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Over the past year there have been some notable changes to employment law in Canada: - The Canada Pension Plan was revamped to gradually increase worker contributions and substantially increase maximum annual benefits. - Ontario passed new legislation expanding the definition of workplace harassment to include sexual harassment and introducing new investigation requirements for employers. - A new liberal federal government was elected that is expected to take a more progressive approach to labour issues compared to the previous conservative administration.

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LABOUR & EMPLOYMENT ANNUAL REVIEW 2016
Published by Financier Worldwide 23rd Floor, Alpha Tower Suffolk Street, Queensway Birmingham B1 1TT United Kingdom Telephone: +44 (0)845 345 0456 Fax: +44 (0)121 600 5911 Email: info@financierworldwide.com www.financierworldwide.com Copyright © 2016 Financier Worldwide All rights reserved. Annual Review • August 2016 Labour & Employment No part of this publication may be copied, reproduced, transmitted or held in a retrievable system without the written permission of the publishers. Whilst every effort is made to ensure the accuracy of all material published in Financier Worldwide, the publishers accept no responsibility for any errors or omissions, nor for any claims made as a result of such errors or omissions. Views expressed by contributors are not necessarily those of the publisher. Any statements expressed by professionals in this publication are understood to be general opinions and should not be relied upon as legal or financial advice. Opinions expressed herein do not necessarily represent the views of the author’s firm or clients or of any organisations of which the author is a member.
Fi n a n c i e r Wo r l d w i d e c a nva s s e s t h e o p i n i o n s o f l e a d i n g p ro fe s s i o n a l s a ro u n d t h e wo r l d o n t h e l a t e s t t re n d s i n l a b o u r & e m p l oy m e n t . LABOUR & EMPLOYMENT A U G U S T 2 0 1 6 • A N N U A L R E V I E W UNITED STATES..................................................... 08 Rebecca Torrey MANATT, PHELPS & PHILLIPS CANADA ............................................................... 12 François Garneau MILLER THOMSON MEXICO ................................................................ 16 Francisco J. Peniche Beguerisse CREEL, GARCÍA-CUÉLLAR, AIZA Y ENRÍQUEZ, S.C. FRANCE ................................................................ 20 Laurent Guardelli COBLENCE & ASSOCIÉS GERMANY ............................................................. 24 Dr Christopher Melms BEITEN BURKHARDT Contents
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LABOUR & EMPLOYMENT A U G U S T 2 0 1 6 • A N N U A L R E V I E W DENMARK ............................................................. 28 Tommy Angermair ADVOKATPARTNERSELSKABET KIRK LARSEN & ASCANIUS ITALY .................................................................... 32 Vittorio De Luca DE LUCA & PARTNERS INDIA ................................................................... 36 Vijay Ravi KOCHHAR & CO. SINGAPORE .......................................................... 40 S Suressh HARRY ELIAS PARTNERSHIP LLP Contents
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T 2 0 1 6
INTRODUCTION Companies operating in today’s global economy have access to,and are able to establish a presence in,diverse and lucrative new markets. But when they do, those companies will be exposed to a host of economic, structural and technological issues, which must be overcome if they are to be successful. Oneofthemostnotablechallengesisacompany’srelationship with its employees, including local employment laws, labour relations and the availability of human capital.The process of attracting and retaining key staff remains a major issue for companies around the world. How organisations respond to these challenges is of paramount importance. For companies operating within the EU, the task of managing cross-border business will be exaggerated by the passing of new EU provisions concerning data processing policies. Other challenges must also be taken into account, including the UK’s Brexit vote, which has put a question mark over the movement of people, including employees, within the bloc. The extent of this issue, and any future restrictions it brings, remains to be seen, but there are sure to be a labour and employment implications. By comparison, labour relations in the US appear to be clearer. Over the last 12 months, important pieces of legislation governing individual employee rights have been implemented at a local and regional level. Variously, these include mandatory paid sick leave benefits, minimum hourly wage increases, protection from discrimination based on sexual identity and expression, the elimination of gender pay disparities, and protection for workplace whistleblowers. A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T 2 0 1 6
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T 8 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T UNITED STATES REBECCA TORREY MANATT, PHELPS & PHILLIPS TORREY: The most notable development over the past 12 months has been the proliferation of laws and regulations, on a local and regional level, thanks to Congressional gridlock from partisan politics and a call to action by President Barack Obama. The employee rights conferred recently by local and state laws and regulations involve mandatory paid sick leave benefits, minimum hourly wage increases above $10 per hour, protection from discrimination based on sexual identity and expression, elimination of gender pay disparities, and protection for workplace whistleblowers. One or more of these enactments were initiated in the cities of San Francisco, Seattle,Washington DC, NewYork and Los Angeles, and on a state-wide basis in Connecticut, California, Massachusetts and Oregon. Other jurisdictions are following suit by offering generally the same rights but formulated differently, along with local administrative enforcement and private rights of action.As a result of the variety of legal requirements, and with changes occurring multiple times per year in different locales, compliance obligations in the US have become increasingly complex and challenging for organisations to follow and manage. TORREY:Whiletheprotectionofindividualemployeerightshasexpanded, the reach of labour unions remains stagnant domestically. Union activity remains vibrant in the healthcare, entertainment and communications, and services industries, though it is declining elsewhere among private employers. The National Labour Relations Board, the federal labour relations regulatory and enforcement agency,has increasingly challenged employers’ policies, prohibiting employees from posting confidential business information on social media on grounds they restrict concerted activities by workers and their right to communicate openly about the terms and conditions of employment, regardless whether an employer is subject to a collective bargaining agreement. The agency focused Q WHAT NOTABLE DEVELOPMENTS IN EMPLOYMENT LAW HAVE YOU SEEN IN THE US OVER THE LAST 12 MONTHS OR SO? HAVE THERE BEEN ANY SIGNIFICANT CHANGES TO EMPLOYEE RIGHTS OR COMPANY OBLIGATIONS, FOR EXAMPLE? Q HOW WOULD YOU DESCRIBE LABOUR RELATIONS IN YOUR REGION AT PRESENT? TO WHAT EXTENT HAS THE INFLUENCE OF UNIONS AND WORKERS COUNCILS GROWN?
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 9 8www.financierworldwide.com UNITED STATES • REBECCA TORREY • MANATT, PHELPS & PHILLIPS recently on limiting employers’ ability in general to restrict collective action through the use of class action waivers in employment arbitration agreements. TORREY:Classactionlawsuitsremainthedominanttrendinemployment litigation. Wage and hour class actions challenging erroneous or unfair payroll practices and policies continue to proliferate, with the largest number of cases filed in the state of California. Class actions may be brought by a single affected employee asserting claims on behalf of other affected employees with a look back period of up to four years. As employers develop protections to defeat class certification, including class action waivers in employment arbitration agreements,the plaintiffs’ bar uses new tactics to net the ample attorney fee awards derived from multi-million dollar settlements. Employees working in California also assert collective actions based on the Private Attorney General Act, an alternative way to assert claims on behalf of similarly situated employees that established substantial monetary penalties for numerous Labor Code violations, including the failure to pay wages, include the precise information required on employee wage statements or timely provide adequate meal and rest periods. Other recent litigation trends include class challenges to gender pay disparities and improper pre-employment background screening practices alleged to invade individual privacy rights. TORREY: Certain state and federal laws require minimum advance notice to employees affected by job loss from plant closures and other laws require a consideration period, information about group layoffs and a revocation period for negotiated departures of employees over 40 years of age involving a release of potential claims. With an Q ARE YOU SEEING ANY RECURRING THEMES IN EMPLOYMENT RELATED LITIGATION IN THE US? Q FOR COMPANIES IN THE PROCESS OF RESTRUCTURING,WHAT EMPLOYMENT ISSUES DO THEY NEED TO EVALUATE
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T 10 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T increase in employment events associated with restructuring, including terminations, demotions and pay cuts, the risk of litigation expands. Departing employees seek an understanding of why they were selected over others and resentment may bring claims. Organisational restructuring can destabilise the remaining workforce due to increased workload, lost relationships and fear for the future. Because the process disrupts people’s livelihoods, these decisions require discernment and vision, along with financial planning. The most common problems we see result from inattention to the human side of restructuring while focusing on headcount and profitability. TORREY: The best run companies we see have a collaborative environment and clear business objectives with an incentive compensation system that rewards contributions to those values. Hiring individuals with skills and personal traits consistent with the organisation’s culture and goals, coupled with direct, timely feedback on performance, aids in the retention of employees who will enhance the team. Identifying problem situations and attending promptly to substantial deficiencies may improve individual performance.Wherenotableimprovementisnotoccurring,werecommend helping a problematic employee move on. Most companies delay far too long to address these issues and act on inappropriate or inadequate performance. Procrastination by management in addressing misbehaviour or lack of productivity is disheartening to others and often drives away the key talent who an organisation hopes to attract and retain. TORREY: The key challenge for management, including in the process of incentivising and rewarding employees, comes from a misunderstanding of what drives employees on an individual level. The management of people requires emotional intelligence to discern individually and generationally what sparks employees to put in their best effort. Assuming that every employee is similarly motivated is the basic mistake underlying most compensation systems. Organisations that can discover what motivates various individuals at different points in Q INYOUR OPINION, HAS IT BECOME MORE DIFFICULT FOR COMPANIES TO REWARD THEIR EXECUTIVES AND EMPLOYEES?WHAT DO COMPANIES NEED TO TAKE INTO ACCOUNT Q WHAT GENERAL ADVICE WOULD YOU GIVE TO COMPANIES ON MANAGING THEIR HUMAN CAPITAL AND RETAINING KEY TALENT? WHEN RESIZING THE WORKFORCE, REDUCING PAYROLL COSTS AND ADJUSTING PENSIONS AND BENEFITS? WHAT KINDS OF RISKS AND LIABILITIES MIGHT ARISE IN SUCH CIRCUMSTANCES? UNITED STATES • REBECCA TORREY • MANATT, PHELPS & PHILLIPS “The most common problems we see result from inattention to the human side of restructuring while focusing on headcount and profitability.”
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 11www.financierworldwide.com their development and implement suitable incentives within a system viewed as fair and transparent overall are most likely to accomplish their business goals with the available resources. TORREY: Current political and social instability,coupled with the inability to resolve historic and cultural conflict on a macro level, are the most significant challenges to global business. The hope to expand business and develop cross-national expertise is frustrated by political leaders with myopic agendas who create an atmosphere of paranoia and fail to serve the well being of others. The ability to collaborate and address our natural differences constructively lags far behind the technological means we have to conduct business globally. A shift could occur if the innovative, dedicated talent in forward-looking organisations would engage long-term in social and political concerns with an eye toward profiting humanity. Q AS GLOBALISATION CONTINUES,WHAT ADDITIONAL CHALLENGES FACE MULTINATIONAL COMPANIES IN TERMS OF CROSS-BORDER EMPLOYMENT AND DEALING WITH FOREIGN WORKERS? Rebecca Torrey Partner Manatt, Phelps & Phillips +1 (310) 312 4172 rtorrey@manatt.com Rebecca Torrey is a partner at Manatt, Phelps & Phillips. Ms Torrey is experienced in all aspects of employment law, with an emphasis on defending employers in single plaintiff and class action cases in state and federal court. Ms Torrey regularly advises employers in the full range of employment matters, including wage and hour issues, protecting trade secrets and the use of nondisclosure agreements, unlawful harassment prevention, EEO and affirmative action compliance (including regression and adverse impact analysis), leaves of absence, background and drug screening, employment agreements, the use of independent contractors and hiring and termination decisions. www.manatt.com WHEN STRUCTURING COMPENSATION PACKAGES, INCENTIVES AND BENEFITS? UNITED STATES • REBECCA TORREY • MANATT, PHELPS & PHILLIPS
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T 12 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T CANADA Q WHAT NOTABLE DEVELOPMENTS IN EMPLOYMENT LAW HAVE YOU SEEN IN CANADA OVER THE LAST 12 MONTHS OR SO? HAVE THERE BEEN ANY SIGNIFICANT CHANGES TO EMPLOYEE RIGHTS OR COMPANY OBLIGATIONS, FOR EXAMPLE? FRANÇOIS GARNEAU MILLER THOMSON GARNEAU: In June 2016, the finance ministers representing the federal government and eight provinces agreed to revamp the Canada Pension Plan. The ministers agreed to gradually and substantially increase the average monthly worker contribution until 2023. These additional sums will increase the maximum annual benefits by close to one-third in order to bring the maximum annual benefit to C$17,478.As a result of this, Ontario decided not to go forward with its own pension plan proposal. Quebec, which had already set up a distinct plan in 1965 and had already increased contributions, is not part of this arrangement.However,Ontario implemented some major changes to its employment legislation by enacting Bill 132, which shall come into force on 8 September 2016. Essentially, the Act expands the Occupational Health and Safety Act so that ‘workplace harassment’ includes ‘workplace sexual harassment’.Thismeansthatthematterwillnotonlybedealtasahumanrights issue but also as a workplace issue. The Act also introduces new obligations concerning the conduct of investigations into workplace harassment,including the establishment of a written programme implementing the employer’s workplace harassment policy. Employers may also be required to hire a third- party investigator at their own expense. GARNEAU: In October 2015, the previous federal conservative government was defeated at the polls and replaced by a majority liberal government led by Justin Trudeau. Prior to the election, the conservative government had introduced legislation which would have compelled unions to disclose all transactions over $5000 and to disclose the details of the remuneration of union executives making more than $100,000 a year. Police Associations, the Federal Privacy Commissioner and the Canadian Bar Association objected to the legislation. Most provinces also contested the legislation on the basis that it was unconstitutional. In December 2015, the new government waived the disclosure requirements and indicated that it would repeal the law. The new government also followed through with its promise to re-establish the Q HOW WOULD YOU DESCRIBE LABOUR RELATIONS IN YOUR REGION AT PRESENT? TO WHAT EXTENT HAS THE INFLUENCE OF UNIONS AND WORKERS COUNCILS GROWN?
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 13 8www.financierworldwide.com Q ARE YOU SEEING ANY RECURRING THEMES IN EMPLOYMENT RELATED LITIGATION IN CANADA? CANADA • FRANÇOIS GARNEAU • MILLER THOMSON previously existing tax credit for contributions to union venture capital funds. In 2013, the previous government had indicated that the credit would be gradually reduced and eliminated. This was met with strong opposition not only from union leaders but also from most of the Quebec business class as the union venture capital funds have become an integral part of venture capital financing in Quebec. GARNEAU: On the individual side, the most recurring issues in employment related litigation are related to discrimination and the duty to accommodate arising from one’s family status, the duty of good faith in an employment context and the conflict between an employee’s fundamental rights to privacy in the context of random drug testing. In Ontario, ‘family status’ obligations are increasingly being invoked to contest an employer’s decision to sanction or dismiss an employee for absenteeism. In one recent decision, an employer dismissed an employee who had worked for the employer for one month because he had been absent for three days to care for his sick children. The employer claimed that the employee in question should have made reasonable efforts to find alternative child care arrangements.This argument was rejected by theTribunal which held that an employee did not have to make alternative arrangements when the absence was “infrequent, sporadic or unexpected”.As for the duty of good faith in employment relationships, in 2014 the Supreme Court rendered a decision which recognised that there was now a general duty of honesty in contractual performance, thus bringing the common law in line with the civil law doctrine of abuse of rights which applies in Quebec. Since then, Canadian courts have relied on this decision to impose a duty of good faith in the employment relationship. A similar conclusion was reached in a decision from Newfoundland and Labrador where an employee, under an acute stress reaction,told his employer he was“done”after being reprimanded by his employer. The Supreme Court of Newfoundland and Labrador found that the employer should not have concluded that the employee had resigned
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T 14 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T from his position because “the implied term of good faith and fair dealings which applied to both parties and to the employment contract required the employer to give Mr Evans time to cool off and reconsider”. GARNEAU:Typically,a collective dismissal will occur where a certain threshold number of employees are terminated within a specific period of time. Most of these legislations require that the employer maintain the group insurance and pension benefits during the collective dismissal notice period. In addition, for those employees who are entitled to additional notice, at common law or underthecivilcode,themajorityofthecaselawrecognisesthattheemployees should be compensated for the loss of their group insurance coverage or employer pension contributions during this period.Employers therefore should not expect to see a substantial reduction of their payroll costs during these periods. GARNEAU: Over the past few years, employee loyalty toward employers has been steadily declining.In order to ensure post-employment loyalty,restrictive covenants are becoming even more important and definitely a chief concern for employers that wish to protect confidential information and avoid unfair competition from former employees. However, in Quebec, the civil code provides that where the employee is dismissed without good and sufficient cause, the employer cannot rely on a non-competition clause which becomes ineffective. GARNEAU: The question of executive compensation is still a major divisive issue. Shareholder frustration with the compensation practices of some of Canada’s largest companies is still quite tangible, and 2016 has seen a slight increase of negative votes during ‘say-on-pay’ votes involving Canada’s 20 largest companies. However, for the time being, only Canadian Pacific Railway Ltd.,whichhelditsannualmeetingearlierthisyear,haslostits‘say-on-pay’vote Q INYOUR OPINION, HAS IT BECOME MORE DIFFICULT FOR COMPANIES TO REWARD THEIR EXECUTIVES AND EMPLOYEES?WHAT DO COMPANIES NEED Q WHAT GENERAL ADVICE WOULD YOU GIVE TO COMPANIES ON MANAGING THEIR HUMAN CAPITAL AND RETAINING KEY TALENT? Q FOR COMPANIES IN THE PROCESS OF RESTRUCTURING,WHAT EMPLOYMENT ISSUES DO THEY NEED TO EVALUATE WHEN RESIZING THE WORKFORCE, REDUCING PAYROLL COSTS AND ADJUSTING PENSIONS AND BENEFITS? WHAT KINDS OF RISKS AND LIABILITIES MIGHT ARISE IN SUCH CIRCUMSTANCES? CANADA • FRANÇOIS GARNEAU • MILLER THOMSON “In order to ensure post-employment loyalty, restrictive covenants are becoming even more important.”
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 15www.financierworldwide.com with 50.1 percent of votes cast against the company’s executive compensation practices. Even though the results of such votes are usually not binding upon a board of directors, the board generally takes into consideration the opinion of the shareholders when implementing its compensation practices. GARNEAU: Since 1 December 2015, employers using a work permit stream to hire foreign talent under Canada’s ForeignWorker Program are now subject to the Administrative Monetary Penalty (AMP) regime for violations of the Immigration and Refugee Protection Regulations. Not only is this new AMP regime broader, but also more constraining as it imposes new penalties for non-compliance to the Temporary Foreign Worker Program, as well as the International Mobility Program where a Labour Market Impact Assessment is notrequired.ToensurecomplianceacrossCanada,thegovernmenthasdecided to randomly inspect one in four employers in 2016 and has entrusted these inspectors with wider investigatory powers. François Garneau Partner Miller Thomson +1 (514) 871 5415 fgarneau@millerthomson.com François Garneau is a labour and employment lawyer and partner in the Montreal office of Miller Thomson. His clientele consists of employers from various economic sectors, be it pharmaceutical companies, oil companies, mining companies, computer consulting firms, food product companies or other manufacturing companies. He has also acted for Crown corporations including Canada Post Corporation, Loto-Québec, Hydro-Québec and the Société Générale de Financement. In addition, he represents senior executives in negotiations involving employment termination, and provides counsel in the drafting of employment contracts. www.millerthomson.com Q AS GLOBALISATION CONTINUES,WHAT ADDITIONAL CHALLENGES FACE MULTINATIONAL COMPANIES IN TERMS OF CROSS-BORDER EMPLOYMENT AND DEALING WITH FOREIGN WORKERS? TO TAKE INTO ACCOUNT WHEN STRUCTURING COMPENSATION PACKAGES, INCENTIVES AND BENEFITS? CANADA • FRANÇOIS GARNEAU • MILLER THOMSON
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T 16 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T MEXICO Q WHAT NOTABLE DEVELOPMENTS IN EMPLOYMENT LAW HAVE YOU SEEN IN MEXICO OVER THE LAST 12 MONTHS OR SO? HAVE THERE BEEN ANY SIGNIFICANT CHANGES TO EMPLOYEE RIGHTS OR COMPANY OBLIGATIONS, FOR EXAMPLE? FRANCISCO J. PENICHE BEGUERISSE CREEL, GARCÍA-CUÉLLAR,AIZA Y ENRÍQUEZ, S.C. PENICHE: In June 2015,a legislative decree that amended and modified the Mexican Federal Labour Law (FLL) regarding the employment of underage workers came into force.The new law forbids the employment of workers under 15 years old, and restricts the employment of workers from 15 to 17 years old to several conditions. There is prohibition regarding employees working overtime. Underage employees are also forbidden from being involved in dangerous activities. Moreover, the consent of the parents of underage workers is required. The Mexican Republic is divided in geographical areas for purposes of the minimum wage; however, on 1 October 2015, geographic zone B was eliminated and as a result there is now a nationwide minimum wage. PENICHE: Attempts by organisations to unionise employees have not increased; however, it is worth mentioning that a reform proposal to the FLL is currently being examined in Congress. The reform has been designed to strengthen the freedom of the unions and prevent companies with no employees from executing ‘protective’ collective bargaining agreements. The reform proposal also seeks to dismiss every petition for a strike during the process of registering a collective bargaining agreement in order to discourage strike petitions from unions that do not represent the potential affected employees. Strikingly, however, Mexico is enjoying a period of relative labour peace. Q HOW WOULD YOU DESCRIBE LABOUR RELATIONS IN YOUR REGION AT PRESENT? TO WHAT EXTENT HAS THE INFLUENCE OF UNIONS AND WORKERS COUNCILS GROWN?
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 17 8www.financierworldwide.com Q ARE YOU SEEING ANY RECURRING THEMES IN EMPLOYMENT RELATED LITIGATION IN MEXICO? MEXICO • FRANCISCO J. PENICHE BEGUERISSE • CREEL, GARCÍA-CUÉLLAR,AIZA Y ENRÍQUEZ, S.C. PENICHE: Senior management litigation is increasing in Mexico. In the past, it was unlikely to see these types of claims filed against former employees. The challenge for companies, however, is that new compensation components such as stock options, restricted units, and so on, are now common in Mexico. However, these kinds of benefits are not regulated under the FLL, which makes their interpretation by the relevant authorities uncertain.We have seen court precedent regarding stock options issued, providing that when included in employment agreements, stock options should be considered part of the employee’s total compensation and consequently should be considered when calculating a potential severance payment. PENICHE: Pursuant to the FLL, employers can only terminate employment relationships with their employees based on the specific causes provided therein. Restructuring is not considered justifiable grounds for employment termination.Accordingly, dismissals triggered by reorganisation are considered unjustified, entitling employees to severance payments. Any unilateral reduction of employment benefits will give just cause to affected employees to terminate the employment relationship and claim severance payment. Consequently, any restructuring process must be carefully planned and formalised. Q FOR COMPANIES IN THE PROCESS OF RESTRUCTURING,WHAT EMPLOYMENT ISSUES DO THEY NEED TO EVALUATE WHEN RESIZING THE WORKFORCE, REDUCING PAYROLL COSTS AND ADJUSTING PENSIONS AND BENEFITS? WHAT KINDS OF RISKS AND LIABILITIES MIGHT ARISE IN SUCH CIRCUMSTANCES?
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T Q WHAT GENERAL ADVICE WOULD YOU GIVE TO COMPANIES ON MANAGING THEIR HUMAN CAPITAL AND RETAINING KEY TALENT? 18 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T PENICHE: From a legal perspective, companies should develop policies and train employees to maintain a healthy work environment and avoid problemssuchassexualharassmentandmobbingintheworkplace.From an administrative perspective, companies should consider developing variable compensation alternatives which provide economic incentives to employees based on their productivity and efficiency, rather than just seniority. Providing a healthy work environment and an attractive compensation scheme increases the odds that human capital and key talent remain in the company. PENICHE: Due to the increasingly competitive and unpredictable nature of the global markets, fixed compensation schemes for executives are changing.They are becoming a much more variable scheme based on an individual’s performance, as well the ability of the company to achieve its global target.When structuring compensation packages, companies should take into consideration the fact that all benefits presented to an employee will very likely be considered acquired rights and part of their total compensation for potential severance payment. Thus, such benefits may increase substantially the amount of an employee’s final payment, and even the considerable economic contingencies in case of litigation. MEXICO • FRANCISCO J. PENICHE BEGUERISSE • CREEL, GARCÍA-CUÉLLAR,AIZA Y ENRÍQUEZ, Q INYOUR OPINION, HAS IT BECOME MORE DIFFICULT FOR COMPANIES TO REWARD THEIR EXECUTIVES AND EMPLOYEES?WHAT DO COMPANIES NEED TO TAKE INTO ACCOUNT WHEN STRUCTURING COMPENSATION PACKAGES, INCENTIVES AND BENEFITS? “Providing a healthy work environment and an attractive compensation scheme increases the odds that human capital and key talent remain in the company.”
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 19www.financierworldwide.com Q AS GLOBALISATION CONTINUES,WHAT ADDITIONAL CHALLENGES FACE MULTINATIONAL COMPANIES IN TERMS OF CROSS-BORDER EMPLOYMENT AND DEALING WITH FOREIGN WORKERS? PENICHE: The FLL does not contemplate the execution of secondment agreements. Different circumstances during an expat’s assignment may trigger legal consequences, such as an expat being considered an employee of the Mexican host entity under the FLL, which may entitle him or her to all mandatory employment and social security benefits. In addition, certain tax consequences for both the expat and the Mexican host company could arise. Moreover, the FLL does not allow employment at will, so unless a justified cause for termination exists, employees will be entitled to severance payments. MEXICO • FRANCISCO J. PENICHE BEGUERISSE • CREEL, GARCÍA-CUÉLLAR,AIZA Y ENRÍQUEZ, S.C. Francisco J. Peniche Beguerisse Partner Creel, García-Cuéllar,Aiza y Enríquez, S.C. +52 55 4748 0670 francisco.peniche@creel.mx Francisco Peniche is a partner at Creel, García-Cuéllar,Aiza y Enríquez, S.C., in Mexico City, where he heads the Labor and Employment practice area. He advises clients on labour and employment matters, including hiring, transfer and termination of executives, employment matters related to corporate transactions, reorganisations and negotiation and execution of collective bargaining agreements. He also represents clients in major downsizings and was recently engaged for several opinions in connection with the application of data privacy laws to employers in Mexico. www.creel.mx
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T 20 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T FRANCE LAURENT GUARDELLI COBLENCE & ASSOCIÉS Q WHAT NOTABLE DEVELOPMENTS IN EMPLOYMENT LAW HAVE YOU SEEN IN FRANCE OVER THE LAST 12 MONTHS OR SO? HAVE THERE BEEN ANY SIGNIFICANT CHANGES TO EMPLOYEE RIGHTS OR COMPANY OBLIGATIONS, FOR EXAMPLE? GUARDELLI: Three major pieces of legislation have been provided by parliament in less than a year regarding all aspects of labour and employment, from relations with personnel representative bodies to collective bargaining rules, health and safety at work, redundancies or trade union law. For example, a bill which has been in parliament for five months and has just been realised, has amended virtually 50 percent of our more than 3500 pages of labour code. For instance, a brand new definition of the economic grounds of dismissal has been provided for, and this definition marks a major change. GUARDELLI: While French labour relations may look very tough from abroad, you have to look at a company level in order to really understand what labour relations are, beyond major strikes and other street fights. One must remember that in France, unions have been provided with numerous prerogatives but only 7 or 8 percent of French employees are actually union members. Moreover, unions are present in important companies, where union representatives, as well as employee representatives in general, are almost professional, making it, if not easy, at least feasible to work with them. Q HOW WOULD YOU DESCRIBE LABOUR RELATIONS IN YOUR REGION AT PRESENT? TO WHAT EXTENT HAS THE INFLUENCE OF UNIONS AND WORKERS COUNCILS GROWN?
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 21 8www.financierworldwide.com Q ARE YOU SEEING ANY RECURRING THEMES IN EMPLOYMENT RELATED LITIGATION IN FRANCE? FRANCE • LAURENT GUARDELLI • COBLENCE & ASSOCIÉS GUARDELLI: Beyond so-called ‘collective’ litigation – meaning litigation regarding unions and personnel representatives – which is a technical as well as strategic type of litigation, one cannot forget to mention litigation that relates to health and safety at work, starting with harassment and ending, unfortunately, with rare cases of suicide at work. This range of cases all deal with working conditions and so- called ‘socio-psychological’ risks, an issue companies must now address in a proactive way. GUARDELLI:A 2013Act has reshaped the entire procedure of workforce reduction, giving the labour inspector a great deal of powers to control both the procedure and the grounds of the dismissal. In this respect, one must deal with the fact that the administration is now the main counterpart, alongside the personnel representative bodies, as it wields a considerable amount of control. From a legal security standpoint, the experience of giving powers to the administration has become a positive, since corporations are able to work within precise timelines and can ensure a project is going to go through the administrative supervision process – a task that was far more difficult in the past with the judiciary. For instance, the risk of seeing an entire restructuring process declared null and void months after employees are dismissed has diminished a great deal, though it is not totally absent. Q FOR COMPANIES IN THE PROCESS OF RESTRUCTURING,WHAT EMPLOYMENT ISSUES DO THEY NEED TO EVALUATE WHEN RESIZING THE WORKFORCE, REDUCING PAYROLL COSTS AND ADJUSTING PENSIONS AND BENEFITS? WHAT KINDS OF RISKS AND LIABILITIES MIGHT ARISE IN SUCH CIRCUMSTANCES?
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T Q WHAT GENERAL ADVICE WOULD YOU GIVE TO COMPANIES ON MANAGING THEIR HUMAN CAPITAL AND RETAINING KEY TALENT? 22 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T GUARDELLI: Retaining key talent is essential to companies that have to manage their workforce in an increasingly competitive market. Companies should consider alternative means of remuneration, including company benefit schemes whereby the individual will be able to provide some type of security for themselves and their family. Obviously, making sure they take part of the company’s capital in one way or another is also beneficial, since management packages are not just limited to LBOs. GUARDELLI: In this respect, what needs to be looked at very carefully is obviously the tax environment, since, fairly enough, France has been blamed for amending its tax provisions too often. Advice should start with a close analysis at each individual’s personal situation, as well as their status in the company, since employees and directors may not be treated similarly depending on the financial package that is proposed to them. Q INYOUR OPINION, HAS IT BECOME MORE DIFFICULT FOR COMPANIES TO REWARD THEIR EXECUTIVES AND EMPLOYEES?WHAT DO COMPANIES NEED TO TAKE INTO ACCOUNT WHEN STRUCTURING COMPENSATION PACKAGES, INCENTIVES AND BENEFITS? FRANCE • LAURENT GUARDELLI • COBLENCE & ASSOCIÉS “Remuneration plans in France cannot, as in most European countries, be unilaterally amended in the course of the fiscal year during which they are calculated.”
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 23www.financierworldwide.com Q AS GLOBALISATION CONTINUES,WHAT ADDITIONAL CHALLENGES FACE MULTINATIONAL COMPANIES IN TERMS OF CROSS-BORDER EMPLOYMENT AND DEALING WITH FOREIGN WORKERS? GUARDELLI: While everyone understands that HR management techniques are border-free, one should not forget that each country, including France, has specificities which prevent the implementation of unilateral decisions taken from above, with no consideration for the local environment. As a single, but frequent, example, remuneration plans in France cannot, as in most European countries, be unilaterally amendedinthecourseofthefiscalyearduringwhichtheyarecalculated, especially when they depend upon objectives; these objectives cannot be amended either.Too often we see decisions amended – for example, one specific element of calculating a worldwide commission plan, with no required acceptance of employees and subsequent court cases where employees claim unilateral modification of the plan,is prohibited under French law, which can result in full payment of commission. It is therefore important to ensure beforehand the feasibility of any such decisions in order to prevent judicial issues. Laurent Guardelli Partner Coblence & Associés + 33 1 53 67 24 24 lg@coblence-avocat.com Laurent Guardelli is a labour and employment partner at Coblence and Associés. He advises companies and top executives on their relations with employees, personnel representation bodies and the labour administration. He is particularly active with the French subsidiaries of Anglo-Saxon groups. He also works with top executives to negotiate their status at the time of hiring and when they leave the company. He manages the labour aspects of corporate transactions. He was admitted to the Paris Bar in 2000 and holds an advanced degree of University Paris II Panthéon- Assas and a Phd (Paris II Panthéon-Assas and St John’s College Oxford). www.coblence-avocat.com FRANCE • LAURENT GUARDELLI • COBLENCE & ASSOCIÉS
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T 24 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T GERMANY Q WHAT NOTABLE DEVELOPMENTS IN EMPLOYMENT LAW HAVE YOU SEEN IN GERMANY OVER THE LAST 12 MONTHS OR SO? HAVE THERE BEEN ANY SIGNIFICANT CHANGES TO EMPLOYEE RIGHTS OR COMPANY OBLIGATIONS, FOR EXAMPLE? DR CHRISTOPHER MELMS BEITEN BURKHARDT MELMS: We have seen the following notable developments in employment law in our region over the last 12 months or so. There have been major changes to the Act on Collective Agreements with enactment of the so-called ‘Principle of Collective Agreement Unity’ (Tarifeinheitsgesetz) on 3 July 2015, also the Act on Minimum Wages of 11 August 2014 and the Act on Equal Participation of Men and Women in Managerial Functions in Private Economy and in the Public Sector of 24 April 2015.All three of these new laws have significantly changed employee rights or company obligations in our region. The amendment to the Act on Collective Agreements has provided for the supremacy of certain trade unions over other smaller trade unions if big trade unions conclude collective agreements. Small trade unions in specific branches of industry – for example, locomotive drivers or pilots – were created and recognised by the Federal Labour Court (Bundesarbeitsgericht). They were fighting for collective agreements onlyfortheirmembers,whereasthenewjurisdictionontherecognition of these small trade unions resulted in various industrial conflicts which were not well received by the public. The law changing the Collective Agreements Act provides that any collective agreements with the biggest trade unions in a certain sector will prevail over any other collective agreement concluded by smaller trade unions. Consequently, smaller trade unions filed constitutional complaints with the Federal Constitutional Court (Bundesverfassungsgericht) which are yet to be decided. Two complaints, however, have already been rejected. A final decision is expected before the end of 2016. The law on Minimum Wages, implemented in 2015, has drastically changed the relationship between employees and employers. Since this law has been in place, employees – and with some exceptions even trainees – are entitled to a minimum wage of €8.50 per hour, and as of 1 January 2017, €8.84 per hour. Finally, the Act on the Equal Representation of Men and Women in certain companies provides for
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 25 8www.financierworldwide.com GERMANY • DR CHRISTOPHER MELMS • BEITEN BURKHARDT Q ARE YOU SEEING ANY RECURRING THEMES IN EMPLOYMENT RELATED LITIGATION IN GERMANY? at least a 30 percent quota of women – and men – on the supervisory boards of public companies. If a company does not comply with this obligation, the courts are entitled to cancel the previous election of certain supervisory board members and fill the seats with appropriate women or men. MELMS: At present, we would describe labour relations in our region as beingcooperative,ifnotfriendly.Thishascertainlybeensupportedbythe excellent national economic situation, with the average unemployment rate in Germany reaching an extremely low figure of about 6 percent, in some regions even significantly less. A low unemployment rate has always resulted in a friendly atmosphere in the relationship between employers and employees. However, we have still experienced a couple of relatively harsh strikes in some sectors, such as the railways and the airlines sectors. MELMS: We see the tendency to agree upon a mediation process, although under German law mediation is not enforceable, in employment agreements or in collective agreements, for example. However, it does provide for a potentially quick solution. Mediation proposals are not binding per se, as both parties are free to agree upon the results of a mediation process. Q HOW WOULD YOU DESCRIBE LABOUR RELATIONS IN YOUR REGION AT PRESENT? TO WHAT EXTENT HAS THE INFLUENCE OF UNIONS AND WORKERS COUNCILS GROWN?
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T 26 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T MELMS: During the process of restructuring, one critical and difficult provision is Sec. 613 of the German Civil Code, governing the provision on the transfer of undertakings. This clause is difficult to handle as it requires considerable preparatory activities, and it is easy to fall into the legalloopholesofthisclause.Iftheoperationprovidesforaworkscouncil (Betriebsrat), the collective provisions in Sec. 111 Shop ConstitutionAct must be carefully considered. The legal requirement to negotiate with the works council on a Social Plan, so-called Reconciliation of Interest, must follow certain formal procedures. MELMS: If companies wish to retain their key talent, they should consider agreeing upon notice periods that exceed statutory provisions, in order to bind talented employees to the company for as long as possible. The downside is that an employer must comply with those notice periods if it wants to terminate the employment. In addition, companies should provide for attractive benefits, such as educational programmes or cooperation with leading universities. Finally, and most importantly, companies should consider establishing special policies relating to the promotion of women in their organisation. This will not only provide equal opportunities to both men and women in the company, but it will also make the company much more attractive when it comes to recruiting new talent. MELMS: It has become more difficult for certain companies to reward their employees as the European Union has set up strict guidelines and provisions on the remuneration of certain groups of employees, mainly in the investment sector and in insurance companies. The general idea Q INYOUR OPINION, HAS IT BECOME MORE DIFFICULT FOR COMPANIES TO REWARD THEIR EXECUTIVES Q WHAT GENERAL ADVICE WOULD YOU GIVE TO COMPANIES ON MANAGING THEIR HUMAN CAPITAL AND RETAINING KEY TALENT? Q FOR COMPANIES IN THE PROCESS OF RESTRUCTURING,WHAT EMPLOYMENT ISSUES DO THEY NEED TO EVALUATE WHEN RESIZING THE WORKFORCE, REDUCING PAYROLL COSTS AND ADJUSTING PENSIONS AND BENEFITS? WHAT KINDS OF RISKS AND LIABILITIES MIGHT ARISE IN SUCH CIRCUMSTANCES? GERMANY • DR CHRISTOPHER MELMS • BEITEN BURKHARDT “It has become more difficult for certain companies to reward their employees as the European Union has set up strict guidelines and provisions.”
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 27www.financierworldwide.com of these principles is that remuneration should reflect the performance of the employee over a period of at least three years. For employees and executives in any other sector, this should be no more difficult than it has been in the past; however, it is recommended that companies structure their remuneration policies in a similar way to the financial sector. MELMS: The most complicated challenges faced by multinational companies in term of cross-border employment have been created by the new EU provision on data processing policies. The main problem, which has been an issue for many years, was the transfer of personal data from one Member State to the US. The new EU provision sets principles on safe harbour policies and contains more restrictions on the free transfer of data to the US. Dr Christopher Melms Partner BEITEN BURKHARDT +49 89 35065 1143 christopher.melms@bblaw.com Dr Christopher Melms is a partner in BEITEN BURKHARDT’s Munich office and head of the Labour & Employment Law practice group. His practice focuses on the food and semi-luxuries industry, the health sector, as well as on media, entertainment and publishing companies. He advises and represents German and foreign companies with regard to collective bargaining and labour management relations law. His activities are concentrated on advising of companies within the scope of processes of change under collective bargaining agreements – for example, changes in pay scale, company collective agreements, etc. – and negotiations with trade unions and works councils. www.beiten-burkhardt.com Q AS GLOBALISATION CONTINUES,WHAT ADDITIONAL CHALLENGES FACE MULTINATIONAL COMPANIES IN TERMS OF CROSS-BORDER EMPLOYMENT AND DEALING WITH FOREIGN WORKERS? AND EMPLOYEES?WHAT DO COMPANIES NEED TO TAKE INTO ACCOUNT WHEN STRUCTURING COMPENSATION PACKAGES, INCENTIVES AND BENEFITS? GERMANY • DR CHRISTOPHER MELMS • BEITEN BURKHARDT
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T 28 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T DENMARK Q WHAT NOTABLE DEVELOPMENTS IN EMPLOYMENT LAW HAVE YOU SEEN IN DENMARK OVER THE LAST 12 MONTHS OR SO? HAVE THERE BEEN ANY SIGNIFICANT CHANGES TO EMPLOYEE RIGHTS OR COMPANY OBLIGATIONS, FOR EXAMPLE? TOMMY ANGERMAIR ADVOKATPARTNERSELSKABET KIRK LARSEN & ASCANIUS ANGERMAIR: Over the last 12 months, the Danish parliament has been unusually active in terms of implementing changes to key labour market legislation. This is normally very stable compared to the corresponding legislation in many other European countries. There have been radical changes in rules applicable to restrictive covenants, including a maximum duration of 12 months, entitlement to compensation irrespective of other income during restriction period and a general prohibition against clauses regarding non-solicitation of colleagues. Rules on statutory severance pay based on length of service have been simplified, with new amounts and required service thresholds. Access to agree on an automatic end of employment at the age of 70 years has been abolished. Furthermore, in August 2015 the Danish government established a committee which is expected to propose radical changes to the current,and very unique,Danish holidaysystemforthepurposeofobtainingcompliancewiththeEUWorking Time Directive (2003/88/EC) following a recent statement from the EU Commission. However, the most significant legislative development was the final adoption of the General Data Protection Regulation (2016/679) on 27 April 2016 which will have a massive impact on Danish employers effective from 25 May 2018. ANGERMAIR: Historically, the Danish labour market has been regulated, to a large extent, by collective bargaining agreements (CBAs). Typically, CBAs require the establishment of one or more works councils if the employee headcount is 35 and above. Accordingly, historically, unions and works councils have had a strong influence on the Danish labour market.However, it is my impression that in recent years that influence has decreased substantially due to a number of factors.The main factors appear to be the apparently rapidly rising number of employers not covered by CBAs and employees without union membership, as well as the increasingly strong influence of EU legislation. Q HOW WOULD YOU DESCRIBE LABOUR RELATIONS IN YOUR REGION AT PRESENT? TO WHAT EXTENT HAS THE INFLUENCE OF UNIONS AND WORKERS COUNCILS GROWN?
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 29 8www.financierworldwide.com DENMARK • TOMMY ANGERMAIR • ADVOKATPARTNERSELSKABET KIRK LARSEN & ASCANIUS Q ARE YOU SEEING ANY RECURRING THEMES IN EMPLOYMENT RELATED LITIGATION IN DENMARK? ANGERMAIR:The hottest topic in employment law litigation has been the protection of disabled employees against discrimination following recent case law from the European Court of Justice (ECJ) which introduced a very wide and vague legal definition of disability. Furthermore, the Danish Supreme Court and Eastern High Court have very recently given judgments regarding the Danish Transfer of Undertakings Act which implemented the EU Acquired Rights Directives (98/50/EC and 77/187/EEC), in particular whether or not a certain transfer constituted a transfer of undertakings in the sense of said directives. ANGERMAIR: In terms of such processes,the most important employment issue is typically avoiding claims of discriminatory treatment due to pregnancyormaternity,disability,age,part-timeorfixedtermemployment, and so on, which may lead to substantial compensation claims, contribute to a negative atmosphere in the work place and/or negative press coverage. Discrimination claims are generally more likely to end up in court than most other employed related claims due to the potentially high level of compensation and the relatively high union focus on pursuing the claims. If such a claim is successfully brought to court by an employee, the employer will be liable to pay compensation amounting to as much as 12 months totalcompensation,includingfixedandvariablesalaryaswellasthevalueof benefits. In terms of significant staff reductions, negotiating loyalty or stay- on packages with key employees tends to be very important to maintaining a motivated and efficient workforce. Completing a certain collective consultation procedure is required under certain circumstances but in most cases that procedure does not lead to significant issues – as opposed to in most other European countries – considering that the procedure can largely be designed according to the employer’s preferences and that neither the works council, the unions nor any other party is empowered to block or delay the decision to proceed with the envisaged restructuring. Q FOR COMPANIES IN THE PROCESS OF RESTRUCTURING,WHAT EMPLOYMENT ISSUES DO THEY NEED TO EVALUATE WHEN RESIZING THE WORKFORCE, REDUCING PAYROLL COSTS AND ADJUSTING PENSIONS AND BENEFITS? WHAT KINDS OF RISKS AND LIABILITIES MIGHT ARISE IN SUCH CIRCUMSTANCES?
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T Q WHAT GENERAL ADVICE WOULD YOU GIVE TO COMPANIES ON MANAGING THEIR HUMAN CAPITAL AND RETAINING KEY TALENT? 30 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T ANGERMAIR: To facilitate a relationship between the company and its employees which remains mutually beneficial, the company should focus on promoting the individual employee’s personal and professional development as well as promoting employee behaviour which supports the company’s short and long term goals. In terms of promoting employee development, it is important for companies to ensure that their employees are assigned challenging tasks, that they receive credit for their work and that they are afforded the opportunity to outperform their manager if they are skilled enough to do so. Companies should also strive to ensure that at any given time their compensation and benefits schemes incentivise behaviour which supports the company’s short and long term goals. ANGERMAIR: Compensation and benefits are obviously absolutely crucial in terms of promoting the right employee behaviour and retaining the right employees. A company should always consider whether their current compensation and benefits schemes promote the right employee behaviour which supports the company’s short and long term goals.This is an obvious point for most leaders but in practice this has always been and still is a difficult exercise for companies. It has not necessarily become more or less difficult recently.In my opinion,too many companies apply standard schemes which are not adequately tailored to the individual company and the individual type of employees, or fail to update the schemes to account for significant changes affecting the company. In most cases, taking the road less travelled by, for example, implementing and maintaining tailored schemes, is absolutely worthwhile, although this often requires a far more substantial effort. From a strictly Danish legal perspective, it is important for companies to take into account the leaver rights protection with regard to incentive and compensation schemes, which in my experience is remarkably strong compared to most other jurisdictions. DENMARK • TOMMY ANGERMAIR • ADVOKATPARTNERSELSKABET KIRK LARSEN & ASCANIUS Q INYOUR OPINION, HAS IT BECOME MORE DIFFICULT FOR COMPANIES TO REWARD THEIR EXECUTIVES AND EMPLOYEES?WHAT DO COMPANIES NEED TO TAKE INTO ACCOUNT WHEN STRUCTURING COMPENSATION PACKAGES, INCENTIVES AND BENEFITS? “Internal HR, mobility and legal functions tend to face more comprehensive and complex challenges.”
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 31www.financierworldwide.com Q AS GLOBALISATION CONTINUES,WHAT ADDITIONAL CHALLENGES FACE MULTINATIONAL COMPANIES IN TERMS OF CROSS-BORDER EMPLOYMENT AND DEALING WITH FOREIGN WORKERS? ANGERMAIR: As the number of foreign workers rises due to increasing globalisation, it will be more challenging for multinational companies to ensure a smooth transition, to integrate the foreign worker into the local staff and thereby to create a strong foundation for the foreign worker’s performance. Internal HR, mobility and legal functions tend to face more comprehensive and complex challenges, which creates a demand for strengthening these functions in terms of headcount and skills. Many Danish entities in multinational companies work closely with colleagues in the UK – typically colleagues in regional group functions – which often involves the relocation of employees between Denmark and the UK. Brexit is very likely to result in work permit requirements being imposed on employees relocating between EU member states and the UK, considering the successful leave campaign’s promise to reduce UK immigration from EU member states, and the new UK prime minister’s declared intent to keep this promise. Tommy Angermair Head of Employment & Corporate Immigration Law Advokatpartnerselskabet Kirk Larsen & Ascanius +45 2710 3439 ta@kirklarsen.dk Tommy Angermair is head of the firm’s employment law and immigration law department. Since 2007, he has exclusively worked on employment law and corporate immigration law matters. He has advised mostly large multinational clients on complex employment and immigration law matters for several years. Mr Angermair is also one of the most experienced legal experts in employee data protection law (specialist level since 2004). He is recommended in the 2016 editions of the Legal 500 EMEA Employment) and Chambers Europe (Employment). In 2015 and 2016, Mr Angermair was a speaker at four major global legal conferences on hot corporate immigration law topics. www.kirklarsen.dk DENMARK • TOMMY ANGERMAIR • ADVOKATPARTNERSELSKABET KIRK LARSEN & ASCANIUS
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T 32 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T ITALY Q WHAT NOTABLE DEVELOPMENTS IN EMPLOYMENT LAW HAVE YOU SEEN IN ITALY OVER THE LAST 12 MONTHS OR SO? HAVE THERE BEEN ANY SIGNIFICANT CHANGES TO EMPLOYEE RIGHTS OR COMPANY OBLIGATIONS, FOR EXAMPLE? VITTORIO DE LUCA DE LUCA & PARTNERS DE LUCA: Over the last 12 months, significant developments have characterised Italian employment law.A broad, in-depth reform known as the Jobs Act was implemented in 2015. The reform has radically changed several aspects of employment and self-employment relationships in Italy. In particular, the reform provided for the reorganisation of all types of employment contracts,the introduction of permanent contracts with increasing levels of protection, thus defining a new system of compensation in the event of unlawful dismissals marked by the certainty and objectivity of the law. This has reduced the possibility of reinstating employees who have been unlawfully dismissed to merely cases of discriminatory termination only, and thus almost entirely eliminates the discretionary power of the courts. To help reduce unemployment, simplify the existing legislation and ensure greater flexibility in employment relationships, the reform also introduced social security exemption system for new hires, liberalised fixed-term contracts and significantly reviewed the regulation of duties, drastically increasing cases where downgrading is lawful. DE LUCA: In the past, labour relations had a fairly influential role in the labour market, based on a triangular system where trade unions, employers and public authorities were involved in negotiations. However, in recent years, many unions have lost their past negotiating power against the government. This has also been confirmed by the recent Jobs Act reform, which has been implemented without any substantial trade union involvement. Therefore, trade unions should overcome the role of national trilateral negotiation, promoting instead increased negotiations on a company level and workers’councils’power of representation. Q HOW WOULD YOU DESCRIBE LABOUR RELATIONS IN YOUR REGION AT PRESENT? TO WHAT EXTENT HAS THE INFLUENCE OF UNIONS AND WORKERS COUNCILS GROWN?
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 33 8www.financierworldwide.com Q ARE YOU SEEING ANY RECURRING THEMES IN EMPLOYMENT RELATED LITIGATION IN ITALY? ITALY • VITTORIO DE LUCA • DE LUCA & PARTNERS DE LUCA: Historically, since reinstatement entitlement was introduced into the workers’ statute, the most frequently recurring theme in employment has been dismissal. However, due to protections against unfair dismissal, litigation concerning dismissal due to discrimination is still fairly uncommon. Since overall employee protection – and in particular, the chance for employees to be reinstated at work – have been radically reduced due to various reforms implemented since 2010 andtheimplementationofeffectivealternativedisputeresolution(ADR) procedures, we expect that in the future, the number of court disputes for unfair dismissal will drastically decrease and at the same time, a higher number of dismissals due to discrimination will be brought to the attention of judges, as happens in most western countries. DE LUCA: The restructuring of a company, including a reduction of the workforce, entails several actions.The most important are those related to the joint meeting to be held with unions in terms of bargaining power, timing and possible disruptive actions. The entitlement of the unions to meet the employer derives from the Italian implementation of law arising from specific European Union directives.According to the law, unions are indeed entitled to request that an employer participate in meetings in order to explain the reasons behind redundancies, and verify whether there may be alternatives to such dismissals and, if not, to agree on possible company measures. During the consultation procedure, companies are required to consider, in terms of costs and benefits, the opportunity to reach an agreement with unions by making any economic or organisational concessions in order to speed up the process and avoid any possible disruptive actions being carried out by the latter. If the parties fail to reach an agreement, the employer is, in Q FOR COMPANIES IN THE PROCESS OF RESTRUCTURING,WHAT EMPLOYMENT ISSUES DO THEY NEED TO EVALUATE WHEN RESIZING THE WORKFORCE, REDUCING PAYROLL COSTS AND ADJUSTING PENSIONS AND BENEFITS? WHAT KINDS OF RISKS AND LIABILITIES MIGHT ARISE IN SUCH CIRCUMSTANCES?
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T 34 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T any case, entitled to deliver dismissal letters and employees are free to object to the reason behind the dismissal, which may be an unfair dismissal. DE LUCA: In our experience, managing people by setting objectives and offering fair, performance-related bonuses, rewards and retains key talent. As a general rule, employers should always be clear about the targets employees are expected to meet. It may be useful to draft and negotiate specific retention plans aimed at granting employee cooperation for a predefined period of time, especially for companies acquired via investment funds which need to prevent key managers from being able to decide to leave before the end of an investment period. DE LUCA: In recent years, it has become more difficult to reward executives, due to their increased expectations in terms of having tailor-made employment offers.The main thing that employers should avoid when structuring compensation packages, incentives and benefits is to use standard international contracts which have not been adapted and made compliant with local regulations. For instance, international companies often apply complex employment contracts to Italian employees without considering that in Italy, the main provisions governing employment relationships are defined by National Collective Bargaining Agreements. As far as a fixed annual salary is concerned, National Collective Bargaining Agreements provide for the minimum annual remuneration to be granted to employees depending on their level of employment. Furthermore, under Italian law, employees and managers are entitled to the so-called leaving indemnity, consisting of compulsory deferred compensation due to the employee at the end of the employment relationship equal to 1/13.5 of the annual salary due to them. Q INYOUR OPINION, HAS IT BECOME MORE DIFFICULT FOR COMPANIES TO REWARD THEIR EXECUTIVES AND EMPLOYEES?WHAT DO COMPANIES NEED TO TAKE INTO ACCOUNT WHEN STRUCTURING COMPENSATION PACKAGES, INCENTIVES AND BENEFITS? Q WHAT GENERAL ADVICE WOULD YOU GIVE TO COMPANIES ON MANAGING THEIR HUMAN CAPITAL AND RETAINING KEY TALENT? ITALY • VITTORIO DE LUCA • DE LUCA & PARTNERS
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 35www.financierworldwide.com Q AS GLOBALISATION CONTINUES,WHAT ADDITIONAL CHALLENGES FACE MULTINATIONAL COMPANIES IN TERMS OF CROSS-BORDER EMPLOYMENT AND DEALING WITH FOREIGN WORKERS? DE LUCA: From an employment law perspective, secondment always involves complex provisions and multiple issues to be dealt with. In particular, cross-border employment often entails companies having to take into consideration employment agreements and comfort letters that must be compliant with both the country of origin and the country of destination of the employee. Furthermore, cross- border employment requires companies be fully compliant with local laws, international treaties against double taxation, and bilateral and multilateral conventions for social securities. Movement of personnel within the European Union is granted by specific regulations according to which,under certain conditions,employees are entitled to contribute to their country of origin, even when they are seconded to a different country. Vittorio De Luca Managing Partner De Luca & Partners +39 02 3655651 vittorio.deluca@delucapartners.it Vittorio De Luca, managing partner of the firm, usually advises corporations and private equity funds. He is regularly involved – as an expert in employment and labour related matters – in primary reorganisations, M&A, restructuring and private equity transactions.Thanks to his degree in Jurisprudence and Economics, he is highly skilled in understanding business needs. Mr De Luca collaborates regularly with ‘Il Sole 24 Ore’ and is the author of a number of articles in the specialist press. He has been interviewed in mass media journals as an expert in employment law and is a regular contributor to seminars and conventions. www.delucapartners.it ITALY • VITTORIO DE LUCA • DE LUCA & PARTNERS “In Italy, the main provisions governing employment relationships are defined by National Collective Bargaining Agreements.”
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T 36 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T INDIA Q WHAT NOTABLE DEVELOPMENTS IN EMPLOYMENT LAW HAVE YOU SEEN IN INDIA OVER THE LAST 12 MONTHS OR SO? HAVE THERE BEEN ANY SIGNIFICANT CHANGES TO EMPLOYEE RIGHTS OR COMPANY OBLIGATIONS, FOR EXAMPLE? VIJAY RAVI KOCHHAR & CO. RAVI: Last year, in a move aimed at initiating significant labour reforms, the Indian Ministry of Labour announced plans to introduce five draft codes which would consolidate 44 labour laws that are currently applicable to businesses. The move has been designed to decrease the multiplicity of compliances in labour laws, improve labour relations and ease the process of doing business in India. Following the announcement, three draft legislations have been made public. One of the important draft codes that has been introduced is the Labour Code on Industrial Relations Bill, 2015 (LCIR Bill). There are a number of key proposals included in the LCIR Bill. First, severance compensation to ‘workmen’ would be payable at the rate of 45 days of average pay for every year of service. Second, an industrial establishment in which less than 300 workers are employed would not require prior government permission or approval for lay-offs and closure.Third, 10 percent or 100 workers employed in an establishment, undertaking or industry would be required to be members of a trade union for it to be registered. Fourth, in an industry in which 100 or more workers are employed in the preceding 12 months, the employer is required to constitute a works committee consisting of representatives of the employer and workers engaged in the establishment.This works committee would be required to promote measures for securing amity and good relations between the employer and the employee. Finally, workers employed in an industrial establishment cannot go on a strike without giving 14 days notice to the employer.Another significant development has been an amendment to the Payment of Bonus Act, 1965 pursuant to which all employees drawing a monthly salary of INR 21,000 or less would be entitled to statutory bonus. This amendment has significant financial implications for employers. The government is also considering a proposal to increase paid maternity leave from the existing 12 weeks to 26 weeks.
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 37 8www.financierworldwide.com INDIA • VIJAY RAVI • KOCHHAR & CO. Q ARE YOU SEEING ANY RECURRING THEMES IN EMPLOYMENT RELATED LITIGATION IN INDIA? RAVI: Presently, labour relations in the private sector are cordial. There have been sporadic instances of labour unrest in public sector banks and the automotive industry.Trade unions in India are mostly concentrated in the public sector and the private sector workforce is not generally unionised. In the recent past, following some large scale lay-offs in the IT sector, trade unions affiliated to political parties have attempted to unionise employees in the sector. RAVI: A large portion of employment litigation in India relates to allegations of unfair dismissal and demands for reinstatement. Some Indian companies that engage temporary workforces – on contract through third-party contractors – have had to defend claims for permanent employment from aggrieved contractual employees. In recent years we have seen increasing complaints of sexual harassment in the workplace. Other recent trends include litigation initiated by employers to protect confidential information and enforce non- compete restrictions in an attempt to dissuade employees from joining competition.A positive development has been the willingness of labour authorities to attempt to resolve labour disputes through mediation in a pragmatic manner. Q HOW WOULD YOU DESCRIBE LABOUR RELATIONS IN YOUR REGION AT PRESENT? TO WHAT EXTENT HAS THE INFLUENCE OF UNIONS AND WORKERS COUNCILS GROWN?
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T 38 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T RAVI: It is not mandatory under Indian laws to engage in a consultation process during the process of restructuring. However, it is imperative that all statutory compliances – including notice requirement and payment of severance compensation – are ensured while undertaking any reduction in the workforce. In situations involving mass lay-offs, there is a risk of employees joining together to negotiate a severance package which is better than what is mandated by law. In the event of a transfer of business, employee consent is required for their transfer to a new employer, to avoid liability of severance compensation. Also, employees must be assured the benefit of continuity of service following a transfer. Any change in terms of service – including benefits – would require giving prior notice to employees. RAVI: Managing attrition to ensure competitive advantage is a key issue for every employer. To retain key talent, tools that companies generally employ include a fair performance appraisal mechanism, a retention bonus as part of the compensation package, regular training programmes which enable an employee to enhance their skills, and overseas assignments to gain global experience. RAVI:A growing Indian economy and increasing foreign investment into India has meant opportunities for talented individuals. Average salaries in most industries have been moving northwards. Multinationals have salary packages which are significantly higher than the minimum wages prescribed by the government. Many companies have introduced joining bonuses, stock option plans, performance bonuses, and so on, as part of theircompensationpackagesinordertoattractandretainkeyemployees. Employers in the IT sector, which has witnessed a mushrooming of start- ups, are increasingly including stock options and similar equity incentive plans, with staggered vesting periods, to motivate employees to be part of their growth story. An increasing trend is the inclusion of a variable component in the compensation structure which is linked to individual performance and overall profitability of the company or group. Q INYOUR OPINION, HAS IT BECOME MORE DIFFICULT FOR COMPANIES TO REWARD THEIR EXECUTIVES AND EMPLOYEES?WHAT DO COMPANIES NEED TO TAKE INTO ACCOUNT WHEN STRUCTURING COMPENSATION PACKAGES, INCENTIVES AND BENEFITS? Q WHAT GENERAL ADVICE WOULD YOU GIVE TO COMPANIES ON MANAGING THEIR HUMAN CAPITAL AND RETAINING KEY TALENT? Q FOR COMPANIES IN THE PROCESS OF RESTRUCTURING,WHAT EMPLOYMENT ISSUES DO THEY NEED TO EVALUATE WHEN RESIZING THE WORKFORCE, REDUCING PAYROLL COSTS AND ADJUSTING PENSIONS AND BENEFITS? WHAT KINDS OF RISKS AND LIABILITIES MIGHT ARISE IN SUCH CIRCUMSTANCES? INDIA • VIJAY RAVI • KOCHHAR & CO.
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 39www.financierworldwide.com Q AS GLOBALISATION CONTINUES,WHAT ADDITIONAL CHALLENGES FACE MULTINATIONAL COMPANIES IN TERMS OF CROSS-BORDER EMPLOYMENT AND DEALING WITH FOREIGN WORKERS? RAVI: International workers taking assignments in India must ensure that they have an appropriate visa. Employment visas are granted only to highly skilled or qualified professionals for jobs for which qualified Indians are not available. Expatriate employees are mandatorily required to make social security contributions in India and the same can be withdrawn only when they reach the age of superannuation, subject to the provisions of any social security agreement between the home country of the expatriate employee and India. Multinationals seconding expatriate employees to India must also be careful in avoiding tax exposure in India as a consequence of being deemed to have a permanent establishment in India. Vijay Ravi Senior Partner Kochhar & Co. +91 11 4111 5222 vijay.ravi@kochhar.com Vijay Ravi is a senior partner in Kochhar & Co. and co-chairs the firm’s labour and employment practice. His practice primarily focuses on advising corporate clients on employee relations, dispute management and resolution and developing best employment practices and policies that are Indian law compliant. He also has extensive experience in delicate and sensitive labour related issues associated with business acquisitions, corporate restructurings and divestments and transactions involving outsourcing arrangements. His robust experience and expertise benefits clients in obtaining an in-depth understanding of the prevailing industrial regime for the effective implementation of both collective and individual employment arrangements. www.kochhar.com “A growing Indian economy and increasing foreign investment into India has meant opportunities for talented individuals” INDIA • VIJAY RAVI • KOCHHAR & CO.
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T 40 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T SINGAPORE Q WHAT NOTABLE DEVELOPMENTS IN EMPLOYMENT LAW HAVE YOU SEEN IN SINGAPORE OVER THE LAST 12 MONTHS OR SO? HAVE THERE BEEN ANY SIGNIFICANT CHANGES TO EMPLOYEE RIGHTS OR COMPANY OBLIGATIONS, FOR EXAMPLE? S SURESSH HARRY ELIAS PARTNERSHIP LLP SURESSH: From 1April 2016,all employers in Singapore will be required to issue itemised pay slips and a document summarising the key employment terms (KET) to employees covered under the Employment Act (Chapter 91). Employers who do not issue itemised pay slips or KET to employees can be fined. From 1 April 2016, the Ministry of Manpower (MOM) will set up a framework to treat less severe breaches of the Employment Act as ‘civil breaches’ which attract administrative penalties. Currently, employers must offer re-employment to eligible employees who turn 62, up to the age of 65. If the employer does not offer the retiring employee re-employment, the employer must pay the retiring employee Employment Assistance Payment. From 1 July 2017, the re-employment age will increase to 67. SURESSH: Labour relations in Singapore are generally good. Labour unrestandindustrialactionisveryunusual.Disputesthatariseareusually resolved between employers and unions with the aid of mediation from the MOM. Employers are prohibited from preventing their workers from forming unions if they wish to do so. However, all such unions have to be registered under the Trade Union Act. Existing trade unions often actively seek to recruit members and seek recognition from employers. Once recognised, they are able to negotiate directly with the employer for collective agreements or on other matters.Workers councils are not common in Singapore and are not legally recognised. Q HOW WOULD YOU DESCRIBE LABOUR RELATIONS IN YOUR REGION AT PRESENT? TO WHAT EXTENT HAS THE INFLUENCE OF UNIONS AND WORKERS COUNCILS GROWN?
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 41 8www.financierworldwide.com SINGAPORE • S SURESSH • HARRY ELIAS PARTNERSHIP LLP Q ARE YOU SEEING ANY RECURRING THEMES IN EMPLOYMENT RELATED LITIGATION IN SINGAPORE? SURESSH: Employment litigation in Singapore falls primarily into two categories. The first category covers cases arising after termination where the departing employee makes claims for sums that they believe they are entitled to. These claims are usually for performance bonuses, share options and outstanding salary.The second category is for cases by employers who are trying to enforce covenants that prevent departing employees from working for competitors. In Singapore, such clauses are prima facie invalid unless the party who seeks to have it enforced can show that it is intended to protect his own legitimate interests and that it is reasonable in all circumstances. SURESSH: Employers who are retrenching employees must do so responsibly and fairly. Tripartite partners – including the MOM, the National Trades Union Congress (NTUC) and the Singapore National Employers Federation (SNEF) – have released the tripartite guidelines on managing excess manpower and responsible retrenchment. If the company is unionised, the relevant union should be consulted; this is usually provided for in the collective agreement. Companies should also notify the Labour Relations & Workplaces Division of the MOM or the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) of their impending retrenchment exercise as soon as possible. The EmploymentAct provides for a minimum notice period requirement for termination of employment. Q FOR COMPANIES IN THE PROCESS OF RESTRUCTURING,WHAT EMPLOYMENT ISSUES DO THEY NEED TO EVALUATE WHEN RESIZING THE WORKFORCE, REDUCING PAYROLL COSTS AND ADJUSTING PENSIONS AND BENEFITS? WHAT KINDS OF RISKS AND LIABILITIES MIGHT ARISE IN SUCH CIRCUMSTANCES?
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T Q WHAT GENERAL ADVICE WOULD YOU GIVE TO COMPANIES ON MANAGING THEIR HUMAN CAPITAL AND RETAINING KEY TALENT? 42 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T SURESSH: Managing human resources and retaining key talent is a matter of relationships between the employer and employee. The employer should not look to the law as a tool to manage its workforce. SURESSH: All foreign workers who intend to work in Singapore must have a suitable work visa or work pass.There are different work passes for different categories of workers and salary ranges. For certain industries and passes, the MOM has quotas for foreign workers to ensure that there is a Singapore ‘core’. In the case of executives who are applying for employment passes, the employer may be required to advertise the job opening on Jobs Bank for at least 14 days before the application is submitted. Jobs Bank is a government run job matching portal that helps to facilitate online job matching between local job seekers and employers. Q AS GLOBALISATION CONTINUES,WHAT ADDITIONAL CHALLENGES FACE MULTINATIONAL COMPANIES IN TERMS OF CROSS-BORDER EMPLOYMENT AND DEALING WITH FOREIGN WORKERS? SINGAPORE • S SURESSH • HARRY ELIAS PARTNERSHIP LLP
A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 43www.financierworldwide.com S Suressh Partner Harry Elias Partnership +65 6361 9365 suressh@harryelias.com.sg S Suressh is a partner in the firm’s civil and commercial litigation practice group. He is also a recommended lawyer in The Legal 500. His main area of practice is in commercial litigation, in particular disputes relating to corporate and shareholder disputes, misfeasance by company officers, international transactions and employment. He advises on compliance issues, in particular relating to money laundering, competition and data protection. He recently represented an international freight forwarding group in connection with investigations by the Competition Commission of Singapore into rate fixing. www.harryelias.com “The employer should not look to the law as a tool to manage its workforce.” SINGAPORE • S SURESSH • HARRY ELIAS PARTNERSHIP LLP
FWS U P P L E M E N T www.financierworldwide.com A N N U A L R E V I E W

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AR_Labour16_045vud

  • 1.
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    Published by Financier Worldwide 23rdFloor, Alpha Tower Suffolk Street, Queensway Birmingham B1 1TT United Kingdom Telephone: +44 (0)845 345 0456 Fax: +44 (0)121 600 5911 Email: info@financierworldwide.com www.financierworldwide.com Copyright © 2016 Financier Worldwide All rights reserved. Annual Review • August 2016 Labour & Employment No part of this publication may be copied, reproduced, transmitted or held in a retrievable system without the written permission of the publishers. Whilst every effort is made to ensure the accuracy of all material published in Financier Worldwide, the publishers accept no responsibility for any errors or omissions, nor for any claims made as a result of such errors or omissions. Views expressed by contributors are not necessarily those of the publisher. Any statements expressed by professionals in this publication are understood to be general opinions and should not be relied upon as legal or financial advice. Opinions expressed herein do not necessarily represent the views of the author’s firm or clients or of any organisations of which the author is a member.
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    Fi n an c i e r Wo r l d w i d e c a nva s s e s t h e o p i n i o n s o f l e a d i n g p ro fe s s i o n a l s a ro u n d t h e wo r l d o n t h e l a t e s t t re n d s i n l a b o u r & e m p l oy m e n t . LABOUR & EMPLOYMENT A U G U S T 2 0 1 6 • A N N U A L R E V I E W UNITED STATES..................................................... 08 Rebecca Torrey MANATT, PHELPS & PHILLIPS CANADA ............................................................... 12 François Garneau MILLER THOMSON MEXICO ................................................................ 16 Francisco J. Peniche Beguerisse CREEL, GARCÍA-CUÉLLAR, AIZA Y ENRÍQUEZ, S.C. FRANCE ................................................................ 20 Laurent Guardelli COBLENCE & ASSOCIÉS GERMANY ............................................................. 24 Dr Christopher Melms BEITEN BURKHARDT Contents
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    LABOUR & EMPLOYMENT AU G U S T 2 0 1 6 • A N N U A L R E V I E W DENMARK ............................................................. 28 Tommy Angermair ADVOKATPARTNERSELSKABET KIRK LARSEN & ASCANIUS ITALY .................................................................... 32 Vittorio De Luca DE LUCA & PARTNERS INDIA ................................................................... 36 Vijay Ravi KOCHHAR & CO. SINGAPORE .......................................................... 40 S Suressh HARRY ELIAS PARTNERSHIP LLP Contents
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T 2 0 1 6
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    INTRODUCTION Companies operating intoday’s global economy have access to,and are able to establish a presence in,diverse and lucrative new markets. But when they do, those companies will be exposed to a host of economic, structural and technological issues, which must be overcome if they are to be successful. Oneofthemostnotablechallengesisacompany’srelationship with its employees, including local employment laws, labour relations and the availability of human capital.The process of attracting and retaining key staff remains a major issue for companies around the world. How organisations respond to these challenges is of paramount importance. For companies operating within the EU, the task of managing cross-border business will be exaggerated by the passing of new EU provisions concerning data processing policies. Other challenges must also be taken into account, including the UK’s Brexit vote, which has put a question mark over the movement of people, including employees, within the bloc. The extent of this issue, and any future restrictions it brings, remains to be seen, but there are sure to be a labour and employment implications. By comparison, labour relations in the US appear to be clearer. Over the last 12 months, important pieces of legislation governing individual employee rights have been implemented at a local and regional level. Variously, these include mandatory paid sick leave benefits, minimum hourly wage increases, protection from discrimination based on sexual identity and expression, the elimination of gender pay disparities, and protection for workplace whistleblowers. A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T 2 0 1 6
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T 8 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T UNITED STATES REBECCA TORREY MANATT, PHELPS & PHILLIPS TORREY: The most notable development over the past 12 months has been the proliferation of laws and regulations, on a local and regional level, thanks to Congressional gridlock from partisan politics and a call to action by President Barack Obama. The employee rights conferred recently by local and state laws and regulations involve mandatory paid sick leave benefits, minimum hourly wage increases above $10 per hour, protection from discrimination based on sexual identity and expression, elimination of gender pay disparities, and protection for workplace whistleblowers. One or more of these enactments were initiated in the cities of San Francisco, Seattle,Washington DC, NewYork and Los Angeles, and on a state-wide basis in Connecticut, California, Massachusetts and Oregon. Other jurisdictions are following suit by offering generally the same rights but formulated differently, along with local administrative enforcement and private rights of action.As a result of the variety of legal requirements, and with changes occurring multiple times per year in different locales, compliance obligations in the US have become increasingly complex and challenging for organisations to follow and manage. TORREY:Whiletheprotectionofindividualemployeerightshasexpanded, the reach of labour unions remains stagnant domestically. Union activity remains vibrant in the healthcare, entertainment and communications, and services industries, though it is declining elsewhere among private employers. The National Labour Relations Board, the federal labour relations regulatory and enforcement agency,has increasingly challenged employers’ policies, prohibiting employees from posting confidential business information on social media on grounds they restrict concerted activities by workers and their right to communicate openly about the terms and conditions of employment, regardless whether an employer is subject to a collective bargaining agreement. The agency focused Q WHAT NOTABLE DEVELOPMENTS IN EMPLOYMENT LAW HAVE YOU SEEN IN THE US OVER THE LAST 12 MONTHS OR SO? HAVE THERE BEEN ANY SIGNIFICANT CHANGES TO EMPLOYEE RIGHTS OR COMPANY OBLIGATIONS, FOR EXAMPLE? Q HOW WOULD YOU DESCRIBE LABOUR RELATIONS IN YOUR REGION AT PRESENT? TO WHAT EXTENT HAS THE INFLUENCE OF UNIONS AND WORKERS COUNCILS GROWN?
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 9 8www.financierworldwide.com UNITED STATES • REBECCA TORREY • MANATT, PHELPS & PHILLIPS recently on limiting employers’ ability in general to restrict collective action through the use of class action waivers in employment arbitration agreements. TORREY:Classactionlawsuitsremainthedominanttrendinemployment litigation. Wage and hour class actions challenging erroneous or unfair payroll practices and policies continue to proliferate, with the largest number of cases filed in the state of California. Class actions may be brought by a single affected employee asserting claims on behalf of other affected employees with a look back period of up to four years. As employers develop protections to defeat class certification, including class action waivers in employment arbitration agreements,the plaintiffs’ bar uses new tactics to net the ample attorney fee awards derived from multi-million dollar settlements. Employees working in California also assert collective actions based on the Private Attorney General Act, an alternative way to assert claims on behalf of similarly situated employees that established substantial monetary penalties for numerous Labor Code violations, including the failure to pay wages, include the precise information required on employee wage statements or timely provide adequate meal and rest periods. Other recent litigation trends include class challenges to gender pay disparities and improper pre-employment background screening practices alleged to invade individual privacy rights. TORREY: Certain state and federal laws require minimum advance notice to employees affected by job loss from plant closures and other laws require a consideration period, information about group layoffs and a revocation period for negotiated departures of employees over 40 years of age involving a release of potential claims. With an Q ARE YOU SEEING ANY RECURRING THEMES IN EMPLOYMENT RELATED LITIGATION IN THE US? Q FOR COMPANIES IN THE PROCESS OF RESTRUCTURING,WHAT EMPLOYMENT ISSUES DO THEY NEED TO EVALUATE
  • 10.
    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T 10 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T increase in employment events associated with restructuring, including terminations, demotions and pay cuts, the risk of litigation expands. Departing employees seek an understanding of why they were selected over others and resentment may bring claims. Organisational restructuring can destabilise the remaining workforce due to increased workload, lost relationships and fear for the future. Because the process disrupts people’s livelihoods, these decisions require discernment and vision, along with financial planning. The most common problems we see result from inattention to the human side of restructuring while focusing on headcount and profitability. TORREY: The best run companies we see have a collaborative environment and clear business objectives with an incentive compensation system that rewards contributions to those values. Hiring individuals with skills and personal traits consistent with the organisation’s culture and goals, coupled with direct, timely feedback on performance, aids in the retention of employees who will enhance the team. Identifying problem situations and attending promptly to substantial deficiencies may improve individual performance.Wherenotableimprovementisnotoccurring,werecommend helping a problematic employee move on. Most companies delay far too long to address these issues and act on inappropriate or inadequate performance. Procrastination by management in addressing misbehaviour or lack of productivity is disheartening to others and often drives away the key talent who an organisation hopes to attract and retain. TORREY: The key challenge for management, including in the process of incentivising and rewarding employees, comes from a misunderstanding of what drives employees on an individual level. The management of people requires emotional intelligence to discern individually and generationally what sparks employees to put in their best effort. Assuming that every employee is similarly motivated is the basic mistake underlying most compensation systems. Organisations that can discover what motivates various individuals at different points in Q INYOUR OPINION, HAS IT BECOME MORE DIFFICULT FOR COMPANIES TO REWARD THEIR EXECUTIVES AND EMPLOYEES?WHAT DO COMPANIES NEED TO TAKE INTO ACCOUNT Q WHAT GENERAL ADVICE WOULD YOU GIVE TO COMPANIES ON MANAGING THEIR HUMAN CAPITAL AND RETAINING KEY TALENT? WHEN RESIZING THE WORKFORCE, REDUCING PAYROLL COSTS AND ADJUSTING PENSIONS AND BENEFITS? WHAT KINDS OF RISKS AND LIABILITIES MIGHT ARISE IN SUCH CIRCUMSTANCES? UNITED STATES • REBECCA TORREY • MANATT, PHELPS & PHILLIPS “The most common problems we see result from inattention to the human side of restructuring while focusing on headcount and profitability.”
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 11www.financierworldwide.com their development and implement suitable incentives within a system viewed as fair and transparent overall are most likely to accomplish their business goals with the available resources. TORREY: Current political and social instability,coupled with the inability to resolve historic and cultural conflict on a macro level, are the most significant challenges to global business. The hope to expand business and develop cross-national expertise is frustrated by political leaders with myopic agendas who create an atmosphere of paranoia and fail to serve the well being of others. The ability to collaborate and address our natural differences constructively lags far behind the technological means we have to conduct business globally. A shift could occur if the innovative, dedicated talent in forward-looking organisations would engage long-term in social and political concerns with an eye toward profiting humanity. Q AS GLOBALISATION CONTINUES,WHAT ADDITIONAL CHALLENGES FACE MULTINATIONAL COMPANIES IN TERMS OF CROSS-BORDER EMPLOYMENT AND DEALING WITH FOREIGN WORKERS? Rebecca Torrey Partner Manatt, Phelps & Phillips +1 (310) 312 4172 rtorrey@manatt.com Rebecca Torrey is a partner at Manatt, Phelps & Phillips. Ms Torrey is experienced in all aspects of employment law, with an emphasis on defending employers in single plaintiff and class action cases in state and federal court. Ms Torrey regularly advises employers in the full range of employment matters, including wage and hour issues, protecting trade secrets and the use of nondisclosure agreements, unlawful harassment prevention, EEO and affirmative action compliance (including regression and adverse impact analysis), leaves of absence, background and drug screening, employment agreements, the use of independent contractors and hiring and termination decisions. www.manatt.com WHEN STRUCTURING COMPENSATION PACKAGES, INCENTIVES AND BENEFITS? UNITED STATES • REBECCA TORREY • MANATT, PHELPS & PHILLIPS
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T 12 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T CANADA Q WHAT NOTABLE DEVELOPMENTS IN EMPLOYMENT LAW HAVE YOU SEEN IN CANADA OVER THE LAST 12 MONTHS OR SO? HAVE THERE BEEN ANY SIGNIFICANT CHANGES TO EMPLOYEE RIGHTS OR COMPANY OBLIGATIONS, FOR EXAMPLE? FRANÇOIS GARNEAU MILLER THOMSON GARNEAU: In June 2016, the finance ministers representing the federal government and eight provinces agreed to revamp the Canada Pension Plan. The ministers agreed to gradually and substantially increase the average monthly worker contribution until 2023. These additional sums will increase the maximum annual benefits by close to one-third in order to bring the maximum annual benefit to C$17,478.As a result of this, Ontario decided not to go forward with its own pension plan proposal. Quebec, which had already set up a distinct plan in 1965 and had already increased contributions, is not part of this arrangement.However,Ontario implemented some major changes to its employment legislation by enacting Bill 132, which shall come into force on 8 September 2016. Essentially, the Act expands the Occupational Health and Safety Act so that ‘workplace harassment’ includes ‘workplace sexual harassment’.Thismeansthatthematterwillnotonlybedealtasahumanrights issue but also as a workplace issue. The Act also introduces new obligations concerning the conduct of investigations into workplace harassment,including the establishment of a written programme implementing the employer’s workplace harassment policy. Employers may also be required to hire a third- party investigator at their own expense. GARNEAU: In October 2015, the previous federal conservative government was defeated at the polls and replaced by a majority liberal government led by Justin Trudeau. Prior to the election, the conservative government had introduced legislation which would have compelled unions to disclose all transactions over $5000 and to disclose the details of the remuneration of union executives making more than $100,000 a year. Police Associations, the Federal Privacy Commissioner and the Canadian Bar Association objected to the legislation. Most provinces also contested the legislation on the basis that it was unconstitutional. In December 2015, the new government waived the disclosure requirements and indicated that it would repeal the law. The new government also followed through with its promise to re-establish the Q HOW WOULD YOU DESCRIBE LABOUR RELATIONS IN YOUR REGION AT PRESENT? TO WHAT EXTENT HAS THE INFLUENCE OF UNIONS AND WORKERS COUNCILS GROWN?
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 13 8www.financierworldwide.com Q ARE YOU SEEING ANY RECURRING THEMES IN EMPLOYMENT RELATED LITIGATION IN CANADA? CANADA • FRANÇOIS GARNEAU • MILLER THOMSON previously existing tax credit for contributions to union venture capital funds. In 2013, the previous government had indicated that the credit would be gradually reduced and eliminated. This was met with strong opposition not only from union leaders but also from most of the Quebec business class as the union venture capital funds have become an integral part of venture capital financing in Quebec. GARNEAU: On the individual side, the most recurring issues in employment related litigation are related to discrimination and the duty to accommodate arising from one’s family status, the duty of good faith in an employment context and the conflict between an employee’s fundamental rights to privacy in the context of random drug testing. In Ontario, ‘family status’ obligations are increasingly being invoked to contest an employer’s decision to sanction or dismiss an employee for absenteeism. In one recent decision, an employer dismissed an employee who had worked for the employer for one month because he had been absent for three days to care for his sick children. The employer claimed that the employee in question should have made reasonable efforts to find alternative child care arrangements.This argument was rejected by theTribunal which held that an employee did not have to make alternative arrangements when the absence was “infrequent, sporadic or unexpected”.As for the duty of good faith in employment relationships, in 2014 the Supreme Court rendered a decision which recognised that there was now a general duty of honesty in contractual performance, thus bringing the common law in line with the civil law doctrine of abuse of rights which applies in Quebec. Since then, Canadian courts have relied on this decision to impose a duty of good faith in the employment relationship. A similar conclusion was reached in a decision from Newfoundland and Labrador where an employee, under an acute stress reaction,told his employer he was“done”after being reprimanded by his employer. The Supreme Court of Newfoundland and Labrador found that the employer should not have concluded that the employee had resigned
  • 14.
    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T 14 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T from his position because “the implied term of good faith and fair dealings which applied to both parties and to the employment contract required the employer to give Mr Evans time to cool off and reconsider”. GARNEAU:Typically,a collective dismissal will occur where a certain threshold number of employees are terminated within a specific period of time. Most of these legislations require that the employer maintain the group insurance and pension benefits during the collective dismissal notice period. In addition, for those employees who are entitled to additional notice, at common law or underthecivilcode,themajorityofthecaselawrecognisesthattheemployees should be compensated for the loss of their group insurance coverage or employer pension contributions during this period.Employers therefore should not expect to see a substantial reduction of their payroll costs during these periods. GARNEAU: Over the past few years, employee loyalty toward employers has been steadily declining.In order to ensure post-employment loyalty,restrictive covenants are becoming even more important and definitely a chief concern for employers that wish to protect confidential information and avoid unfair competition from former employees. However, in Quebec, the civil code provides that where the employee is dismissed without good and sufficient cause, the employer cannot rely on a non-competition clause which becomes ineffective. GARNEAU: The question of executive compensation is still a major divisive issue. Shareholder frustration with the compensation practices of some of Canada’s largest companies is still quite tangible, and 2016 has seen a slight increase of negative votes during ‘say-on-pay’ votes involving Canada’s 20 largest companies. However, for the time being, only Canadian Pacific Railway Ltd.,whichhelditsannualmeetingearlierthisyear,haslostits‘say-on-pay’vote Q INYOUR OPINION, HAS IT BECOME MORE DIFFICULT FOR COMPANIES TO REWARD THEIR EXECUTIVES AND EMPLOYEES?WHAT DO COMPANIES NEED Q WHAT GENERAL ADVICE WOULD YOU GIVE TO COMPANIES ON MANAGING THEIR HUMAN CAPITAL AND RETAINING KEY TALENT? Q FOR COMPANIES IN THE PROCESS OF RESTRUCTURING,WHAT EMPLOYMENT ISSUES DO THEY NEED TO EVALUATE WHEN RESIZING THE WORKFORCE, REDUCING PAYROLL COSTS AND ADJUSTING PENSIONS AND BENEFITS? WHAT KINDS OF RISKS AND LIABILITIES MIGHT ARISE IN SUCH CIRCUMSTANCES? CANADA • FRANÇOIS GARNEAU • MILLER THOMSON “In order to ensure post-employment loyalty, restrictive covenants are becoming even more important.”
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 15www.financierworldwide.com with 50.1 percent of votes cast against the company’s executive compensation practices. Even though the results of such votes are usually not binding upon a board of directors, the board generally takes into consideration the opinion of the shareholders when implementing its compensation practices. GARNEAU: Since 1 December 2015, employers using a work permit stream to hire foreign talent under Canada’s ForeignWorker Program are now subject to the Administrative Monetary Penalty (AMP) regime for violations of the Immigration and Refugee Protection Regulations. Not only is this new AMP regime broader, but also more constraining as it imposes new penalties for non-compliance to the Temporary Foreign Worker Program, as well as the International Mobility Program where a Labour Market Impact Assessment is notrequired.ToensurecomplianceacrossCanada,thegovernmenthasdecided to randomly inspect one in four employers in 2016 and has entrusted these inspectors with wider investigatory powers. François Garneau Partner Miller Thomson +1 (514) 871 5415 fgarneau@millerthomson.com François Garneau is a labour and employment lawyer and partner in the Montreal office of Miller Thomson. His clientele consists of employers from various economic sectors, be it pharmaceutical companies, oil companies, mining companies, computer consulting firms, food product companies or other manufacturing companies. He has also acted for Crown corporations including Canada Post Corporation, Loto-Québec, Hydro-Québec and the Société Générale de Financement. In addition, he represents senior executives in negotiations involving employment termination, and provides counsel in the drafting of employment contracts. www.millerthomson.com Q AS GLOBALISATION CONTINUES,WHAT ADDITIONAL CHALLENGES FACE MULTINATIONAL COMPANIES IN TERMS OF CROSS-BORDER EMPLOYMENT AND DEALING WITH FOREIGN WORKERS? TO TAKE INTO ACCOUNT WHEN STRUCTURING COMPENSATION PACKAGES, INCENTIVES AND BENEFITS? CANADA • FRANÇOIS GARNEAU • MILLER THOMSON
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T 16 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T MEXICO Q WHAT NOTABLE DEVELOPMENTS IN EMPLOYMENT LAW HAVE YOU SEEN IN MEXICO OVER THE LAST 12 MONTHS OR SO? HAVE THERE BEEN ANY SIGNIFICANT CHANGES TO EMPLOYEE RIGHTS OR COMPANY OBLIGATIONS, FOR EXAMPLE? FRANCISCO J. PENICHE BEGUERISSE CREEL, GARCÍA-CUÉLLAR,AIZA Y ENRÍQUEZ, S.C. PENICHE: In June 2015,a legislative decree that amended and modified the Mexican Federal Labour Law (FLL) regarding the employment of underage workers came into force.The new law forbids the employment of workers under 15 years old, and restricts the employment of workers from 15 to 17 years old to several conditions. There is prohibition regarding employees working overtime. Underage employees are also forbidden from being involved in dangerous activities. Moreover, the consent of the parents of underage workers is required. The Mexican Republic is divided in geographical areas for purposes of the minimum wage; however, on 1 October 2015, geographic zone B was eliminated and as a result there is now a nationwide minimum wage. PENICHE: Attempts by organisations to unionise employees have not increased; however, it is worth mentioning that a reform proposal to the FLL is currently being examined in Congress. The reform has been designed to strengthen the freedom of the unions and prevent companies with no employees from executing ‘protective’ collective bargaining agreements. The reform proposal also seeks to dismiss every petition for a strike during the process of registering a collective bargaining agreement in order to discourage strike petitions from unions that do not represent the potential affected employees. Strikingly, however, Mexico is enjoying a period of relative labour peace. Q HOW WOULD YOU DESCRIBE LABOUR RELATIONS IN YOUR REGION AT PRESENT? TO WHAT EXTENT HAS THE INFLUENCE OF UNIONS AND WORKERS COUNCILS GROWN?
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 17 8www.financierworldwide.com Q ARE YOU SEEING ANY RECURRING THEMES IN EMPLOYMENT RELATED LITIGATION IN MEXICO? MEXICO • FRANCISCO J. PENICHE BEGUERISSE • CREEL, GARCÍA-CUÉLLAR,AIZA Y ENRÍQUEZ, S.C. PENICHE: Senior management litigation is increasing in Mexico. In the past, it was unlikely to see these types of claims filed against former employees. The challenge for companies, however, is that new compensation components such as stock options, restricted units, and so on, are now common in Mexico. However, these kinds of benefits are not regulated under the FLL, which makes their interpretation by the relevant authorities uncertain.We have seen court precedent regarding stock options issued, providing that when included in employment agreements, stock options should be considered part of the employee’s total compensation and consequently should be considered when calculating a potential severance payment. PENICHE: Pursuant to the FLL, employers can only terminate employment relationships with their employees based on the specific causes provided therein. Restructuring is not considered justifiable grounds for employment termination.Accordingly, dismissals triggered by reorganisation are considered unjustified, entitling employees to severance payments. Any unilateral reduction of employment benefits will give just cause to affected employees to terminate the employment relationship and claim severance payment. Consequently, any restructuring process must be carefully planned and formalised. Q FOR COMPANIES IN THE PROCESS OF RESTRUCTURING,WHAT EMPLOYMENT ISSUES DO THEY NEED TO EVALUATE WHEN RESIZING THE WORKFORCE, REDUCING PAYROLL COSTS AND ADJUSTING PENSIONS AND BENEFITS? WHAT KINDS OF RISKS AND LIABILITIES MIGHT ARISE IN SUCH CIRCUMSTANCES?
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T Q WHAT GENERAL ADVICE WOULD YOU GIVE TO COMPANIES ON MANAGING THEIR HUMAN CAPITAL AND RETAINING KEY TALENT? 18 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T PENICHE: From a legal perspective, companies should develop policies and train employees to maintain a healthy work environment and avoid problemssuchassexualharassmentandmobbingintheworkplace.From an administrative perspective, companies should consider developing variable compensation alternatives which provide economic incentives to employees based on their productivity and efficiency, rather than just seniority. Providing a healthy work environment and an attractive compensation scheme increases the odds that human capital and key talent remain in the company. PENICHE: Due to the increasingly competitive and unpredictable nature of the global markets, fixed compensation schemes for executives are changing.They are becoming a much more variable scheme based on an individual’s performance, as well the ability of the company to achieve its global target.When structuring compensation packages, companies should take into consideration the fact that all benefits presented to an employee will very likely be considered acquired rights and part of their total compensation for potential severance payment. Thus, such benefits may increase substantially the amount of an employee’s final payment, and even the considerable economic contingencies in case of litigation. MEXICO • FRANCISCO J. PENICHE BEGUERISSE • CREEL, GARCÍA-CUÉLLAR,AIZA Y ENRÍQUEZ, Q INYOUR OPINION, HAS IT BECOME MORE DIFFICULT FOR COMPANIES TO REWARD THEIR EXECUTIVES AND EMPLOYEES?WHAT DO COMPANIES NEED TO TAKE INTO ACCOUNT WHEN STRUCTURING COMPENSATION PACKAGES, INCENTIVES AND BENEFITS? “Providing a healthy work environment and an attractive compensation scheme increases the odds that human capital and key talent remain in the company.”
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 19www.financierworldwide.com Q AS GLOBALISATION CONTINUES,WHAT ADDITIONAL CHALLENGES FACE MULTINATIONAL COMPANIES IN TERMS OF CROSS-BORDER EMPLOYMENT AND DEALING WITH FOREIGN WORKERS? PENICHE: The FLL does not contemplate the execution of secondment agreements. Different circumstances during an expat’s assignment may trigger legal consequences, such as an expat being considered an employee of the Mexican host entity under the FLL, which may entitle him or her to all mandatory employment and social security benefits. In addition, certain tax consequences for both the expat and the Mexican host company could arise. Moreover, the FLL does not allow employment at will, so unless a justified cause for termination exists, employees will be entitled to severance payments. MEXICO • FRANCISCO J. PENICHE BEGUERISSE • CREEL, GARCÍA-CUÉLLAR,AIZA Y ENRÍQUEZ, S.C. Francisco J. Peniche Beguerisse Partner Creel, García-Cuéllar,Aiza y Enríquez, S.C. +52 55 4748 0670 francisco.peniche@creel.mx Francisco Peniche is a partner at Creel, García-Cuéllar,Aiza y Enríquez, S.C., in Mexico City, where he heads the Labor and Employment practice area. He advises clients on labour and employment matters, including hiring, transfer and termination of executives, employment matters related to corporate transactions, reorganisations and negotiation and execution of collective bargaining agreements. He also represents clients in major downsizings and was recently engaged for several opinions in connection with the application of data privacy laws to employers in Mexico. www.creel.mx
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T 20 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T FRANCE LAURENT GUARDELLI COBLENCE & ASSOCIÉS Q WHAT NOTABLE DEVELOPMENTS IN EMPLOYMENT LAW HAVE YOU SEEN IN FRANCE OVER THE LAST 12 MONTHS OR SO? HAVE THERE BEEN ANY SIGNIFICANT CHANGES TO EMPLOYEE RIGHTS OR COMPANY OBLIGATIONS, FOR EXAMPLE? GUARDELLI: Three major pieces of legislation have been provided by parliament in less than a year regarding all aspects of labour and employment, from relations with personnel representative bodies to collective bargaining rules, health and safety at work, redundancies or trade union law. For example, a bill which has been in parliament for five months and has just been realised, has amended virtually 50 percent of our more than 3500 pages of labour code. For instance, a brand new definition of the economic grounds of dismissal has been provided for, and this definition marks a major change. GUARDELLI: While French labour relations may look very tough from abroad, you have to look at a company level in order to really understand what labour relations are, beyond major strikes and other street fights. One must remember that in France, unions have been provided with numerous prerogatives but only 7 or 8 percent of French employees are actually union members. Moreover, unions are present in important companies, where union representatives, as well as employee representatives in general, are almost professional, making it, if not easy, at least feasible to work with them. Q HOW WOULD YOU DESCRIBE LABOUR RELATIONS IN YOUR REGION AT PRESENT? TO WHAT EXTENT HAS THE INFLUENCE OF UNIONS AND WORKERS COUNCILS GROWN?
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 21 8www.financierworldwide.com Q ARE YOU SEEING ANY RECURRING THEMES IN EMPLOYMENT RELATED LITIGATION IN FRANCE? FRANCE • LAURENT GUARDELLI • COBLENCE & ASSOCIÉS GUARDELLI: Beyond so-called ‘collective’ litigation – meaning litigation regarding unions and personnel representatives – which is a technical as well as strategic type of litigation, one cannot forget to mention litigation that relates to health and safety at work, starting with harassment and ending, unfortunately, with rare cases of suicide at work. This range of cases all deal with working conditions and so- called ‘socio-psychological’ risks, an issue companies must now address in a proactive way. GUARDELLI:A 2013Act has reshaped the entire procedure of workforce reduction, giving the labour inspector a great deal of powers to control both the procedure and the grounds of the dismissal. In this respect, one must deal with the fact that the administration is now the main counterpart, alongside the personnel representative bodies, as it wields a considerable amount of control. From a legal security standpoint, the experience of giving powers to the administration has become a positive, since corporations are able to work within precise timelines and can ensure a project is going to go through the administrative supervision process – a task that was far more difficult in the past with the judiciary. For instance, the risk of seeing an entire restructuring process declared null and void months after employees are dismissed has diminished a great deal, though it is not totally absent. Q FOR COMPANIES IN THE PROCESS OF RESTRUCTURING,WHAT EMPLOYMENT ISSUES DO THEY NEED TO EVALUATE WHEN RESIZING THE WORKFORCE, REDUCING PAYROLL COSTS AND ADJUSTING PENSIONS AND BENEFITS? WHAT KINDS OF RISKS AND LIABILITIES MIGHT ARISE IN SUCH CIRCUMSTANCES?
  • 22.
    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T Q WHAT GENERAL ADVICE WOULD YOU GIVE TO COMPANIES ON MANAGING THEIR HUMAN CAPITAL AND RETAINING KEY TALENT? 22 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T GUARDELLI: Retaining key talent is essential to companies that have to manage their workforce in an increasingly competitive market. Companies should consider alternative means of remuneration, including company benefit schemes whereby the individual will be able to provide some type of security for themselves and their family. Obviously, making sure they take part of the company’s capital in one way or another is also beneficial, since management packages are not just limited to LBOs. GUARDELLI: In this respect, what needs to be looked at very carefully is obviously the tax environment, since, fairly enough, France has been blamed for amending its tax provisions too often. Advice should start with a close analysis at each individual’s personal situation, as well as their status in the company, since employees and directors may not be treated similarly depending on the financial package that is proposed to them. Q INYOUR OPINION, HAS IT BECOME MORE DIFFICULT FOR COMPANIES TO REWARD THEIR EXECUTIVES AND EMPLOYEES?WHAT DO COMPANIES NEED TO TAKE INTO ACCOUNT WHEN STRUCTURING COMPENSATION PACKAGES, INCENTIVES AND BENEFITS? FRANCE • LAURENT GUARDELLI • COBLENCE & ASSOCIÉS “Remuneration plans in France cannot, as in most European countries, be unilaterally amended in the course of the fiscal year during which they are calculated.”
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 23www.financierworldwide.com Q AS GLOBALISATION CONTINUES,WHAT ADDITIONAL CHALLENGES FACE MULTINATIONAL COMPANIES IN TERMS OF CROSS-BORDER EMPLOYMENT AND DEALING WITH FOREIGN WORKERS? GUARDELLI: While everyone understands that HR management techniques are border-free, one should not forget that each country, including France, has specificities which prevent the implementation of unilateral decisions taken from above, with no consideration for the local environment. As a single, but frequent, example, remuneration plans in France cannot, as in most European countries, be unilaterally amendedinthecourseofthefiscalyearduringwhichtheyarecalculated, especially when they depend upon objectives; these objectives cannot be amended either.Too often we see decisions amended – for example, one specific element of calculating a worldwide commission plan, with no required acceptance of employees and subsequent court cases where employees claim unilateral modification of the plan,is prohibited under French law, which can result in full payment of commission. It is therefore important to ensure beforehand the feasibility of any such decisions in order to prevent judicial issues. Laurent Guardelli Partner Coblence & Associés + 33 1 53 67 24 24 lg@coblence-avocat.com Laurent Guardelli is a labour and employment partner at Coblence and Associés. He advises companies and top executives on their relations with employees, personnel representation bodies and the labour administration. He is particularly active with the French subsidiaries of Anglo-Saxon groups. He also works with top executives to negotiate their status at the time of hiring and when they leave the company. He manages the labour aspects of corporate transactions. He was admitted to the Paris Bar in 2000 and holds an advanced degree of University Paris II Panthéon- Assas and a Phd (Paris II Panthéon-Assas and St John’s College Oxford). www.coblence-avocat.com FRANCE • LAURENT GUARDELLI • COBLENCE & ASSOCIÉS
  • 24.
    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T 24 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T GERMANY Q WHAT NOTABLE DEVELOPMENTS IN EMPLOYMENT LAW HAVE YOU SEEN IN GERMANY OVER THE LAST 12 MONTHS OR SO? HAVE THERE BEEN ANY SIGNIFICANT CHANGES TO EMPLOYEE RIGHTS OR COMPANY OBLIGATIONS, FOR EXAMPLE? DR CHRISTOPHER MELMS BEITEN BURKHARDT MELMS: We have seen the following notable developments in employment law in our region over the last 12 months or so. There have been major changes to the Act on Collective Agreements with enactment of the so-called ‘Principle of Collective Agreement Unity’ (Tarifeinheitsgesetz) on 3 July 2015, also the Act on Minimum Wages of 11 August 2014 and the Act on Equal Participation of Men and Women in Managerial Functions in Private Economy and in the Public Sector of 24 April 2015.All three of these new laws have significantly changed employee rights or company obligations in our region. The amendment to the Act on Collective Agreements has provided for the supremacy of certain trade unions over other smaller trade unions if big trade unions conclude collective agreements. Small trade unions in specific branches of industry – for example, locomotive drivers or pilots – were created and recognised by the Federal Labour Court (Bundesarbeitsgericht). They were fighting for collective agreements onlyfortheirmembers,whereasthenewjurisdictionontherecognition of these small trade unions resulted in various industrial conflicts which were not well received by the public. The law changing the Collective Agreements Act provides that any collective agreements with the biggest trade unions in a certain sector will prevail over any other collective agreement concluded by smaller trade unions. Consequently, smaller trade unions filed constitutional complaints with the Federal Constitutional Court (Bundesverfassungsgericht) which are yet to be decided. Two complaints, however, have already been rejected. A final decision is expected before the end of 2016. The law on Minimum Wages, implemented in 2015, has drastically changed the relationship between employees and employers. Since this law has been in place, employees – and with some exceptions even trainees – are entitled to a minimum wage of €8.50 per hour, and as of 1 January 2017, €8.84 per hour. Finally, the Act on the Equal Representation of Men and Women in certain companies provides for
  • 25.
    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 25 8www.financierworldwide.com GERMANY • DR CHRISTOPHER MELMS • BEITEN BURKHARDT Q ARE YOU SEEING ANY RECURRING THEMES IN EMPLOYMENT RELATED LITIGATION IN GERMANY? at least a 30 percent quota of women – and men – on the supervisory boards of public companies. If a company does not comply with this obligation, the courts are entitled to cancel the previous election of certain supervisory board members and fill the seats with appropriate women or men. MELMS: At present, we would describe labour relations in our region as beingcooperative,ifnotfriendly.Thishascertainlybeensupportedbythe excellent national economic situation, with the average unemployment rate in Germany reaching an extremely low figure of about 6 percent, in some regions even significantly less. A low unemployment rate has always resulted in a friendly atmosphere in the relationship between employers and employees. However, we have still experienced a couple of relatively harsh strikes in some sectors, such as the railways and the airlines sectors. MELMS: We see the tendency to agree upon a mediation process, although under German law mediation is not enforceable, in employment agreements or in collective agreements, for example. However, it does provide for a potentially quick solution. Mediation proposals are not binding per se, as both parties are free to agree upon the results of a mediation process. Q HOW WOULD YOU DESCRIBE LABOUR RELATIONS IN YOUR REGION AT PRESENT? TO WHAT EXTENT HAS THE INFLUENCE OF UNIONS AND WORKERS COUNCILS GROWN?
  • 26.
    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T 26 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T MELMS: During the process of restructuring, one critical and difficult provision is Sec. 613 of the German Civil Code, governing the provision on the transfer of undertakings. This clause is difficult to handle as it requires considerable preparatory activities, and it is easy to fall into the legalloopholesofthisclause.Iftheoperationprovidesforaworkscouncil (Betriebsrat), the collective provisions in Sec. 111 Shop ConstitutionAct must be carefully considered. The legal requirement to negotiate with the works council on a Social Plan, so-called Reconciliation of Interest, must follow certain formal procedures. MELMS: If companies wish to retain their key talent, they should consider agreeing upon notice periods that exceed statutory provisions, in order to bind talented employees to the company for as long as possible. The downside is that an employer must comply with those notice periods if it wants to terminate the employment. In addition, companies should provide for attractive benefits, such as educational programmes or cooperation with leading universities. Finally, and most importantly, companies should consider establishing special policies relating to the promotion of women in their organisation. This will not only provide equal opportunities to both men and women in the company, but it will also make the company much more attractive when it comes to recruiting new talent. MELMS: It has become more difficult for certain companies to reward their employees as the European Union has set up strict guidelines and provisions on the remuneration of certain groups of employees, mainly in the investment sector and in insurance companies. The general idea Q INYOUR OPINION, HAS IT BECOME MORE DIFFICULT FOR COMPANIES TO REWARD THEIR EXECUTIVES Q WHAT GENERAL ADVICE WOULD YOU GIVE TO COMPANIES ON MANAGING THEIR HUMAN CAPITAL AND RETAINING KEY TALENT? Q FOR COMPANIES IN THE PROCESS OF RESTRUCTURING,WHAT EMPLOYMENT ISSUES DO THEY NEED TO EVALUATE WHEN RESIZING THE WORKFORCE, REDUCING PAYROLL COSTS AND ADJUSTING PENSIONS AND BENEFITS? WHAT KINDS OF RISKS AND LIABILITIES MIGHT ARISE IN SUCH CIRCUMSTANCES? GERMANY • DR CHRISTOPHER MELMS • BEITEN BURKHARDT “It has become more difficult for certain companies to reward their employees as the European Union has set up strict guidelines and provisions.”
  • 27.
    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 27www.financierworldwide.com of these principles is that remuneration should reflect the performance of the employee over a period of at least three years. For employees and executives in any other sector, this should be no more difficult than it has been in the past; however, it is recommended that companies structure their remuneration policies in a similar way to the financial sector. MELMS: The most complicated challenges faced by multinational companies in term of cross-border employment have been created by the new EU provision on data processing policies. The main problem, which has been an issue for many years, was the transfer of personal data from one Member State to the US. The new EU provision sets principles on safe harbour policies and contains more restrictions on the free transfer of data to the US. Dr Christopher Melms Partner BEITEN BURKHARDT +49 89 35065 1143 christopher.melms@bblaw.com Dr Christopher Melms is a partner in BEITEN BURKHARDT’s Munich office and head of the Labour & Employment Law practice group. His practice focuses on the food and semi-luxuries industry, the health sector, as well as on media, entertainment and publishing companies. He advises and represents German and foreign companies with regard to collective bargaining and labour management relations law. His activities are concentrated on advising of companies within the scope of processes of change under collective bargaining agreements – for example, changes in pay scale, company collective agreements, etc. – and negotiations with trade unions and works councils. www.beiten-burkhardt.com Q AS GLOBALISATION CONTINUES,WHAT ADDITIONAL CHALLENGES FACE MULTINATIONAL COMPANIES IN TERMS OF CROSS-BORDER EMPLOYMENT AND DEALING WITH FOREIGN WORKERS? AND EMPLOYEES?WHAT DO COMPANIES NEED TO TAKE INTO ACCOUNT WHEN STRUCTURING COMPENSATION PACKAGES, INCENTIVES AND BENEFITS? GERMANY • DR CHRISTOPHER MELMS • BEITEN BURKHARDT
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T 28 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T DENMARK Q WHAT NOTABLE DEVELOPMENTS IN EMPLOYMENT LAW HAVE YOU SEEN IN DENMARK OVER THE LAST 12 MONTHS OR SO? HAVE THERE BEEN ANY SIGNIFICANT CHANGES TO EMPLOYEE RIGHTS OR COMPANY OBLIGATIONS, FOR EXAMPLE? TOMMY ANGERMAIR ADVOKATPARTNERSELSKABET KIRK LARSEN & ASCANIUS ANGERMAIR: Over the last 12 months, the Danish parliament has been unusually active in terms of implementing changes to key labour market legislation. This is normally very stable compared to the corresponding legislation in many other European countries. There have been radical changes in rules applicable to restrictive covenants, including a maximum duration of 12 months, entitlement to compensation irrespective of other income during restriction period and a general prohibition against clauses regarding non-solicitation of colleagues. Rules on statutory severance pay based on length of service have been simplified, with new amounts and required service thresholds. Access to agree on an automatic end of employment at the age of 70 years has been abolished. Furthermore, in August 2015 the Danish government established a committee which is expected to propose radical changes to the current,and very unique,Danish holidaysystemforthepurposeofobtainingcompliancewiththeEUWorking Time Directive (2003/88/EC) following a recent statement from the EU Commission. However, the most significant legislative development was the final adoption of the General Data Protection Regulation (2016/679) on 27 April 2016 which will have a massive impact on Danish employers effective from 25 May 2018. ANGERMAIR: Historically, the Danish labour market has been regulated, to a large extent, by collective bargaining agreements (CBAs). Typically, CBAs require the establishment of one or more works councils if the employee headcount is 35 and above. Accordingly, historically, unions and works councils have had a strong influence on the Danish labour market.However, it is my impression that in recent years that influence has decreased substantially due to a number of factors.The main factors appear to be the apparently rapidly rising number of employers not covered by CBAs and employees without union membership, as well as the increasingly strong influence of EU legislation. Q HOW WOULD YOU DESCRIBE LABOUR RELATIONS IN YOUR REGION AT PRESENT? TO WHAT EXTENT HAS THE INFLUENCE OF UNIONS AND WORKERS COUNCILS GROWN?
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 29 8www.financierworldwide.com DENMARK • TOMMY ANGERMAIR • ADVOKATPARTNERSELSKABET KIRK LARSEN & ASCANIUS Q ARE YOU SEEING ANY RECURRING THEMES IN EMPLOYMENT RELATED LITIGATION IN DENMARK? ANGERMAIR:The hottest topic in employment law litigation has been the protection of disabled employees against discrimination following recent case law from the European Court of Justice (ECJ) which introduced a very wide and vague legal definition of disability. Furthermore, the Danish Supreme Court and Eastern High Court have very recently given judgments regarding the Danish Transfer of Undertakings Act which implemented the EU Acquired Rights Directives (98/50/EC and 77/187/EEC), in particular whether or not a certain transfer constituted a transfer of undertakings in the sense of said directives. ANGERMAIR: In terms of such processes,the most important employment issue is typically avoiding claims of discriminatory treatment due to pregnancyormaternity,disability,age,part-timeorfixedtermemployment, and so on, which may lead to substantial compensation claims, contribute to a negative atmosphere in the work place and/or negative press coverage. Discrimination claims are generally more likely to end up in court than most other employed related claims due to the potentially high level of compensation and the relatively high union focus on pursuing the claims. If such a claim is successfully brought to court by an employee, the employer will be liable to pay compensation amounting to as much as 12 months totalcompensation,includingfixedandvariablesalaryaswellasthevalueof benefits. In terms of significant staff reductions, negotiating loyalty or stay- on packages with key employees tends to be very important to maintaining a motivated and efficient workforce. Completing a certain collective consultation procedure is required under certain circumstances but in most cases that procedure does not lead to significant issues – as opposed to in most other European countries – considering that the procedure can largely be designed according to the employer’s preferences and that neither the works council, the unions nor any other party is empowered to block or delay the decision to proceed with the envisaged restructuring. Q FOR COMPANIES IN THE PROCESS OF RESTRUCTURING,WHAT EMPLOYMENT ISSUES DO THEY NEED TO EVALUATE WHEN RESIZING THE WORKFORCE, REDUCING PAYROLL COSTS AND ADJUSTING PENSIONS AND BENEFITS? WHAT KINDS OF RISKS AND LIABILITIES MIGHT ARISE IN SUCH CIRCUMSTANCES?
  • 30.
    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T Q WHAT GENERAL ADVICE WOULD YOU GIVE TO COMPANIES ON MANAGING THEIR HUMAN CAPITAL AND RETAINING KEY TALENT? 30 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T ANGERMAIR: To facilitate a relationship between the company and its employees which remains mutually beneficial, the company should focus on promoting the individual employee’s personal and professional development as well as promoting employee behaviour which supports the company’s short and long term goals. In terms of promoting employee development, it is important for companies to ensure that their employees are assigned challenging tasks, that they receive credit for their work and that they are afforded the opportunity to outperform their manager if they are skilled enough to do so. Companies should also strive to ensure that at any given time their compensation and benefits schemes incentivise behaviour which supports the company’s short and long term goals. ANGERMAIR: Compensation and benefits are obviously absolutely crucial in terms of promoting the right employee behaviour and retaining the right employees. A company should always consider whether their current compensation and benefits schemes promote the right employee behaviour which supports the company’s short and long term goals.This is an obvious point for most leaders but in practice this has always been and still is a difficult exercise for companies. It has not necessarily become more or less difficult recently.In my opinion,too many companies apply standard schemes which are not adequately tailored to the individual company and the individual type of employees, or fail to update the schemes to account for significant changes affecting the company. In most cases, taking the road less travelled by, for example, implementing and maintaining tailored schemes, is absolutely worthwhile, although this often requires a far more substantial effort. From a strictly Danish legal perspective, it is important for companies to take into account the leaver rights protection with regard to incentive and compensation schemes, which in my experience is remarkably strong compared to most other jurisdictions. DENMARK • TOMMY ANGERMAIR • ADVOKATPARTNERSELSKABET KIRK LARSEN & ASCANIUS Q INYOUR OPINION, HAS IT BECOME MORE DIFFICULT FOR COMPANIES TO REWARD THEIR EXECUTIVES AND EMPLOYEES?WHAT DO COMPANIES NEED TO TAKE INTO ACCOUNT WHEN STRUCTURING COMPENSATION PACKAGES, INCENTIVES AND BENEFITS? “Internal HR, mobility and legal functions tend to face more comprehensive and complex challenges.”
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 31www.financierworldwide.com Q AS GLOBALISATION CONTINUES,WHAT ADDITIONAL CHALLENGES FACE MULTINATIONAL COMPANIES IN TERMS OF CROSS-BORDER EMPLOYMENT AND DEALING WITH FOREIGN WORKERS? ANGERMAIR: As the number of foreign workers rises due to increasing globalisation, it will be more challenging for multinational companies to ensure a smooth transition, to integrate the foreign worker into the local staff and thereby to create a strong foundation for the foreign worker’s performance. Internal HR, mobility and legal functions tend to face more comprehensive and complex challenges, which creates a demand for strengthening these functions in terms of headcount and skills. Many Danish entities in multinational companies work closely with colleagues in the UK – typically colleagues in regional group functions – which often involves the relocation of employees between Denmark and the UK. Brexit is very likely to result in work permit requirements being imposed on employees relocating between EU member states and the UK, considering the successful leave campaign’s promise to reduce UK immigration from EU member states, and the new UK prime minister’s declared intent to keep this promise. Tommy Angermair Head of Employment & Corporate Immigration Law Advokatpartnerselskabet Kirk Larsen & Ascanius +45 2710 3439 ta@kirklarsen.dk Tommy Angermair is head of the firm’s employment law and immigration law department. Since 2007, he has exclusively worked on employment law and corporate immigration law matters. He has advised mostly large multinational clients on complex employment and immigration law matters for several years. Mr Angermair is also one of the most experienced legal experts in employee data protection law (specialist level since 2004). He is recommended in the 2016 editions of the Legal 500 EMEA Employment) and Chambers Europe (Employment). In 2015 and 2016, Mr Angermair was a speaker at four major global legal conferences on hot corporate immigration law topics. www.kirklarsen.dk DENMARK • TOMMY ANGERMAIR • ADVOKATPARTNERSELSKABET KIRK LARSEN & ASCANIUS
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T 32 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T ITALY Q WHAT NOTABLE DEVELOPMENTS IN EMPLOYMENT LAW HAVE YOU SEEN IN ITALY OVER THE LAST 12 MONTHS OR SO? HAVE THERE BEEN ANY SIGNIFICANT CHANGES TO EMPLOYEE RIGHTS OR COMPANY OBLIGATIONS, FOR EXAMPLE? VITTORIO DE LUCA DE LUCA & PARTNERS DE LUCA: Over the last 12 months, significant developments have characterised Italian employment law.A broad, in-depth reform known as the Jobs Act was implemented in 2015. The reform has radically changed several aspects of employment and self-employment relationships in Italy. In particular, the reform provided for the reorganisation of all types of employment contracts,the introduction of permanent contracts with increasing levels of protection, thus defining a new system of compensation in the event of unlawful dismissals marked by the certainty and objectivity of the law. This has reduced the possibility of reinstating employees who have been unlawfully dismissed to merely cases of discriminatory termination only, and thus almost entirely eliminates the discretionary power of the courts. To help reduce unemployment, simplify the existing legislation and ensure greater flexibility in employment relationships, the reform also introduced social security exemption system for new hires, liberalised fixed-term contracts and significantly reviewed the regulation of duties, drastically increasing cases where downgrading is lawful. DE LUCA: In the past, labour relations had a fairly influential role in the labour market, based on a triangular system where trade unions, employers and public authorities were involved in negotiations. However, in recent years, many unions have lost their past negotiating power against the government. This has also been confirmed by the recent Jobs Act reform, which has been implemented without any substantial trade union involvement. Therefore, trade unions should overcome the role of national trilateral negotiation, promoting instead increased negotiations on a company level and workers’councils’power of representation. Q HOW WOULD YOU DESCRIBE LABOUR RELATIONS IN YOUR REGION AT PRESENT? TO WHAT EXTENT HAS THE INFLUENCE OF UNIONS AND WORKERS COUNCILS GROWN?
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 33 8www.financierworldwide.com Q ARE YOU SEEING ANY RECURRING THEMES IN EMPLOYMENT RELATED LITIGATION IN ITALY? ITALY • VITTORIO DE LUCA • DE LUCA & PARTNERS DE LUCA: Historically, since reinstatement entitlement was introduced into the workers’ statute, the most frequently recurring theme in employment has been dismissal. However, due to protections against unfair dismissal, litigation concerning dismissal due to discrimination is still fairly uncommon. Since overall employee protection – and in particular, the chance for employees to be reinstated at work – have been radically reduced due to various reforms implemented since 2010 andtheimplementationofeffectivealternativedisputeresolution(ADR) procedures, we expect that in the future, the number of court disputes for unfair dismissal will drastically decrease and at the same time, a higher number of dismissals due to discrimination will be brought to the attention of judges, as happens in most western countries. DE LUCA: The restructuring of a company, including a reduction of the workforce, entails several actions.The most important are those related to the joint meeting to be held with unions in terms of bargaining power, timing and possible disruptive actions. The entitlement of the unions to meet the employer derives from the Italian implementation of law arising from specific European Union directives.According to the law, unions are indeed entitled to request that an employer participate in meetings in order to explain the reasons behind redundancies, and verify whether there may be alternatives to such dismissals and, if not, to agree on possible company measures. During the consultation procedure, companies are required to consider, in terms of costs and benefits, the opportunity to reach an agreement with unions by making any economic or organisational concessions in order to speed up the process and avoid any possible disruptive actions being carried out by the latter. If the parties fail to reach an agreement, the employer is, in Q FOR COMPANIES IN THE PROCESS OF RESTRUCTURING,WHAT EMPLOYMENT ISSUES DO THEY NEED TO EVALUATE WHEN RESIZING THE WORKFORCE, REDUCING PAYROLL COSTS AND ADJUSTING PENSIONS AND BENEFITS? WHAT KINDS OF RISKS AND LIABILITIES MIGHT ARISE IN SUCH CIRCUMSTANCES?
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T 34 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T any case, entitled to deliver dismissal letters and employees are free to object to the reason behind the dismissal, which may be an unfair dismissal. DE LUCA: In our experience, managing people by setting objectives and offering fair, performance-related bonuses, rewards and retains key talent. As a general rule, employers should always be clear about the targets employees are expected to meet. It may be useful to draft and negotiate specific retention plans aimed at granting employee cooperation for a predefined period of time, especially for companies acquired via investment funds which need to prevent key managers from being able to decide to leave before the end of an investment period. DE LUCA: In recent years, it has become more difficult to reward executives, due to their increased expectations in terms of having tailor-made employment offers.The main thing that employers should avoid when structuring compensation packages, incentives and benefits is to use standard international contracts which have not been adapted and made compliant with local regulations. For instance, international companies often apply complex employment contracts to Italian employees without considering that in Italy, the main provisions governing employment relationships are defined by National Collective Bargaining Agreements. As far as a fixed annual salary is concerned, National Collective Bargaining Agreements provide for the minimum annual remuneration to be granted to employees depending on their level of employment. Furthermore, under Italian law, employees and managers are entitled to the so-called leaving indemnity, consisting of compulsory deferred compensation due to the employee at the end of the employment relationship equal to 1/13.5 of the annual salary due to them. Q INYOUR OPINION, HAS IT BECOME MORE DIFFICULT FOR COMPANIES TO REWARD THEIR EXECUTIVES AND EMPLOYEES?WHAT DO COMPANIES NEED TO TAKE INTO ACCOUNT WHEN STRUCTURING COMPENSATION PACKAGES, INCENTIVES AND BENEFITS? Q WHAT GENERAL ADVICE WOULD YOU GIVE TO COMPANIES ON MANAGING THEIR HUMAN CAPITAL AND RETAINING KEY TALENT? ITALY • VITTORIO DE LUCA • DE LUCA & PARTNERS
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 35www.financierworldwide.com Q AS GLOBALISATION CONTINUES,WHAT ADDITIONAL CHALLENGES FACE MULTINATIONAL COMPANIES IN TERMS OF CROSS-BORDER EMPLOYMENT AND DEALING WITH FOREIGN WORKERS? DE LUCA: From an employment law perspective, secondment always involves complex provisions and multiple issues to be dealt with. In particular, cross-border employment often entails companies having to take into consideration employment agreements and comfort letters that must be compliant with both the country of origin and the country of destination of the employee. Furthermore, cross- border employment requires companies be fully compliant with local laws, international treaties against double taxation, and bilateral and multilateral conventions for social securities. Movement of personnel within the European Union is granted by specific regulations according to which,under certain conditions,employees are entitled to contribute to their country of origin, even when they are seconded to a different country. Vittorio De Luca Managing Partner De Luca & Partners +39 02 3655651 vittorio.deluca@delucapartners.it Vittorio De Luca, managing partner of the firm, usually advises corporations and private equity funds. He is regularly involved – as an expert in employment and labour related matters – in primary reorganisations, M&A, restructuring and private equity transactions.Thanks to his degree in Jurisprudence and Economics, he is highly skilled in understanding business needs. Mr De Luca collaborates regularly with ‘Il Sole 24 Ore’ and is the author of a number of articles in the specialist press. He has been interviewed in mass media journals as an expert in employment law and is a regular contributor to seminars and conventions. www.delucapartners.it ITALY • VITTORIO DE LUCA • DE LUCA & PARTNERS “In Italy, the main provisions governing employment relationships are defined by National Collective Bargaining Agreements.”
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T 36 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T INDIA Q WHAT NOTABLE DEVELOPMENTS IN EMPLOYMENT LAW HAVE YOU SEEN IN INDIA OVER THE LAST 12 MONTHS OR SO? HAVE THERE BEEN ANY SIGNIFICANT CHANGES TO EMPLOYEE RIGHTS OR COMPANY OBLIGATIONS, FOR EXAMPLE? VIJAY RAVI KOCHHAR & CO. RAVI: Last year, in a move aimed at initiating significant labour reforms, the Indian Ministry of Labour announced plans to introduce five draft codes which would consolidate 44 labour laws that are currently applicable to businesses. The move has been designed to decrease the multiplicity of compliances in labour laws, improve labour relations and ease the process of doing business in India. Following the announcement, three draft legislations have been made public. One of the important draft codes that has been introduced is the Labour Code on Industrial Relations Bill, 2015 (LCIR Bill). There are a number of key proposals included in the LCIR Bill. First, severance compensation to ‘workmen’ would be payable at the rate of 45 days of average pay for every year of service. Second, an industrial establishment in which less than 300 workers are employed would not require prior government permission or approval for lay-offs and closure.Third, 10 percent or 100 workers employed in an establishment, undertaking or industry would be required to be members of a trade union for it to be registered. Fourth, in an industry in which 100 or more workers are employed in the preceding 12 months, the employer is required to constitute a works committee consisting of representatives of the employer and workers engaged in the establishment.This works committee would be required to promote measures for securing amity and good relations between the employer and the employee. Finally, workers employed in an industrial establishment cannot go on a strike without giving 14 days notice to the employer.Another significant development has been an amendment to the Payment of Bonus Act, 1965 pursuant to which all employees drawing a monthly salary of INR 21,000 or less would be entitled to statutory bonus. This amendment has significant financial implications for employers. The government is also considering a proposal to increase paid maternity leave from the existing 12 weeks to 26 weeks.
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 37 8www.financierworldwide.com INDIA • VIJAY RAVI • KOCHHAR & CO. Q ARE YOU SEEING ANY RECURRING THEMES IN EMPLOYMENT RELATED LITIGATION IN INDIA? RAVI: Presently, labour relations in the private sector are cordial. There have been sporadic instances of labour unrest in public sector banks and the automotive industry.Trade unions in India are mostly concentrated in the public sector and the private sector workforce is not generally unionised. In the recent past, following some large scale lay-offs in the IT sector, trade unions affiliated to political parties have attempted to unionise employees in the sector. RAVI: A large portion of employment litigation in India relates to allegations of unfair dismissal and demands for reinstatement. Some Indian companies that engage temporary workforces – on contract through third-party contractors – have had to defend claims for permanent employment from aggrieved contractual employees. In recent years we have seen increasing complaints of sexual harassment in the workplace. Other recent trends include litigation initiated by employers to protect confidential information and enforce non- compete restrictions in an attempt to dissuade employees from joining competition.A positive development has been the willingness of labour authorities to attempt to resolve labour disputes through mediation in a pragmatic manner. Q HOW WOULD YOU DESCRIBE LABOUR RELATIONS IN YOUR REGION AT PRESENT? TO WHAT EXTENT HAS THE INFLUENCE OF UNIONS AND WORKERS COUNCILS GROWN?
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T 38 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T RAVI: It is not mandatory under Indian laws to engage in a consultation process during the process of restructuring. However, it is imperative that all statutory compliances – including notice requirement and payment of severance compensation – are ensured while undertaking any reduction in the workforce. In situations involving mass lay-offs, there is a risk of employees joining together to negotiate a severance package which is better than what is mandated by law. In the event of a transfer of business, employee consent is required for their transfer to a new employer, to avoid liability of severance compensation. Also, employees must be assured the benefit of continuity of service following a transfer. Any change in terms of service – including benefits – would require giving prior notice to employees. RAVI: Managing attrition to ensure competitive advantage is a key issue for every employer. To retain key talent, tools that companies generally employ include a fair performance appraisal mechanism, a retention bonus as part of the compensation package, regular training programmes which enable an employee to enhance their skills, and overseas assignments to gain global experience. RAVI:A growing Indian economy and increasing foreign investment into India has meant opportunities for talented individuals. Average salaries in most industries have been moving northwards. Multinationals have salary packages which are significantly higher than the minimum wages prescribed by the government. Many companies have introduced joining bonuses, stock option plans, performance bonuses, and so on, as part of theircompensationpackagesinordertoattractandretainkeyemployees. Employers in the IT sector, which has witnessed a mushrooming of start- ups, are increasingly including stock options and similar equity incentive plans, with staggered vesting periods, to motivate employees to be part of their growth story. An increasing trend is the inclusion of a variable component in the compensation structure which is linked to individual performance and overall profitability of the company or group. Q INYOUR OPINION, HAS IT BECOME MORE DIFFICULT FOR COMPANIES TO REWARD THEIR EXECUTIVES AND EMPLOYEES?WHAT DO COMPANIES NEED TO TAKE INTO ACCOUNT WHEN STRUCTURING COMPENSATION PACKAGES, INCENTIVES AND BENEFITS? Q WHAT GENERAL ADVICE WOULD YOU GIVE TO COMPANIES ON MANAGING THEIR HUMAN CAPITAL AND RETAINING KEY TALENT? Q FOR COMPANIES IN THE PROCESS OF RESTRUCTURING,WHAT EMPLOYMENT ISSUES DO THEY NEED TO EVALUATE WHEN RESIZING THE WORKFORCE, REDUCING PAYROLL COSTS AND ADJUSTING PENSIONS AND BENEFITS? WHAT KINDS OF RISKS AND LIABILITIES MIGHT ARISE IN SUCH CIRCUMSTANCES? INDIA • VIJAY RAVI • KOCHHAR & CO.
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 39www.financierworldwide.com Q AS GLOBALISATION CONTINUES,WHAT ADDITIONAL CHALLENGES FACE MULTINATIONAL COMPANIES IN TERMS OF CROSS-BORDER EMPLOYMENT AND DEALING WITH FOREIGN WORKERS? RAVI: International workers taking assignments in India must ensure that they have an appropriate visa. Employment visas are granted only to highly skilled or qualified professionals for jobs for which qualified Indians are not available. Expatriate employees are mandatorily required to make social security contributions in India and the same can be withdrawn only when they reach the age of superannuation, subject to the provisions of any social security agreement between the home country of the expatriate employee and India. Multinationals seconding expatriate employees to India must also be careful in avoiding tax exposure in India as a consequence of being deemed to have a permanent establishment in India. Vijay Ravi Senior Partner Kochhar & Co. +91 11 4111 5222 vijay.ravi@kochhar.com Vijay Ravi is a senior partner in Kochhar & Co. and co-chairs the firm’s labour and employment practice. His practice primarily focuses on advising corporate clients on employee relations, dispute management and resolution and developing best employment practices and policies that are Indian law compliant. He also has extensive experience in delicate and sensitive labour related issues associated with business acquisitions, corporate restructurings and divestments and transactions involving outsourcing arrangements. His robust experience and expertise benefits clients in obtaining an in-depth understanding of the prevailing industrial regime for the effective implementation of both collective and individual employment arrangements. www.kochhar.com “A growing Indian economy and increasing foreign investment into India has meant opportunities for talented individuals” INDIA • VIJAY RAVI • KOCHHAR & CO.
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T 40 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T SINGAPORE Q WHAT NOTABLE DEVELOPMENTS IN EMPLOYMENT LAW HAVE YOU SEEN IN SINGAPORE OVER THE LAST 12 MONTHS OR SO? HAVE THERE BEEN ANY SIGNIFICANT CHANGES TO EMPLOYEE RIGHTS OR COMPANY OBLIGATIONS, FOR EXAMPLE? S SURESSH HARRY ELIAS PARTNERSHIP LLP SURESSH: From 1April 2016,all employers in Singapore will be required to issue itemised pay slips and a document summarising the key employment terms (KET) to employees covered under the Employment Act (Chapter 91). Employers who do not issue itemised pay slips or KET to employees can be fined. From 1 April 2016, the Ministry of Manpower (MOM) will set up a framework to treat less severe breaches of the Employment Act as ‘civil breaches’ which attract administrative penalties. Currently, employers must offer re-employment to eligible employees who turn 62, up to the age of 65. If the employer does not offer the retiring employee re-employment, the employer must pay the retiring employee Employment Assistance Payment. From 1 July 2017, the re-employment age will increase to 67. SURESSH: Labour relations in Singapore are generally good. Labour unrestandindustrialactionisveryunusual.Disputesthatariseareusually resolved between employers and unions with the aid of mediation from the MOM. Employers are prohibited from preventing their workers from forming unions if they wish to do so. However, all such unions have to be registered under the Trade Union Act. Existing trade unions often actively seek to recruit members and seek recognition from employers. Once recognised, they are able to negotiate directly with the employer for collective agreements or on other matters.Workers councils are not common in Singapore and are not legally recognised. Q HOW WOULD YOU DESCRIBE LABOUR RELATIONS IN YOUR REGION AT PRESENT? TO WHAT EXTENT HAS THE INFLUENCE OF UNIONS AND WORKERS COUNCILS GROWN?
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 41 8www.financierworldwide.com SINGAPORE • S SURESSH • HARRY ELIAS PARTNERSHIP LLP Q ARE YOU SEEING ANY RECURRING THEMES IN EMPLOYMENT RELATED LITIGATION IN SINGAPORE? SURESSH: Employment litigation in Singapore falls primarily into two categories. The first category covers cases arising after termination where the departing employee makes claims for sums that they believe they are entitled to. These claims are usually for performance bonuses, share options and outstanding salary.The second category is for cases by employers who are trying to enforce covenants that prevent departing employees from working for competitors. In Singapore, such clauses are prima facie invalid unless the party who seeks to have it enforced can show that it is intended to protect his own legitimate interests and that it is reasonable in all circumstances. SURESSH: Employers who are retrenching employees must do so responsibly and fairly. Tripartite partners – including the MOM, the National Trades Union Congress (NTUC) and the Singapore National Employers Federation (SNEF) – have released the tripartite guidelines on managing excess manpower and responsible retrenchment. If the company is unionised, the relevant union should be consulted; this is usually provided for in the collective agreement. Companies should also notify the Labour Relations & Workplaces Division of the MOM or the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) of their impending retrenchment exercise as soon as possible. The EmploymentAct provides for a minimum notice period requirement for termination of employment. Q FOR COMPANIES IN THE PROCESS OF RESTRUCTURING,WHAT EMPLOYMENT ISSUES DO THEY NEED TO EVALUATE WHEN RESIZING THE WORKFORCE, REDUCING PAYROLL COSTS AND ADJUSTING PENSIONS AND BENEFITS? WHAT KINDS OF RISKS AND LIABILITIES MIGHT ARISE IN SUCH CIRCUMSTANCES?
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T Q WHAT GENERAL ADVICE WOULD YOU GIVE TO COMPANIES ON MANAGING THEIR HUMAN CAPITAL AND RETAINING KEY TALENT? 42 • FINANCIER WORLDWIDE • AUGUST 2016 www.financierworldwide.com A N N UA L R E V I E W • L A B O U R & E M P L OY M E N T SURESSH: Managing human resources and retaining key talent is a matter of relationships between the employer and employee. The employer should not look to the law as a tool to manage its workforce. SURESSH: All foreign workers who intend to work in Singapore must have a suitable work visa or work pass.There are different work passes for different categories of workers and salary ranges. For certain industries and passes, the MOM has quotas for foreign workers to ensure that there is a Singapore ‘core’. In the case of executives who are applying for employment passes, the employer may be required to advertise the job opening on Jobs Bank for at least 14 days before the application is submitted. Jobs Bank is a government run job matching portal that helps to facilitate online job matching between local job seekers and employers. Q AS GLOBALISATION CONTINUES,WHAT ADDITIONAL CHALLENGES FACE MULTINATIONAL COMPANIES IN TERMS OF CROSS-BORDER EMPLOYMENT AND DEALING WITH FOREIGN WORKERS? SINGAPORE • S SURESSH • HARRY ELIAS PARTNERSHIP LLP
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    A N NUA L R E V I E W • L A B O U R & E M P L OY M E N T AUGUST 2016 • FINANCIER WORLDWIDE • 43www.financierworldwide.com S Suressh Partner Harry Elias Partnership +65 6361 9365 suressh@harryelias.com.sg S Suressh is a partner in the firm’s civil and commercial litigation practice group. He is also a recommended lawyer in The Legal 500. His main area of practice is in commercial litigation, in particular disputes relating to corporate and shareholder disputes, misfeasance by company officers, international transactions and employment. He advises on compliance issues, in particular relating to money laundering, competition and data protection. He recently represented an international freight forwarding group in connection with investigations by the Competition Commission of Singapore into rate fixing. www.harryelias.com “The employer should not look to the law as a tool to manage its workforce.” SINGAPORE • S SURESSH • HARRY ELIAS PARTNERSHIP LLP
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    FWS U PP L E M E N T www.financierworldwide.com A N N U A L R E V I E W