.  Nevertheless, for centuries the Roma had been subject to laws in their respective home countries specifically meant to limit their rights, travel and freedoms.  In some instances in fact, groups of Romani peoples were subject to actual slavery into the later half of the Nineteenth Century.  And, more recently, between 250,000 and 500,000 Roma (and by some estimates many more)  were killed by Nazis during the Holocaust.  Partly as a result of this history, the Roma traditionally have not used the judicial systems of their respective countries to seek redress for grievances, criminal or civil.  

However, in recent years, and especially within the past decade, European countries have become focused on the plight of Roma, and have enacted broad-based initiatives to protect the rights of the Romani people and bring them into the fold of European society.  Leading the way has been the European Commission (“EC”), the executive body of the European Union (“EU”) responsible for proposing legislation.  In 2011, the EC adopted a “Communication on an EU Framework for National Roma Integration Strategies by 2020,” which in turn led to EU member states developing their own individual national strategies to integrate their respective Roma populations, both economically and socially.

Part of the broad EC initiative, as well as the individual member states’ strategies, is to ensure that Romani people have access to jobs and are not discriminated against in the hiring process or in the workplace. To this end, the Roma should be considered protected minorities in all the EU countries, as all of the member states have incorporated the EU Directive on Racial Equality into their own respective laws, which prohibits employment discrimination on the basis of race or ethnicity.

The EC’s and EU member states’ most recent push for Roma integration also coincides with the growing self-initiated civil rights movement by the European Roma population. The combination of civil rights activism combined with state initiatives to combat discrimination against the Roma is most certain to lead to more legal action initiated by, and on behalf of, the European Roma population, including action against employers for alleged discrimination  based upon an individual’s Roma affiliation and/or heritage.  For this reason, employers with European operations and employees would be wise to re-evaluate their anti-discrimination and harassment policies, and re-emphasize the existence of these policies to their employees, especially in countries with a large Roma population and/or in countries or regions where latent discriminatory attitudes towards the Roma may still exist.  

Europe | European Union | European Commission

Employment Law in France: The Basics

January 22, 2013 08:36
by Amanda K. Caldwell

France, the largest country in Western Europe, with a population of approximately 64 million people, and which borders eight different countries plays an integral role in Europe and the worldwide market.   Given its central geographic location, highly developed infrastructure and qualified workforce, many companies around the world have chosen to do business in France. However, it is imperative that companies who are already doing business in France and companies who are considering doing business in France be aware of the country’s strict employment and labor laws as they apply to employment contracts, wage and hour, terminations and anti-harassment and discrimination laws. The purpose of this article is to provide a brief overview of some of the basic principles of employment law in France and to inform employers of recent developments in potential labor reform.

Sources of Employment Law in France

 The primary sources of employment law in France are the French Constitution, the French codified collection of employment law provisions knows as the “Code du Travail”, Collective Bargaining Agreements known as “Conventions Collectives de Travail” and work regulations known as “Reglèment Interieur” applicable to discipline and health and safety standards.

Employment Contracts

In France, there are two types of employment contracts. An employee can be employed pursuant to an open-term contract (“contrat à durée indéterminée”) or pursuant to a fixed-term contract (“contrat a durée déterminée”). Employment contracts should be in writing although not required unless the contract is for a fixed term or if a Collective Bargaining Agreement requires that it be in writing. An open-term contract, as the title suggests, is for an indefinite period of time.

 Any written employment contract should contain the following specific information regarding the particular employment:

  • The identity of the employee and employer;
  • The employee’s duties and responsibilities;
  • Duration of the contract;
  • The place of work;
  • The amount of compensation;
  • Whether there is a specific probationary period at the commencement of the employment;
  • Any applicable notice periods relevant to the employment;
  • Amounts of paid leave available; and
  • Regular working hours.

Pursuant to article L. 1221-3 of the Code du Travail, the employment contract must be in French although translations of the contract in alternative languages may be provided to the employee along with the French version.

Collective Bargaining Agreements

Collective Bargaining Agreements are sometimes applicable nationally and others at a localized level and typically relate to a particular sector of the industry or commerce. Collective Bargaining Agreements are binding upon employers even if that employer was neither a part of the collective bargaining negotiations nor a member of any employer representative group who participated in the collective bargaining negotiations. Thus, it is important for an employer in France to regularly verify the provisions of an applicable Collective Bargaining Agreement so that the employer is consistently aware of any changes and/or updates that have been made. This is especially important to ensure that an employee is being compensated in accordance with the minimum compensation required by the particular agreement.

Working Hours and Overtime Requirements

Regular working hours in France are 35 hours a week. Any hours worked in excess of 35 hours will be considered compensable overtime. The first eight hours of overtime are paid at a rate of 25 percent higher than the employee’s regular rate of pay. Any overtime hours worked in excess of eight are compensated at a rate of 50 percent more than the employee’s regular rate of pay. The 35-hour work week does not apply to certain executives which are exempt from overtime requirements.

Terminations

In France, like most European countries, there is no employment “at will” meaning that an employer can not terminate an employee unless it is for a reason recognized by the Code du Travail. Legal reasons for terminating an employment contract include the following:

  • The expiration of the contract term, if applicable;
  • Resignation by the employee if the resignation is a clear decision on behalf of the employee which should be confirmed in writing by the employer;
  • Termination by mutual agreement which must be set forth in a formal written agreement and signed by both the employee and employer;
  • Death of the employee;
  • Retirement by the employee;
  • Dismissal on personal grounds for misconduct by the employee if the employer follows the legal procedures and notice requirements applicable to the particular employee. Notice requirements will vary depending upon the level of misconduct of the employee and are set forth both in Code du Travail and relevant case law;
  • A Redundancy, which is the termination of an employee for economic grounds, typically when a particular job function is eliminated. The procedure for implementing a redundancy is very specific and set forth in detail in the Code du Travail.

Sexual Harassment Law

In May of 2012, the French Constitutional Council repealed the sexual harassment law in effect at the time, Section 222-33 of France’s Penal Code, which defined sexual harassment as the “act of harassing others to gain sexual favors”. Under the former law, violations carried a jail sentence of one year and a fine equivalent to $18,500. The Council determined that the definition of sexual harassment set forth in the law was far too vague and did not offer enough protection to potential victims because it did not appropriately address all forms of sexual harassment. After its repeal and to the outrage of many throughout the country, France was without a sexual harassment law for almost three months. The timing of the repeal also gained international attention because it came within a year after then International Monetary Fund Chief, Dominique Strauss-Kahn, a French citizen, was charged with sexually assaulting a maid in New York City. The charges, although ultimately dropped, lead to his resignation and put the issue of sexual harassment into the spotlight.

Finally, in July of 2012, the French Parliament passed much tougher and broader sexual harassment legislation. The new law now defines harassment as “imposing on someone, in a repeated way, words or actions that have a sexual connotation and either affecting the person’s dignity because of their degrading or humiliating nature or putting him or her in an intimidating, hostile or offensive situation.”  The law extends to the workplace and provides for a possible two-year jail sentence and a fine of up to 30,000 euros for violations. The most serious offenses, such as harassing a disabled individual, are punishable by a jail sentence of up to three years.

Anti-discrimination Law

France, like the United States, also has strict laws prohibiting discrimination in the workplace.  The Code du Travail prohibits discrimination based upon an individual’s sex, lifestyle, sexual orientation, age, family situation, non-membership, whether genuine or assumed, of an ethnic group, nation or race, political beliefs, trade union activities, religious beliefs, physical appearance, surname, state of health or disability.  Moreover, the definition of discriminatory practices provided by the Code du Travail applies to recruitment, access to placement or in-company training programs, pay, job classifications, promotions, transfers from one workplace to another, terminations and renewal of employment contracts.  Notably, employers can be held both civilly and criminally liable for violations of the antidiscrimination laws.

Recent Developments in French Labor Law

Last week, French employer groups and three major labor unions agreed to enact major labor reforms.  These reforms, which will be the most significant in decades, are expected to provide employers with more flexibility to terminate employees for economic reasons, lessen the costs incurred by employers when implementing layoffs and allow employers to temporarily cut wages in an economic downturn. French President Francois Hollande is hoping that such measures will improve economic competitiveness internationally and decrease unemployment rates domestically. Employer groups and labor unions have struggled for months to come to an agreement with unions heavily opposing greater flexibility in work contracts and demanding more job security for short term workers.  The draft reforms are expected to be prepared in early 2013.

Employment Contracts | Europe | France

Turkey Continues Its Reform Of Labor And Employment Laws Despite Waning Enthusiasm For EU Membership

November 28, 2012 08:16
by Roland De Monte

Turkey’s decades-long quest for membership into the European Union has been the impetus of many rapid and “modernizing” changes throughout this ancient country,  pushing it ever closer to its European neighbors relative to its laws, economy and politics.  This transformation, in reality nearly a century in the making since the founding of modern Turkey in 1923, has accelerated in the two decades since Turkey applied for membership in the European Union (EU) in 1987. 

Turkey’s transition into a European-style state has been especially acute since it was granted official candidate status for membership into the EU in 1999.  Since the marking of its official candidacy, Turkey has undertaken the serious task of “harmonizing” its legal framework with EU member states, including revising its labor and employment laws.  Some of the main changes to Turkey’s labor and employment laws occurred in the years immediately prior to 2005, the year when negotiations officially began for Turkey’s full accession into the EU.  During the time period, Turkey enacted a variety of changes to its labor and employment laws, not the least of which was Turkey’s Labor Act No. 4857 (the “Labor Act”).

In 2003, Turkey adopted the Labor Act, which was designed to align the rights of Turkish workers with their counterparts in EU member states.  The Labor Act was expansive and comprehensive in its reach. It established many benefits for employees including:

  • A 45-hour work week
  • Protection against discrimination based upon sex, religion, gender and/or political affiliation
  • Protection against disparate treatment between that of permanent and temporary workers
  • Termination of employment only for “valid cause”
  • Entitlement to employees terminated without valid cause to both severance pay at the time of their termination in addition to “notice” pay for failure to provide adequate notice to the employee
  • Employment arrangements for a year or more in duration having to be expressed in a written contract between the employer and employee

The Labor Act was enacted by Turkey during a period when both Turkey’s public and politicians were very much in favor of the prospect of EU membership.  However, in a relatively short amount of time thereafter, Turkey’s ruling political party as well as the Turkish public as a whole have cooled somewhat on the idea of EU membership due to a variety of factors, including: political changes, Turkey’s strong economic growth and its increasing influence in world and regional affairs.  At the very least, collectively the Turkish people and its leadership have paused to contemplate whether EU membership is necessary for Turkey’s economic and geopolitical success, especially in light of the fiscal crises now enveloping the EU.

What has emerged from Turkey’s current collective mindset is a dynamic in which  Turkey has continued  its harmonization with EU employment and labor laws, albeit keeping in mind its own interests, even when these interests may not align with those of the EU.  For example, while Turkey passed referendums in 2010 amending its constitution to lift restrictions on strikes, lockouts and union membership for Turkish workers, it also, just this year, despite strong EU opposition,  passed a law prohibiting strikes by workers in its aviation industry (this law was subsequently withdrawn due to both external and internal pressure against the ban).

As Turkey seems both poised and willing to play a larger rule in regional and world affairs, independent of its potential membership with the EU, it is difficult to foresee what future changes Turkey will feel it is required to make regarding its labor and employment laws, especially if its economy remains relatively robust compared to many EU member states.  However, it appears certain that more changes to Turkey’s labor and employment laws are on their way.  The main question is whether the new laws will closely follow the prescriptions of the EU, or whether they will be more distinctly tailored to the needs of Turkey and its rapidly evolving economy and society. 

Europe | European Union | Turkey

Croatian Employment Law in Brief

November 6, 2012 07:45
by Danielle Urban

Since its declaration of independence in 1991, which precipitated the dissolution of Yugoslavia, Croatia has had a difficult path transitioning to a market economy.  Now, Croatia is set to become the newest member of the European Union in July 2013, provided its accession treaty is ratified by the other 27 member countries.  As part of Yugoslavia prior to 1991, about three-quarters of Croatia’s labor force was employed in the public sector, largely employed by state-controlled enterprises.  Private sector employment accounted for only about thirteen percent of the working population in 1990.  Although public sector employers employ fewer Croatians today, the number is still high, and Croatia still struggles with rigid and uncompetitive regulations and the cost of a very generous social welfare system.   
 
Croatia is a unitary democratic parliamentary republic of approximately 4.3 million people.  Despite the challenges inherent in transitioning such a high number of employees to private-sector employment, Croatia has a highly-educated and skilled workforce and occupies a strategic position within central Europe, bordering the Adriatic Sea, as well as the countries of Hungary, Serbia, Bosnia and Herzegovina, Montenegro, and Slovenia.  Although many young, educated Croatians left Croatia to seek employment elsewhere in past years, the economic slump in Europe has brought many skilled Croatians back to the country.  Its capital is Zagreb, and its currency is the Kuna. 

The Croatian Labor Act

Employment in Croatia is governed by the Croatian Labor Act, the Constitution, collective bargaining agreements and individual employment agreements, as well as international conventions and treaties.  The Labor Act, which is the main source for labor law in Croatia, regulates leaves, wages, strikes, and prohibits discrimination, among other subjects.

The Employment Contract

Under Croatian law, all employment relationships are governed by contract, which must be in writing.  The contract may specify an indefinite term, which is common, or a definite term, which is only permitted in limited circumstances. Each contract must include provisions enumerating the parties to the contract, working hours, periods of annual leave, duration of the contract, amount of salary and any salary supplements, and pay and notice periods.

Although the employee and employer may negotiate certain terms of the employment agreement, many provisions are mandatory.  Some of the key mandatory provisions are summed up here:

  • In general, the work week may not exceed 40 hours, and overtime may be worked only under special circumstances, and then only up to eight additional hours per week; 
  • Minors age 15-18 are not permitted to work overtime (no one under age 15 may be employed);
  • Employees who work in “harmful” occupations may work less than 40 hours per week pursuant to law; 
  • Women are generally not permitted to perform night work, and may not work underground, under water, or in very physically demanding jobs;
  • Wages must be paid at regular intervals, but not less than once per month;
  • Employees are entitled to four weeks’ vacation each year;
  • Pregnant women must take leave beginning 28 days prior to the expected birth of her child, and maternity leave may last up to 6 months, although the leave must last for a minimum of 42 days following the birth of a child.  Fathers are also entitled to parental leave;
  • Employees who work six or more hours per day are entitled to at least one 30-minute break;
  • Employers with at least 20 employees must permit its employees to participate in decisions that affect their “economic and social rights and interests.”

Termination

An individual work contract may be terminated by the employer only for “legitimate” reasons, and pursuant to the notice period set out in the employment contract.  Legitimate reasons include employee misconduct, employee inability to continue performing his or her job duties, or a change in technology, organizational structure, or economic reasons such that the work need no longer be performed.

Employers who seek to discharge 20 or more employees at one time must present a “redundancy plan” within 90 days of the planned action, and must work with the regional employment council and workers’ council to design and implement the plan.

The Croatian Constitution and Gender Equality Act

Under Article 4 of the Constitution, and the 2003 and 2008 Gender Equality Act, discrimination in employment is expressly forbidden.  The Constitution protects citizens from discrimination based on their race, color, gender, religion, and political beliefs.  The Gender Equality Act defines sexual harassment, and makes it illegal to engage in sexual harassment in the workplace, or to discriminate based on an employee’s gender, marital status, family status or sexual orientation.  Any alleged violations of the Gender Equality Act may be brought before the Ombudsperson for Gender Equality or through the traditional court system.  Despite these protections, sexual harassment and discrimination against women in the workplace is not uncommon.  Further, although the war following the breakup of Yugoslavia ended many years ago, there is a great deal of ethnic tension within the workplace between and among ethnic Croatians and the almost 30 different ethnic minorities living in Croatia.  In particular, the Roma and Croatian Serbs complain about rampant discrimination, harassment and tension in the workplace.  Any would-be employer in Croatia will want to ensure that its employment policies comport with Croatian law and that there are mechanisms in place to adequately address workplace discrimination and harassment.

Employment Contracts | Europe | European Union | Termination | Croatia

The European Union: Compliance With Transfer Of Undertakings

September 19, 2012 08:47
by Alice Wang

Employers with operations in a country that is a member of the European Union (EU) should be well versed with EU Directives, as well as the specific country’s own domestics laws related to the EU Directive.  There are a total of twenty-seven (27) countries that are EU member states.  EU Directives set out the policy objectives and goals that need to be attained by the Member nation-states within a certain time frame.  The Member states must then pass their own relevant domestic or sovereign legislation to effectuate the EU Directive.  In effectuating an EU Directive on a national sovereign level, Member states use the Directive as guidance and a minimum standards benchmark, but can effectuate more strict and stringent policies to meet the objectives and goals sought by the Directive.  Although Directives seek and encourage Member states to effectuate its own laws, EU Directives can and do have legal force even if Member states do not actively and affirmatively pass its own national legislation.  Therefore, for best business practice, employers should ensure compliance with EU Directives, as well as the Member states own national legislation and laws. 

There are numerous EU Directives, including but not limited to, data privacy and transfer of undertakings.  The EU Directive on Transfer of Undertakings was first issued March 2001, known as Directive (2001/23/EC).  The Directive (2001/23/EC) codifies a previous Directive (77/187/EEC) which was amended by a third (98/50/EC).  For those unfamiliar with the term, the transfer of an undertaking occurs as a result of a legal transfer or merger of an establishment or entity. Following a transfer, the transferee of the undertaking becomes an employee of the undertaking transferred by the transferor.  Under these circumstances, the aim of this Directive is to protect employees in the event of a change of employer following a transfer of undertaking, including but not limited to, a merger, a purchase, an acquisition, etc.  From a public policy prospective, the goal of EU Directive for transfer of undertakings is to achieve a high level of employment and social protection by improving and sustaining working conditions that enhance economic growth and social cohesion.  From a business perspective for employers, the goal of EU Directive for transfer of undertakings is to prevent unfair dismissals or unfair terminations as a result of a legal transfer or merger of companies and entities.

What Constitutes a Transfer?

The applicability of this Directive depends on whether or not a “transfer” will actually occur.  The Directive provides definitions for what constitutes a “transfer”, however, gives deference to Member states to assess whether or not there is an actually “transfer” based on certain factors.  These factors include: (1) type of undertaking or business, (2) whether or not the tangible assets such as buildings and movable property are transferred, (3) the value of the intangible assets at the time of transfer, (4) whether or not the majority of employees are taken over by the new employer as a result of the undertaking, (5) whether or not customers and clientele are transferred (e.g. good will), (6) the degree of similarity between the business activities carried on before the transfer and after the transfer, and (7) the period (if any) for which the business activities are suspended.  Of these seven factors, not one is dispositive or governing, nor is one given substantially more weight than others.  Comparably speaking, the European Court of Justice provides rational and conclusions similar to the ‘totality of circumstances” test and standard in the United States.  However, European courts interpreting this Directive more often than not utilize a very broad definition to determine whether or not a transfer will occur – “any situation when one business entity, by contract, assigns to another business entity/entrepreneur responsibility for running a facility or staff of which the former entity directly managed or operated.” 

How Do Employers Ensure Compliance After A Transfer?

Once it is determined that a transfer will occur, then the transferee (e.g. new establishment) of the undertaking becomes the employer of the employees following the transfer.  In accordance with the objectives and goals of the Directive, the rights and obligations of both the employee and the new employer must remain the same, thereby, safeguarding and protecting employees’ rights as well as the social responsibilities of both the previous entity and the new entity.  This Directive applies to the large majority, if not all types, of employment relationships with respect to (1) the number of working hours, (2) duties and responsibilities of work to be performed, and (3) type of employment contract or relationship (e.g. at-will, fixed duration, or temporary).  It is noteworthy to mention that the EU Directive for transfer of undertakings do not related to entities going insolvent or bankrupt. 

How Do Employers Handle Deviations Among Countries Within the EU?

As discussed above, it is important and pertinent to ensure compliance with both the EU Directive for transfer of undertakings, as well as the specific county or countries own national legislation and laws.  This is because deviations exist among the various Member states national laws, legislation and regulations. 

To demonstrate the deviations, here are some examples of distinctions among the laws of Member states of the EU. 

The Netherlands:

Under Dutch Law, the existing employment relationship becomes apart of the undertaking.  This means that the transferee will have to respect all condition of employment existing with the transferor at the time of the transfer.  At the time of the transfer of undertaking, it is not possible to agree upon deviations in employment terms, and the new entity is under an obligation to offer the employees the same compensation and benefits package, including the same pension plan.  It is advised that compensation, benefits and pension plans are identical because if the terms and conditions are different, then they can be deemed invalid.  Noteworthy to mention is that the public transport industry in the Netherlands is an exception to the laws surrounding transfer of undertakings, and any movement among business in the public transport sector are not automatically considered a transfer of undertaking under the Dutch law.
 
United Kingdom:

In the United Kingdom (UK), employees must be given the same terms and conditions as a result of a transfer of undertaking.  Other than certain aspects of the pension plan (which is different from Dutch law), an obligation to meet minimum requirements as it relates to prior pension entitlement is required but not necessarily after the transfer.  However, terms and conditions of employment must be the same, unless it is for a “permissible reason” outlined in the UK’s statutory authority echoing the EU Directive, known as the Transfer of Undertakings for Protection of Employment, Regulations 2006 (TUPE).  Further, dismissals during a transfer of undertaking is automatically deemed unfair unless it is for an economic, technical or reorganization reasons necessitating changes in the workforce.   Additionally, employees must be informed and consulted with through representatives prior to a transfer of undertaking.  Penalties and recourse are provided in the TUPE for failure to inform and give notice prior to the transfer of undertaking. 

France:

French law on transfer of undertakings is virtually identical to the EU Directive governing transfer of undertakings.  There is no legal requirement in France as there is in the UK to inform each employee before the transfer, but there is a legal requirement to inform and consult the works council (if one exists) before the transfer.  As a practical matter, information regarding a transfer is usually provided to employees in an attempt to achieve a seamless transition and build unity with the new entity.  It is noteworthy to mention that in French, an employee cannot object to a transfer, and the only other realistic option is resignation.  However, terminations directly before, during, or immediately after a transfer is highly scrutinized and more likely than not deemed null and void.

Germany:

Like British law, German laws requires an obligation to inform and consult with employees prior to the transfer of undertaking.  As part of this requirement, a statement explaining the new employer’s intentions concerning the future of the business entity, and any planned or likely changes must be provided to employees.  However, unlike French law, German law provides employees with a “right of contradiction” even though transfers of employment are automatic and protected.  For practical purposes, an employee who exercises his or her right of contradiction may end in a cessation of employment for “operational reasons,” but proper procedures and protocols must be carefully followed to ensure it is not a termination based on the transfer of undertaking as it is illegal.

 Italy:
 
 Italian laws are identical and echo the EU Directive, but also implements and utilizes an inform and consult requirement.  Indeed, transfers of employment are deemed automatic.  However, it is important for employers to be mindful that joint liability is applied to transfer of undertakings, and both the previous entity (e.g. seller) and new entity (e.g. buyer) may be held liable in a court of law for employment issues on the date of the transfer. 

Poland:

Polish law also honors the EU Directive by largely following and echoing it’s EU authority.  It also has an inform and consult requirement, and also deems transfers of employment automatic.  In fact, all employment contracts remain the same, except the new employer is a new party to the employment contract.  Similar, but even broader than Italian law, both the previous and new employer can be held jointly liable for employment obligations and issues stemming from before the transfer of undertaking through the course of employment. 

Based on the few deviations discussed above for demonstrative and comparable purposes only, it is best business practice to consult with an experienced attorney to ensure compliance.  In addition to ensuring compliance with black and white letter laws, it important to be mindful of subjective working culture concerns of a transfer of undertaking. For example, after an undertaking, and depending on the EU country, you may have employees from the previous entity with five weeks vacation while new employees only receive four weeks vacation.  This can and may cause working culture dissatisfaction and tension, and lead to practical problems in building optimal business operations. Therefore, the notion of consulting with an experienced attorney is even more important to provide employers with well-rounded perspective and guidance to ensure legal compliance, and also build a healthy and productive working culture. 

Europe | United Kingdom | European Union | EU Directives | Poland | Italy | France | Germany | The Netherlands

Spain: Labor Reform Update

August 13, 2012 06:01
by Amanda K. Caldwell

In February of 2012, the Spanish government introduced drastic labor reforms known as Royal Decree Law 3/ 2012 (“Reform Law”) in the hopes of improving an ailing economy and reducing Spain’s sky-high unemployment rate which has reached a staggering 23%. The reforms specifically focused on promoting employment for the youth, providing employers with more flexibility in managing its workforce and cutting the cost of terminating workers.  On July 9, 2012, the Spanish Parliament ratified the labor reforms resulting in the Reform Law being enacted despite heavy opposition by the public, unions and numerous political parties.

Since the introduction of the labor reforms in February to the recent ratification of the law, there have been several amendments and modifications which have resulted in the following specific Reform Law provisions:

  • Pursuant to the Reform Law, employers can deviate from the provisions of a collective bargaining agreement for certain economic, technical, organizational or production reasons.  The Reform Law now defines the aforementioned terms and sets forth with specificity what constitutes sufficient economic cause for an employer to deviate from a collective bargaining agreement and implement a redundancy1.  The standard of sufficient economic cause for a redundancy will be met when there is a “persistent decrease in the level of revenues and sales” of a company. This has been further defined to mean when a company’s ordinary revenue over three (3) consecutive quarters is less than the ordinary revenue from the same period from the previous year.
  • An employer will also have sufficient economic cause to suspend employee contracts when there has been a decrease in revenues and sales during two (2) consecutive quarters compared to the same quarters from the previous year.
  • The Reform Law requires that the employer notify the labour authority and the employee with all information necessary to demonstrate the reasons for a collective dismissal.
  • Employers are permitted to modify the working conditions set forth in collective bargaining agreements for financial cause.
  • The Reform Law nullifies any provisions included in a collective bargaining agreement entered into after July 8, 2012 that require the retirement of employees at the age of sixty-five (65).
  • The Reform Law reduces the automatic extensions of collective bargaining agreements from two (2) years to one (1) year. If a collective bargaining agreement is not renegotiated within that one year, the provisions of the collective bargaining agreement will no longer be in force and effect.
  • The percentage of irregular work hours that an employer can distribute has been increased from 5% to 10% of an annual working schedule.  However, the Reform Law requires that the employee be given five (5) days notice of the date and time he or she will be required to work.
  • Terminations as the result of absenteeism are permitted in cases where the employee misses 20% of his/her working hours in two (2) consecutive months.  However, the total number of absences in the preceding twelve (12) months must also amount to 5% of the employee’s total working hours.

Despite the enormous amount of opposition within the country from the public, unions and numerous political parties, the Spanish government is confident and hopeful that the aforementioned reforms will improve the economy and lessen the burden on employers.

1  A redundancy is defined pursuant to Spanish law as the termination of job positions for economic, technical, organizational or production reasons.

Europe | Spain | Termination | Reform Law

Ukrainian Labor and Employment Law Basics

August 7, 2012 01:37
by Danielle Urban

Ukraine, which has been independent from the Soviet Union since 1991, is the second largest contiguous country in Europe.  Since 1991, Ukraine has been transitioning to a market economy, although progress has been slow, and was further delayed by the global recession in 2008.  Nevertheless, Ukraine is an important consumer and supplier in the global market, and is strategically located in eastern Europe, bordering the Russian Federation, Belarus, Poland, Hungary, Slovakia, Romania, Moldova and the Black Sea and the Sea of Azov.

Labor Code of Ukraine

The Labor Code of Ukraine is based on the idea that workers, as opposed to employers,  are the presumed “weaker party” and are therefore in need of greater protection by the state.  The Labor Code, which is based on the former Soviet Labor Code and was adopted in 1971, provides many employee protections not common in the United States. The Labor Code governs wages, leave, the right to collective bargaining, and termination of employment, among other topics.  It is the primary source of law governing employment relationships in the Ukraine.  Ukraine is a member of the International Labour Organisation (“ILO”), and employers in Ukraine should be aware that a number of ILO conventions supersede conflicting provisions of Ukraine’s own domestic labor laws.  In addition to the Labor Code, employers must also look to the Constitution of the Ukraine and labor regulations issued by the Cabinet of Ministers of Ukraine, as well as local and state government regulation, to understand their legal obligations to employees.         

The Employment Contract

As in the rest of Europe, employment agreements are common.  In general, there are three types of employment agreements:  (1) indefinite term; (2) fixed term; and (3) project-specific agreements.  The Labor Code distinguishes between employment agreements, which are indefinite in duration and may be commenced by an oral agreement, and employment contracts, which are a special subset of employment agreements, and specify a fixed term or work until a particular task is completed.  Although an employment agreement may provide more generous employment terms and conditions than mandated under Ukrainian law, the agreement may not require the employee to give up any benefits or protections to which he or she may be entitled under Ukrainian law. 

Where employment agreements are committed to writing, they  should contain the employee’s name, position, and employment commencement date, as well as a description of the employee’s duties.  It is important that the employee’s duties are carefully articulated from the outset because employers are generally not permitted to require employees to perform duties not described in the employment agreement.  The written employment agreement should be signed by the employer and employee, and the local director. 

Employers may hire employees for a probationary period, which generally should not exceed three months.  Although an employee may be discharged during this period  for “unfitness for the position” after the probationary period has passed, the employer must ensure all Ukrainian Labor Code obligations are satisfied before discharging an employee.

Other Terms and Conditions of Employment

Employees are generally not permitted to work more than 40 hours per week, and employees working in certain specified hazardous conditions and employees between 16 and 18 years of age may not work more than 36 hours per week.  Employees are permitted to work no more than 120 hours of overtime in any one-year period, and the overtime rate is double that of the regular hourly rate.  In addition to paying overtime wages, employers are required to pay additional wages to employees who are asked to perform duties in addition to those specified in their employment agreements.
Employees are guaranteed a minimum of 24 paid holidays per year, and are not allowed to work on any of the 10 official Ukrainian holidays.  Women are entitled to up to 70 days of leave prior to the birth of a child, and up to 70 days after the birth of a child, and parents with children under the age of three will be granted parental leave upon request.

Ukraine requires that employees be paid a minimum monthly salary, and must be paid at least twice per month, with the interval between pay periods no longer than 16 days.

Although the Ukrainian Law on Equal Rights and Opportunities forbids discrimination against employees based on gender, race, ethnicity, religion, or “political or economic orientation,” Human Rights Watch recently reported that these laws are poorly enforced, and that sexual harassment is prevalent.  Because women may take up to three years off after the birth of a child, employers frequently express hiring preferences for men.

Termination

As with most other developed and developing countries, the concept of “employment-at-will” is generally not recognized in Ukraine.  Termination of an employment agreement is only permitted under certain circumstances:

  • Agreement of the parties;
  • Expiration of a definite-term agreement;
  • The employee’s entry into military service;
  • Transfer of employee to another position;
  • Employee’s refusal to move with a business move or refusal to work based on a substantial change in work conditions;
  • Employee imprisonment;
  • Termination of agreement based on employee, employer, or trade-union initiative.
  • Termination based on other grounds as set forth in the employment agreement.

Because other grounds for termination are not recognized, employers are advised to consult with a legal advisor before terminating an employment agreement on other grounds.  Further, there is typically a great deal of time and expense involved in discharging an employee based on grounds other than mutual agreement or employee initiative.  Whenever possible, therefore, employers should attempt to reach agreement with the employee in question prior to discharge.  

Employment of Foreign Nationals

Before employing a foreign-born employee, employers must be approved for a work permit through the Employment Centre, which requires employers to demonstrate that there are no Ukrainian citizens who are able to perform the work in question.  An employment permit is issued for a one-year period generally, but may be extended upon request.  The Employment Centre is required to grant or refuse permits within 30 days of receipt of the complete application.  Employers, in turn, must notify the Employment Centre of the employee’s start date or termination date within three days’ of the event.

Labor and Employment in Poland

June 12, 2012 06:34
by Danielle Urban

This is the sixth article in a series about Central and East European employment law issues.

Since 1990, Poland has been steadily transitioning to a liberalized economy, and although progress has been rocky at times, Poland stands out as a bright spot among its fellow transitional economies.  Poland still struggles with rigid labor and employment laws, low-level corruption, and creaky infrastructure, but boasts an educated workforce, and according to the World Bank, ranks 62 out of 183 economies for ease of doing business (a slight decrease from 2011).  As of the post date of this entry, Poland is in the midst of co-hosting the Euro 2012 competition (for those of you who may be scratching your heads – the Euro 2012 is a showcase of the world’s most popular sport – the “beautiful game” known as football the world over, and soccer to most Americans), which to date has gone off fairly smoothly, and has served to introduce many to the beauty of Poland and its capability to host a major international event.   

Background

Poland is a democracy, with its current constitution in place since 1997.  The head of government is the president, who serves a 5-year term, and a prime minister.    There is a bicameral parliament, with a lower house, the Sejm, consisting of 460 members, and an upper house of 100 members, the Senat.  The Polish economy has continued to remain fairly strong during the global recession, and as of early 2012, had not entered recession.  Although many Polish citizens took advantage of their European citizenship to see work elsewhere, a number of highly-educated, English-speaking Poles have returned to Poland in the last couple of years as jobs in western Europe have dried up and those economies struggle with stagnant growth.  Tourism, banking, and energy are all important  industries in Poland, and Poland exports textiles, machines, and chemicals, among other products.  The zloty is the Polish unit of currency, and as of the date of this post, one Euro was roughly equal to 4.27 zloty and one dollar equal to approximately 3.40 zloty.    

The Labour Code

The Labour Code, along with secondary legislation and collective bargaining agreements, are the primary sources of labor and employment law.  The Labour Code was enacted in 1974, but has been amended numerous times.  Employers doing business in Poland are advised to review relevant Labour Code provisions on a regular basis.  Perhaps surprisingly, given Poland’s history with organized labor, only about 20% of all Polish employees are covered by some type of collective bargaining agreement.

The employment contract

As in most European countries, the employment contract establishes the essential terms of the employment relationship.  Under the Labour Code, the employment contract must be in writing and must include the following information, at a minimum:

• The names of the parties to the contract;
• The date employment commences and contract execution date;
• The type of contract (e.g., fixed term, unlimited term, or contacts for specific tasks);
• Type of work to be performed;
• Location where work will be performed;
• Salary amount, how often wages are paid;
• Working hours (on a daily and weekly basis);
• Entitlement to holidays;
• Required notice period.

Employers should note that these terms are required to be in writing at the outset of the employment relationship, and seven days after the commencement of employment for additional terms.  

Termination of employment

Employment contracts may only be terminated based on the grounds enumerated in the Labour Code.  For an individual dismissal without notice, the employee may only be dismissed for (1) gross violation of job duties; (2) employee committing a crime which makes it impossible for him or her to continue with his or her job duties; or (3) employee loss of necessary license/authorizations, etc.  Under certain circumstances enumerated under the Labour Code, employees may be entitled to severance, and terminations in violation of the Labour Code may be appealed to the Labour Court.  Remedies include reinstatement or payment of damages

Non-competition agreements valid

Under the Labour Code, employees may be subjected to post-employment restrictions on employment provided they are paid a minimum salary for the duration of the on-competition period.  Although the contract must specify the period of the restriction, the period is not limited by law, but cannot be unreasonable. 

Equal Treatment under the Labour Code

The Labour Code requires equal treatment of all employees, with respect to commencement and termination of employment, pay and work-related benefits, promotions, and training.  Employees are protected on the basis of gender, age, disability, race, religion or belief, nationality and ethnic origin, political views, trade union membership, sexual orientation, and employment contract status (i.e., whether unlimited, fixed term or specific task).  The burden to prove there was no discrimination rests with the employer, and sexual harassment can lead to criminal liability, including fines and/or imprisonment. 

Although this is only a brief overview, it is important to note that trade unions, collective bargaining, and employee work councils are also permitted under the Labour Code, and foreign employers doing business in Poland should take care to review all potential contracts and agreements pertaining to its operations before taking any actions that may affect employee rights, or the terms and conditions of employment.

Employment Contracts | Europe | Non-compete | Terms of Employment | Eastern Europe | Labour Code

Spain’s Employment Law and 2012 Labor Reform

June 6, 2012 08:23
by Amanda K. Caldwell

In the face of a growing economic crisis, a 23% unemployment rate and an unemployment rate of 50% affecting the youth, the Spanish Parliament recently passed drastic reforms relevant to Spanish labor law known as Royal Decree Law 3/2012 (“Spanish Labor Reforms”). The enactment of these reforms will make it easier and cheaper for employers to lay off workers, will provide incentives for employers to hire younger workers, and is expected to increase employer confidence.  This article will provide some basic information relevant to labor law in Spain and introduce some of the more critical provisions of the reform law.

Sources of Spanish Labor Law

The basic sources of labor law in Spain are the Constitution of 1978, treaties such as the International Labour Organization Agreements No. 87 (Agreement on Trade Union Freedom and Protection of the Right to Form Trade Unions of 1948) and No. 98 (Agreement on the Right to Form Trade Unions and Right to Collective Bargaining of 1949), the 1995 Labor Act, Parliament Acts, Royal Decrees, the government regulations that implement the 1995 Labor Acts, collective bargaining agreements, individual labor contracts and case law.

General Requirements of Employment Contracts

Although not required in all situations, it is recommended that employers utilize written employment contracts with their employees. The Spanish government has created model form contracts; however, additional clauses may be added.  At a minimum, all employment contracts should include the name of the employer and employee, the domicile and work location of the employer, the date of commencement of employment, a summary of the job position, amount of base salary and any additional compensation, work hours and schedule, the amount of vacation time permitted, and if applicable, prior notice relevant to termination.

The duration of an employment contract is presumed to be entered into for an indefinite period of time unless the contract sets forth a specific term of employment.  Employers should review current collective bargaining agreements prior to executing definite term contracts in order to ensure that the definite term contracts are in compliance with such agreements.

Employers should note that pursuant to the Spanish Labor Reforms, employers may now deviate from the provisions of a collective bargaining agreement for certain economic, technical, organizational or production reasons.

Contract Termination and New Rules Applicable to Severance Payments

The Labor Act provides a list of various reasons that an employment relationship can be terminated, including but not limited to: mutual agreement of the employer and employee;  reasons set forth in the contract to the extent permitted by law; disciplinary reasons; constructive dismissals (for economic reasons, technical reasons, organizational reasons, and production reasons); resignations and death; or disability of the employee.  Collective bargaining agreements typically set forth in detail the various permissible grounds for terminating employment and required procedures to be followed by the employer.

Prior to the Spanish Labor Reforms, the Labor Act required, under certain circumstances such as unjustified dismissals, that employers make severance payments to the terminated employee computed on the basis of 45 days’ gross salary per year of employment with a maximum of 42 months’ salary. The reform law reduces the required severance payments to 33 days per year of employment and caps payments at a maximum of 24 months.  Additionally, if an employer can demonstrate three consecutive quarters of losses, the employer will now only be required to pay 20 days of severance per year of employment.

Additionally the Spanish Labor Reforms have eliminated the need to obtain official authorization prior to proceeding with collective dismissals and, as a result, the reasons for and procedures applicable to the dismissals are monitored exclusively by the labor courts.

Leave Entitlement and New Rules Applicable to Paternity Leave

Leaves of absences pursuant to Spanish law include short-term paid leaves of absences to which employees are exceeding their vacation and holiday time. Paid leaves of absences are typically governed by the employment contracts or collective bargaining agreements. Types of paid leave include, but are not limited to: leave for marriage (a minimum of fifteen days); maternity or adoptions (sixteen weeks for a single child); paternity (two days); leave for serious illness of a relative (two-to-four days depending upon the circumstances); and leave to perform public duties.  The time permitted depends on the purpose of the leave. Pursuant to the recent reforms, an employee seeking to take paternity leave must give fifteen days notice prior to commencing leave and specify a start and end date for the leave.

New Incentives Created by the Spanish Labor Reforms for Employers to Hire More Employees

The Spanish Labor Reforms create various incentives for employers to employ more staff, including  providing  tax incentives to employers with fewer than 50 employees and providing a reduction to employer’s social security payments for hiring employees 45 years and over, women in sectors which traditionally employ few women and individuals under the age of 30.

Employment Contracts | Europe | Leave Laws | Separation of Employment | Severance | Terms of Employment | Spain

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