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Implementation of the Law on the Securing of Employment
A major new law (‘Loi sur la sécurisation de l’emploi’) was passed in June, setting out new procedures for collective dismissals. For more detail on the content of the Law see Be Global August 2013. On 1 August 2013 the Government published the timeline for publication of the decrees implementing the Law. A number of decrees have already been adopted; confirming that the competent labour authority for the validation of a social plan is the regional director of the French labor administration ("DIRECCTE") and that if an expert opinion is requested by the Works Council, if the expert does not report in a timely manner, this will not postpone the deadlines for the information/consultation of the employees' representative bodies.
A number of legal issues still remain to be addressed. The following main decrees will be published by the end of October 2013:
Decree relating to the specific timeframe within which the works council must give its opinion ("avis");
Decree relating to the content of the economic and social data base accessible to the staff representatives;
Decree relating to the timeframe within which the technical expert or the accountant appointed by the works council must present his report.
The decrees relating to the time allotted to the staff representatives at the company's board to exercise their mandate will be published by the end of December 2013.
Important ruling may suggest development in the law governing employers' access to employee emails
Are employers allowed to access their employees’ email or does such behaviour violate the secrecy of telecommunications? Legal commentary and case law suggests that the prevailing view is that employers are not permitted to access their employees’ e-mail if employees have been allowed to use their company email address for private purposes. However, the Administrative Court in Karlsruhe on 27 May 2013 decided differently in an important lawsuit which involved the former Prime Minister of Baden-Württemberg, Stefan Mappus, as employee (docket number – 2 K 3249/12). It granted the employer access to the employee's email communication even though he had been allowed private use of his company email address. It will be interesting to follow the development of this highly controversial topic and see whether the predominant position will continue to prevail. Until a last-resort decision by the Federal Labor Court in Germany acknowledges the change in legal practice, employers should carefully assess the potential legal risk and continue to explicitly prohibit private use of company email accounts in order to enable themselves to access those accounts at a later stage if required.
Changes to rules on fixed term contracts
On 9 August 2013, the Italian Government enacted a new labour reform which has introduced significant changes to the regulations governing fixed-term contracts (FT), making the use of this type of contract more flexible. In particular, within the overall one year period it is now possible to extend FT contracts which are exempt from the obligation to provide a specific reason for termination. Furthermore, the minimum mandatory break that must elapse between two FT contracts has been shortened. The reform has also modified the regulation of project contracts, jobs on call, the secondment of employees between companies of the same group and provides incentives to hire people under the age of 29 and employees who benefit from the unemployment indemnity.
TUPE reform proposals scaled back
On 5 September 2013, the UK Government finally published its response to consultation on the reform of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). TUPE is the UK's domestic legislation implementing the European Acquired Rights Directive (ARD). After taking into account stakeholders' concerns, the Government has significantly scaled back its original proposals. Most importantly, it has decided not to repeal the service provision change provisions, despite the fact that these provisions represent gold-plating of the ARD. The Government does, however, intend to make changes to other aspects of TUPE and will lay new regulations before Parliament in December 2013. Full details are available in our Be Alert.
Impact of elections on employment law
On 7 September 2013, the Australian federal elections were held and the Liberal National Party coalition won a majority of seats in the House of Representatives. We expect that that the Liberal National Party coalition will implement a number of its policies that impact upon employees as follows:
delay by two years further legislated increases, beyond the increase to 9.25% on 1 July 2013, in compulsory employer contributions;
introduce six months' "full replacement wages" parental leave for mothers whose salary is up to $150,000 per annum plus superannuation. Fathers will be eligible for two of the 26 weeks as dedicated paternity leave, also at replacement wages plus superannuation. If the father is the primary caregiver, the father will be paid the lower of his wage or the mother's wage. The government will administer the scheme and pay employees directly. The scheme will be funded by an 1.5% levy on companies whose annual taxable income exceeds $5 million. The changes are proposed to take effect in July 2015;
the Fair Work Commission will not be able to approve protected industrial action unless the claims made will not affect productivity, are "fair and reasonable", and not "exorbitant or excessive" having regard to the conditions at the workplace and the relevant industry;
before the Fair Work Commission can approve an enterprise agreement, it also will need to be satisfied that parties have "considered and discussed ways to improve productivity"; and
the new bullying laws which are due to commence on 1 January 2014 will be amended to require the worker who is claiming bullying to seek preliminary help, advice or assistance from an independent regulator before making an application to the Fair Work Commission. Bullying will also be expanded to cover the "conduct of union officials towards workers and employers".
The new government may have difficulty in implementing its proposed amendments until 1 July 2014, when the newly elected Senators take office as it will, until then, be dealing with a relatively hostile Senate.
Record penalties for underpaying foreign workers
A Perth cleaning company and its manager have been ordered to pay a record $343,860 in penalties for deliberately underpaying foreign workers. The company was fined $286,550 and the business manager was fined a further $57,310. The six cleaners – including five foreign nationals from Taiwan, Hong Kong, New Zealand and Ireland (some with limited English) were underpaid amounts ranging from $1,915 to $4,554. They worked for the company for just one to three months between June 2011 and January 2012. They worked nine to ten hour days cleaning homes in suburban Perth but were only paid for 7.6 hours. They were underpaid overtime and penalty rates, leave, meal break and travelling time entitlements and had money unlawfully deducted from their wages. The company and the business manager failed to issue pay slips, make payments with the correct frequency and keep employment records: Fair Work Ombudsman v ACN 146 435 118 Pty Ltd & Anor  FCCA 803 (12 July 2013)
High standard required to justify summary dismissal
In a recent case in the Hong Kong High Court, Grant David Vincent Williams v Jefferies Hong Kong Limited - HCA 320/2011, the Plaintiff, Grant Williams, was successful in his claim for wrongful termination by way of summary dismissal and breach of the implied term of trust and confidence against the Defendant, Jefferies Hong Kong Limited. He was awarded over HK$15.8 million in damages plus (unusually) costs to be paid to him on an indemnity basis. This case is an important reminder that the standard required to justify a summary dismissal in Hong Kong is very high and that before making a decision to summarily dismiss an employee, an employer should carry out a thorough information gathering exercise to ascertain what the employee has allegedly done to justify the summary dismissal. It is also worth noting the court's criticism of the Defendant's conduct in making the award of indemnity costs which included: a failure to adduce evidence from the decision makers (the Defendant's senior management in the US); withholding of key email communications and other records; and a 'wasteful and unconstructive' approach to settlement. Employers should take a careful and cautious approach to any litigation and seek legal advice where required.
Changes to visa regulations
The Regulation on the Control of Foreigners' Entry and Exit (the Regulation) came into effect on 1 September 2013. The Regulation can be deemed as the implementing rules of the PRC Exit-Entry Administration Law. The Regulation includes some changes to visa classifications, modifications to visa extensions, medical report requirements and more clearly defines what constitutes illegal work and illegal stay in China. For more information see our Be Alert Asia Pacific.
Major employment reforms on track - but some key proposals abandoned
Previous contributions to this publication have dealt with the pending amendments to the primary employment legislation in South Africa. There is still no clarity regarding the date of implementation of such amendments, although it appears increasingly likely that the amendments will only take effect in the course of 2014.
Notably, initial proposals aimed at excluding senior employees from the majority of unfair dismissal protections as well as the introduction of a balloting requirement prior to strike action, have been abandoned in the Parliamentary process.
The remaining components of the pending amendments however still encompass material changes to South African employment law. There is a clear move away from the majoritarian approach to trade union recognition (which is currently the preferred status), by allowing for enforced recognition of trade unions with less employee support than required under existing legislation, even in the face of opposition from the majority union. The proposed mechanisms to ensure increased protection to employees in non-standard types of employment (e.g. fixed term or temporary employment services) have further been retained and indeed in some respects tightened further.
How U.S. Laws may apply to non-U.S. Employees, and a lesson in strategic planning
With conscious planning and an eye toward local law, an organization may enjoy the benefits of uniform management of its parent and subsidiaries with respect to company culture, cohesion, and efficiency, and meet other business needs, while also protecting against cross-national and cross-company litigation.
Although there are unique considerations with every step and every new jurisdiction, proper organizational structuring and growth planning is key to achieve this balance, particularly in the United States where “joint employment” litigation is prevalent. U.S. employers have long been aware of the “joint employment” concept domestically, but a new case from New York federal court cautions multinational companies that the concept may be applied internationally between parents, subsidiaries, and sister entities.
While each court case is highly fact-specific, and it is not clear how expansively this court-opinion will be interpreted, the August 2013 St. Jean v. Orient-Express Hotels Inc. opinion from New York federal court illustrates one employee’s success in surviving a motion to dismiss her case, where she worked for a Caribbean company but sued its U.S.-based sister entity under U.S. law when she was terminated.
In St. Jean v. Orient-Express Hotels Inc., Plaintiff Melissa St. Jean worked at Cupecoy Village in the Caribbean. Cupecoy did not have its own management, marketing, and human resources departments, but instead operated under its U.S. sister company Orient-Express Hotels, Inc.’s Managing Director, Director of Real Estate Marketing, and Human Resources, all based in the United States. Plaintiff complained to the U.S. Human Resources department that she was being sexually harassed by a co-worker, and Plaintiff was terminated by the U.S. Managing Director. When Plaintiff sued for discrimination and retaliation, she brought her lawsuit against the U.S.-based Orient-Express Hotels Inc., under U.S. Title VII anti-discrimination law, claiming that Orient-Express was her true employer, and the Court allowed Plaintiff to proceed with her case beyond the pleading stage.
Ultimately, Orient-Express demonstrates that U.S. courts may entertain lawsuits from foreign employees against related U.S. entities if the terms and conditions of the plaintiff’s employment were heavily controlled by the U.S. entity. In Orient-Express, Plaintiff claimed that she dealt with a number of the U.S. entity’s employees on a daily basis as part of her job; that the U.S. entity’s Managing Director was responsible for hiring, firing, and setting the income for employees at Cupecoy and, in fact, he signed Plaintiff’s termination letter; and that the U.S. entity and Cupecoy shared operations and management, such that Plaintiff reported to the U.S. entity’s Managing Director and Director of Real Estate Marketing on budget items, finances, invoicing, sales results and reports, and weekly traffic logs, among other commonalities.
The opinion indicates that the more control the U.S. entity has over a foreign employee’s employment terms, the more likely it may be that the U.S. entity is determined to be an employer under U.S. law, and therefore U.S. employment laws apply to that employee. Not only may this expose companies to additional litigation, but it raises other concerns regarding what laws apply to which employees. However, by developing a mindful strategy for entity organization, management, and growth, organizations may avoid the pitfalls of Orient-Express and also maintain organizational, philosophical and management unity.