ICLG The International Comparative Legal Guide to: Employment & Labour Law 2018
8th Edition A practical cross-border insight into employment and labour law
Published by Global Legal Group with contributions from:
A. Lopes Muniz Advogados Associados Koushos Korfiotis Papacharalambous LLC BAS – Sociedade de Advogados, SP, RL Lakshmikumaran & Sridharan Carnelutti Law Firm Latournerie Wolfrom Avocats CDZ Legal Advisors Law firm Šafar & Partners, Ltd Debarliev, Dameski and Kelesoska, Attorneys at Law Mariscal & Abogados, Asociados Deloitte Kosova Sh.p.k. McCann FitzGerald Deloitte Legal Sh.p.k. Meridian Law Chambers DQ Advocates Limited Mori Hamada & Matsumoto EmpLaw Advokater AB Pachiu & Associates Erdinast, Ben Nathan, Toledano & Co. Advocates People + Culture Strategies FCLAW – LAWYERS & PRIVATE NOTARIES Rátkai Law Firm GANADO Advocates SEUM Law Global Law Office Shahid Law Firm Gün + Partners Skrine Gürlich & Co. Stikeman Elliott LLP Hamdan AlShamsi Lawyers and Legal Consultants Sulaiman & Herling Attorneys at Law Hogan Lovells Udo Udoma & Belo-Osagie Homburger Wildgen S.A. Hughes Hubbard & Reed LLP Winkler Partners The International Comparative Legal Guide to: Employment & Labour Law 2018
General Chapter:
1 Where Next for the Gig Economy? – Stefan Martin & Jo Broadbent, Hogan Lovells 1
Country Question and Answer Chapters:
2 Albania Deloitte Legal Sh.p.k.: Sabina Lalaj & Ened Topi 5 Contributing Editors Stefan Martin & 3 Australia People + Culture Strategies: Joydeep Hor & Therese MacDermott 15 Jo Broadbent, Hogan Lovells 4 Bahamas Meridian Law Chambers: Dywan A – G. R. Rodgers 22 Sales Director Florjan Osmani 5 Brazil A. Lopes Muniz Advogados Associados: Antônio Lopes Muniz & Zilma Aparecida S. Ribeiro 28 Account Director Oliver Smith 6 Canada Stikeman Elliott LLP: Patrick L. Benaroche & Hélène Bussières 35 Sales Support Manager 7 China Global Law Office: Weiwei Gu & Kelly Cao 43 Toni Hayward Sub Editor 8 Cyprus Koushos Korfiotis Papacharalambous LLC: Loizos Papacharalambous & Jenna Feasey Marilia Ioannou 51 Senior Editors 9 Czech Republic Gürlich & Co.: JUDr. Richard Gürlich, Ph.D. & Mgr. Kamila Janoušková 60 Caroline Collingwood Suzie Levy 10 Egypt Shahid Law Firm: Rasha Maurice 67 Chief Operating Officer 11 France Latournerie Wolfrom Avocats: Sarah-Jane Mirou 74 Dror Levy 12 Germany Hogan Lovells: Dr. Kerstin Neighbour & Dr. Tim Gero Joppich 83 Group Consulting Editor Alan Falach 13 Hungary Rátkai Law Firm: Dr. Ildikó Rátkai & Dr. Nóra Feith 90
Publisher 14 India Lakshmikumaran & Sridharan: Neeraj Dubey 97 Rory Smith Published by 15 Indonesia Sulaiman & Herling Attorneys at Law: Allova Herling Mengko, S.H. & Global Legal Group Ltd. Valery Sarumpaet, S.H. 106 59 Tanner Street 16 Ireland McCann FitzGerald: Mary Brassil & Stephen Holst 112 London SE1 3PL, UK Tel: +44 20 7367 0720 17 Isle of Man DQ Advocates Limited: Leanne McKeown & Jessica McManus 120 Fax: +44 20 7407 5255 Email: [email protected] 18 Israel Erdinast, Ben Nathan, Toledano & Co. Advocates: URL: www.glgroup.co.uk Miriam Kleinberger-Attar 128
GLG Cover Design 19 Italy Carnelutti Law Firm: Giuseppe Bulgarini d’Elci & Marco Sartori 135 F&F Studio Design 20 Japan Mori Hamada & Matsumoto: Shiho Ono & Yuko Kanamaru 144 GLG Cover Image Source iStockphoto 21 Korea SEUM Law: Steve Ahn & Byungil Lee 154 Printed by Ashford Colour Press Ltd 22 Kosovo Deloitte Kosova Sh.p.k.: Ardian Rexha & Vjosa Misini 161 April 2018 23 Luxembourg Wildgen S.A.: Jackye Elombo 167
Copyright © 2018 24 Macau FCLAW – LAWYERS & PRIVATE NOTARIES: Miguel Quental & Global Legal Group Ltd. Paulo Cordeiro de Sousa 174 All rights reserved No photocopying 25 Macedonia Debarliev, Dameski & Kelesoska, Attorneys at Law: Emilija Kelesoska Sholjakovska & Ljupco Cvetkovski 181 ISBN 978-1-912509-03-4 ISSN 2045-9653 26 Malaysia Skrine: Selvamalar Alagaratnam & Siva Kumar Kanagasabai 189 Strategic Partners 27 Malta GANADO Advocates: Dr. Matthew Brincat & Dr. Lara Pace 196
28 Mexico Hogan Lovells: Hugo Hernández-Ojeda Alvírez & Luis Ruiz Gutiérrez 204
29 Mozambique BAS – Sociedade de Advogados, SP, RL: Pedro Madeira de Brito & Lara Tarciana Sousa dos Mucudos Macamo 211
30 Nigeria Udo Udoma & Belo-Osagie: Jumoke Lambo & Mary Ekemezie 217
31 Poland CDZ Legal Advisors: Weronika Papucewicz & Piotr Kryczek 224
32 Portugal BAS – Sociedade de Advogados, SP, RL: Dália Cardadeiro & Alexandra Almeida Mota 232
33 Romania Pachiu & Associates: Mihaela Cracea 240
Continued Overleaf
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Disclaimer This publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice. Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication. This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional when dealing with specific situations.
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Country Question and Answer Chapters:
34 Slovenia Law firm Šafar & Partners, Ltd: Martin Šafar 249
35 Spain Mariscal & Abogados, Asociados: Ana Gómez & Sara Moukayed 259
36 Sweden EmpLaw Advokater AB: Annika Elmér 267
37 Switzerland Homburger: Dr. Balz Gross & Dr. Gregor Bühler 273
38 Taiwan Winkler Partners: Christine Chen 281
39 Turkey Gün + Partners: Pelin Baysal & Beril Yayla Sapan 286
40 United Arab Emirates Hamdan AlShamsi Lawyers and Legal Consultants: Hamdan Al Shamsi & Dr. Ghandy Abuhawash 293
41 United Kingdom Hogan Lovells: Stefan Martin & Jo Broadbent 299
42 USA Hughes Hubbard & Reed LLP: Ned Bassen & Nathan Cole 306
EDITORIAL
Welcome to the eighth edition of The International Comparative Legal Guide to: Employment & Labour Law. This guide provides corporate counsel and international practitioners with a comprehensive worldwide legal analysis of labour and employment laws and regulations. It is divided into two main sections: One general chapter titled “Where Next for the Gig Economy?”. Country question and answer chapters. These provide a broad overview of common issues in labour and employment laws and regulations in 41 jurisdictions. All chapters are written by leading labour and employment lawyers and industry specialists and we are extremely grateful for their excellent contributions. Special thanks are reserved for the contributing editors Stefan Martin and Jo Broadbent of Hogan Lovells International LLP for their invaluable assistance. The International Comparative Legal Guide series is also available online at www.iclg.com.
Alan Falach LL.M. Group Consulting Editor Global Legal Group [email protected] Chapter 1
Where Next for the Gig Economy? Stefan Martin
Hogan Lovells Jo Broadbent
Over the last few years there has been a growing concern in the UK that the modern economy is working for the few, not for the Employee, worker or neither? many. We have seen a rapid rise in platform-based technology which “matches” businesses with consumers. However, there is a It is well-established in the UK that if there is no “mutuality of question about whether the flexible working models that underpin obligation” – no obligation on a business to offer work and no the “gig economy”, as such businesses are commonly known, are at obligation on an individual to accept work that is offered – there the expense of workers. These models typically treat the individuals cannot be an employment relationship. Individuals engaged on a providing services – the courier or the taxi-driver for example – as zero-hours arrangement of this kind are generally not employees. self-employed. As such, they do not benefit from the employment This means that they are not entitled to unfair dismissal protection, rights available to employees and workers. redundancy payments or maternity or paternity leave, for example. In 2017, a number of individuals who were treated as self-employed However, there is an intermediate category between someone who brought successful employment tribunal claims that they were is employed and someone who is self-employed. Such individuals workers and, as such, entitled to basic employment rights such as are known as workers, and although they are not entitled to full minimum wage and holiday entitlement. The Employment Appeal employment protection, they have more limited rights to the national Tribunal and Court of Appeal will hear appeals against some of minimum wage, working time limits and statutory annual holiday. those decisions in 2018. The government has also asked Matthew The question tribunals have addressed is whether those working in Taylor, Chief Executive of the Royal Society for the encouragement the gig economy are workers or genuinely self-employed. of Arts, Manufactures and Commerce, to conduct a review into To be a worker, an individual has got to have a contract with how employment rights need to change to keep pace with modern a business under which they are obliged to perform services business models. His report was published in July 2017 and we are personally. Further, the business must not be a client or customer expecting to see proposals for legislation in the course of 2018. This of a business or undertaking carried on by the individual. In simple article takes stock of where we are now in terms of workplace rights terms, this means that if individuals do not have to provide services and what we can expect to see in the coming year. themselves (they can send someone to work on their behalf), or are genuinely running a business on their own account, they will not be a worker. The Current Legal Position Gig economy contracts tend to include a substitution clause allowing How does the gig economy operate within the current legal workers to send someone else to perform services on their behalf. framework? The term “gig economy” is used to cover a variety The business will then argue that because the individual is not under of different working arrangements. These are most commonly an obligation to perform personal service, he or she cannot be a associated with the rise of new technology platforms, but the worker. The most recent case on the point, Pimlico Plumbers Ltd v term is also used more generically to describe a situation in which Smith, confirms that an unfettered power to substitute is inconsistent individuals contract with a business to provide services on a with a personal service obligation. However, a conditional right freelance or short-term basis, where there is no obligation on the to appoint a substitute may or may not be consistent with personal business to offer work and no obligation on the individual to accept service, depending on factors such as whether the individual is work that is offered. unable or unwilling to carry out the work and whether he or she needs consent to appoint a substitute. This means that individuals The advantage of the gig economy model for business is obvious; may be workers even if their contract contains a limited right of it can offer services to customers without being under a duty to substitution. offer work to an individual if there is no demand. That is clearly efficient from a business perspective, because the business only has Contracts usually purport to be between the business and someone to pay for work that is carried out. That degree of flexibility may self-employed. Although the contract will be the starting point suit individuals, because they want to combine work with other in determining the nature of the relationship between the parties, commitments, such as caring responsibilities or studying, and can courts and tribunals can look behind the contractual arrangements choose when they want to work. However, if an individual does not and ask whether they reflect the reality of the situation. This have a genuine choice about the basis on which they are engaged, is particularly likely if there is a perceived imbalance of power such work can feel precarious. between the employer and the individual. In Autoclenz Ltd v Belcher, the Supreme Court recognised that in a work context, it is difficult for an individual to influence the terms on which he or she
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is engaged. This gives scope for the court to find that a contract does the National Living Wage, maternity rights, auto-enrolment, and not reflect the way in which the work is actually undertaken, or the holiday pay; how professional development can be facilitated in the true relationship between the parties. modern economy to benefit businesses and workers; and whether employment law definitions need to be updated to reflect new ways of working. Themes from the cases The “Good Work – The Taylor Review of Modern Working Practices” Last year the employment tribunal had to consider whether a range report (the Report) was published on 11 July 2017. It makes several of individuals working in the gig economy were really workers. proposals in relation to employment law and to the way in which the The key question for the tribunal in each case was whether the tax system is structured. The key recommendations are explained individuals were genuinely running their own business, or whether below. they were in fact operating as part of another’s business. Contracts drafted by “armies of lawyers” to present the relationship as one of Employment status self-employment were regarded with a degree of scepticism. The decisions identify a range of relevant factors. The Report suggests that in the future it should be easier for ■ What degree of operational control does the individual have individuals to understand what their employment status is. Whether over their work? In a self-employed situation, an individual someone is an employee is determined by tests or factors set out in will exercise control over how they perform the work. In previous legal decisions, such as the need for mutuality of obligation many gig economy cases, once individuals have logged on or control. This makes it difficult for individuals to assess what to an app to show that they are available for work, they have type of contract they have, so the high-level criteria for employment limited control over the performance of their role. In cases status should be set out in legislation to make the position clearer. involving couriers, individuals were told which jobs to do by a controller, expected to remain in contact throughout the day, The current “three-tier” approach to employment status (i.e., had to remain in a specified area while waiting for jobs, and employee, worker, self-employed) should be retained, because it were not entitled to refuse a job once it had been allocated to allows basic protections for less formal employment arrangements. them except in exceptional circumstances. However, workers should be renamed “dependent contractors” and ■ Who provides uniform and equipment? The more equipment the current emphasis on personal service should be reduced. It provided by the business, the more likely it is that there will is not right to deprive someone of basic employment protections be a worker relationship. In Pimlico Plumbers, individuals just because they have a genuine contractual right to appoint a were expected to wear Pimlico Plumbers uniforms and drive substitute. There should be a greater emphasis on control as the branded vans; in Gasgoigne v Addison Lee Ltd couriers were basis for deciding whether someone is a dependent contractor or provided with a branded bag and T-shirt (although their use genuinely self-employed. was not consistently enforced), a book of receipts, and the technology they needed to pick up jobs; medical couriers In addition, the burden of proof should be on the employer to were provided with relevant kit free of charge in Dewhurst v demonstrate that someone is not an employee in the event of CitySprint UK Ltd. a claim, rather than the other way round. The Report suggests ■ Who sets charges and deals with payments? Generally the the introduction of an online tool to provide an indication of an cases indicate that if rates are set by the “employer”, and individual’s employment status, which could eventually be used as there is no opportunity for individuals to set their own rate or a simple way of establishing employee status. More transparency negotiate a better rate with the customer, they are more likely is also needed to ensure that all workers are aware of their basic to be viewed as workers. Typically the “employer” will deal entitlements. Employers have to give employees a written statement with invoicing the customer and receiving payment, part of of their terms and conditions of employment and this right could be which is then passed on to the individual. extended to dependent contractors. ■ What degree of risk does the individual undertake? New rights are proposed for agency workers and those on zero- Individuals working in the gig economy are often required hours contracts. Once an agency worker has been placed with the to have insurance covering the performance of their duties. This is often provided by the business at a lower cost than same hirer for 12 months, the Report suggests that they should have would be available if the individual had been obliged to a right to request a direct contract with the hirer. Similarly, once arrange their own cover. a zero-hours worker has been engaged for 12 months, they should ■ Where does risk lie if the customer ultimately fails to pay? In have a right to request a guaranteed-hours contract. The end-user in many of the cases, the individual is cushioned from loss by each case would have to consider requests in a reasonable manner the actions of the business, which was more consistent with a but would not be obliged to agree to them. worker relationship than that of a self-employed contractor. Another idea in the Report for ensuring that all individuals have The trend at tribunal level, and in the Employment Appeal Tribunal access to “good work” is to ensure that employees and other workers in the one case that has so far been determined, is for “self- have an effective voice in the workplace. Employees have a right employed” gig economy contractors to be regarded as workers. under the Information and Consultation of Employees Regulations Further developments are expected in 2018, with the Supreme Court to ask employers to set up an information and consultation body if due to hear an appeal in the Pimlico Plumbers case. 10% of employees support the request. The Report suggests that both employees and workers should be able to support a request and that only 2% of the workforce should have to support a request for The Taylor Review it to be binding. The Report also envisages bringing public pressure to bear on While individuals have been pursuing claims in the employment companies that do not adopt good employment practices. Employers tribunal, the government has asked Matthew Taylor to conduct a above a certain size could be required to publish details of their wider-ranging review into issues such as: whether the growth in employment models, their use of agency workers and the number non-standard employment models undermines policies such as
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of requests for direct contracts/guaranteed hours-contracts that they Giving dependent contractors a right to a written statement of terms have received and agreed to. This is designed to allow consumers to and conditions would present an additional administrative burden make choices about how to use their purchasing power. for employers and it may also make individuals more aware of their rights. In turn, this might result in more enforcement action, particularly as individuals no longer have to pay a fee to bring an The role of tax employment tribunal claim, following a Supreme Court decision in 2017 which found the existing tribunal fees regime to be unlawful. A key point highlighted by the Report is the part that tax plays in the worker/employee/contractor debate. The way that the National The right to request a direct contract (in the case of agency workers) Insurance Contributions (NICs) system in particular works means or a guaranteed hours contract (in the case of zero-hours workers) that there is a financial advantage both to businesses and to after 12 months is again more of an administrative burden than a individuals in structuring arrangements to avoid employee status. legal one, given that the duty is to consider requests reasonably, not to agree to them. However, dealing with a significant volume This is because for tax purposes an individual is either an employee of requests would be time-consuming and the solution for some and subject to employee tax (including employee and employer NICs companies may be to offer a certain number of guaranteed hours obligations) or self-employed. According to figures in the Report, with additional non-guaranteed hours on top. We may also see an employee doing a particular job would pay 12% employee NICs companies placing limits on the duration of agency assignments. contributions and his or her employer would pay 13.8% employer NICs contributions. By contrast, someone doing the same job on a The Report places significant emphasis on employee consultation self-employed basis would only pay 9% NICs and there would be as a way of ensuring “good work” for all. Generally employees no employer contribution. have been apathetic about their rights under the Information and Consultation Regulations and there is no obvious reason why this The reason for this difference is largely historical and reflects the will change in non-unionised workforces if the threshold for making fact that the employed and self-employed were originally entitled a request is reduced. The story may be different in unionised to different social security benefits. Those differences have now workplaces, if unions see information and consultation as a first step been largely eliminated, other than in relation to certain types of to union recognition and are therefore keen to support it. If this idea paid family leave and statutory sick pay entitlements. The Report is pursued, we may see employers facing more requests to set up suggests that the tax treatment of paid work needs to be harmonised, consultation bodies. However, it seems relatively unlikely that this regardless of whether it is provided on an employed or self- will be a political priority for the current government and a potential employed basis. Where state benefits are essentially the same for Labour government is likely to prioritise union rights over more both groups of worker, there is no longer a logical reason why the general information and consultation obligations. burden of paying for those benefits should fall more heavily on employed workers. Finally, there is a question about the impact of requiring businesses to be more transparent about their employment models. There is a risk of negative publicity for businesses that are perceived to exploit How Significant Would the Proposed their workers. In turn, this may result in consumers “voting with Changes be? their feet” by refusing to use businesses that they perceive to be acting in this way. In practice, this probably depends on whether One of the key recommendations in the report is to change the consumers are willing to pay more for products or services if this definition of employee status. However, if the new definition of results in better working conditions for staff. The approach is who constitutes an employee simply reflects the position already similar to the approach that has been taken to the gender pay-gap established by case law, the proposal has limited implications for and time will tell whether it is likely to be effective. employers. If the legal test is clearer, individuals may be more Ultimately, the recommendation that would have the greatest impact willing to challenge their status through the employment tribunal, would be the harmonisation of NICs rates for the employed and particularly if the burden of proof shifts to the employer to disprove self-employed. However, it remains to be seen whether changes employer status. to the tax system are possible politically, after a failed attempt to The Report’s recommendations make it more likely that individuals harmonise NICs rates in the 2017 budget. will be dependent contractors (workers) in the future. At the moment, it is clear that someone who has an unfettered right of substitution cannot be a worker. The removal of the requirement for personal service for dependent contractors would remove this potential barrier to worker status.
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Stefan Martin Jo Broadbent Hogan Lovells Hogan Lovells Atlantic House, Holborn Viaduct Atlantic House, Holborn Viaduct London EC1A 2FG London EC1A 2FG United Kingdom United Kingdom
Tel: +44 20 7296 2751 Tel: +44 20 7296 2026 Fax: +44 20 7296 2001 Fax: +44 20 7296 2001 Email: [email protected] Email: [email protected] URL: www.hoganlovells.com URL: www.hoganlovells.com
Stefan is Head of the London Employment Practice and advises on all Jo is PSL Counsel in the Hogan Lovells employment team. As well aspects of employment and employment relations law. His practice as keeping clients and the team up to date with legal developments, includes advising on individual employment disputes, unfair and she develops and presents internal and external client training courses wrongful dismissal, discrimination and equal pay, enforcement of post- and workshops and sits on the Employment Lawyers Association termination covenants and protection of confidential information, and training committee. One of her particular interests relates to maternity employment aspects of regulatory and other investigations. Stefan and other family-friendly policies – she is the main contributor to the also advises on collective employment law, employee consultation, “Family friendly” section of the CIPD’s HR-inform tool, and the updating trade union recognition and industrial action. In addition, Stefan author of much of Xpert HR’s family-friendly rights section. Jo is also a has extensive experience advising on employee matters arising in co-author of the book “Informing and Consulting Employees: the New connection with all types of corporate transactions, business transfers Law”, and contributed the UK employment law section to a book on and outsourcing agreements. European cross-border mergers. Stefan has been listed as a leading UK employment law practitioner in both UK and international directories.
Today’s market challenges Employment law frameworks around the world are complex and pose many challenges for global companies. They affect the way business is conducted and have an impact on how strategy is built and rolled out. The ability to work swiftly and effectively across borders – in a variety of languages and cultures – is essential. How we help We have the geographic reach and local knowledge our clients need. From this platform, we provide sophisticated, coordinated guidance on the most pressing and difficult employment issues, wherever they arise. Our work covers the full spectrum of employment matters. We help navigate workplace policies and practices. We develop comprehensive risk avoidance strategies. We advocate in litigation and arbitration. We negotiate with unions and other employee representatives. And we regularly implement strategic domestic and international initiatives. Our team approaches all of these challenges creatively, strategically and cost-effectively. Over and above being a legal adviser, we aim to be a business partner. And we always put our clients first.
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Albania Sabina Lalaj
Deloitte Legal Sh.p.k. Ened Topi
governs the employment relationship of certain employees working 1 Terms and Conditions of Employment in the public sector. The applicable legislation may provide for additional protection (i.e., with regard to work conditions) regarding 1.1 What are the main sources of employment law? certain types of employees (i.e., employees working in the mining sector). The main pieces of legislation governing the employment The following types of employment contracts are regulated under relationship in Albania are the Labour Code and the Law on the Labour Code: Civil Servants. Herein below are other sources along with the ■ full-time and part-time contracts; aforementioned acts, listed in hierarchal order: ■ limited and unlimited duration contracts; (i) Albanian Constitution. ■ employment agency contracts; (ii) Conventions governing employment matters as ratified by the ■ individual and collective employment contracts; Republic of Albania. ■ home-based employment contracts; (iii) Law no. 7961, dated 12.07.1995 “The Labour Code of the ■ commercial agent contracts; and Republic of Albania”, as amended (“Labour Code”). ■ apprenticeship/internship contracts. (iv) Law no. 152/2013, dated 30.05.2013 “On the Civil Officer”, as amended (“Law on Civil Servant”). (v) Law no. 10237, dated 18.02.2010 “On Security and Health at 1.3 Do contracts of employment have to be in writing? If Work”, as amended. not, do employees have to be provided with specific (vi) Law no. 9634, dated 30.10.2006 “On Work Inspection”, as information in writing? amended. (vii) Law no. 7703, dated 11.05.1993 “On Social Insurance in the In specific cases when, for justified reasons, the contract hasnot Republic of Albania”, as amended. been concluded in writing, the employer must, within a period (viii) Law no. 10383, dated 24.02.2011 “On Obligatory Health of seven days from the date when the employee is hired, sign the Care Insurance in the Republic of Albania”, as amended. contract in writing. Failure to comply with this requirement may result in a fine for the employer of up to 30 times the value of the (ix) Law no. 10221, dated 04.02.2010 “On Protection from Discrimination”. minimum monthly salary. (x) Law no. 9970, dated 24.07.2008 “On Gender Equality”. (xi) Law no. 108/2013, dated 28.3.2013 “On Foreigners”, as 1.4 Are any terms implied into contracts of employment? amended. (xii) Secondary legislation (i.e., decisions of the Council of All the mandatory provisions of the Labour Code on the non- Ministers and various instructions or orders issued for the renounceable rights of the employee are applicable. Some rights implementation of the above). are/may be specifically provided in the employment contract, while Another important source is the unifying decisions of the Unified for others this information is provided by reference to the provisions Colleges of the Albanian Supreme Court that serve as mandatory of the Labour Code, the decisions of the Council of Ministers or a case law for disputes deriving from the employment relationship. collective agreement (i.e., rights to compensation, time-off, various leaves, safety at work, etc.). In addition, the obligations of loyalty, due diligence and care are applicable to employees without the need 1.2 What types of worker are protected by employment to specifically address them in the contract. law? How are different types of worker distinguished?
A general distinction can be made among employees engaged in 1.5 Are any minimum employment terms and conditions the employment relationship governed by the Labour Code: private set down by law that employers have to observe? sector employees and employees in certain categories of the public sector; and public sector employees. The latter refers to civil The employer shall observe the non-discrimination obligation, the servants engaged in an employment relationship regulated by the right of the employees to be organised in unions, the protection Law on Civil Servants. There is no clear-cut division based on of employees that denounces corruption, the minimum age of the public and private sector criteria, since the Labour Code also employees, health and safety at work, safety/protection of the
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employee personality, protection of pregnant women and the The strike is considered legally compliant when organised by a applicable facilities, minimal salary, overtime limits, annual legally founded trade union; it aims to reach either the conclusion holidays/paid leave, other permits/other paid and unpaid leave, etc. of a collective contract or (if that already exists) the fulfilment of those requirements deriving from the employment relationship but not set forth in the collective contract, with parties (trade union 1.6 To what extent are terms and conditions of employment agreed through collective bargaining? and employers) having made all efforts to solve the issue through Does bargaining usually take place at company or mediation and reconciliation. industry level? The Labour Code provides protection for the striking employees during the strike period, inclusive of the prohibition of the employer The collective contract contains provisions on employment to dismiss or replace the participants in the strike with new employees. Albania conditions, on content and termination of the individual employment contracts, provisions related to disciplinary measures and on 2.4 Are employers required to set up works councils? If relationships between the contracting parties. The collective contract so, what are the main rights and responsibilities of cannot contain less favourable provisions for the employee than such bodies? How are works council representatives provided for in the applicable legislation. Furthermore, in case of chosen/appointed? provisions not anticipated in the individual employment contract, reference is made to collective bargaining. The collective bargaining The Labour Code does not provide regulations for the establishment usually takes place at company level. of work councils. Law no. 9901, dated 14.04.2008 “On Entrepreneurs and Commercial Companies”, as amended, provides that the council 2 Employee Representation and Industrial of employees may appoint representatives to the board of a joint stock company, if agreed with the management of the company. No Relations other provisions deal with such issues. The establishment of a safety council and relevant criteria are 2.1 What are the rules relating to trade union recognition? provided under the Law no. 10237, dated 18.02.2010 “On Safety and Health at Work”. This type of council represents the employees The Labour Code provisions govern the establishment and the rights solely in relation to health and security issues at the workplace. of the trade unions and professional organisations of employers and employees. It also has to be noted that freedom of association is a 2.5 In what circumstances will a works council have co- right guaranteed by the Albanian Constitution. determination rights, so that an employer is unable to Trade unions and professional organisations should submit the act of proceed until it has obtained works council agreement incorporation and the bylaws to the First Instance Court of Tirana in to proposals? order to acquire legal personality. The act of incorporation and bylaws of the trade union should be signed by a minimum of 20 founding This is not applicable. members, whilst the professional organisation should have a minimum of five founding members. Legal personality is acquired 60 days after 2.6 How do the rights of trade unions and works councils the filing, unless the court rules on the rejection of such request. interact?
2.2 What rights do trade unions have? This is not applicable.
Trade unions represent their members in negotiations of the collective 2.7 Are employees entitled to representation at board contracts with the employers, as well as in negotiations regarding level? the change of terms and conditions of the existing collective employment contracts. Trade unions are further entitled to protect Please see our answer to question 2.4 above. the interests of their members before the courts, in order to oblige the employer to observe the provisions of the employment legislation, collective employment contract or individual employment contracts. 3 Discrimination These organisations may be of a larger size such as federations (i.e., the voluntary union of least two trade unions) and confederations 3.1 Are employees protected against discrimination? If (i.e., voluntary union of least two federations), and may become so, on what grounds is discrimination prohibited? members of international professional organisations. Based on the Labour Code provisions, only trade unions may organise and Article 18 of the Constitution of the Republic of Albania provides announce strikes. that we are all equal before the law. No one may be discriminated for reasons such as: gender; race; religion; ethnicity; language; 2.3 Are there any rules governing a trade union’s right to political opinions; religious or philosophical beliefs; their economic, take industrial action? educational, or social status; or parental ethnicity. Exceptions are made in cases when there is a legal and objective reason for such The right to strike is also guaranteed by the Albanian Constitution. discrimination. The Labour Code defines that only trade unions have the right to Furthermore, article 9 of the Labour Code provides that while organise and announce strikes. In practice, such industrial action is exercising the right to employment and exercising their profession, used as a last resort by trade unions to achieve their economic and employees are protected against any form of discrimination as social goals. provided in the Labour Code or any other sectorial legislation. The same principles for the protection of employees against any
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discrimination have also been provided by Law no. 10221, dated 04.02.2010 “On the Protection Against Discrimination”. 3.6 Do “atypical” workers (such as those working part- time, on a fixed-term contract or as a temporary The prohibition of discrimination aims to guarantee equal chances agency worker) have any additional protection? in employment to persons who are in objectively similar situations. “Atypical” employees are entitled to the same rights for protection 3.2 What types of discrimination are unlawful and in what against discrimination as any other full-time employee. circumstances?
Discrimination means any kind of distinction, exclusion, restriction 4 Maternity and Family Leave Rights or preference, based on: race; skin; colour; ethnicity; language; Albania gender identity; sexual orientation; political opinions; religious 4.1 How long does maternity leave last? or philosophical beliefs; economic, educational or social status; pregnancy; parentage; parental responsibility; age; marital or family Maternity and family leave rights are regulated by the Labour Code, status; residence; health status; genetic predispositions; any kind of as well as Law no. 7703, dated 11.05.1993 “On Social Security disability; HIV/AIDS; joining or belonging to unions; affiliation Contributions in the Republic of Albania”, as amended (“Social with a particular group; or in any other case, that has the purpose Security Law”). or effect of preventing or making impossible the exercise of the right to employment and occupation, in the same conditions as other Pursuant to article 104 of the Labour Code, it is prohibited for employees. pregnant women to work 35 days before and 63 days after birth. When a woman is pregnant with more than one child, the first period becomes 60 days. 3.3 Are there any defences to a discrimination claim? Furthermore, the Social Security Law, article 27, provides that pregnant women shall benefit from maternity leave payment from The employer against whom the employee has raised discrimination the social security contribution scheme for a period of 365 calendar claims has the burden of proof and should present the relevant days in total, including a minimum of 35 days before and 63 evidence that the discriminatory situation does not exist. days after childbirth. In line with article 104 of the Labour Code mentioned above, for women pregnant with more than one child, 3.4 How do employees enforce their discrimination the benefit period shall be a total of 390 calendar days, including a rights? Can employers settle claims before or after minimum of 60 days before childbirth. they are initiated? Therefore, the maternity leave period is a minimum of 98 days and a maximum of 365 days, or otherwise a minimum of 125 days and Article 15 of Law no. 10221, dated 04.02.2010 “On the Protection a maximum of 390 days if the woman carries more than one child. Against Discrimination” provides that every employee has the right According to article 105.4 of the Labour Code, after completing to complain to the employer, the Commissioner for the Protection the minimum mandatory maternity leave, after the 63-day period against Discrimination or the court if he/she believes that he/she has following childbirth, a woman may decide by herself if she wants been discriminated against. This provision does not limit the right to work or benefit from the social security payment and therefore of appeal to special institutions created at different employment avail of the maximum period of maternity leave, as indicated above. sectors. With such regard, the employee and employer may settle the claims between them before starting any administrative or In any case, the right to maternity leave payment is granted to women judicial procedure. who have paid social security contributions for at least 12 months in total. Exception to the requirement of the 12-month insurance period During the examination of the complaint, the employee has the right is made in cases when the right for the next maternity leave begins to continue working as per the terms of the respective employment within 24 months from the date of birth of the previous child. contract. The parties may reach an understanding/settlement even after raising the relevant discrimination claims. Furthermore, with the latest amendments to the Labour Code as well as Social Security Law, special treatment has been introduced for If the employer does not take action to investigate and resolve a adoptive parents with regards to leave and benefits, similar to those complaint of discrimination, the employee who raised the complaint attributed to biological parents. has the right to stop working, without losing the salary, for as long as it is necessary to be protected from such discrimination. The As such, article 106 of the Labour Code stipulates that, in the case of employee must return the salary received as above if the court, adoption of a newborn child, the employee has the right to a period through a final decision, decides against the existence of the claimed of leave defined by the legislation on social security. Leave for discrimination. adoption may be used by only one of the adoptive parents. Article 27 of the Social Security Law stipulates the period of the 3.5 What remedies are available to employees in parenting leave in the case of adoption. Pursuant to this disposition, successful discrimination claims? the adoptive mother of a child, aged up to one year old, that has paid social security contributions for at least 12 months, has the right to Pursuant to the abovementioned law, if the discrimination claims of parenting leave, starting from the day of adoption, not earlier than rd the employee are based in law, he/she may require to be reinstated in the 63 day after childbirth and for a maximum of 330 days after their previous position or may require indemnification for material childbirth. In any case, the minimum adoptive leave is of 28 days. or non-material damages or any other appropriate measures. The biological mother is entitled to maternity leave benefits until the adoption date, in cases where the child has been adopted during the maternity leave period. In any case, the maternity leave benefits for the biological mother shall be calculated for a period not exceeding 63 days from the date of birth.
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any risk towards the employee and the child. In case such adaptation 4.2 What rights, including rights to pay and benefits, does is not possible for technical reasons and a possible transfer in a woman have during maternity leave? a similar job is impossible, the employee shall benefit from the protection offered by the legislation on social security contributions The Social Security Institute grants to women the following benefits (maternity leave and payment as per points (i) and (ii) of question and payments under the social security contributions scheme: 4.2 above). (i) The right to maternity leave payment for each case of Furthermore, article 108 of the Labour Code stipulates requirements pregnancy, for women who have paid social security and conditions regarding night-shift work for mothers, until the contributions for at least 12 months. An exception to the child reaches the age of one. In this regard, it is provided that the requirement of the 12-month insurance period is made in employer cannot require a mother to carry out night-shift work, in Albania cases when the right for the next maternity leave begins within 24 months from the date of birth of the previous child case a medical report certifies that such work may endanger the (article 27 of the Social Security Law). health of the mother and child. The same protection and benefits The payment for maternity leave for insured women is as those attributed to mothers working under hazardous working calculated as below: conditions as provided in the above paragraph, are also applicable to night-shift work. a) 80% of the daily average net assessment base of the last 12 months, starting from the date the right of payment before birth has started and 150 calendar days after birth. 4.4 Do fathers have the right to take paternity leave? b) 50% of the daily average net assessment base of the last 12 months starting from the date the right of payment The latest amendments to the Labour Code and Social Security Law before birth has started, for the period thereafter. have introduced additional rights for the male parent. (ii) A woman insured for at least 12 months, that pursuant to a Article 96.3 of the Labour Code provides that a father, being a decision of the competent medical committee, has changed workplace because of her pregnancy, has the right to obtain spouse or a partner living with the mother, is entitled to three days compensation for any reduction of income incurred because of paid leave. of this change, provided that she has paid social security Furthermore, the Social Security Law, under point 7 of article 27, contributions for at least 12 months (article 28 of the Social provides that the right of maternity leave after the period of 63 Security Law). days after birth, can also be granted to the father or adoptive male (iii) Remuneration for childbirth is granted to an insured mother parent if he is insured, in cases where the mother does not fulfil the that has paid social security contributions for one year prior necessary insurance requirements or does not wish to exercise such to childbirth. This remuneration is a one-time payment, right. equal to 50% of the minimum monthly wage (article 29 of the Social Security Law). In addition, special protection is granted to pregnant or lactating 4.5 Are there any other parental leave rights that employers have to observe? women, through articles 104.2 and 108 of the Labour Code, providing that they cannot be employed to carry out hazardous or dangerous work as well as work during night shifts that can harm Article 132.1 of the Labour Code determines other parental leave either their own or their child’s health. rights. Under such provision, an employee, who has more than a year of continuous employment with the same employer is entitled to unpaid leave of no less than four months, until the dependent 4.3 What rights does a woman have upon her return to child reaches the age of six years. The right to request parental leave work from maternity leave? for each parent is individual and not transferable, except when one of the parents dies. The leave may be granted partially, but in any Article 105.4 of the Labour Code provides that, after completing case, for no less than one week a year. The duration is determined maternity leave, the employee has the right to return to the same through a written agreement between the employer and employee. work position or an equivalent one under no less favourable working In case of adoption, such parental leave is granted within six years conditions, and benefit from any improvement of her working from the date of adoption of the child, but no later than when the conditions that would have been of benefit during her absence. child reaches the age of 12 years. The same provision is also applicable for a parent benefitting from adoption leave. In addition, the Labour Code provides for special protection with leave benefits for a mother during pregnancy, as below: More specifically, according to article 105 of the Labour Code, in case the decision of the mother is to return to work after the 63-day (i) In case the job position consists of standing or leaning for a long time, paid breaks of 30 minutes for every three hours of period following childbirth, in agreement with the employer and for work are given. the purpose to feed the child until he/she reaches the age of one year (ii) In agreement with the employer, the pregnant employee has old, she has the right to choose between: the right to paid breaks for carrying out medical examinations (i) a paid break of two hours within normal working hours; or during working hours. (ii) daily normal working hours reduced by two hours, payable as if it is a working day of normal duration. 4.6 Are employees entitled to work flexibly if they have The Labour Code offers special protection regarding the working responsibility for caring for dependants? conditions for a mother. In this regard, after returning to work from childbirth, the employer shall ensure that the working conditions With regards to flexibility on working hours because of childcare, are suitable and safe, and in accordance with the provisions of the the Labour Code does not provide any specific provisions. However, legislation for health and safety at work. In this regard, the employer under article 132 of the Labour Code, employees that take care of shall take any necessary measures for the interim adaptation of the dependents have several benefits, as follows: working conditions and working hours, for the purpose of avoiding (i) up to 12 days of paid leave per year;
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(ii) when the dependent children are up to three years old, up to 15 days of paid leave per year, provided that the sickness of 6 Termination of Employment the children is proven by a medical report; and (iii) additional sick leave for up to 30 days unpaid. 6.1 Do employees have to be given notice of termination The right of sick leave for the dependents is granted to the parent of their employment? How is the notice period that is effectively involved with taking care of the child, or otherwise determined? to both parents, one after the other. During the first three months of employment, considered the probation period, each party may terminate the employment contract 5 Business Sales upon a notification delivered to the other party at least five days in advance. Albania
5.1 On a business sale (either a share sale or asset Furthermore, pursuant to article 143 of the Labour Code, the transfer) do employees automatically transfer to the following notification periods are applicable for each party (i.e., buyer? employer or employee) that intends to terminate the employment contract after the probation period: According to article 138 paragraph 2 of the Labour Code, the partial or (i) two weeks during the first six months of employment; complete business sale (share sale or asset transfer) would not affect (ii) one month for between six months and two years of the rights and obligations deriving from the employment contract in employment; force up to the moment of transfer. The same paragraph stipulates (iii) two months for two to five years of employment; and that the employee is obliged to work for the new employer up to the (iv) three months for more than five years of employment. termination of the notice period, even if he/she is against the transfer. Such terms are suspended during disability, maternity leave or during holidays given by the employer, and resume upon expiration 5.2 What employee rights transfer on a business of such suspension. Additionally, during the notice period, the sale? How does a business sale affect collective employee shall benefit from at least 20 hours of paid leave per week, agreements? in order to seek another job.
As indicated under question 5.1, all rights and obligations arising from employment contracts in force at the moment of transfer will 6.2 Can employers require employees to serve a period pass to the new employer. of “garden leave” during their notice period when the employee remains employed but does not have to attend for work? 5.3 Are there any information and consultation rights on a business sale? How long does the process typically The employment relationship terminates at the end of the notice take and what are the sanctions for failing to inform period; however, the parties may agree that the employee, although and consult? being ‘formally’ under contract, is released from the obligation to discharge his/her duties. Both the transferor and the transferee have the duty to inform the trade union (recognised as the representative body of the employees) or, in its absence, the affected employees on the transfer, of the transfer’s 6.3 What protection do employees have against reason, the legal, economic and social consequences and measures dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third that will be carried out for them. The obligation on information and party required before an employer can dismiss? consultation should be carried out regardless of whether the decision on the transfer is made by the employer or another controlling entity. There are different levels of protection, spanning from the grounds The notification has to be made at least 30 days from the transfer of termination, to the procedure of termination itself. As for the date. Consultations regarding the measures affecting the employee grounds of termination, article 144 paragraph 3 of the Labour Code during the transfer should be carried out within the same period. stipulates that the decision of the employer on termination should be on grounds related to the employee’s performance or behaviour 5.4 Can employees be dismissed in connection with a or the operational needs of the company. Moreover, the employee business sale? cannot be dismissed for so-called unreasonable grounds listed under article 146 of the Labour Code. With regard to the procedure to Generally, the dismissal of employees based on business sale be followed, the employer is bound to follow the termination grounds is considered as null and void. However, there are some procedure detailed under question 6.6 below. The employee is exceptions such as dismissals based on the economic, technological considered dismissed in cases where the employer has terminated or structural reasons, which do require changes in the employment the employment contract (i.e., with the elapsing of the notice period plan. In the latter case, the procedure and rules as detailed in the or with immediate effect in case of dismissal for justified grounds). following section 6, Termination of Employment, must apply. Generally, no third-party consent is required for an employee’s dismissal; however, an exception is made in cases of employees that 5.5 Are employers free to change terms and conditions of are representatives of trade unions. In the latter case, the employer employment in connection with a business sale? should request consent of the trade union, and the latter might withhold its consent should the dismissal heavily impair or make The Labour Code stipulates that the transferor and transferee are impossible the operation of the trade union or violate the principle obliged to observe the obligations deriving from the employment of equal treatment. contract until the end of the notice period or the term set out in the employment contract.
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6.4 Are there any categories of employees who enjoy 6.7 What claims can an employee bring if he or she is special protection against dismissal? dismissed? What are the remedies for a successful claim? According to the provisions of the Labour Code, the employer cannot terminate the employment contract of: The employee can address the court and challenge the dismissal for (i) employees benefitting from allowances for temporary procedural breaches and/or material breaches. Should the employer disability from the employer or Social Security Institute, for fail to comply with the termination procedure, the employee must a period of up to one year; be indemnified with two monthly salaries. On top of that, in (ii) employees during the period of benefitting from the Social case of termination without reasonable cause, the employee can Albania Security Institute, in the event of maternity or adoption leave; be indemnified with up to one year’s salary, the salary that the and employee should have received during the notice period, plus the (iii) employees on vacation granted by the employer. accrued annual leave and relevant seniority bonus (if applicable). In any case, it is the employer’s responsibility to prove compliance with the termination procedure provided by the legislation in force. 6.5 When will an employer be entitled to dismiss for: 1) reasons related to the individual employee; or 2) Moreover, for cases of immediate termination of employment business related reasons? Are employees entitled without justifiable cause, the employee is entitled to the salary to compensation on dismissal and if so how is he/she should have received during the notice period or until the compensation calculated? end of the employment contract (in cases of contracts of limited duration). An indemnification not exceeding one year’s salary, plus The employer is entitled to dismiss for reasons related to the relevant seniority bonus (if applicable), will be added to the performance, behaviour or the operational needs of the company. In foregoing. The same will apply for breaches of the notice period. this case, employee is entitled to the following: (i) notice period (as per question 6.1 above); 6.8 Can employers settle claims before or after they are (ii) seniority bonus in cases where the employee has served at initiated? least three years. The seniority bonus is not less than the employee’s salary for 15 days for each employment year Yes, employers can settle claims both before and after they are calculated on the salary at the moment of the termination of initiated. the employment contract; (iii) accrued annual leave; and 6.9 Does an employer have any additional obligations if (iv) end-of-year bonus granted to the employee for three it is dismissing a number of employees at the same consecutive years without expressing any objections. Should time? the employment contract terminate before such bonus is awarded, the same is granted proportionally with the period of work performed. Pursuant to article 148 of the Labour Code, a collective dismissal of employees, occurs when the employer terminates the employment On the other hand, in case the employee has been dismissed with for reasons that are not related to the employee. It is considered immediate effect for justified causes, which do not allow the as collective employment termination when within 90 days, the continuation of the employment on a good faith basis, the latter employer dismisses at least: 10 employees for enterprises with will be entitled to receive only the accrued leave. In any case, up to 100 employees; 15 employees for enterprises with 100–200 the grounds leading to termination with immediate effect will be employees; and 20 employees for enterprises with more than 200 checked by the judge, should the employee bring the case in front employees. of the courts. When the employer intends to collectively dismiss the employees, they should notify in writing the employees’ trade union, which 6.6 Are there any specific procedures that an employer represents the employees or, in the absence of such union, the has to follow in relation to individual dismissals? employer should publish a notification in the working place, with the aim of notifying the interested parties. Such notification should Article 144 of the Labour Code determines the procedure that the indicate, especially: employer has to follow for the termination of the contract. Firstly, (i) the termination’s reasons; the employer should deliver a prior notification to the employee, requiring a meeting to discuss their intentions to terminate the (ii) the number of the employees to be dismissed; employment. (iii) the total employees employed; and At least 72 hours from the delivery of the notice, a meeting must (iv) the period when these terminations shall occur. take place in order to discuss the intention of terminating the Further, such notification should also be delivered to the competent employment. In the meeting, the employee presents his/her ministry for employment. counterarguments (if any). Should the employer fail to comply with The employer should meet and consult with the employees’ union such procedure of termination they might be liable to pay to the in order to achieve an agreement, or if there is no such union, with employee a penalty equal to two monthly salaries. the respective employees. Such consultations are held for at least The decision for termination of the employment is notified in writing 30 days, starting from the notification date, except in cases where to the employee 48 hours to one week before the date of the meeting. the employer agrees for a longer duration. Upon conclusion of
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the consultations with the employees’ union or the employees, the employer should notify the competent ministry on such conclusion 7.2 When are restrictive covenants enforceable and for and send a copy of the notice to the interested party. In case the what period? employer and the union or the employees have not reached any agreement, the ministry should assist the parties in reaching an As indicated in the first paragraph of question 7.1 above, the agreement within 30 days from the date the ministry is notified of employee is prohibited from working for third parties or undertaking the conclusion of the consultations with the employees’ union or work that harms or competes with that of the employer, during the employees. The ministry cannot halt collective dismissal. entire period they are under contract with the employer. In cases where no agreement is reached, the employer may continue In order for a non-compete agreement to be enforced, the following with the collective dismissal procedures. The notice period indicated conditions should apply: Albania under question 6.5 above will apply. (i) the employee is at least 18 years old; The employer failing to respect the procedure of the collective (ii) the employee has knowledge of manufacturing/business dismissal from work, is obliged to pay the employee damages, secrets; which equal up to six months’ salary (eventual other damages and (iii) the employee should receive a remuneration of at least compensation of up to one year’s salary are due in case the employer 75% of the salary, he/she would have received in case of fails to respect the notice period). continuation of the employment; and It is to be noted that the employer should give priority to the re- (iv) the agreement is valid only for one year. employment of the employees dismissed from work for reasons not to do with the employees, if they employ employees of comparable 7.3 Do employees have to be provided with financial qualification. compensation in return for covenants?
6.10 How do employees enforce their rights in relation to Please refer to question 7.2. mass dismissals and what are the consequences if an employer fails to comply with its obligations? 7.4 How are restrictive covenants enforced?
With regards to mass dismissals, employees may address the Restrictive covenants are enforceable before the courts. Employees competent court and ask for damage relief. found in breach will be liable for damage relief.
7 Protecting Business Interests Following 8 Data Protection and Employee Privacy Termination
8.1 How do employee data protection rights affect the 7.1 What types of restrictive covenants are recognised? employment relationship? Can an employer transfer employee data freely to other countries? Based on the provisions of the Labour Code, during the employment period, the employee cannot perform paid work for third parties, The protection of employees’ personal data and privacy is which would harm or compete with the work of the employer. guaranteed by the Albanian Constitution, the Labour Code, Law no. Furthermore, article 28 of the Labour Code stipulates for the 9887, dated 10.03.2008 “On Personal Data Protection and Freedom possibility to enter into a non-compete agreement by which the of Information” as amended (“Law on Personal Data Protection”) employee undertakes, following conclusion of the relationship and respective secondary legislation (jointly, the “Legislation on with the employer, the obligation not to compete and, especially, Personal Data Protection”). not to establish, work for, or have any interest in a competitive To this effect, article 35 of the Albanian Constitution sets out, inter enterprise. The non-compete agreement is not applied when the alia, that the collection and public disclosure of personal data is employer terminates the employment contract for unjustified causes allowed only upon approval of the data subject (i.e., the employee), or when the employee terminates it with a justified cause related to unless provided for otherwise by letter of law. the employer. Furthermore, according to article 35 of the Labour Code, the Such non-compete agreements are valid only if the work conditions employer, during the employment relationship, has, inter alia, have granted the employee the possibility of being informed of trade the following obligations with regard to protection of employees’ secrets or information regarding the activity of the employer, the use personal data and/or information: of which could cause considerable damage to the employer. The (i) the employer should not process employees’ information employer may require the execution of the non-compete agreement (i.e., data), except when such information is related to the only if during such period they offer the employee a payment of professional capabilities of the employee or is necessary for at least 75% of the salary he/she would have obtained if he/she the applicability of the employment contract; continued to work for the employer. (ii) the employer should take the relevant security measures on The agreement must explicitly define the prohibition of competition protection of employees’ personal data, especially sensitive data (i.e., employees’ data on provenance, race, ethnicity, for the place, time type of activity, in order not to harm the economic political opinions, adherence in trade unions, religious or future of the employee. philosophic beliefs, criminal conviction, health and sexual life), Notwithstanding the terms of the agreement, the non-compete in accordance with the legislation on personal data protection; obligation terminates when it is proven that the employer no longer (iii) the employer must protect the confidentiality and credibility has legitimate interest. of employees’ personal data. Such data should not be
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divulged, unless otherwise provided for by letter of law. (i) the confirmation whether or not any of his/her personal data Such obligation survives the duration of the employment is being processed, information about the processing’s scope, relationship and is not limited by time; and the categories of processed data, as well as the data receivers (iv) the employer should retain the personal data processed in the and categories thereof; and employee’s file up until the termination of the employment (ii) the personal data and available information about the source relationship. Personal data processing in excess of such term thereof. is allowed only upon consent of the employee. Additionally, any data subject is entitled to request the blocking, Additionally, the legislation on personal data protection reinforces the correction or deletion of his/her data, free of charge, whenever obligation of the employer (i.e., in the quality of the data controller) to becoming aware that such data is incorrect, untrue, incomplete or obtain an employee’s consent prior to processing his/her personal data. has been processed in violation of the provisions of the law (article Albania In addition, such legislation sets out, through several acts of the 13 of the Law on Personal Data Protection). Commissioner for Freedom of Information and Personal Data Protection (“Commissioner”), the obligation of the employer to take 8.3 Are employers entitled to carry out pre-employment precautionary measures regarding the safety of the personal data of checks on prospective employees (such as criminal the employee. record checks)? With regards to the cross-border transfer of employees’ personal data, the Labour Code does not contain any specific provision According to Commissioner’s instruction no. 42, dated 22.07.2014 dealing therewith. “On processing of personal data of employment candidates”, the However, article 35 paragraph 3 of the Labour Code stipulates that employer is entitled to process the personal data of employment the employer is not entitled to disclose the information (including candidates, inter alia, only if its use is lawful and to the extent that the personal data) of the employee to any third party (inside and/ such data are necessary in the scope of recruitment (article 2). or outside the country), unless consented to by the employee him/ When processing the personal data of (i.e., performing pre- herself or as provided for otherwise by the letter of law. employment checks on) the candidates, the employer is obliged To such an end, the general rules on personal data cross-border to inform the latter, through the written declaration on recruitment transfer as per the legislation on personal data protection, shall privacy policies, about the requirements of the applicable legislation apply in the ambit of employment relationships as well. regarding the protection of personal data (articles 2 and 7). This means that the employer might perform the pre-employment checks, According to articles 8 and 9 of the Law on Personal Data Protection, personally, to the relevant candidates, and in compliance with the the cross-border transfer of personal data (to countries with and/or provisions of the legislation on personal data protection (including, without adequate level of personal data protection – as determined but not being limited to, through obtaining the consent of the in virtue of Commissioner’s decision) is allowed, inter alia, in the candidates). following cases: The employer is not entitled to process personal data of individuals, (i) if consented to by the employee; if there is no vacancy at all (at the moment of publication of the (ii) where the transfer is necessary for: the purpose of realisation relevant announcement), or by having the scope of data processing of the relevant contract in place between the data controller solely for the testing of the labour market (article 4). and the data subject; the purpose of implementation of the pre-contractual measures, taken upon request of the data In addition, article 7 of the Law on Personal Data Protection subject; or the fulfilment or realisation of a contract in place stipulates that the processing of sensitive data (including, but not between the data controller and a third party, which is in the being limited to, criminal records) might take place, inter alia, upon interest of the data subject; consent of the data subject. (iii) where it is necessary for the protection of the vital interests of Save the above, the processing of criminal records should be the data subject; also assessed in view of the legislation On Protection Against (iv) where it is necessary or constitutes a legal requirement for an Discrimination. important public interest or for the exercising and protection To this effect, article 12 of the Law no. 10221, dated 04.02.2010 of a legal right; “On Protection Against Discrimination”, in harmony with article (v) where it is done through a public register; and/or 5 of the Labour Code, prohibits any form of discrimination (i.e., (vi) where it is authorised by the Commissioner (as per the any distinction, exclusion, restriction or preference based on, inter procedure set out through the acts of the latter). alia: gender; race; ethnicity; economic, educational or social state; As per the above, the cross-border transfer of personal data of the political opinions; or any other cause (i.e., criminal background), employee should take place in compliance with the applicable which has as its purpose or cause the hindering of, or making legislation. impossible, the exercising of the employment right) in relation to the recruitment of employees. 8.2 Do employees have a right to obtain copies of any Such distinctions, exclusions, restrictions or preferences shall not be personal information that is held by their employer? considered as discrimination if, due to the nature of the professional activities or the conditions under which the profession or the activity Yes, according to article 35 of the Constitution, everybody is (of the employer) is being performed, such characteristics (i.e., criminal entitled to be informed about their personal data being processed by background) form a true and professionally necessary requirement for any third party, and to request the correction or deletion of untrue, the employment. This is on the condition that the different treatment is incomplete or unlawfully processed personal data. lawful and in accordance with the principle of proportionality. Furthermore, according to article 12 of the Law on Personal Data In light of the above, the criminal background check, in the pre- Protection, any data subject is entitled to receive from the data hiring phase, might be conducted in accordance with the mandatory controller, free of charge and upon written request addressed to the provisions of all of the abovementioned legal acts, especially if this latter, inter alia, the following information: is justified in the scope of the recruitment.
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Social media represents a fully private domain of an employee’s 8.4 Are employers entitled to monitor an employee’s life and it is exclusively his/her right to use such communication emails, telephone calls or use of an employer’s means as the latter might consider appropriate. The use of computer system? communication means is, in general, related to the freedom of speech, which constitutes a constitutional right of any citizen The Albanian legislation does not deal explicitly with matters of (article 22 of the Constitution) and the freedom and confidentiality employers monitoring employees’ emails, telephone calls or use of of the correspondence of communication means (article 36 of the their computer system. Moreover, to the best of our knowledge this Constitution). has not yet been tested before any public authority and/or court. Based on the above the employer cannot control how an employee However, this might be assessed on the basis of the rights and uses his/her social media, both inside or outside of the workplace. Albania obligations that the employer and employee have in virtue of the Notwithstanding the foregoing, the employer would be entitled to applicable legislation (including, but not being limited to, the restrict the use of such media through the equipment and/or devices Labour Code). that are their property, and which have been made available to The Labour Code sets out several obligations that the employee the employee by them, for the purpose of performance of his/her should accomplish during the employment relationship; such contractual tasks. accomplishments might also be subject to monitoring on the part Additionally, the employer might set out specific rules in connection of the employer. with use of social media, emphasising the various obligations of the In this view, according to article 23 of the Labour Code, the employee employee (duty of care, protecting the interest of the employer, etc.) must perform his/her tasks as per the orders and/or instructions of in the ambit of the employment relationship. the employer and to the best interest of the latter. The employee should carry out his/her job diligently, with due 9 Court Practice and Procedure care, and in accordance with the rules set out by the employer, and the equipment, devices and other means made available by the employer (article 24). 9.1 Which courts or tribunals have jurisdiction to hear Moreover, the employee is obliged to protect the best interest of employment-related complaints and what is their the employer and, especially, preserve the secrecy of facts and composition? information received by the employer, as requested by the latter (article 26). Any dispute related to employment relationships involving private parties shall be subject to the jurisdictions of the District Civil Additionally, as mentioned in question 8.1 hereinabove, the Courts of the Republic of Albania. As a rule at the First Instance employer is allowed to collect, during the employment relationship, Court, the cases are judged by a single judge. any information about the employee that relates to professional capabilities or applicability of the employment contract. The court may be composed of a panel of three judges, should the dispute amount be higher than ALL 20 million (approx. EUR Therefore, it might be considered a lawful and reasonable right of 147,000) and the creation of the panel is required from one of the the employer to monitor, supervise, and become aware of, (including disputing parties. During the appeal the court panel is composed of through the communication means made available to the employee three judges. In the Supreme Court, the case is examined by a panel by the employer themselves) the compliance of the employee with of three judges for cases judged by a single judge in first instance, the employment contract and the abovementioned provisions of the and five judges in other cases. Labour Code. In any case, it is crucial for the lawfulness of the monitoring process that the employee is aware of such employer Any dispute to employment relationship, when the employee is part activity. of the public administration, shall be subject to the jurisdiction of the Administrative Courts of the Republic of Albania. In relation to On the other hand, article 36 of the Constitution stipulates that the employment disputes, the cases are judged by a single judge in the freedom and confidentiality of the correspondence and any other first instance, three judges in the Administrative Appeal Court and communication means is guaranteed. five judges at the Administrative Panel of the Supreme Court. To such an end, article 123 of the Criminal Code sets out, inter alia, that the intentional monitoring (placement under control) or interception of telephone calls or any other communication means 9.2 What procedure applies to employment-related constitutes criminal contravention and is punishable by a fine or up complaints? Is conciliation mandatory before a complaint can proceed? Does an employee have to to two years’ imprisonment. pay a fee to submit a claim? In light of the above, the employer is entitled to exercise their monitoring rights (inter alia, through the communication means Employment-related complaints may be filed with the competent and/or equipment that the latter has made available to the employee) court within 180 days from the termination of the employment without violating the privacy rights of the employee. Otherwise, the or the damage suffered. There is not any mandatory conciliation monitoring process would be unlawful. procedure to be followed prior to the filing of the lawsuit. The official fees applicable for employment-related complaints actually 8.5 Can an employer control an employee’s use of social vary from ALL 0 to ALL 3,000 (approx. EUR 22). media in or outside the workplace? A new law on court tariffs has been enacted (Law no. 98/2017) and will enter into force on 01.06.2018. The matter of employers controlling an employee’s use of social media, as with question 8.4, is not explicitly regulated by labour legislation and has not yet, to the best of our knowledge, been tested before any public authority or court.
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9.3 How long do employment-related complaints typically 9.4 Is it possible to appeal against a first instance take to be decided? decision and if so how long do such appeals usually take? Employment-related complaints typically take six months to be decided in the civil court and approximately three months in the First instance court decisions are challengeable before the competent administrative court. civil or administrative appeal courts of appeal. The decision may take approximately one year. Albania
Sabina Lalaj Ened Topi Deloitte Legal Sh.p.k. Deloitte Legal Sh.p.k. Rr. Elbasanit Rr. Elbasanit Pallati nr. 1 poshte F. Gjeologji - Miniera Pallati nr. 1 poshte F. Gjeologji - Miniera Tirana, 1001 Tirana, 1001 Albania Albania
Tel: +355 4 45 17 927 Tel: +355 4 45 17 906 Email: [email protected] Email: [email protected] URL: www2.deloitte.com/al/en URL: www2.deloitte.com/al/en
Sabina is a Senior Managing Associate at Deloitte Legal Sh.p.k. She Ened is a Managing Associate at Deloitte Legal Sh.p.k. He joined joined our practice in 2015 from a leading law firm in Albania. She our practice in 2015 from a leading law firm in Albania. Ened has specialises in employment law, corporate law, project finance, real more than eight years of experience in employment, corporate law, estate, public procurement, mergers and acquisitions, concessions, project and corporate finance, mergers and acquisitions, competition, privatisations, energy, banking and construction law. Sabina is construction, concessions, intellectual property, consumer and data continuously involved in providing legal advice both in Albania and protection law, etc. He is the author of several papers and chapters in Kosovo. She is the author of several papers and chapters in international international legal publications such as The International Comparative legal publications such as The International Comparative Legal Guide Legal Guide series and International Law Office. Ened graduated in series and International Law Office. Sabina graduated in Law from Law from the University of Macerata, Italy (2006), and holds a Master’s Tirana University in Albania (2000), and obtained a Master of Arts degree in Euro-Mediterranean Studies in Commerce and Social- degree in South East European Studies at the National & Kapodistrian cultural Cooperation from the University of Macerata, Italy (2007). University of Athens, Greece (2001). Sabina has been a member of the He is a member of the Albanian Bar Association and an Authorised Albanian Bar Association since 2003. Trademark & Industrial Design Representative.
Deloitte Legal Sh.p.k. is a limited liability company established and organised in accordance with the laws of Albania. Deloitte Legal Sh.p.k. is an affiliate of Deloitte Central Europe Holdings Limited, the member firm in Central Europe of DeloitteTouche Tohmatsu Limited. The firm was established, having as its priority and goal, the imperative of serving, with competence and due expertise. The firmworkswith local and multinational companies and not-for-profit organisations, government bodies and individuals, in areas of law encompassing commercial, employment, banking, competition law, construction and real estate, intellectual property, dispute resolution, etc. Deloitte Legal Sh.p.k., is composed of highly trained professionals, with a broad range of experience in legal issues affecting the Albanian market.
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Australia Joydeep Hor
People + Culture Strategies Therese MacDermott
uncommon for a contract to be partly written, partly oral. Upon 1 Terms and Conditions of Employment commencing employment, all employees must be provided with a copy of the Fair Work Information Statement, advising them of their 1.1 What are the main sources of employment law? rights under the NES.
Legislation, industrial instruments, and the common law are the main 1.4 Are any terms implied into contracts of employment? sources of employment law. The Fair Work Act 2009 (Cth) (the “FW Act”) governs the employment of the majority of Australian Terms may be implied into a contract by fact, custom or law. Terms employees, supplemented by other federal, state and territory implied by law are the most significant and include the employee’s legislative schemes pertaining to areas such as work, health and safety duties of good faith and fidelity, to work with skill and diligence, and and non-discrimination. Relevant industrial instruments include to obey lawful and reasonable orders. Most implied terms can be modern awards, which are determined by the Fair Work Commission excluded by the express terms of the contract. In the absence of an (the “FWC”), and enterprise agreements. Awards provide a safety entire agreement clause, terms included in policies may be incorporated net of minimum pay rates and employment conditions, and are used into a contract of employment if expressed in promissory language. as the benchmark for assessing whether employees are “better off overall” under a proposed enterprise agreement. Each year the FWC conducts an annual wage review and decides on a national minimum 1.5 Are any minimum employment terms and conditions set down by law that employers have to observe? wage. In the 2017 review, the national minimum wage was set to $694.90/week, equating to $18.90/hr. The contract of employment and common law principles are important sources of the terms and The National Employment Standards (the “NES”) set minimum conditions of employees, particularly for those who are not covered standards of employment across the following 10 areas: by an award or enterprise agreement. ■ maximum weekly hours; ■ requests for flexible working arrangements; 1.2 What types of worker are protected by employment ■ parental leave and related entitlements; law? How are different types of worker distinguished? ■ annual leave; ■ personal carers’ leave and compassionate leave; Employment law generally protects those who work pursuant to a ■ community service leave; contract of service rather than a contract for services. At common ■ long service leave; law, this distinction between employees and independent contractors ■ public holidays; is determined by applying a multi-indicia test, which looks at the totality of the employment relationship. This dichotomy may be ■ notice of termination and redundancy pay; and altered by specific legislative schemes, such as in the context of work, ■ Fair Work Information Statement. health and safety legislation, which uses an expanded definition of “worker”, or the FW Act, which provides some protections for 1.6 To what extent are terms and conditions of independent contractors. The distinction between permanent and employment agreed through collective bargaining? casual employees can be important when determining whether an Does bargaining usually take place at company or employee is entitled to certain benefits. To obtain certain benefits, industry level? casuals must be “continuous casuals” as per the FW Act. The Act provides that to fulfil the “continuous” requirements, employment The determination of modern awards by the FWC involves must be regular and systematic. Certain specific protections apply submissions from interested parties, rather than through collective to “long-term” casuals and outworkers. bargaining. At the workplace or enterprise level, agreements are bargained between employers and employees (often through 1.3 Do contracts of employment have to be in writing? If bargaining representatives), or between employers and unions not, do employees have to be provided with specific directly in the case of genuinely new enterprises. The terms and information in writing? conditions of enterprise agreements must cover certain mandated terms, but otherwise can deal with any matters pertaining to the Contracts of employment do not have to be in writing. It is not employment relationship.
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2 Employee Representation and Industrial 2.4 Are employers required to set up works councils? If Relations so, what are the main rights and responsibilities of such bodies? How are works council representatives chosen/appointed? 2.1 What are the rules relating to trade union recognition? This is not applicable. The Fair Work (Registered Organisations) Act 2009 provides for the registration of employee and employer associations and 2.5 In what circumstances will a works council have co- enterprise associations. Registration entails responsibilities with determination rights, so that an employer is unable to respect to the rules of an organisation, governance standards, and
Australia proceed until it has obtained works council agreement financial management. The legislation also sets out processes by to proposals? which an organisation’s registration may be cancelled, organisations amalgamated, and demarcation disputes resolved. This is not applicable. Amendments to this legislative scheme were passed in November 2016, and came into force on 1 May 2017. Oversight in this area is 2.6 How do the rights of trade unions and works councils now split between the Fair Work Commission and a new body, the interact? Registered Organisations Commission. New obligations regarding auditing arrangements and financial disclosures by officers and This is not applicable. related persons commenced on 2 May 2017.
2.7 Are employees entitled to representation at board 2.2 What rights do trade unions have? level?
Through registration, unions acquire rights in relation to standing The schemes for employee representation at board level, found in in proceedings to represent the interest of members and potential some European countries, do not exist in Australia. members. The FW Act also allows registered unions the right to act as bargaining representatives and the capacity to enforce standards on behalf of members. In addition, the FW Act and the Work 3 Discrimination Health and Safety Act 2011 (Cth) enable trade union officials to enter workplaces for specified purposes. Representatives who hold a valid permit may enter an employer’s premises for the purposes 3.1 Are employees protected against discrimination? If so, on what grounds is discrimination prohibited? of investigating a suspected contravention of either the Act or an industrial instrument; exercising rights under health and safety laws; investigating breaches relating to outworkers; or meeting Employees are protected by a range of federal, state and territory with employees. In cases of entry for the purpose of investigating a anti-discrimination legislation. Employees are further protected suspected breach, the permit holder may: by the FW Act ‘general protections’ provisions that prohibit an employer taking adverse action against an employee or prospective ■ inspect any relevant work, process or object; employee because of a protected attribute. While the attributes ■ interview willing participants; and covered in each legislative scheme vary, the specific protected ■ require the employer or occupier to provide any directly attributes in the FW Act include: relevant records or documents. ■ race; Entry for the purpose of discussions with employees requires written ■ colour; notice of no less than 24 hours, unless an exemption applies. ■ sex; ■ sexual preference; 2.3 Are there any rules governing a trade union’s right to ■ age; take industrial action? ■ physical or mental disability; To qualify as protected industrial action under the FW Act, ■ marital status; any industrial action, either by employee or employer, must be ■ family or carer’s responsibilities; organised for the purpose of supporting or advancing claims in ■ pregnancy; relation to a proposed enterprise agreement. It cannot be part of ■ religion; pattern bargaining, nor can it relate to a demarcation dispute. To be ■ political opinion; protected it must meet these requirements: ■ national extraction; and ■ relates to a single-enterprise agreement; ■ social origin. ■ representatives are genuinely trying to reach an agreement; ■ all relevant orders are complied with by representatives; 3.2 What types of discrimination are unlawful and in what ■ cannot commence prior to the expiry date of an existing circumstances? enterprise agreement;
■ three days’ notice is given; and In Australia, there are two commonly used formulations of what ■ a protected action ballot was undertaken, authorising the constitutes unlawful discrimination: direct discrimination; and action. indirect discrimination. Direct discrimination occurs when the
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complainant is treated less favourably than a person without the imposing stricter penalties for employers who commit serious protected attribute in the same or similar circumstances, where contraventions, and prohibiting employers from forcing employees this treatment is causally related to the protected attribute. Indirect to make unreasonable payments such as “cashback”. discrimination occurs when an unreasonable requirement or condition is imposed upon a complainant which operates as an unfair barrier for the complainant with a protected attribute. 4 Maternity and Family Leave Rights
3.3 Are there any defences to a discrimination claim? 4.1 How long does maternity leave last?
Each piece of Australian anti-discrimination legislation contains its All employees in Australia are entitled to unpaid parental leave if Australia own specific exceptions or exemptions, which are often tailored to a they have worked for their employer for at least 12 months. Under specific attribute. In the employment context, common exceptions the NES, employees are entitled to 12 months of unpaid parental are genuine occupational qualifications, inherent requirements of leave following the birth or adoption of a child, and a request can be the job and unjustifiable hardship (disability specific), acts done made for an additional 12 months of leave. under statutory authority, and employment in a private household or private educational institution. In addition, it is possible under most 4.2 What rights, including rights to pay and benefits, does statutory schemes to obtain a temporary exemption. a woman have during maternity leave?
3.4 How do employees enforce their discrimination Employees may be entitled to paid parental leave from the Australian rights? Can employers settle claims before or after Government or from their employer under an enterprise agreement, they are initiated? contract or policy. Under the Australian Government Paid Parental Leave Scheme, eligible employees who are the primary carer of Generally, a complaint must first be lodged with the relevant a newborn or adopted child can receive 18 weeks’ payment at the statutory authority for investigation and attempted resolution national minimum wage. In its current formulation, payment under through conciliation. The second stage involves escalating this scheme does not affect the entitlement to unpaid leave or affect the complaints to a court or tribunal to enforce legal rights and parental leave paid by the employer. obligations. Employees and prospective employees can also enforce their discrimination rights under the FW Act by making a 4.3 What rights does a woman have upon her return to general protections claim, with the process varying depending on work from maternity leave? whether a dismissal is involved. Most discrimination claims are resolved through conciliation or negotiation. Employees have the right to return to the same job they had before going on leave. If an employee was transferred to a safe job 3.5 What remedies are available to employees in before they took parental leave or they reduced their hours due to successful discrimination claims? pregnancy, then they are entitled to return to the job they had before the transfer or reduction. If an employee’s job no longer exists or Remedies available under anti-discrimination legislation include: has significantly changed, they must be offered a suitable alternative ■ declarations; job. If the employee’s job no longer exists, a redundancy may arise. ■ compensatory damages; ■ injunctions; 4.4 Do fathers have the right to take paternity leave? ■ variations of contract; ■ apologies; and Eligible fathers and partners (including same-sex partners) are ■ retractions. entitled to two weeks’ paid leave under the Australian Government Paid Parental Leave Scheme. Fathers who are the primary carer of If a general protections claim is successful, the FWC may order a child may also be entitled to unpaid parental leave under the NES. reinstatement, payment of compensation or lost remuneration, and continuity of service. 4.5 Are there any other parental leave rights that employers have to observe? 3.6 Do “atypical” workers (such as those working part- time, on a fixed-term contract or as a temporary Parental leave entitlements in Australia extend beyond maternity agency worker) have any additional protection? leave to include paternity and partner leave, adoption leave, and special maternity leave (where an employee has a pregnancy- A wide range of workers are covered under anti-discrimination related illness or her pregnancy ends after 12 weeks because of a legislation, including apprentices or trainees, workers on probation, miscarriage, termination or stillbirth). part-time and full-time workers, casual workers, labour hire workers, contract workers and workers on a work visa. While there are no specific provisions that provide additional protection against 4.6 Are employees entitled to work flexibly if they have discrimination for atypical workers, there are some protections, responsibility for caring for dependants? such as those relating to carer and parental responsibilities, which may arise incidentally. Employees such as parents returning to work after taking parental The Fair Work Amendment (Protecting Vulnerable Workers) Act leave, and those with other caring responsibilities, have the right to 2017 was introduced to protect vulnerable workers, namely by request flexible working arrangements. Employers can only refuse such a request on reasonable business grounds.
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5 Business Sales 6 Termination of Employment
5.1 On a business sale (either a share sale or asset 6.1 Do employees have to be given notice of termination transfer) do employees automatically transfer to the of their employment? How is the notice period buyer? determined?
At common law, contracts of employment do not automatically To end employment, an employer must give the employee written transfer. Under the FW Act there may be a transfer of employment notice of the last date of employment, or payment in lieu of notice. between two employers where the transferring employee commences Minimum notice periods are based on length of service. Longer
Australia work within three months of termination from the old employer, the notice requirements may apply under an industrial instrument, work performed is substantially the same, and one of the following contract or policy. connections is established:
■ they are associated entities; 6.2 Can employers require employees to serve a period ■ there is an outsourcing or insourcing of business between of “garden leave” during their notice period when the them; or employee remains employed but does not have to ■ there is an arrangement concerning the ownership or the attend for work? assets to which the transferring work relates. Employees may be put on “garden leave” while they are serving out a period of notice relying on an express or implied term in the 5.2 What employee rights transfer on a business contract of employment. sale? How does a business sale affect collective agreements? 6.3 What protection do employees have against If there is a transfer of employment, the employee’s period of dismissal? In what circumstances is an employee service with their first employer counts as service. This means treated as being dismissed? Is consent from a third that an employee retains his or her entitlement to accrued annual party required before an employer can dismiss? leave (unless paid out on termination of employment with the first employer), and that the period of service relevant to redundancies is Employees are protected against terminations of their employment not interrupted, unless the second employer (not being an associated that are harsh, unjust or unreasonable, that are discriminatory, or entity) decides not to recognise the employee’s period of service that arise as a consequence of the exercise of a workplace right with the first employer. Continuity of long service leave entitlement or engaging in industrial activities. An employee is treated as is dependent on the applicable state legislation. being dismissed where their employment has been terminated at the employer’s initiative, or they have resigned in circumstances constituting constructive dismissal. Consent is not required from 5.3 Are there any information and consultation rights on a third party. a business sale? How long does the process typically take and what are the sanctions for failing to inform and consult? 6.4 Are there any categories of employees who enjoy special protection against dismissal? The FW Act places no obligation on employers to notify employees of a transfer of business, although consultation obligations This is not applicable. regarding redundancies may consequentially arise. The consultation obligations regarding redundancies may be enforced by the FWC. 6.5 When will an employer be entitled to dismiss for: An applicable award or agreement may dictate specific consultation 1) reasons related to the individual employee; or 2) processes. business related reasons? Are employees entitled to compensation on dismissal and if so how is compensation calculated? 5.4 Can employees be dismissed in connection with a business sale? An employer is entitled to dismiss for reasons related to an Employees can be dismissed in connection with a business sale if individual employee’s unsatisfactory performance or misconduct, their position is genuinely redundant (discussed below at questions subject to giving the appropriate notice or payment in lieu. Serious 6.5 and 6.6). misconduct can warrant summary dismissal without notice. An employer is entitled to dismiss for business-related reasons where it no longer requires a job to be done by anyone, subject to meeting 5.5 Are employers free to change terms and conditions of the minimum entitlement to redundancy pay based on continuous employment in connection with a business sale? service or a more generous entitlement under an industrial instrument, contract or policy. An enterprise agreement will continue to apply to a transferring employee while they are performing transferring work, until it is terminated or replaced. However, the new employer, a transferring 6.6 Are there any specific procedures that an employer has to follow in relation to individual dismissals? employee, or a union, may apply to the FWC for an order varying the application of the transferring instrument. Procedural factors are relevant in determining whether a dismissal is unfair, including whether the employee was notified of the reason for termination and given an opportunity to respond, and in the
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case of unsatisfactory performance, whether the employee was prohibiting employees from approaching clients, working for a made aware of performance concerns and given an opportunity to competitor or establishing their own business in competition with improve. For a redundancy to be genuine, an employer must follow their former employer during the restraint period. the consultation requirements and have considered reasonable redeployment opportunities. 7.2 When are restrictive covenants enforceable and for what period? 6.7 What claims can an employee bring if he or she is dismissed? What are the remedies for a successful Restrictive covenants are generally unenforceable on the grounds of claim? being contrary to public policy. However, they will be enforced where an employer can show that they have a legitimate interest to protect, An employee can potentially bring one of the following claims: and the restraint imposed is no more than reasonably necessary Australia unfair dismissal; general protections; unlawful termination; to protect that interest. Legitimate interest includes goodwill, discrimination; reasonable notice; or breach of contract. Remedies protection against soliciting employees or the release of confidential vary in accordance with the particular claim, although employees information and trade secrets. Under the common law, covenants that often seek reinstatement or compensation in FWC proceedings. An are unreasonable will not be enforced. The exception is under the income threshold applies to some FWC proceedings, as well as a Restraint of Trade Act 1976 (NSW), which provides that a reasonable cap on compensation. restraint will be enforced and allows courts to read down the restraint period to what is reasonable. The non-enforceability of unreasonable 6.8 Can employers settle claims before or after they are restraints has encouraged the drafting of cascading clauses that initiated? allow any restraint determined to be too wide to be severed, and the remaining more limited but valid restraint to be enforced. Settlement of termination claims either before or after claims are initiated is common and generally formalised in the form of a deed 7.3 Do employees have to be provided with financial of release (which is akin to a compromise agreement). compensation in return for covenants?
6.9 Does an employer have any additional obligations if Courts will consider whether consideration for a restrictive it is dismissing a number of employees at the same covenant has been given to an employee. Where the covenant was time? part of the employee’s original offer of employment, it can be seen as part of the exchange for the employer’s promise to employ the Where an employer proposes to dismiss 15 or more employees, for individual. Where the covenant is introduced after the employment economic, technological, structural or similar reasons, notice must has commenced, it can be linked to a bonus or salary increase in be given to the trade union representing employees affected by this order to gain the employee’s agreement to the terms, particularly if decision and to a federal government agency (Centrelink). Specific a more onerous restraint is proposed. consultation obligations regarding the opportunity for trade unions to advocate measures to mitigate the impact of proposed dismissals 7.4 How are restrictive covenants enforced? also apply. Commonly restrictive covenants are enforced by way of an 6.10 How do employees enforce their rights in relation to injunction. An employer may also seek compensatory damages and, mass dismissals and what are the consequences if an less commonly, an account of profits. employer fails to comply with its obligations?
Employees can enforce their rights regarding consultation by 8 Data Protection and Employee Privacy application to the FWC. It can make orders seeking to enforce compliance by putting the employees and the trade union in the 8.1 How do employee data protection rights affect the same or similar position as if the employer had complied with the employment relationship? Can an employer transfer obligations (excluding reinstatement and compensation). employee data freely to other countries?
7 Protecting Business Interests Following In Australia, there is no common law right to privacy. However the collection, use and disclosure of personal information is regulated Termination by the Privacy Act 1988 (Cth) (the “Privacy Act”). The Privacy Act contains an “employee records” exemption that relieves employers 7.1 What types of restrictive covenants are recognised? from compliance obligations. As such, employers are free to collect, use and disclose employee records and outsource employment- Non-solicitation, non-dealing and non-compete covenants are the related functions without obtaining prior consent, provided these three main restrictive covenants recognised within employment acts are directly related to the employment relationship. Records contracts. A “non-solicitation” covenant prevents the employee pertaining to unsuccessful job applicants and contractors are not from pursuing clients, customers or suppliers they had dealings with covered by the exemption, and must be managed in accordance with during their employment. A “non-dealing” covenant prevents dealing the requirements of the Privacy Act. with or doing business with anyone who has a business connection Due to the employee records exemption, an employer can freely with the employer (such as customers, clients or employees) and transmit an employee’s records overseas without prior notification. does not differentiate between the employee soliciting clients or However, the overseas entity in receipt of such records does not the client approaching the employee for services. “Non-compete” have the benefit of the exemption, and is obliged to handle them in covenants place the most onerous obligations on employees, accordance with the privacy laws in its own jurisdiction.
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Personal information of employees that does not directly relate to their employment relationship and records of unsuccessful job 8.5 Can an employer control an employee’s use of social applicants and contractors that are transferred overseas are subject media in or outside the workplace? to the requirements of the Privacy Act. In these circumstances, the employer will have a positive obligation to take reasonable steps Australian case law supports an employer’s right to direct employees to ensure that the overseas entity complies with the Privacy Act. not to use social media in a manner which could compromise its Including compliance with those requirements as a contractual term business interests, reputation or security. This right extends beyond in an agreement between the employer and the overseas entity may social media activity at work to include outside activities where be regarded as a “reasonable step”. a connection can be drawn to the person’s employment. Misuse of social media may be in breach of an employee’s contractual
Australia obligations and can result in termination of employment. 8.2 Do employees have a right to obtain copies of any personal information that is held by their employer? 9 Court Practice and Procedure There are limited circumstances in which access to employee records may be granted by an employer. Because the records of unsuccessful job applicants and contractors are not captured by the 9.1 Which courts or tribunals have jurisdiction to hear employee records exemption, they have the right to request access employment-related complaints and what is their composition? to their personal information, while current and past employees do not. However, the FW Regulations provide that an employee can Most complaints are dealt with by the FWC, which consists make a request to inspect and copy his/her employee records, and of a President, two Vice-Presidents, Deputy Presidents, and an employer must comply. Commissioners. In some circumstances, complaints may be dealt Permit holders, such as union officials, may also be permitted to with by the Federal Court of Australia or the Fair Work Division inspect or copy employee records on behalf of an employee, where of the Federal Circuit Court, either following an unsuccessful there is a suspected breach of industrial laws. An inspector is also attempt to resolve the matter at the FWC or as part of the court’s permitted to require the production of an employee record. original jurisdiction. Where an employment-related complaint raises discrimination issues, employees also have the option to pursue a 8.3 Are employers entitled to carry out pre-employment claim under federal anti-discrimination laws or the coexisting state checks on prospective employees (such as criminal and territory laws, with a determination of the complaint undertaken record checks)? by the relevant Court or Tribunal vested with jurisdiction under the statutory scheme. Pre-employment checks such as medical examinations, substance abuse testing and criminal record checks on prospective employees 9.2 What procedure applies to employment-related are permissible to the extent that such checks are necessary to complaints? Is conciliation mandatory before a ascertain a candidate’s ability to fulfil the inherent requirements complaint can proceed? Does an employee have to of a role. For example, pre-employment police record checks will pay a fee to submit a claim? usually be permissible in circumstances where an employee will be working with children or vulnerable individuals, responsible for When an employee lodges an unfair dismissal application with the handling significant assets, or where a particular security clearance FWC, conciliation is made available on a voluntary basis, although is required. If testing does not relate to a specific legislative most parties avail themselves of this process. If the parties are requirement (e.g. for the mining industry), the inherent requirements unable to resolve the complaint or a jurisdictional objection is of a role, or a work health and safety issue, it risks being challenged raised, the matter goes before the FWC for hearing. as discriminatory conduct or an infringement of the individual’s “General protection” claims under the FW Act that involve a privacy. dismissal must first be heard in a private conference and, ifa resolution cannot be reached, the FWC must issue a certificate to 8.4 Are employers entitled to monitor an employee’s this effect. Parties may then apply for consent arbitration, or if the emails, telephone calls or use of an employer’s respondent is unwilling, the applicant may bring a claim in either computer system? the Federal Court or the Federal Circuit Court. Where there is no dismissal but a general protections breach is alleged, the applicant The employer’s right to undertake surveillance of computer may bring the matter directly to the Federal Court or Federal Circuit usage or by way of listening, tracking and optical devices in the Court if the respondent refuses to participate in a private conference workplace differs amongst the various states and territories. The with the FWC. most comprehensive legislative schemes exist in New South Wales To lodge an application with the FWC, employees must pay a and the Australian Capital Territory, which prohibit workplace modest fee, subject to a waiver of the fee on the basis of financial surveillance unless there is compliance with prescribed notice hardship. requirements. The extent to which computer surveillance in the workplace is regulated depends, in other States and Territories, on whether a computer can fall within the definition of a “listening device” and, in the case of Victoria and Western Australia, whether it falls within the definition of an “optical surveillance device”. Tracking surveillance is regulated in New South Wales, the Australian Capital Territory, the Northern Territory, Victoria and Western Australia.
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9.3 How long do employment-related complaints typically 9.4 Is it possible to appeal against a first instance take to be decided? decision and if so how long do such appeals usually take? A significant proportion of all complaints to the FWC are unfair dismissal claims (43% in the 2016–2017 reporting year) and the Decisions made by the FWC may be appealed with the Commission’s vast majority of these are finalised either at conciliation or prior to permission. The primary consideration is whether it is in the public a hearing. In the 2016–2017 reporting year, 34 days was the mean interest to grant permission. Questions of law may be referred by time from the lodging of an application to conciliation, and within the FWC to the Federal Court and must then be determined by a Full the range of approx. one to four months to reach finalisation. Bench of that court. The 2016–2017 FWC Annual Report states that 96% of appeals were heard within 12 weeks; 100% of appeals were Australia heard within 16 weeks.
Joydeep Hor Therese MacDermott People + Culture Strategies People + Culture Strategies Level 9, NAB House, 255 George Street Level 9, NAB House, 255 George Street Sydney NSW 2000 Sydney NSW 2000 Australia Australia
Tel: +612 8094 3101 Tel: +612 8094 3120 Fax: +612 8094 3149 Fax: +612 8094 3149 Email: [email protected] Email: therese.macdermott@ URL: www.peopleculture.com.au peopleculture.com.au URL: www.peopleculture.com.au
Joydeep Hor is People + Culture Strategies Founder and Managing Therese MacDermott is a consultant at People + Culture Strategies Principal. He is one of Australia’s most well-known workplace relations and an Associate Professor at Macquarie Law School, where she lawyers due to his high media profile (both as a sought-after media teaches Discrimination and the Law, and Dispute Management and commentator and prolific keynote speaker) and representation of Resolution. several high-profile clients throughout his career. Therese has a diverse legal background that includes a number of While an expert in all areas of workplace relations, Joydeep is one years in private legal practice, an appointment as a part-time Tribunal of Australia’s “go to” lawyers for complex and sensitive terminations member hearing discrimination cases, and experience in legal of employment and also for addressing all aspects of workplace consulting in the Pacific. Her particular expertise lies in the areas of behaviour and culture. dispute resolution, labour law and anti-discrimination law. Therese has published extensively in these areas and is a regular presenter Joydeep graduated from Harvard Business School in 2016 where he at conferences and a commentator on discrimination and employment completed the Harvard’s Owner President Management Program. He law issues. already has professional qualifications as a Fellow of the Australian Human Resources Institute, Chartered Fellow of the United Kingdom’s Institute of Personnel and Development, and a Master of Laws from University of Sydney (where he previously completed a Bachelor of Laws with Honours degree and a Bachelor of Arts majoring in English literature).
People + Culture Strategies (PCS) is a unique Australian law firm that also provides management consulting and leadership development services in labour and employment law. Founded in 2010, PCS has established itself as one of Australia’s most innovative and value-creating professional services firms. PCS works with employers, many of whom are global brand names, to service their legal and strategic needs in people management in Australia. PCS has a unique approach to partnering with clients to ensure it is ready to respond strategically to any crisis in the most appropriate way across areas and activities such as contract disputes, discrimination, bullying and harassment investigations, unfair dismissal and adverse action claims.
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Bahamas
Meridian Law Chambers Dywan A – G. R. Rodgers
and other benefits; the manner and period of payment of wages and 1 Terms and Conditions of Employment other benefits; the number of hours of daily work; and the hours of the day at which work is to commence and terminate. 1.1 What are the main sources of employment law? 1.4 Are any terms implied into contracts of employment? The main sources of employment law are statute laws and the common law. As regards statute laws of the Commonwealth of As is the case in many common law jurisdictions, there are many The Bahamas, the primary Acts are the Employment Act 2001 and terms and conditions that may be implied into a contract of the Employment (Amendment) Act 2017. Additional statutes for employment. For example, there is a mutual obligation of trust and consideration are: the Minimum Wages Act 2002; the Minimum confidence between employer and employee that is implied into Wages (Increase in Minimum Wages) Order 2015; the Health and a contract of employment and is considered the cornerstone of an Safety At Work Act 2002; the Industrial Relations Act 1971; the employment contract. Additionally, statute laws may be implied Industrial Relations Trade Union Regulations 1971; the Industrial into a contract of employment. Relations (Amendment) Act 2012; the Industrial Relations (Amendment) Act 2017; and the National Insurance Act 1972 along with various amendments and Regulations. 1.5 Are any minimum employment terms and conditions set down by law that employers have to observe?
1.2 What types of worker are protected by employment Yes, there are minimum employment terms and conditions set out in law? How are different types of worker distinguished? the Employment Act 2001 and the Minimum Wages Act 2002 along with amendments. In the Bahamian Supreme Court Action Paula All types of workers are protected by employment law. Under Deveaux v. Bank of the Bahamas, Ganpatsingh, JA, (as he then the Employment Act 2001 there is no distinction between part- was) stated “it seems to us that Parliament did not intend that the time workers and full-time workers, however, the law recognises Employment Act be a codification of the law of employment relations. that there is a distinction between an employee, a fixed-term On the contrary the Act was passed to establish minimum standards employee, an independent contractor and a consultant. As regards …”. It should be emphasised that Section 4 of the Employment the definition of an “employee”, the Employment Act 2001 and Act 2001 leaves the possibility for an employee to negotiate better the Industrial Relations Act 1971 provide: “employee – means any terms and conditions of employment than that provided for under person who has entered into or works under (or, in the case of a the Employment Act: “…nothing in this Act shall be construed as contract which has been terminated, worked under) a contract with limiting and restricting (a) any greater rights or better benefits of an employer, whether the contract is for manual labour, clerical any employee under any law, contract of employment, arrangement work or otherwise is expressed or implied, oral or in writing, and or custom…(c) an employer from conferring upon any employee whether it is a contract of service or apprenticeship…”. rights or benefits, that are more favourable to an employee than the rights or benefits conferred by this Act”. 1.3 Do contracts of employment have to be in writing? If not, do employees have to be provided with specific 1.6 To what extent are terms and conditions of information in writing? employment agreed through collective bargaining? Does bargaining usually take place at company or It is preferred that contracts of employment are in writing setting industry level? out the full terms and conditions of employment so that all parties know their rights and benefits. Under the rubric “Conditions of If there is a lawfully recognised collective bargaining unit there is Employment”, Section 5 of the Employment Act 2001 specifies an obligation on behalf of the employer, when called upon by such the bare minimum terms and conditions of employment that must union, to treat and enter into negotiations with that trade union. “An be reduced into writing. The contract must specify: the name of employer who, after a claim for recognition as bargaining agent has the employer or group of employers; the place of employment; the been established… fails or refuses to treat or enter into negotiations name of the employee; the nature of employment; in appropriate within a reasonable time with such bargaining agent…shall be circumstances the duration of the employment; the rate of wages guilty of an offence…” (see Section 41(1)(2) and (3) of the Industrial Relations Act 1971).
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2 Employee Representation and Industrial 3 Discrimination Relations 3.1 Are employees protected against discrimination? If 2.1 What are the rules relating to trade union recognition? so, on what grounds is discrimination prohibited?
The law relevant to trade union recognition can be found in the Section 6 and Section 7 of the Employment Act 2001 attempt to Industrial Relations Act 1971. In particular, PART III intituled address the issue of discrimination within the workplace. Section “Recognition of Trade Unions” provides: “A trade union which 6 provides that an employer or person acting on behalf of an seeks recognition an employer as bargaining agent for employees employer shall not discriminate against an employee or applicant Bahamas employed by him, shall make its claim for such recognition in for employment on the basis of race, creed, sex, marital status, writing to the employer specifying the bargaining unit, if any, in political opinion, age or HIV/AIDS. Section 7 protects disabled respect of which recognition is sought, and shall serve a copy of employees. The Employment Act 2001 also protects employees such claim on the Minister”. Further, “Every employer shall from discrimination based on the involvement or affiliation with a recognize, as the bargaining agent for employees employed by him, particular trade union (see Section 36 of the Employment Act 2001). a trade union of which more than fifty per centum of the employees in his employment, or in a bargaining unit of such employees, are 3.2 What types of discrimination are unlawful and in what members in good standing or…that trade union which the Minister circumstances? determines…to be the union entitled to such recognition…”. Section 6 of the Employment Act 2001 provides: “no employer or 2.2 What rights do trade unions have? person acting on behalf of an employer shall discriminate against an employee or applicant for employment on the basis of race, creed, sex, marital status, political opinion, age or HIV/Aids by – refusing Please refer to the online version of this guide for answer. to offer employment to an applicant for employment or not affording the employee access to opportunities for promotion, training or 2.3 Are there any rules governing a trade union’s right to other benefits, or by dismissing or subjecting the employee to other take industrial action? detriment solely because of his or her race…- paying him at a rate of pay less than the rate of pay of another employee, for substantially The Industrial Relations Act 1971 PART VI and PART VII set out the the same kind of work or for work of equal value performed in the rules governing a trade union’s right to take industrial action such as same establishment…”. trade dispute procedures and strikes. There is also considerable case law in connection with union strikes. 3.3 Are there any defences to a discrimination claim?
2.4 Are employers required to set up works councils? If Please refer to the online version of this guide for answer. so, what are the main rights and responsibilities of such bodies? How are works council representatives chosen/appointed? 3.4 How do employees enforce their discrimination rights? Can employers settle claims before or after The term “works council” is not a familiar term within The they are initiated? Bahamas. However, there is no obligation for an employer to set up a works council or any form of council. There is however, An employee may enforce their discrimination rights, as is the usually an obligation to consult in good faith with a union or union case with most labour disputes/issues, in any number of ways. An representative of a properly and lawfully recognised bargaining employee may lodge a complaint with The Bahamas Department agent. of Labour. Once a complaint is lodged then the parties (employer and employer with the representatives) will engage in conciliation in good faith (see Section 70 of the Industrial Relations Act 1971). 2.5 In what circumstances will a works council have co- Should the parties fail to resolve the issue, the matter would be determination rights, so that an employer is unable to referred to the Industrial Tribunal of The Bahamas. The Industrial proceed until it has obtained works council agreement to proposals? Tribunal is a creature of statute and created in accordance with the Industrial Relations Act 1971. The Industrial Relations Act This is not applicable in this jurisdiction. 1971, sets out the scope, power, jurisdiction and function of the Industrial Tribunal. Alternatively, an employee may seek to commence proceedings with the Supreme Court of the Commonwealth of The 2.6 How do the rights of trade unions and works councils Bahamas to enforce such rights. It is always open and, in fact interact? encouraged at all times, for the parties to settle a claim before or after they are initiated. In fact, many claims are settled on the day This is not applicable in this jurisdiction. of trial. For example, Section 58 (1) of the Industrial Tribunal Act 1971, asseverates “…the Tribunal may (a) remit a dispute…to the 2.7 Are employees entitled to representation at board parties for further consideration by them to settling…”. level? 3.5 What remedies are available to employees in Employees are entitled to representation at all levels and at all successful discrimination claims? times, whether by legal counsel, or lawfully recognised union representatives. Please refer to the online version of this guide for answer.
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3.6 Do “atypical” workers (such as those working part- 4.5 Are there any other parental leave rights that time, on a fixed-term contract or as a temporary employers have to observe? agency worker) have any additional protection? There are no other parental leave rights which employers must As regards “atypical” workers, the Employment Act 2001 does not observe. distinguish between them and full-time employees even though their contract of employment may differ. Part-time employees 4.6 Are employees entitled to work flexibly if they have are not afforded any additional protection or anything more than responsibility for caring for dependants? that spelled out inside their contracts or provided for under the
Bahamas Employment Act 2001. An employee’s entitlement to work flexibly if responsible for caring for dependants would have to be negotiated with an employer, but 4 Maternity and Family Leave Rights there is no such statutory right.
4.1 How long does maternity leave last? 5 Business Sales
A female employee must, in order to qualify for a grant of maternity 5.1 On a business sale (either a share sale or asset leave, be employed for at least 12 months by the employer from transfer) do employees automatically transfer to the whom she requests such leave and is not entitled to maternity pay by buyer? the same employer more than once every three years. It should be emphasised that this is the minimum standard and the employee can Under the rubric “Change of ownership”, Section 72 (1) of the always negotiate better terms and conditions of employment. Upon Employment Act 2001, addresses the issue of employees being qualifying for maternity leave, a female employee is entitled to no transferred to the buyer on a business sale and provides: “where a less than a total of 12 weeks’ paid maternity leave. change occurs (whether by virtue of a sale or other disposition or by operation of law) in the ownership of any business...and after such 4.2 What rights, including rights to pay and benefits, does change of ownership such employee continues to be so employed a woman have during maternity leave? without interruption, the person who immediately after the change occurs is the owner of the business shall be deemed to be the employer During the 12-week paid maternity leave, the female employee is (“the new employer”) of that employee and the employment shall be entitled to a minimum of 33 ⅓% of such portion of her wages which deemed to be continuous notwithstanding the change”. does not exceed the National Insurance ceiling on insurable wages. The National Insurance programme was established December 5.2 What employee rights transfer on a business 12, 1972 with the signing into law of the National Insurance Act sale? How does a business sale affect collective 1972. The National Insurance Board (NIB), the organisation agreements? charged with administering the social security programme, opened its doors officially on October 7, 1974. Its primary mission was, So long as the criteria under Section 71 (1) of the Employment Act and is, to provide income-replacement in respect of sickness, 2001, are met, all employee rights transfer on the sale of a business invalidity, maternity, retirement, death, industrial injury/disease, and continue to accrue. Apropos collective agreements, so long as and involuntary loss of income. the same is registered in accordance with Section 46 of the Industrial Relations Act 1971, it will have effect pursuant to Section 50 of the 4.3 What rights does a woman have upon her return to Industrial Relations Act 1971. work from maternity leave? 5.3 Are there any information and consultation rights on Section 22 of the Employment Act 2001 provides: “Where a a business sale? How long does the process typically female employee has been granted maternity leave she is, on her take and what are the sanctions for failing to inform resumption of work after such leave, entitled to – her seniority rights; and consult? reinstatement in her former position or equivalent position, and she shall not be reason only of the fact that she went on maternity leave, Please refer to the online version of this guide for answer. to be paid a smaller remuneration than she received before she went on maternity leave”. 5.4 Can employees be dismissed in connection with a business sale? 4.4 Do fathers have the right to take paternity leave? Employees may be dismissed in connection with a business sale, As always the principles of freedom of contract apply so it is always however, if an employee is not being summarily dismissed for an option to have such a provision in an employment contract but there cause, there is an obligation on the employer to properly and fairly is no such obligation on the employer. The closest to such a right is compensate the employee upon termination. provided under Section 20 of the Employment Act 2001, which states “An employee who has been employed for at least six (6) months is 5.5 Are employers free to change terms and conditions of entitled to family leave without pay for a period not exceeding one (1) employment in connection with a business sale? week per annum following (a) the birth of a child…”. It is always open to an employer to change the terms and conditions of an employment contract whether or not there is a business sale
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but it must be mutually agreed between the employer and employee. must, pursuant to the terms and conditions of a trade agreement, Put another way, no employer has a right to vary the terms of an consult with a lawfully recognised trade union as bargaining agent employee’s contract of employment without that employee’s for employees before lawfully dismissing an employee. consent/acquiescence unless the employee has, by way of contract or agreement, given such power or right to his employer. An employer 6.4 Are there any categories of employees who enjoy cannot unilaterally change an employee’s contract of employment special protection against dismissal? especially if it is to the employee’s detriment, e.g., reduction in salary. Normally, if an employer wishes to change the terms and PART IX of the Employment Act 2001 attempts to set out categories conditions of employment and it adversely affects an employee, the of employees who enjoy special protection under the heading employer would terminate the employee pursuant to the terms and “Unfair Dismissal”. Under this provision, “the dismissal of an conditions of the old contract or in accordance with the Employment Bahamas employee by an employer shall be regarded as having been unfair Act 2001 and thereafter rehire the employee, if so desired, under a if the reason for it (or, if more than one, the principal reason) was new contract of employment. that the employee – was or proposed to become a member of an independent trade union…– was redundancy…– was pregnant – 6 Termination of Employment was conducting or instituting a lockout or taking part in a lawful industrial action…”.
6.1 Do employees have to be given notice of termination of their employment? How is the notice period 6.5 When will an employer be entitled to dismiss for: determined? 1) reasons related to the individual employee; or 2) business related reasons? Are employees entitled to compensation on dismissal and if so how is Yes, an employee must be given notice of termination of their compensation calculated? employment. The minimum notice period is provided by the Employment Act 2001. In particular, Section 29 of the Employment In essence, an employer may dismiss an employee in two ways. Act 2001 provides: “for the purpose of this Act, the minimum The first is to summarily dismiss an employee for cause andin period of notice required to be given by an employer to terminate such an instance the employer only has to pay the employee for the contract of employment of an employee shall be – where the accrued vacation not taken and for any time actually worked. The employee has been employed for six months or more but less than second is to terminate the employee and compensate him pursuant twelve months – one week’s notice or one week’s basic pay in lieu to his contract of employment or the Employment Act 2001 (see of notice and one week’s basic pay (or a part thereof on a pro rata above in connection with Section 29 of the Employment Act 2001 basis) for the said period between six months and twelve months; – “Termination of Employment with Notice”). As regards summary where the employee has been employed for twelve months or more dismissal, Section 31 of the Employment Act 2001 provides: “an – two weeks’ notice or two weeks’ basic pay in lieu of notice and two employer may summarily dismiss an employee without pay or weeks’ basic pay (or part thereof on a pro rata basis) for each year notice when the employee has committed a fundamental breach of up to twenty-four weeks; - where the employee holds a supervisory his contract of employment or has acted in a manner repugnant to or managerial position – one month’s notice or one month’s basic the fundamental interests of the employer”. Misconduct which may pay in lieu of notice and one month’s basic pay (or part thereof on a constitute a fundamental breach may be, for example, dishonesty, pro rata basis) for each year up to forty-eight weeks”. theft, etc. In order to summarily dismiss an employee, an employer must prove that he honestly and reasonably believed on a balance of 6.2 Can employers require employees to serve a period probability that the employee committed the misconduct in question of “garden leave” during their notice period when the and that the employer had conducted a reasonable investigation of employee remains employed but does not have to such misconduct except where such investigation is unwarranted. attend for work?
6.6 Are there any specific procedures that an employer Garden leave or gardening leave, describes the practice where an has to follow in relation to individual dismissals? employee leaving a job – having resigned or otherwise had their employment terminated – is instructed to stay away from work Section 30 of the Employment Act 2001 provides: “any notice during the notice period, while still remaining on the payroll. In The which under this Part is required or authorized to be given by an Bahamas there is no such term as garden leave. Section 29 (2) of the employer may be given orally or in writing”. It is the usual practice Employment Act 2001 provides: “An employee shall not terminate to reduce the termination into writing, setting out the employee’s his employment until after the expiry of – two week’s notice to the entitlements in the body of the termination letter. If the employee employer if the period of employment is one year but less than is terminated summarily for cause then the cause/misconduct is two years; or four week’s notice to the employer if the period of usually cited. employment is two years or more”. During the notice period, an employer has every right to insist that the employee not attend work and to stay away from the work premises. 6.7 What claims can an employee bring if he or she is dismissed? What are the remedies for a successful claim? 6.3 What protection do employees have against dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third Potential claims to be brought by an employee are in respect of: party required before an employer can dismiss? breach of contract; wrongful dismissal; and unfair dismissal. The remedies vary but essentially there are damages, i.e., financial As regards an employer obtaining consent from a third party in compensation, reinstatement and reengagement. order to dismiss an employee, there are instances where an employer
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6.8 Can employers settle claims before or after they are 8.2 Do employees have a right to obtain copies of any initiated? personal information that is held by their employer?
The employers always have the option to settle a claim before and/ Please refer to the online version of this guide for answer. or after they are initiated. Settlement outside of Court or Tribunal is encouraged. 8.3 Are employers entitled to carry out pre-employment checks on prospective employees (such as criminal 6.9 Does an employer have any additional obligations if record checks)? it is dismissing a number of employees at the same Bahamas time? Please refer to the online version of this guide for answer.
Please refer to the online version of this guide for answer. 8.4 Are employers entitled to monitor an employee’s emails, telephone calls or use of an employer’s 6.10 How do employees enforce their rights in relation to computer system? mass dismissals and what are the consequences if an employer fails to comply with its obligations? Please refer to the online version of this guide for answer.
Please refer to the online version of this guide for answer. 8.5 Can an employer control an employee’s use of social media in or outside the workplace? 7 Protecting Business Interests Following Termination Please refer to the online version of this guide for answer.
7.1 What types of restrictive covenants are recognised? 9 Court Practice and Procedure
The most recognised and typical restrictive covenants are in relation 9.1 Which courts or tribunals have jurisdiction to hear to non-compete, non-disclosure and non-solicitation clauses. The employment-related complaints and what is their test for their enforceability is “reasonableness”. composition?
The Magistrate Courts, Supreme Court, Industrial Tribunal and 7.2 When are restrictive covenants enforceable and for what period? Court of Appeal have jurisdiction to hear employment-related complaints. Under appropriate circumstances, a matter may be litigated before the Privy Council of England, United Kingdom. The aforesaid restrictive covenants are usually enforceable during the life of the employment contract and also for a reasonable period after the conclusion of the employment contract. 9.2 What procedure applies to employment-related complaints? Is conciliation mandatory before a complaint can proceed? Does an employee have to 7.3 Do employees have to be provided with financial pay a fee to submit a claim? compensation in return for covenants? If a party (whether employee or employer) decides to have an No, employees do not need to be provided with financial employment-related matter heard in the Magistrate Courts or compensation in return for covenants. The restrictive covenants are Supreme Court, there is no conciliatory process. However, if a party simply terms and conditions stipulated in an employment contract opts to go to the Industrial Tribunal, the employment-related matter and it is for the potential employee to either accept or reject the must first be conciliated in “good faith” before a conciliator at the restrictive covenants contained therein. Department of Labour (see Section 70 of the Industrial Relations Act). 7.4 How are restrictive covenants enforced? 9.3 How long do employment-related complaints typically The restrictive covenants are enforced the same as any other rights take to be decided? or obligations under a contract. The enforcing party can either apply to the Courts or the Tribunal. The timescale for decisions to be made on employment-related complaints varies. 8 Data Protection and Employee Privacy 9.4 Is it possible to appeal against a first instance decision and if so how long do such appeals usually 8.1 How do employee data protection rights affect the take? employment relationship? Can an employer transfer employee data freely to other countries? It is possible to appeal a first instance decision. However, if it is a decision of the Industrial Tribunal, a party can only appeal on a Please refer to the online version of this guide for answer. point of law (see Section 64 of the Industrial Relations Act). The timescale for appeals varies.
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Dywan A – G. R. Rodgers Meridian Law Chambers Suite B6, East Bay Street Shopping Centre East Bay Street, P.O. Box N-168 Nassau The Bahamas
Tel: +1 242 393 3975 Email: darodgers@ meridianlawchambers.com URL: www.meridianlawchambers.com
Dywan Rodgers is a Partner in the firm whose principal areas of Bahamas practice are grounded in civil and commercial litigation, and dispute resolution. Dywan’s areas of expertise include Employment Law and Industrial Relations Law, Contract Law, Negligence and Personal Injury Law, Debt Recovery, Admiralty and Shipping Law, Property Law, Intellectual Property and the Enforcement of Foreign Judgments in The Bahamas. Although the firm does not generally engage in criminal law practice, Dywan has participated in and successfully defended several criminal suits. Dywan has appeared as Counsel in varying civil actions, before all forums sitting within The Bahamas. In particular, he has litigated and appeared before the Privy Council, the Magistrate’s Court, the Industrial Tribunal, the Supreme Court and Court of Appeal, as well as Court appointed and voluntary Mediation and Arbitration Hearings. He has acted on behalf of several major institutions and individuals, international and local. In addition to his practice, Dywan also lends assistance in the law classes and tutorials at the Eugene Dupuch Law School, Nassau, Bahamas. Dywan obtained his LL.B. (Hons.) at the University of Essex, England and was called to the Honourable Bar of England and Wales, as a member of Lincoln’s Inn, and to the Honourable Bar of the Commonwealth of The Bahamas in 1998.
Meridian Law Chambers is a boutique firm led by experienced Attorneys with a wealth of experience in various practice areas spanning over 20 years with offices situated in Nassau, New Providence. The firm is involved in the general practice of law which includes Civil and Commercial Litigation, Conveyancing and Real Property, Company formations (including incorporations of International Business Corporations and management of Domestic and International Business Companies), Domestic and International Banking, Limited Partnerships, Intellectual Property Law, Family and Matrimonial Law, Insurance Law, Immigration Law, Probate and Estate Administration.
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Brazil Antônio Lopes Muniz
A. Lopes Muniz Advogados Associados Zilma Aparecida S. Ribeiro
■ Law 13.467/2017 – Labour Reform Law; 1 Terms and Conditions of Employment ■ Ordinance MT 3.214/1978 – sets forth norms related to labour health and safety issues that are regulated by 36 1.1 What are the main sources of employment law? different Ordinances issued by the Ministry of Labour; ■ there are several other laws regulating certain regulated The main source of employment law in Brazil is the “Consolidation professions as physicians, engineers, etc.; and of Labour Laws” known as the “Labour Code”. The Labour Code ■ the content of Collective Bargaining Agreements. was enacted on 1 May 1943 and has been subject to many changes, Direct negotiations between employees and employers were given amendments and adaptations since then, including amendments the same status of the Collective Bargaining Agreements (that provided by the Federal Constitution enacted on 5 October 1988. are signed with the Employee’s Union), in relation to employees The Labour Code has been subject to several amendments and holding a university degree and receiving salaries equal or superior updates in 2017, especially in relation to the enactment of a new to twice the maximum benefit paid by Social Security. law regulating the outsourcing of services and of a comprehensive reform in the Labour Code (“Labour Reform”). The main concept of the Labour Reform is to enhance the autonomy of the parties in 1.2 What types of worker are protected by employment law? How are different types of worker distinguished? negotiating terms and conditions of employment.
That said, employment relations in Brazil are regulated, mainly, by The workers that are protected under the law are, as a general rule: the following sources: ■ pregnant employees; ■ Law-Decree 5.452/1943 – Labour Code; ■ workers suffering from labour-related illnesses and some ■ Articles 6, 7 and 8 of the Federal Constitution; specific diseases not labour-related; ■ Law 605/1949 – regulates weekend pay; ■ workers who are directors of Workers’ Unions; ■ Law 3.207/1957 – regulates payment of commissions to ■ workers that are elected as representatives of the group of salesmen; workers in the internal Cooperative of Credit of the company, ■ Law 4.090/1962 – regulates the payment of the 13th salary if any; and (Christmas bonus); ■ workers that are elected as representatives of the group of ■ Law 5.811/1972 – regulates employment contracts of workers workers in the Labour Accident Prevention Committee. in the area of oil (offshore); Please note that Collective Bargaining Agreements can add other ■ Law 5.889/1973 – regulates employment contracts of workers types of workers that would also be protected. For example, some in rural areas; agreements protect workers that are close to retirement (12/36 ■ Law 6.019/1974 – regulates the hiring of temporary workers; months) and one year before male workers have to enlist for military ■ Law 6.919/1981 – regulates the Severance Fund (FGTS), to service. be paid to members of the Executive Board of the company; Basically, the Labour Code distinguishes workers subject to a work ■ Law 7.064/1982 – regulates expatriation and repatriation of journey control from those not subject to such control (high-level residents in Brazil and hiring of any foreign workers; workers, e.g., directors, heads of department, mid-level management ■ Law 7.418/1985 – regulates payment of workers’ and field workers). transportation costs, residence-workplace-residence; Even though high-level workers are under more flexible regulation ■ Law 7.783/1989 – regulates workers’ rights to strike; all workers are equally protected under the labour legislation, taking ■ Law 8.036/1990 – regulates the Severance Fund (FGTS) to into account the particulars of their respective agreements as follows be paid to terminated workers; are: ■ Law 9.029/1995 – prohibits discrimination in the work place; ■ workers paid on a monthly salary; ■ Law 9.279/1996 – regulates workers’ invention rights; ■ workers paid by the hour; ■ Law 10.101/2000 – regulates Profit/Results sharing schemes; ■ workers hired for an undetermined term; and ■ Law 11.770/2008 – regulates maternity leave; ■ workers hired for a determined term. ■ Law 12.506/2011 – regulates proportional pre-notice; ■ Law 13.429/2017 – regulates outsourcing;
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Determined term labour contracts are an exception and only valid issues related to the companies involved and their norms can only for: change the rules of the collective bargaining executed between ■ a period of experience up to 90 days; or Unions, if more favourable to the workers. ■ up to two years if the services to be rendered or the activities of the company are of transitory nature that could justify the fixed term. 2 Employee Representation and Industrial Relations Determined term labour contracts for less than two years may be renewed once, provided that the total duration does not extend for more than two years. 2.1 What are the rules relating to trade union recognition? Brazil
1.3 Do contracts of employment have to be in writing? If There are Trade Unions that represent workers and Trade Unions not, do employees have to be provided with specific that represent employers of the same industry. Trade Unions’ information in writing? rights and responsibilities in Brazil are regulated by Article 8 of the Federal Constitution and by Articles 511 to 539 of the Labour Code. The Labour Code does not require the existence of written Trade Union recognition requires: employment agreements; however, in order to secure a better level ■ the association of ⅓ of the companies of the same industry of legal certainty, it is highly recommended that written agreements (employers) or ⅓ of the workers of the same industry; are executed. ■ mandate of three years for the respective Board of Directors; ■ the president must be a Brazilian citizen, born in Brazil. 1.4 Are any terms implied into contracts of employment? Other representatives need to be Brazilian citizens but can be a naturalised foreigner; No terms are implied into contracts of employment. In Brazil, facts ■ mandatory registration of the Union before the Ministry of will prevail over form. Labour; and Note that, independent from the existence of a written contract, ■ the territory covered by any given Union may be Municipal, employees must have the employment registered in the official State, Regional or Federal. However, only one Union can be Labour Booklet (Carteira de Trabalho) which is an official recognised in one specific territory for a specific industry. document. This document will indicate the employer, date of hiring, Note that, as summarised above, the general rule is that the job, salary and date of termination. Employers that do not observe Union represents an industry and the exceptions are the Regulated this are subject to fines by the Ministry of Labour. Professions (there are close to 60 – for example, engineers, nurses, chemists, lawyers, accountants, etc.), that are represented by their specific Unions. 1.5 Are any minimum employment terms and conditions set down by law that employers have to observe? 2.2 What rights do trade unions have? Yes. The following minimum terms and conditions must be observed: Unions have the following rights: ■ legal minimum wage or the minimum as negotiated in ■ represent employers or workers of a specific industry before Collective Bargaining Agreements; the executive, the judiciary and the legislative; ■ 30-day vacation with payment of vacation additional pay (⅓ ■ negotiate and execute Collective Bargaining Agreements; of the salary); and ■ maximum work hours – eight per day, up to 44 per week; ■ collect fees from the employers or from the workers that are ■ Severance Fund (FGTS); members of the Union. ■ 13th salary; It is important to point out that Collective Bargaining Agreements ■ overtime limited to two hours per day (only for workers will impact all employers and all employees of each industry or each subject to a work journey control). Overtime is paid with an regulated profession, as the case may be, in each specific territory, addition of at least 50% over the regular wage; and whether or not they are unionised. ■ pre-notice for termination (30 to 90 days) (please see the answer to question 6.1 below). 2.3 Are there any rules governing a trade union’s right to take industrial action? 1.6 To what extent are terms and conditions of employment agreed through collective bargaining? Yes, Law 7.783/1989 regulates workers’ rights to take industrial Does bargaining usually take place at company or action and imposes some formal requirements to be complied with industry level? by the Workers’ Unions before they take action.
Collective bargaining agreements in Brazil (executed between 2.4 Are employers required to set up works councils? If Workers’ Unions and Employers’ Unions), as a general rule, take so, what are the main rights and responsibilities of place at industry level, and refer in general to wages, tenure, such bodies? How are works council representatives overtime, outsourcing, social benefits and procedures for election chosen/appointed? of members of the Labour Accident Prevention Committee. There may be agreements applicable to one specific employer (executed No, employers are not required to set up works councils. As between Workers’ Unions on one side and one or more specific mentioned above, employees and employers are represented by companies on the other side) usually they will relate to specific their respective Unions. Works councils may be negotiated in the
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collective bargaining, and their scope, rights and obligations will ■ Reintegration to the job with payment of all salaries since the vary from case to case. The closest bodies to works councils unfair termination or payment in double of all salaries since as provided by the law are for instance: Labour Accident the unfair termination. Prevention Committees; and Employee Committees that may be ■ Granting of equal conditions of employment if related to elected from time to time to negotiate profit sharing agreements. unequal treatment. Representatives of employees are elected by the employees. ■ Moral damages (pain and suffering).
2.5 In what circumstances will a works council have co- 3.6 Do “atypical” workers (such as those working part- determination rights, so that an employer is unable to time, on a fixed-term contract or as a temporary
Brazil proceed until it has obtained works council agreement agency worker) have any additional protection? to proposals? No, atypical workers in Brazil have the same protection as regular Works council will only have co-determination rights if they are workers and no additional protection. created or recognised by the company with such powers.
4 Maternity and Family Leave Rights 2.6 How do the rights of trade unions and works councils interact? 4.1 How long does maternity leave last? Please see the answer to question 2.5 above. Maternity leave lasts for 120 days and it may start, at employees’ 2.7 Are employees entitled to representation at board choice, on any day during the last month of pregnancy. This period level? may be extended for an additional 60 days, under the terms of Law 11.770/2008, if employee and employer agree and, in case The Union board is directly elected by the members (associates) the extension is agreed, the employer will have the right to a tax among the candidates that must be also associated to the Union; benefit equal to the amount of the salary of the employee during this therefore, there is no appointment of a specific representative at extension period. board level. It is important to keep in mind that the maternity leave term may also be extended by Collective Bargaining Agreements. 3 Discrimination 4.2 What rights, including rights to pay and benefits, does a woman have during maternity leave? 3.1 Are employees protected against discrimination? If so, on what grounds is discrimination prohibited? It is important to point out that employees in Brazil have job tenure from the date of conception until five months after the delivery of Yes. Brazilian law strictly prohibits discrimination in relation to the child. That is, assuming that the employee started her leave 28 salaries, exercise of any function and/or hiring/termination criteria days before the birth and returned to work 120 days after that (90 based on gender, age, race, civil status, sexual orientation or disability. days after the birth), she will still have two months of job tenure. It is important to keep in mind that this period may be extended by 3.2 What types of discrimination are unlawful and in what Collective Bargaining Agreements. circumstances?
4.3 What rights does a woman have upon her return to Please see the answer to question 3.1 above. work from maternity leave?
3.3 Are there any defences to a discrimination claim? A female employee has the right to the remainder of the job tenure period. She may also have the right to breaks for breastfeeding Employers and the alleged offender have the right of defence in (please see the answer to question 4.6 below). any discrimination claim. 4.4 Do fathers have the right to take paternity leave? 3.4 How do employees enforce their discrimination rights? Can employers settle claims before or after Yes, fathers are entitled to paternity leave of five days that can be they are initiated? extended to 15 additional days. It is important to keep in mind that the paternity leave term may be Discrimination rights (as well as any other rights) will be enforced extended by Collective Bargaining Agreements. in a Court of Law. Employer and employees may settle claims at any time before or during the processing of the claim. 4.5 Are there any other parental leave rights that employers have to observe? 3.5 What remedies are available to employees in successful discrimination claims? The same rights of maternity leave apply for cases of adoption. Other rights will only apply if they are included in Collective In successful discrimination claims, the remedies available to Bargaining Agreements. employees include:
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4.6 Are employees entitled to work flexibly if they have 6 Termination of Employment responsibility for caring for dependants?
6.1 Do employees have to be given notice of termination Not under the law, except in the case of breastfeeding. Until a of their employment? How is the notice period child reaches six months of age, the mother shall have two half- determined? hour intermissions during the day to breastfeed. Under doctors’ recommendation, this period of six months may be extended. Other Termination of employment in Brazil, in general, requires a pre- rights will only apply if they are included in Collective Bargaining notice of 30 days during the first year of the contract. After the Agreements. first year the pre-notice period is increased by three days per year, Brazil up to the limit of 90 days. In some cases, depending on Collective 5 Business Sales Bargaining Agreements, pre-notice for some employees (after a determined age, for instance) may require longer pre-notices. Pre-notice period, however, can be either worked or indemnified. If 5.1 On a business sale (either a share sale or asset the employee is required to work during the pre-notice period, he/ transfer) do employees automatically transfer to the she will have their daily work journey reduced by two hours. buyer? Note that if the employee resigns, he/she is required to give pre- notice of 30 days to the employer or in lieu of the pre-notice, the In general, in the case of a share sale, labour contracts remain linked employee should pay the employer an amount equal to the monthly to the employer’s business. In the case of a sale of assets, related salary. employees may be transferred if the purchaser desires and the employees agree. In this case, the purchaser will assume all past labour liabilities. 6.2 Can employers require employees to serve a period of “garden leave” during their notice period when the employee remains employed but does not have to 5.2 What employee rights transfer on a business attend for work? sale? How does a business sale affect collective agreements? No, employees are not required to serve a period of “garden leave”. Labour Courts have ruled against this practice. Sales of businesses have no effect on Collective Bargaining Agreements. All employees will maintain all their rights, including time of service to that company that will continue counting without 6.3 What protection do employees have against interruption in connection to any benefits that may be based on time dismissal? In what circumstances is an employee of service. treated as being dismissed? Is consent from a third party required before an employer can dismiss?
5.3 Are there any information and consultation rights on In general, employees have no protection against dismissal. (Please a business sale? How long does the process typically see the response to question 6.4 below.) A dismissed employee is take and what are the sanctions for failing to inform one that has been notified that he/she has been dismissed with cause and consult? or without cause.
No. Labour legislation does not provide for any information and/or No consent from any third party is required for dismissing an consultation rights on a business sale. employee.
5.4 Can employees be dismissed in connection with a 6.4 Are there any categories of employees who enjoy business sale? special protection against dismissal?
Yes. Labour law, as a general rule, does not impose any restriction The only protection against dismissal applies to the cases of employees on the termination of employees with no need to justify the decision, that have temporary job tenure. The protection is usually related to: except those with rights of temporary job tenure mentioned in ■ pregnant employees; question 1.2 above, and if a collective dismissal is characterised ■ workers suffering from labour-related illnesses and some (please see the answer to question 6.9 below). specific diseases not labour-related; ■ workers who are directors of Workers’ Unions; 5.5 Are employers free to change terms and conditions of ■ workers that are elected as representatives of the group of employment in connection with a business sale? workers in the internal Cooperative of Credit of the company, if any; No. Any change to labour agreements need to have the consent of ■ workers that are elected as representatives of the group of the employee. Any change that is considered unfavourable to the workers in the Labour Accident Prevention Committee; and employee, even with the employee’s consent, will be deemed null ■ workers that have received a Social Security labour-related and void by the Labour Courts. sickness leave. (Please also see the answer to question 1.2 above.)
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6.5 When will an employer be entitled to dismiss for: 6.7 What claims can an employee bring if he or she is 1) reasons related to the individual employee; or 2) dismissed? What are the remedies for a successful business related reasons? Are employees entitled claim? to compensation on dismissal and if so how is compensation calculated? A dismissed employee can file claims related to any and all labour rights before a Labour Justice Court. Outside of the mentioned exceptions (see the answer to question 6.4 It is important to point out that the claims must observe the statute above), and provided that a “mass dismissal” is not characterised of limitation as follows: (see the answer to question 6.9 below), there are no limits on any Brazil private employer to dismiss employees, be it for individual reasons ■ claims have to be filed up to five years after the labour right was allegedly breached; and or business-related reasons. ■ up to two years after the termination of the labour agreement A dismissed employee, without cause, in general, has the right to whatever the reason, whichever comes first. receive the following compensation: As labour claims are usually based on facts arising from the day to ■ pre-notice (30 to 90 days’ salary, proportionally to the time of day relationship between the parties, remedies for a successful claim services in the company); will vary from case to case. ■ proportional salary for the days worked after last payment; ■ proportional 13th salary (1/12 per month from January to December); 6.8 Can employers settle claims before or after they are initiated? ■ proportional vacation pay (1/12 per month counting from his last vacation); Yes, employers can settle claims either before or after they are ■ proportional vacation bonus (1/12 per month counting from his last vacation); initiated. However, this needs to be carefully studied, on a case-by- case basis, as out of Court settlements in labour-related complaints ■ authorisation to withdraw the Severance Fund (8% of the can always be re-discussed in Court. salary deposited every month during the life of the labour agreement); and With the Labour Reform, it will be possible for employees that ■ a penalty equal to 40% of the total amount deposited in the receive more than twice the maximum benefit paid by Social mentioned Severance Fund. Security, to ask for or agree with an arbitration clause, in order to settle any claims before going into Court. Please note that the pre-notice term is counted as the work period for all effects of the law and included in the calculation basis for all labour rights. 6.9 Does an employer have any additional obligations if A dismissed employee for just cause will only be entitled to receive it is dismissing a number of employees at the same time? proportional 13th salary and indemnification for pending vacation, if any. The employee will not have the right to withdraw the Severance Fund and to receive the 40% penalty. No, an employer has no additional obligations when dismissing a number of employees at the same time unless it is a “mass dismissal”. ■ With the enactment of the Labour Reform, the parties may If this is the case, although the legislation does not require any also terminate an employment contract by mutual agreement, with the payment of 50% of the pre-notice and fine of 20% formality, the Superior Labour Court has consistently required over the Severance Fund (versus 40% on the termination that “mass dismissal” be negotiated with the Workers’ Union. It without cause). is important to note, also, that there is no firm indication from any decision (or from the doctrine) of what would be considered a “mass dismissal” (5%, 10%, 20% or more of the labour force). With the 6.6 Are there any specific procedures that an employer Labour Reform, however, mass dismissals have been equalled to has to follow in relation to individual dismissals? other termination possibilities and, therefore, a company will no longer have to negotiate “mass dismissals” with the Workers’ Union. Specific procedures for individual dismissals are: ■ without cause: 6.10 How do employees enforce their rights in relation to ■ employer gives notice of the termination and pays the mass dismissals and what are the consequences if an termination rights within 10 calendar days from the employer fails to comply with its obligations? delivery of the notice; and ■ employer and employee must submit the termination The Labour Court precedents require that the Workers’ Union forms to the Ministry of Labour or Workers’ Union for participate in the mass dismissals procedures in order to seek, by homologation if the employee has worked for a period greater than one year. With the Labour Reform, there means of negotiation, additional benefits to the targeted employees. will be no further need to submit the termination to the If the employer fails to comply with this requirement, the Workers’ Workers’ Union for homologation; and Union may file a specific complaint before the local Labour Court ■ with just cause: aiming at annulling the dismissals and the reinstatement of the employees’ labour contracts, plus indemnification. This is no longer ■ the same as above, plus a detailed description in writing of the reasons for the just cause dismissal, and in applicable under the terms of the Labour Reform. most cases, Workers’ Unions refuse to homologate the termination. Note that, in the case of employees that are directors of the Workers’ Union, the dismissal for a just cause must be preceded by a judiciary investigation of the facts.
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7 Protecting Business Interests Following 8.3 Are employers entitled to carry out pre-employment Termination checks on prospective employees (such as criminal record checks)?
7.1 What types of restrictive covenants are recognised? Although there is no express reference to this type of pre- employment check, Brazilian Labour Courts have consistently The most common restrictive covenants are related to non-compete decided that it would only be acceptable in cases where the law and confidentiality clauses. requires it (e.g., police force) or in cases where the performance of the function would reasonably require such check (e.g. treasury Brazil 7.2 When are restrictive covenants enforceable and for positions, workers involved in the transportation of valuables or what period? providing private security services).
They would be considered enforceable, in principle, in relation 8.4 Are employers entitled to monitor an employee’s to employees whose functions give them access to proprietary emails, telephone calls or use of an employer’s information. There is no specific period defined in the law. For computer system? confidentiality, the usual term is five years after the termination. For non-compete, in general terms, the Courts consider that it would be Yes, employers are entitled to monitor an employee’s emails, reasonable if restricted to a specific market segment (competitive telephone calls or use of their computer system. However, for the products) and if enforceable for up to two years. employer to exercise their right to do so, it is absolutely mandatory that the employers make it absolutely clear in writing to the employees the company policies on the use of the company’s means 7.3 Do employees have to be provided with financial compensation in return for covenants? of communication and its legal nature of work tools, and that employee communications through these means will be monitored by the employer. Yes. If the non-compete covenant restricts the former employee from finding a suitable job, the company must pay him/her at least an amount equal to his/her monthly salary for every month the 8.5 Can an employer control an employee’s use of social restriction applies. A confidentiality covenant does not generate media in or outside the workplace? compensation by law. Employers can control (block) the use of social media in the workplace. The employer cannot control the use of social media 7.4 How are restrictive covenants enforced? outside of the workplace. However, employees will always be responsible for any damages that their use of social media can cause As violations of restrictive covenants may configure a criminal to their employers. offence and/or a civil illicit, companies may submit the case to a Criminal or a Civil Court including requests for injunctions, if necessary. In some specific cases the Labour Courts may be 9 Court Practice and Procedure considered concurrently competent for judging the complaint.
9.1 Which courts or tribunals have jurisdiction to hear 8 Data Protection and Employee Privacy employment-related complaints and what is their composition?
8.1 How do employee data protection rights affect the Employment-related complaints are under the jurisdiction of the employment relationship? Can an employer transfer Labour Justice. employee data freely to other countries? The Labour Justice is a sub-set of the Federal Court System and it Due to restrictions on prospective employees’ background checks, is composed of: data protection rights may affect employment relationships, as Item ■ First Instance Courts composed by a singular judge. X of Article 5 of the Federal Constitution, in general terms, protects ■ Regional Courts of Appeal composed of several chambers people’s privacy and intimacy. (the number of judges and chambers may vary from region to region), each one with three judges for ordinary appeals and special composition chambers for collective labour claims, 8.2 Do employees have a right to obtain copies of any writs of mandamus, rescissory action, etc. personal information that is held by their employer? ■ The Superior Labour Court composed of 27 justices and eight chambers, each one with three judges for special Yes, in principle, employees do have a right to obtain copies of appeals, and special composition chambers with a higher personal information held by their employer, as all documents and number of justices for specific appeals from collective labour information held by the employer, relating to the employee, are claims, individual labour claims, and for writs of mandamus, considered data belonging to both parties. As a consequence, the rescissory action, etc. employee can file an injunction to request the exhibition of such Cases that involve Constitutional Issues can be appealed to the data from the employer, demonstrating that it is necessary for him or Supreme Court. her to exercise labour rights. The employer cannot refuse to provide data containing in any legal registry forms or other information if the employee proves its existence.
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9.2 What procedure applies to employment-related 9.3 How long do employment-related complaints typically complaints? Is conciliation mandatory before a take to be decided? complaint can proceed? Does an employee have to pay a fee to submit a claim? In the first instance, employment-related complaints will typically take approximately one year to be decided. There is no mandatory previous conciliation out of Court. In the labour system, however, the Courts must try to lead the parties to conciliation before the presentation of the defence and at the 9.4 Is it possible to appeal against a first instance decision and if so how long do such appeals usually beginning of any other hearing in the first instance.
Brazil take? Employees do not have to pay any fees to submit a claim. However, if the employee loses the case, he or she may be required to pay Yes. All decisions may be subject to appeal. Appeals to the Regional Court fees. Court of Appeals will take about one year to be judged. Appeals to the Superior Labour Court may take another 18 months.
Antônio Lopes Muniz Zilma Aparecida S. Ribeiro A. Lopes Muniz Advogados Associados A. Lopes Muniz Advogados Associados Avenida Brigadeiro Faria Lima Avenida Brigadeiro Faria Lima 1656 – 5o andar 1656 – 5o andar São Paulo – SP São Paulo – SP 01451-001 01451-001 Brazil Brazil
Tel: +55 11 3038 0723 Tel: +55 11 3038 0723 Email: [email protected] Email: [email protected] URL: www.almlaw.com.br URL: www.almlaw.com.br
Antônio Lopes Muniz is the founding partner of the firm. He has over 40 Zilma Aparecida S. Ribeiro is the partner responsible for the labour years of experience working as a lawyer, both in-house and as a legal area of the firm, both in litigation and in advisory. She specialised consultant. Mr. Muniz was as a member of the Board of Examination in Labour Law at the University of São Paulo from which she holds of new lawyers for the São Paulo Bar Association. He also served a Master’s Degree. Ms. Ribeiro has over 30 years of experience as the Secretary for the São Paulo Bar Association Court of Ethics working as a lawyer, both in-house and as a legal consultant. and a member of the Court of Ethics. He has been recognised since 2012 by the publication “Análise Advocacia 500”, the most prestigious publication on the Analysis of Legal Services, as one of Brazil’s most admired lawyers in the fields of Labour Law.
Since the firm’s foundation in 1975, we have guided ourselves for the rendering of comprehensive legal services with credibility, ethics and high standards of excellence to local and multinational clients. We are recognised for a multi-field action firm, known for solutions that grant security for our clients to face their legal challenges. Our work model is based in specialised teams, led by one or more partners that participate in the finding of solutions and strategies for each case, assuring the high level of quality for which we are recognised. We constantly invest in the training, the improvement and in the careers of our collaborators who have at their disposal modern office facilities and up-to-date technological resources for promptly and fully attending to needs of clients and their projects.
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Canada Patrick L. Benaroche
Stikeman Elliott LLP Hélène Bussières
employment contract, assuming that it can be proven. In practice, 1 Terms and Conditions of Employment the great majority of employment contracts in Canada are not made in writing. Nor is there any requirement that employees be provided 1.1 What are the main sources of employment law? with any specific information in writing at the time of hiring. As such, it is common for employees to have either a simple verbal Several sources of employment law exist in Canada; firstly, there agreement or an informal letter of hire when they are employed. are a host of federal and provincial statutes specifically designed More senior executives may have a more formal written agreement to deal with employment issues including employment standards, which will contain detailed terms and conditions of employment. workers’ compensation and workplace discrimination. There is also the common law in each province (the Civil Code in the province of 1.4 Are any terms implied into contracts of employment? Québec), as well as jurisprudence by Canadian courts. In Québec, various texts by legal scholars, called “doctrine”, can also inspire Yes. Regardless of what form the employment contract takes, employment law and finally, the contract of employment between all employment relationships implicitly include the employer’s the parties can be a source of law between them. obligation to provide work, to pay for the work and to provide a safe working environment for its employees. As for the employee, 1.2 What types of worker are protected by employment every contract of employment implies that the employee will carry law? How are different types of worker distinguished? out the work and be loyal to his/her employer, not only during the term of employment but also for a reasonable period of time after Only workers who are considered “employees” are protected by termination of employment. employment law. Workers are distinguished on the basis of whether they are employees or independent contractors. Most employment 1.5 Are any minimum employment terms and conditions laws will have specific definitions of who constitutes an employee set down by law that employers have to observe? within the meaning of that law. In general, an employee will be a person who works for remuneration according to the instructions Yes, minimum terms and conditions of employment are contained in and under the supervision or control of another person. Many the various employment standards and legislation of each Canadian protective measures benefit employees including, for example, province and in the Canada Labour Code for federally regulated the right not to be dismissed without just and sufficient cause if an businesses. Thus, for example, there are minimum standards employee has more than two years of continuous service (Québec), established for wages, vacation pay, overtime pay, statutory holidays, protection against reprisals for employees who are pregnant, or who hours of work, leaves of absence, and termination of employment. are required to be absent for the purposes of child or family care, etc. All employees are protected against the right to be dismissed with a prior reasonable notice if there is no cause for dismissal. 1.6 To what extent are terms and conditions of employment agreed through collective bargaining? Employees can also be distinguished on the basis of whether they Does bargaining usually take place at company or are ordinary employees or management personnel. Employees are industry level? distinguished from managers on a number of factors, including hours of work, mode of remuneration and whether they have the ability The freedom to associate and to bargain collectively is a to hire and dismiss other workers in the course of exercising their fundamental freedom under Canadian law. Approximately 30 per work. The distinction is relevant as certain legal treatments may cent of the workforce, including public sector employees, have differ for employees and managers, as well as for senior managers. their terms and conditions of employment agreed through collective bargaining. This rate rises to close to 40 per cent in Québec and 1.3 Do contracts of employment have to be in writing? If British Columbia. Collective bargaining can take place either at not, do employees have to be provided with specific company level or, in certain circumstances (e.g., the construction information in writing? industry), at industry level.
No, the employment contract is not subject to any particular formality in Canada. Even a verbal agreement can constitute an
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2 Employee Representation and Industrial 2.4 Are employers required to set up works councils? If Relations so, what are the main rights and responsibilities of such bodies? How are works council representatives chosen/appointed? 2.1 What are the rules relating to trade union recognition? No, there are no requirements to set up works councils in Canada. In all jurisdictions, employees have the right and freedom to join or Unions are the form through which employee representation occurs. form a union of their choice. In order to be recognised or certified as the bargaining agent for a group of employees, a union must secure 2.5 In what circumstances will a works council have co-
Canada the support of a majority of the workers who form the bargaining determination rights, so that an employer is unable to unit. A “majority” is defined as 50 per cent of the workers plus one. proceed until it has obtained works council agreement Typically, employees will be approached to sign union membership to proposals? cards; these cards will be compiled. Once a sufficient number of cards have been obtained, a petition will be filed before the This is not applicable. (See question 2.4, above.) appropriate labour board who will certify the union as bargaining agent for the group of employees targeted. In certain circumstances, if the union obtains support of less than 50 per cent plus one but more 2.6 How do the rights of trade unions and works councils interact? than 35 per cent (or 40 per cent in certain provinces), a vote can be ordered by the labour board to determine whether the union will be recognised. If the employer does not agree with the bargaining unit This is not applicable. (See question 2.4, above.) as defined by the union, there is a procedure for contestation, and a hearing before the labour board will be held prior to certifying 2.7 Are employees entitled to representation at board the union until such time as the bargaining unit has been properly level? defined. In certain jurisdictions in Canada, voluntary recognition by an employer of a union as bargaining agent for employees is No, employees are not entitled to representation at board level. permitted.
3 Discrimination 2.2 What rights do trade unions have?
Canadians believe that it is in the public interest to resolve industrial 3.1 Are employees protected against discrimination? If disputes quickly and efficiently. The primary rights of a trade union so, on what grounds is discrimination prohibited? are firstly to bargain collectively with an employer. Certification gives a union the exclusive authority to bargain collectively with an Yes. All jurisdictions in Canada have legislation designed to protect employer on behalf of all employees in the bargaining unit. Both employees from unlawful discrimination. Several categories parties have the legal duty to bargain in good faith. In the event that of employees are protected such as pregnant workers, disabled the parties are unable to reach an agreement, the employees, through workers and those that are the subject of retaliation for having their union, have the right to strike, and employers have the right to exercised their legal rights. All jurisdictions in Canada prohibit lock out employees. In Québec, there is legislation which expressly discrimination based on race, national, ethnic or place of origin, prohibits the use of replacement workers during a strike or lockout. colour, creed, marital status, physical or mental disability or sex. A union also has the right to have disputes or grievances arising Certain jurisdictions also prohibit discrimination on the basis of during the life of a collective agreement decided by arbitration. ancestry, criminal conviction and political beliefs. All jurisdictions All disputes between a union and an employer concerning the prohibit discrimination on the basis of age, although the definition interpretation, application, administration or alleged violation of a of age differs in each jurisdiction. In most jurisdictions, mandatory collective agreement must be settled by arbitration. Also, the union retirement has been abolished and an employee cannot be dismissed can, at any time during the collective bargaining process, request the purely by virtue of the fact that he/she has reached the normal age intervention of a Government-appointed conciliator to facilitate the of retirement. bargaining process. In the case of a first collective agreement, either party can also ask for binding arbitration if the collective bargaining 3.2 What types of discrimination are unlawful and in what or conciliation process is unsuccessful. circumstances?
2.3 Are there any rules governing a trade union’s right to Employers are prohibited from discriminating in respect of hiring, take industrial action? apprenticeship, duration of probationary period, vocational training, promotion, transfer, displacement, layoff, suspension, dismissal or Yes, there are rules which govern a trade union’s right to take conditions of employment of an employee or the establishment of industrial action. A union’s right to take industrial action, such as categories or classes of employment. Similarly, an employer cannot a strike or picketing, is regulated by law; strikes can be conducted require a person to give information on a job application regarding lawfully once majority support by the employees in the bargaining any of the prohibited grounds of discrimination mentioned in unit has been secured. Picketing actions (including secondary question 3.1 above. picketing) are permitted as a form of free expression but must be conducted in such a way as not to interfere with the flow of business 3.3 Are there any defences to a discrimination claim? on the employer’s premises. Yes. The principal defence raised against a charge of discrimination in employment is that the adverse action was taken for a legitimate,
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non-discriminatory reason. There are also defences on the basis that discrimination on a prohibited ground is a bona fide occupational 3.5 What remedies are available to employees in requirement. Thus, for example, if a certain level of physical fitness successful discrimination claims? is an absolute requirement for a particular job, it may be permissible to refuse the position to a person who is handicapped and unable to The human rights tribunal has the power to order a person to cease meet the physical requirements of the job. However, no practice any discriminatory practice and to take measures to prevent similar will be considered to be a bona fide occupational requirement practices from happening again. The tribunal can also restore such unless it has first been established that the employer has tried to rights, opportunity or privileges to the victim as were denied to him/ accommodate the needs of the employee affected, up to the point her as a result of the discriminatory practice and to compensate the of undue hardship, taking into account health, safety and cost. In victim for any lost wages and expenses and other damages incurred order to determine whether accommodating for the employee has as a result of the discriminatory practice, including moral and Canada reached the point of undue hardship, courts will look at various exemplary (punitive) damages where appropriate. factors including the context of the situation, such as whether prior steps to accommodate the employee were taken, the impact on 3.6 Do “atypical” workers (such as those working part- the organisational structure, any applicable collective agreement, time, on a fixed-term contract or as a temporary provisions in force and any adverse impact on other employees in agency worker) have any additional protection? addition to the cost to the company. A workplace does not have to be entirely reorganised and employers are not expected to have to No, so-called atypical workers (i.e., part-time, fixed-term, contract bear excessive financial costs or expose other workers or members or temporary agency workers) do not have additional protection of the public (or even the disabled employee himself/herself) to but they do benefit from the same protections which prohibit unacceptable levels of risk to health, safety and general well-being. discrimination in employment as are applicable to other categories In order to establish a bona fide occupational requirement, the of workers. employer must show three things: 1. that the employer adopted the requirement for a purpose 4 Maternity and Family Leave Rights rationally connected to the performance of the job; 2. that the requirement was adopted in an honest and good faith belief that it was necessary to the fulfilment of a legitimate 4.1 How long does maternity leave last? work-related purpose; and 3. that the requirement is reasonably necessary to accomplish The length of maternity leave can vary from one province to the legitimate work-related purpose. another as well as under federal jurisdiction. Each jurisdiction will generally state that a pregnant employee who has worked for the 3.4 How do employees enforce their discrimination same employer for a specified period of time is entitled to unpaid rights? Can employers settle claims before or after maternity leave of approximately 16 or 18 weeks, depending on the they are initiated? jurisdiction.
All Canadian jurisdictions have human rights commissions 4.2 What rights, including rights to pay and benefits, does whose purpose is to promote the understanding, acceptance and a woman have during maternity leave? compliance with legislation designed to prevent discrimination in the workplace. If an employee has reasonable grounds to believe A woman on maternity leave is entitled to obtain employment that he/she has been the victim of a discriminatory practice, he/she insurance (EI) maternity benefits. In order to be eligible for these may file a complaint with the appropriate human rights commission. payments, an employee must have accumulated at least 600 hours Once a complaint is filed, the commission will typically designate of insurable employment during the qualifying period prior to the a person to investigate the complaint. During the investigation, maternity leave. These benefits are payable during the period that both parties are invited to provide their versions of events. At the commences eight weeks prior to the week in which delivery is conclusion of the investigation, the investigator submits a report expected or the week in which delivery occurs, whichever is the of his findings to the commission. Upon receipt of the report, the earlier. The maximum number of weeks for which benefits may be commission decides whether to dismiss the complaint or refer the obtained during the maternity leave period is 15 (17 weeks minus a matter for a hearing before the human rights tribunal. mandatory two-week waiting period). Employers are able to settle claims after they have been initiated by As a general rule, the basic rate for calculating employment benefits participating in a mediation exercise. At any time after a complaint is 55 per cent of the employee’s average insurable weekly earnings, has been filed, the human rights commission may appoint a up to a maximum amount. Since 1 January 2018, the maximum conciliator to facilitate mediation between the parties. If the matter yearly insurable earnings amount is $51,700, which means that, goes to a hearing, all parties are given the opportunity to appear in regardless of an employee’s income, the maximum that a pregnant person or through legal counsel and to present evidence and make worker can receive from EI benefits during maternity leave is $547 representations. These hearings are public unless confidentiality is per week. essential to protect public security, the fairness of the hearing, the It is not uncommon for employees to “top up” these amounts life, liberty or security of a person, or prevent undue hardship to through a group plan. the persons involved. In Ontario, claimants are able to address the human rights tribunal directly rather than having complaints first assessed and then forwarded by the commission. 4.3 What rights does a woman have upon her return to work from maternity leave?
While on maternity leave, a woman continues to be an employee. At the end of her leave, the employer is required to reinstate her to the
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position that she held prior to the leave, or to an alternative position of comparable nature. Also, the employer may have to continue 5.2 What employee rights transfer on a business making payments to any applicable group benefit or insurance plans, sale? How does a business sale affect collective agreements? or provide the employee with an option to maintain these benefits at her own expense. Finally, some jurisdictions prohibit any loss of seniority in respect of an employee who was on maternity leave. The successor employer is bound by the collective agreement entered into between the union and the vendor. The purchaser steps into the shoes of the seller and assumes all rights, powers, duties and 4.4 Do fathers have the right to take paternity leave? liabilities in connection with the collective agreement and becomes a party to any proceeding relating to the said collective agreement. Canada Yes, all jurisdictions provide for parental leave in their employment In all Canadian provinces other than Québec, the purchaser who standards legislation. This means that leave is available for fathers chooses to offer employment to non-unionised employees can as well as mothers. Parents are entitled to an unpaid parental leave determine the terms and conditions of employment that it offers of between 35 and 52 weeks, depending on the jurisdiction. Parental to the employees of the vendor. However, the purchaser who leave may be taken by both parents in some jurisdictions and must employs the seller’s employees has to recognise the past service be shared between the parents in other jurisdictions. of these employees with the seller for certain purposes set forth in employment standards legislation such as vacation entitlements and 4.5 Are there any other parental leave rights that statutory notice of termination of employment. The purchaser is not employers have to observe? obliged to assume the past years of service of the employees with the seller for the purposes of calculating the reasonable notice of The rights of adoptive parents are usually the same as those provided termination of employment at common law. In practice, however, it for natural parents. Moreover, all parents are protected against is common for a purchaser to recognise the past years of service of any form of discrimination or reprisal as a result of having taken a the employees so as not to demotivate the employees from joining maternity or parental leave. the purchaser’s organisation. In the province of Québec, the purchaser must recognise the 4.6 Are employees entitled to work flexibly if they have employee’s previous years of service for all purposes. responsibility for caring for dependants? 5.3 Are there any information and consultation rights on No, employees are not entitled to work flexibly if they have a business sale? How long does the process typically dependent care responsibilities. However, an employee is entitled to take and what are the sanctions for failing to inform unpaid leave ranging between three and 10 days, depending on the and consult? jurisdiction, in any given year, in order to meet the responsibilities related to the health, care or education of a family member. We are There are no mandatory consultation rights on a business sale. not aware of any law that would impose a general duty on employers However, collective agreements may contain provisions requiring to accommodate employees with respect to any responsibilities that the employer to inform the union in advance of a transaction they might have caring for dependants. affecting the business. If the sale of a business results in a mass layoff, the employer will typically need to inform the Minister of Employment of the province 5 Business Sales in advance of the effective date of the collective dismissal.
5.1 On a business sale (either a share sale or asset 5.4 Can employees be dismissed in connection with a transfer) do employees automatically transfer to the business sale? buyer? In Canadian provinces other than Québec, the purchaser has the Upon the sale of shares by a vendor, the identity of the employer does option to employ or not to employ the seller’s non-unionised not change but merely that of the shareholders. The employment employees. Employees who do not receive or do not accept an contracts and collective agreements that are in force between the offer of employment from the purchaser will be terminated as a employer and its employees remain in full force and effect, and the result of the business sale. All obligations and liabilities towards the employer simply retains all of its obligations and liabilities towards employees remain with the seller, including responsibility for notice, its employees. severance or other termination entitlements. In a sale of assets, the unionised employees are automatically In the province of Québec, all employees have a right to be transferred transferred to the purchaser by operation of law. In all Canadian to the purchaser’s business. If a purchaser fails to continue to employ provinces other than Québec, the non-unionised employees are one non-unionised employee after the sale of the business, such an not automatically transferred to the purchaser upon the sale of a employee, if he/she accumulated two years of service or more, has business. The purchaser has the option to employ or not to employ the right to challenge the termination of his/her employment and may the seller’s employees. The vendor retains liability relating to seek to be reinstated in the purchaser’s business if his/her dismissal is all employees who do not receive or who do not accept offers of deemed to have been made without just and sufficient cause. employment from the purchaser. In the province of Québec, all non-unionised employees are 5.5 Are employers free to change terms and conditions of automatically transferred to the purchaser upon the sale of a employment in connection with a business sale? business, on the same terms and conditions of employment as those which apply immediately prior to the closing of the sale. In all Canadian provinces other than Québec, the purchaser who chooses to offer employment to employees of the seller can
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determine the terms and conditions of employment that will apply effective as of the closing of the sale. In the province of Québec, 6.3 What protection do employees have against the employment agreements of non-unionised employees are dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third automatically transferred to, and binding on, the purchaser of the party required before an employer can dismiss? business. This means that the employees have a right to continue to be employed on the same terms and conditions of employment Dismissals based on prohibited grounds of discrimination are illegal. as those that applied immediately prior to the sale of the business. Employees can file complaints before human rights tribunals or In practice, in all Canadian provinces, it is customary for the labour boards in order to contest the termination of their employment purchaser to offer the seller’s employees terms and conditions of if it was based on a prohibited ground of discrimination. Moreover, in employment substantially similar to those that applied immediately the province of Québec, employees who have accumulated two years Canada prior to the sale of the business. of continuous service or more are protected against dismissal made without just and sufficient cause. The same protection applies to 6 Termination of Employment employees of federal undertakings who have accumulated 12 months of continuous service or more and to employees in the province of Nova Scotia who have accumulated 10 years of service or more. 6.1 Do employees have to be given notice of termination Consent from a third party is not required before a dismissal takes of their employment? How is the notice period place. determined?
In Canada, the concept of “at will” employment does not exist. If 6.4 Are there any categories of employees who enjoy the employer does not have just cause to terminate the employee’s special protection against dismissal? employment, the employee is entitled to receive prior notice of the termination of his/her employment. All Canadian provinces have Yes, several categories of employees are protected such as pregnant enacted employment standards legislation which sets forth the workers, disabled workers and those that are the subject of statutory minimum notice of termination (and severance pay in retaliation for having exercised their legal rights. All jurisdictions the case of Ontario and federal jurisdiction) which must be given in Canada prohibit discrimination based on race, national, ethnic to employees in the event of the termination of their employment or place of origin, colour, creed, marital status, physical or mental without just cause. Notice of termination can be given either in time disability, sex and family status (in certain provinces). (working notice), in money (pay in lieu of notice) or a combination Employees of the province of Québec who have accumulated two of both. The duration of the notice of termination or the indemnity years of continuous service or more, employees of the province of in replacement thereof that is required to be given to each employee Nova Scotia with 10 years of service or more, and employees of varies with the length of the employee’s service. federal undertakings with 12 months of service or more are also In Canada, employees are also entitled to receive a reasonable protected against dismissal made without just and sufficient cause. notice of the termination of their employment. What is “reasonable” In addition, employees subject to a collective bargaining agreement is determined on a case-by-case basis after consideration of all or to an employment contract may enjoy special protection against relevant factors in each particular case, including: the nature of dismissal depending on the terms of the contract. employment; the length of service; the age of the employee; the level of responsibility of the employee; the employee’s salary and 6.5 When will an employer be entitled to dismiss for: other remuneration; the availability of alternative employment; and 1) reasons related to the individual employee; or 2) the circumstances surrounding the hiring of the employee at the business related reasons? Are employees entitled commencement of employment. to compensation on dismissal and if so how is As a “rule of thumb”, reasonable notice can be calculated by compensation calculated? multiplying one, two, three, four or five weeks per year of service, with a minimum of six to eight weeks and up to a maximum of 24 Employers are entitled to dismiss for reasons related to the months, in the absence of extraordinary circumstances. individual employee or for business-related reasons, so long as those reasons do not violate an applicable employment agreement or laws prohibiting discrimination or retaliation. In the province 6.2 Can employers require employees to serve a period of Québec, employers must show that they have just and sufficient of “garden leave” during their notice period when the cause for dismissing employees who have accumulated two years of employee remains employed but does not have to attend for work? service or more. The same applies to employees with 10 years of service or more in the province of Nova Scotia, and to employees of Employees are not required to serve a period of garden leave if this federal undertakings with 12 months of service or more. possibility is not included in the employee’s employment contract. Employees who are laid off due to business-related reasons or who “Garden leave” arrangements are not common in Canada. This type are dismissed without just cause are entitled to receive notice, or of arrangement could be challenged by the employees on the basis pay in lieu of notice, of the termination of their employment. In that the employer is not fulfilling its obligation to provide work to addition, in Ontario and in the federal jurisdiction, severance pay its employees. This means that an employee could allege that the obligations may apply. termination of his/her employment is effective as of the beginning of the “garden leave” and that the employee would therefore be entitled 6.6 Are there any specific procedures that an employer to receive all notice, pay in lieu of notice or severance pay flowing has to follow in relation to individual dismissals? from the termination of his/her employment as of that date. Similarly, the starting point of the duration of post-employment restrictive With respect to unionised employees, employees with two years of covenants would be the date on which the “garden leave” begins. service or more in the province of Québec, employees with 10 years
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of service or more in Nova Scotia, and employees with 12 months of In certain provinces, employers who fail to provide advanced notice service or more in federal undertakings, employers should follow a of massive termination to the Minister of Employment may have fair procedure to avoid a finding of unjust dismissal. What amounts to pay to their employees an indemnity equal to the employee’s to a fair procedure depends on the reason for the dismissal, but will wages for a period equal to the time period or remainder of the time generally involve respecting the rule of progressive discipline and period within which the employer was required to give notice to the imposing a sanction that is proportional to the offence committed by Minister. Furthermore, an employer who does not give notice of the the employee. With respect to the termination of employment based collective dismissal to the Minister of Employment within the delay on the employee’s poor performance, the employee must have been provided in the applicable employment standards legislation may be given a reasonable opportunity to meet the required standards of guilty of a penal offence and liable to pay a fine of an amount which performance and must have been warned in writing that he/she was is set forth in the applicable employment standards legislation. Canada at risk of dismissal. 7 Protecting Business Interests Following 6.7 What claims can an employee bring if he or she is Termination dismissed? What are the remedies for a successful claim? 7.1 What types of restrictive covenants are recognised? A unionised employee who was dismissed may bring a grievance contesting his/her dismissal under the collective agreement. This Restrictive covenants usually include provisions protecting the grievance will be heard by an arbitrator or a board of arbitration. confidentiality of information pertaining to the employer’s business, If the dismissal is found not to be for just cause, then the employer non-solicitation clauses prohibiting the solicitation of the employer’s will have to reinstate the employee in his/her employment, normally customers, suppliers and personnel as well as non-competition with full back pay. clauses. A non-unionised employee who is dismissed may bring an action at common law or civil courts alleging that the cause relied on by the 7.2 When are restrictive covenants enforceable and for employer was not such as to warrant dismissal without notice. what period? In the provinces of Québec and Nova Scotia, as well as under federal jurisdiction, employees can seek to be reinstated in their employment In order to be enforceable, restrictive covenants must be limited to with full back pay if they have accumulated the required number the protection of the legitimate interests of the employer. Restrictive of years of service. In the province of Québec, if reinstatement is covenants, such as non-competition clauses, must be reasonable in deemed to be inappropriate or unpractical, employees can receive, their duration, in their geographical scope and in the scope of the in addition to the compensation for the wages that they lost since the activities that are prohibited. Generally, non-competition clauses date of their dismissal, an indemnity to compensate them for the loss will not be enforceable if the duration is longer than nine to 12 of their employment. months in common law provinces or 18–24 months in the province of Québec. Courts will not “read down” or modify a covenant that 6.8 Can employers settle claims before or after they are they find to be unreasonable; the clause will simply be declared to initiated? be entirely unenforceable.
Employers can settle employment claims either before or after 7.3 Do employees have to be provided with financial they are initiated. Such a settlement must, however, comply with compensation in return for covenants? the employment standards legislation applicable to each province. In addition, in the province of Québec, employees cannot validly When restrictive covenants are given at the time of an employee’s renounce in advance their right to receive a reasonable notice of hiring, the employment of the employee constitutes sufficient termination of their employment. consideration for the restrictive covenant. In common law provinces, additional consideration is necessary if the restrictive 6.9 Does an employer have any additional obligations if covenant is entered into during employment. it is dismissing a number of employees at the same time? 7.4 How are restrictive covenants enforced?
Yes, most Canadian provinces have requirements that are specific An employer can enforce a restrictive covenant by seeking an for group terminations. These typically include an obligation to injunction to prevent the employee from violating the covenant or by give written notice to the Minister of Employment of the province. instituting a lawsuit claiming from the employee (and sometimes from Employers may also be required to establish or participate in a his/her new employer) the damages suffered by the former employer reclassification assistance committee or an adjustment committee as a result of the breach, by the employee, of the restrictive covenant. whose role is to assist employees in order to minimise the impact of the dismissal and to facilitate the maintenance or re-entry into the labour market. 8 Data Protection and Employee Privacy
6.10 How do employees enforce their rights in relation to 8.1 How do employee data protection rights affect the mass dismissals and what are the consequences if an employment relationship? Can an employer transfer employer fails to comply with its obligations? employee data freely to other countries?
Employees can file a complaint with the applicable employment Certain provinces, such as Québec, Alberta, Manitoba and British standards commission.
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Columbia, have adopted private-sector legislation pertaining to and for a legitimate purpose (for example, to verify its reasonable the protection of personal information. The Personal Information suspicions that the employee is competing with its business). The Protection and Electronic Documents Act (PIPEDA), in turn, employer shall only collect information relating to this purpose and applies to federally regulated organisations across Canada. This shall use the least intrusive means possible to achieve this purpose. law governs the collection, use, transfer and disclosure of personal information as well as record retention requirements and privacy 8.5 Can an employer control an employee’s use of social rights. media in or outside the workplace? Generally, an employer can transfer employee data with notice to the employee or, in some provinces, employee consent. In the Employees do not have a general “right” to use social media in case of transfer of personal information to other countries, some the workplace. An employee’s right to use social media is thus a Canada additional requirements may apply, such as the obligation for the function of the nature of the position held and the employer policies employer to take reasonable steps: (i) to ensure that the information in this regard. That being said, employers generally permit a will not be used for purposes not relevant to the object of the file; reasonable use by employees of social media in the workplace, as (ii) to notify employees explicitly that personal information will be long as this does not interfere with the performance of their duties. stored or processed outside of Canada, where it will be subject to the In addition, employers can adopt social media policies which apply laws of the destination country; and (iii) in the case of nominative not only to the employee’s use of social media at work but also lists in Québec, to ensure that the persons concerned have a valid outside of the workplace. In this case, the policy needs to strike a opportunity to refuse that personal information concerning them be right balance between the employee’s freedom of expression and the used for purposes of commercial or philanthropic prospection. employer’s right to protect its business. Employees have a duty of loyalty towards their employer which 8.2 Do employees have a right to obtain copies of any includes an obligation not to disclose confidential information personal information that is held by their employer? pertaining to their employer and an obligation to protect the reputation of their employer. An employer could adopt a policy on Yes, as a general rule, employees have a right to access personal the use of social media which would include some rules to ensure information held by their employer. Exceptions to this rule do exist that employees do not damage the employer’s reputation or divulge and include: information protected by legal privilege; information confidential information pertaining to the employer, in social media, which would reveal confidential information regarding a third party; whether used at work or outside the workplace. and information which would affect judicial proceedings in which A social media policy would generally include a statement to the either party has an interest. effect that employees must refrain from posting on social media comments that could reasonably be viewed as disparaging of other 8.3 Are employers entitled to carry out pre-employment employees or as constituting psychological harassment towards one checks on prospective employees (such as criminal of their colleagues. Also, social media policies generally require record checks)? that employees have to make it clear that whenever they engage in any social media activity, they speak on their own behalf and not on Yes, employers are entitled to carry out pre-employment checks behalf of their employer. on prospective employees, with the employee’s written consent, provided that the pre-employment background checks are aimed at determining if the job candidate will be able to fulfil the 9 Court Practice and Procedure requirements of the position for which he/she applies. For example, gathering extensive information about the financial situation of a 9.1 Which courts or tribunals have jurisdiction to hear candidate is not always necessary to determine a person’s suitability employment-related complaints and what is their for a position. Since background checks can reveal a broad range composition? of information pertaining to a person, it is important to note that an employer is not entitled to discriminate against a candidate on Each province has its labour standards board or commission that the basis of one of the prohibited grounds of discrimination such as hears employment-related complaints. Employees of federally ethnic origin, physical or mental disability or religion. regulated businesses must file their employment-related complaint In addition, generally, no one may refuse to hire a person owing to with the Canada Industrial Relations Board. the mere fact that that person was convicted of a penal or criminal Claims for reasonable notices of termination are brought before the offence, if the offence is in no way connected with the employment civil law or common law courts. or if the person has obtained a pardon for the offence.
9.2 What procedure applies to employment-related 8.4 Are employers entitled to monitor an employee’s complaints? Is conciliation mandatory before a emails, telephone calls or use of an employer’s complaint can proceed? Does an employee have to computer system? pay a fee to submit a claim?
Employers are entitled to monitor an employee’s emails or use The applicable procedure depends on the forum in which the of an employer’s computer system, subject to certain conditions. employment claim is brought. Conciliation is usually offered on a Employers should have a policy governing the use of their voluntary basis by the various labour standards commissions and is information systems so as to minimise the employee’s reasonable generally not mandatory for employment-related complaints. expectation of privacy when using the hardware and software There are no fees to pay by an employee wishing to file a claim belonging to their employer. An employer that monitors an before one of the many administrative boards. If an employee employee must be acting on the basis of a reasonable concern
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wishes to launch a civil suit, there are minor amounts due for judicial stamps upon filing, but these amounts are recoverable from 9.4 Is it possible to appeal against a first instance the employer if the employee prevails in his/her action. decision and if so how long do such appeals usually take?
9.3 How long do employment-related complaints typically Generally, it is possible to request that a decision of a labour take to be decided? standards board be reviewed on a point of law. Such motions for review must generally be filed within 30–90 days of the initial Employment-related complaints will typically be heard by decision. administrative boards within 12–18 months following the filing of
Canada said complaint. The delay increases before civil law and common law courts to 24–36 months.
Patrick L. Benaroche Hélène Bussières Stikeman Elliott LLP Stikeman Elliott LLP 1155 René-Lévesque Blvd. West 1155 René-Lévesque Blvd. West Montréal Montréal Québec H3B 3V2 Québec H3B 3V2 Canada Canada
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Patrick L. Benaroche is a senior partner and former chair of the Hélène Bussières is a partner and head of the Employment and Labour Employment Practice Group in the Montréal office of Stikeman Group in the Montréal office of Stikeman Elliott. Ms. Bussières has Elliott. With a background in Industrial Psychology, Patrick provides extensive experience representing employers in the context of both advice to major corporations on all aspects of Canadian employment individual employment relationships and matters relating to unionised and labour law, with an emphasis on cross-border issues affecting environments. Her diverse practice includes appearances before a mobile workforce. Patrick appears regularly before civil and the courts, negotiation of collective agreements, drafting of executive administrative tribunals on matters relating to wrongful dismissal, employment agreements and providing advice on incentive plans, workplace harassment and discrimination, non-competition clauses termination packages and employment standards. and protection of trade secrets. He is often called upon by employers Ms. Bussières has also acquired considerable experience in the to advise on executive employment contracts, termination packages, coordination of all employee-related matters in the context of workplace policies, employment standards, privacy compliance, commercial transactions such as acquisitions of assets, and she has including matters related to plant closures, restructuring and mass developed a strong expertise in strategic human resources planning terminations. and executive compensation for her clients across Canada. Patrick is also extremely experienced in management-labour relations, Ms. Bussières is a member of the Québec Bar and the Canadian Bar including union certification and decertification proceedings, collective Association. Ms. Bussières also teaches employment and labour law bargaining, grievance arbitration, management of strikes and lockouts. at the Québec Bar School. Patrick is an officer of the Employment and Industrial Relations Law For more information, please visit Ms. Bussières’ full profile at Committee of the International Bar Association and is often called upon http://www.stikeman.com/cps/rde/xchg/se-en/hs.xsl/Profile. to participate in conferences and lectures on Canadian employment htm?ProfileID=32337. law. He is a member of the Québec Bar, the Canadian Bar Association and the American Bar Association. For more information, please visit Mr. Benaroche’s full profile at http://www.stikeman.com/cps/rde/xchg/se-en/hs.xsl/Profile. htm?ProfileID=32371.
Stikeman Elliott LLP is one of Canada’s leading business law firms, with offices in Montréal, Toronto, Ottawa, Calgary and Vancouver as well as in London, New York and Sydney. The firm is recognised as a Canadian leader in each of its core practice areas – corporate finance, M&A, corporate- commercial law, banking, structured finance, real estate, tax, insolvency, competition and foreign investments, employment and business litigation – and is regularly retained by domestic and international companies in a wide range of industries including communications, financial services, insurance, technology, transportation, manufacturing, mining, energy, infrastructure and retail. Our 500 lawyers include many of Canada’s most prominent business practitioners and leading litigators, and our depth across practice areas enables clients to benefit from efficient, expert teams of lawyers at all levels. The firm has also invested heavily in cutting-edge knowledge management and project management systems in order to assure our clients of advice of the highest quality. Our offices frequently work together on major transactions and litigation files, and regularly collaborate with prominent U.S. and international law firms on cross-border transactions of global significance.
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China Weiwei Gu
Global Law Office Kelly Cao
i) the employer’s name, address and legal representative or 1 Terms and Conditions of Employment person who is in charge; ii) the employee’s name, address and his identification card 1.1 What are the main sources of employment law? number; iii) term of the contract of employment; The main source of employment law is legislation. At national iv) job description and the employee’s workplace; level, the legislation in connection with employment and labour v) working hours, rest and vacation; law includes: Labour Law; Labour Contract Law; Employment vi) the employee’s remuneration; Promotion Law; Trade Union Law; Law on Safety in Mines; vii) the employee’s social insurance; and Vocational Education Law; Law on Prevention of Occupational Diseases; and Mediation and Arbitration Law of Labour-dispute. viii) labour protection, working conditions and protection against occupational hazards. In addition, there are regulations and judicial interpretations in connection with employment law. In addition to the requisite terms mentioned above, an employer and an employee may agree to have other matters stipulated in Although judicial precedent is not applicable in China, the judgment the contract of employment, such as a probation period, training, ruled by the Supreme People’s Court may be deemed as guidance. confidentiality, supplementary insurance and welfare benefits, etc.
1.2 What types of worker are protected by employment law? How are different types of worker distinguished? 1.4 Are any terms implied into contracts of employment?
Employment law protects a worker who has a labour relation with Terms implied by law are most significant. For instance, the an employer. principles of lawfulness, fairness, equality, voluntariness, consensus through consultation and good faith, as well as the employee’s duty Workers who are protected by employment law can be classified of loyalty and fidelity, to work with diligence and to obey lawful into the following categories based on different standards of orders and the employer’s internal rules and regulations, are all classification: implied into contracts of employment. i) full-time worker, who works for eight hours a day and for five days a week; ii) part-time worker, with whom an agreement on probation 1.5 Are any minimum employment terms and conditions period cannot be concluded; set down by law that employers have to observe? iii) worker who concludes a fixed-term labour contract; The Labour Law and Labour Contract Law set standards of iv) worker who concludes an open-ended labour contract; employment regarding the following areas: v) worker who concludes a labour contract that expires upon i) special protection to female and underage employees (age completion of given jobs; and above 16 but under 18); vi) dispatched worker or agency worker, who is employed by a ii) prohibition on hiring any minors (age under 16); labour-dispatching unit and dispatched to other companies. iii) annual leave and maternity leave; iv) maximum weekly working hours; 1.3 Do contracts of employment have to be in writing? If not, do employees have to be provided with specific v) minimum wages; and information in writing? vi) social insurance.
According to the Labour Contract Law, contracts of employment 1.6 To what extent are terms and conditions of shall be in writing. If the employer is found intentionally delaying employment agreed through collective bargaining? the conclusion of contracts of employment, the labour administrative Does bargaining usually take place at company or department will demand the employer to rectify. industry level? The Labour Contract Law stipulates that a labour contract shall contain the following terms: The extent to which terms and conditions of employment agreed
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through collective bargaining may vary due to local regulations and industries. In China, collective bargaining usually takes place at 2.5 In what circumstances will a works council have co- company level. determination rights, so that an employer is unable to proceed until it has obtained works council agreement to proposals? 2 Employee Representation and Industrial Relations Not applicable, please see question 2.4.
2.1 What are the rules relating to trade union recognition? 2.6 How do the rights of trade unions and works councils interact? China The Trade Union Law provides the definition and establishment of trade unions in China. Not applicable, please see question 2.4. Employers are required by law to establish a trade union under certain circumstances. As provided by the Trade Union Law, any 2.7 Are employees entitled to representation at board enterprises, institutional organisations and governmental agencies level? that have more than 25 trade union members, shall establish a trade union and trade union committee. A trade union member refers to Yes, employees are entitled to representation at board level. Pursuant an employee who has joined a trade union during the labour relation to the Company Law, in terms of any limited liability companies with his former employer. established with investment of two or more State-owned enterprises, or other State-owned investing entities, the board of directors shall comprise of at least one employees’ representative. The board of 2.2 What rights do trade unions have? directors of any other limited liability companies may include an employees’ representative. The Trade Union Law grants a broad range of rights to the trade union, enabling the trade union to protect the rights and interests of employees. 3 Discrimination The trade union is entitled to engage in negotiation with employers on matters including the term of the labour contract, salary, working 3.1 Are employees protected against discrimination? If hours, working conditions, welfare benefits, etc., for the purpose so, on what grounds is discrimination prohibited? of benefitting employees, and advising on those matters tothe employer. Yes, employees are protected against discrimination. Both the The trade union shall protect the legitimate rights and interests of Labour Law and Employment Promotion Law provide that the employees and supervise employers’ performance of labour employees shall be treated impartially regardless of their nationality, contracts. race, gender or religious beliefs. In cases where an employer decides to unilaterally terminate the labour contract, the employer shall in advance notify the trade 3.2 What types of discrimination are unlawful and in what union of the reason for doing so. The employer shall reconsider its circumstances? decision and subsequently submit a written feedback to the trade union if the trade union raises any objections. Discrimination will be deemed as unlawful if the employer’s decision to refuse to hire, enhance the hiring standard, or treat its 2.3 Are there any rules governing a trade union’s right to employees partially, is based upon discriminatory grounds. take industrial action? In practice, causal connection between the employer’s adverse action and the asserted discriminatory grounds should be proven Though labour laws of the People’s Republic of China (“PRC”) do before unlawful discrimination can be found by courts. not grant to the trade union the right to strike or organise strikes, the Trade Union Law grants the trade union the right to take 3.3 Are there any defences to a discrimination claim? other industrial actions on behalf of employees when employees’ interests and rights are infringed upon by their employers. A trade union is entitled, on behalf of employees, to request the employer Yes. One of the defences to a discrimination claim is an employer to take corrective and remedial actions. If the employer fails to showing that their decision is based on justifiable grounds other than take corrective actions as requested, the trade union, on behalf of the candidate’s or employee’s nationality, race, gender or religious employees, can request the local government to step in and take belief. administrative actions against the employer, or raise a suit against There are legal defences specified by laws, especially in gender the employer. discrimination cases. If an employer can prove that the type of work is unsuitable for females, and thus female candidates cannot be employed to do that specific work, then the employer’s 2.4 Are employers required to set up works councils? If refusal to employ a female candidate will not constitute unlawful so, what are the main rights and responsibilities of such bodies? How are works council representatives discrimination. The Labour Law and the Special Provisions on chosen/appointed? Labour Protection for Female Employees specify the types of work unsuitable for females, including: Employers are not required to set up works councils in China. i) underground mining; ii) grade four physical labour intensive work as stipulated in the Physical Labour Intensive Work Grading Standards; and
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iii) work involving carrying weights which exceed 20 kg for six A female employee shall receive 15 days of maternity leave in the times or more per hour, or intermittently carrying weights case of a miscarriage within the first four months of pregnancy. which exceed 25 kg each time. When there has been a miscarriage after four months of pregnancy, a female employee shall receive 42 days of maternity leave. 3.4 How do employees enforce their discrimination Municipal or provincial regulations may provide female employees rights? Can employers settle claims before or after with an additional 30–90 days of maternity leave. they are initiated?
4.2 What rights, including rights to pay and benefits, does In practice, labour discrimination cases usually rise in the situation a woman have during maternity leave? where an employer refuses to hire the applicant on discriminatory China grounds, especially on the ground of gender. In such situation, the During the maternity leave of a female employee, the employer employee’s right of personality or right of equal employment may shall not reduce her salary, adjust her position without her consent be infringed by the discriminatory act of the employer. Under the or terminate her labour contract. Upon the expiration of the labour PRC laws, the employee who believes his right has been infringed contract, the term of the labour contract shall be automatically upon by the employer’s discrimination is entitled to bring a lawsuit extended during her maternity leave. against the employer on a tort-based claim. Moreover, a female employee is entitled to maternity allowance and An employer can settle claims before or after a claim is initiated, medical expenses for childbirth or miscarriage in the following two as long as the settlement is reached before the arbitral award or ways: judiciary judgment is rendered. i) if the female employee has already participated in maternity insurance, this fund shall pay her maternity allowance and 3.5 What remedies are available to employees in medical expenses; or successful discrimination claims? ii) if the female employee has not participated in maternity insurance, the employer shall pay her maternity allowance Under the Tort Law, an employee suffering from labour and medical expenses. discrimination will be entitled to a variety of remedies including cease of infringement, apology for infringement, compensation 4.3 What rights does a woman have upon her return to for damages, elimination of adverse influence and recovering work from maternity leave? the reputation. Those remedies can be granted collectively or individually. When a female employee returns to work from maternity leave, she enjoys the right to a breastfeeding period. The employer shall 3.6 Do “atypical” workers (such as those working part- arrange one hour of breastfeeding time in each working day for time, on a fixed-term contract or as a temporary female employees during their breastfeeding period, which ends agency worker) have any additional protection? when their babies reach one year old. In the event of multiple births, the female employee shall be entitled to an additional hour The Labour Contract Law provides additional protections for part- of breastfeeding time for each additional baby. Some municipal or time employees and employees who conclude fixed-term labour provincial regulations may provide that if a baby above one year old contracts. is diagnosed as weak or ill by a healthcare institution of county level Additional protection for part-time employees includes no probation or above, the employee may extend the period of breastfeeding time period, minimum hourly wages, and no more than 15 days for for no more than six months. payment period. During the female employee’s breastfeeding period, the employer Additional protection for employees who conclude fixed-term shall not reduce her salary, adjust her position without her consent, labour contracts include that: terminate her employment contract, extend their working hours or i) an employer shall pay compensation to the employee assign night shift duties. If the term of her labour contract expires upon the expiration of a fixed-term labour contract, unless during her breastfeeding period, the term of her labour contract shall the employee refuses to renew even when the employer be automatically extended until the breastfeeding period ends. maintains or improves the terms and conditions agreed in the labour contract; and 4.4 Do fathers have the right to take paternity leave? ii) an employer shall conclude an open-ended labour contract when the employee intends to renew the labour contract after he has concluded two consecutive fixed-term labour Yes. Although no laws at national level stipulate fathers’ paternity contracts, unless otherwise provided by relevant laws. leave, most municipal or provincial regulations provide that fathers are entitled to paid paternity leave, the term of which varies from seven to 30 days. 4 Maternity and Family Leave Rights
4.5 Are there any other parental leave rights that 4.1 How long does maternity leave last? employers have to observe?
At national level, the PRC laws stipulate that a female employee At national level, aside from those mentioned above, there are no who gives birth shall have 98 days of maternity leave, of which 15 other parental leave rights that employers have to observe or are days of maternity leave may be taken before giving birth. In the regulated. case of a dystocia, the maternity leave shall be extended for a further 15 days. In the case of multiple births, the maternity leave shall be extended for a further 15 days for the birth of each additional baby.
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4.6 Are employees entitled to work flexibly if they have 6 Termination of Employment responsibility for caring for dependants?
6.1 Do employees have to be given notice of termination Under the PRC laws, employees are not entitled to work flexibly if of their employment? How is the notice period they have responsibility for caring for dependants, unless consensus determined? is reached between employees and their employers. Employees have to be given notice of termination of their 5 Business Sales employment, which includes the reason of termination and the last
China working day. In accordance with the Labour Contract Law, in cases where an employer decides to unilaterally terminate the labour 5.1 On a business sale (either a share sale or asset contract prior to its expiration, the employer is obliged to give the transfer) do employees automatically transfer to the employee a 30-day advance written notice or payment in lieu of buyer? notice, under any of the following circumstances: i) where the employee suffers from an illness or a non-work- Contracts of employment do not automatically transfer to the related injury and is unable to undertake the original job buyer on a share sale, because the purchaser only becomes a new duties or other job duties arranged by the employer following shareholder of the target company whose share is on sale. completion of the stipulated medical treatment period; With regard to asset transfer, the purchaser is not obligated to ii) where the employee cannot perform his job duties and succeed the contracts of employment. In practice, the seller and remains to be incapable of performing his job duties after the buyer usually include an employee placement plan as part of the training or adjustment of position; or agreement of asset transfer. iii) where the objective circumstances upon which the conclusion of the labour contract is based, have undergone significant changes and as a result thereof, the labour contract can no 5.2 What employee rights transfer on a business longer be performed, and upon negotiation between the sale? How does a business sale affect collective employer and the employee both parties are unable to reach agreements? an agreement on modification of the labour contract.
In asset transfer, if the seller and the buyer agree to the transfer 6.2 Can employers require employees to serve a period of employees, new labour contracts will be concluded between of “garden leave” during their notice period when the employees and the buyer. The years of service with the original employee remains employed but does not have to employer shall be successively calculated together with the years of attend for work? service with the new employer. In practice, if a collective agreement could no longer be performed “Garden leave” is not provided under PRC laws, and thus an due to a business sale, the collective agreement can be modified or employer has no right to require the employee to take “garden leave”. terminated in accordance with municipal or provincial regulations. 6.3 What protection do employees have against 5.3 Are there any information and consultation rights on dismissal? In what circumstances is an employee a business sale? How long does the process typically treated as being dismissed? Is consent from a third take and what are the sanctions for failing to inform party required before an employer can dismiss? and consult? An employer has no right to unilaterally terminate the labour contract The laws do not provide the information and consultation rights on with the employee. In other words, an employer is not allowed to a business sale. However, in practice, employers usually inform dismiss the employee at will except otherwise specifically provided employees of the business sale. by the law, otherwise the employer’s unilateral act of dismissal will constitute wrongful termination. If an employee conceives that the employer’s unilateral dismissal is inconsistent with the laws 5.4 Can employees be dismissed in connection with a business sale? or regulations, the employee is entitled to claim for reinstating the labour relation or compensation. The PRC laws do not provide that employees can be dismissed Under circumstances where an employer unilaterally dismisses the in connection with a business sale. However, if the business sale employee, to which the employee raises no objection, the labour could be deemed as “material change of objective circumstances” relation between the employer and the employee is terminated at as stipulated in the Labour Law and Labour Contract Law, and the the point where the decision of dismissal is made and delivered to employer and employee are unable to reach a consensus to modify the employee. In the case where the employer should give a 30-day the labour contract, the employer may terminate the labour contract advance written notice, as provided by the law, the labour contract st by providing a 30-day advance written notice or payment in lieu of is terminated on the 31 day after the employee receives the notice notice. of dismissal. If an employee objects to the employer’s decision of unilateral termination, he may file claims with a labour-dispute resolution institution. In such case, the date that the labour contract 5.5 Are employers free to change terms and conditions of is terminated will be confirmed by the labour-dispute resolution employment in connection with a business sale? institution. Where an employer intends to unilaterally terminate the labour No, employers are not free to change terms and conditions of contract with the employee, the employer shall in advance inform employment in connection with a business sale. the trade union of the reasons for termination in advance.
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iv) where the objective circumstances upon which the conclusion 6.4 Are there any categories of employees who enjoy of the labour contract is based have undergone significant special protection against dismissal? changes and as a result thereof, the labour contract can no longer be performed, and upon negotiation between the Under any of the following circumstances, the employer shall not employer and the employee, both parties are unable to reach terminate the contracts of employment prior to the expiration of the an agreement on modification of the labour contract; or contracts: v) where the employer undergoes restructuring pursuant to i) where the employee who has engaged in work exposed to the provisions of the Enterprise Bankruptcy Law, and the occupational hazards has not undergone occupational health employer needs to dismiss 20 or more employees or the check before leaving his working post or during the period number of employees to be dismissed is less than 20 but where an employee is suspected to have contracted an comprises 10% or more of the total number of employees of China occupational illness, or under medical observation; the employer. ii) where the employee has contracted an occupational illness Compensation shall be paid to the employee based on the standard or suffered a work injury while working for the employer of one month’s salary for each completed year of service. Where and is confirmed to have lost his labour capability wholly or the period of service is more than six months but less than a year, it partially; shall be deemed as a completed year of service; where the period of iii) during the mandatory medical treatment period of the service is less than six months, the employer shall pay salary of half employee suffering from illness or non-work-related injury; a month to the employee as compensation. iv) during the pregnancy, maternity leave or breastfeeding period of the female employee; or 6.6 Are there any specific procedures that an employer v) where the employee has worked for 15 years consecutively has to follow in relation to individual dismissals? with the employer and will reach his statutory retirement age in less than five years. The law specifically provides that an employer, under certain However, in any of the abovementioned situations, the employer circumstances, shall give a 30-day advance written notice of the may still have the right to dismiss the employee before the expiration matter of dismissal (please see question 6.1) to the employee, of the labour contract if any of the following circumstances apply: and shall notify the trade union of its reasons for dismissal. An i) where it is proven during the probationary period that the employer, in practice, is generally suggested to specify the reasons employee does not satisfy the criteria of employment; for dismissal in a written form when notifying the employee of its ii) where the employee has committed a serious breach of the decision of dismissal. employer’s rules or regulations; iii) where the employee is guilty of serious dereliction of duties 6.7 What claims can an employee bring if he or she is and corruption, thus causing the employer to suffer significant dismissed? What are the remedies for a successful damages; claim? iv) where the employee concurrently establishes a labour relation with another employer, and such labour relation imposes a An employee may request the labour dispute resolution institution severe impact on his performance of work tasks assigned by to confirm that the employer’s unilateral act of dismissal is illegal the employer, or the employee refuses to make a correction and therefore invalid, and thereby request for the recovery of labour after it is demanded by the employer; relation at the same time. In addition, the employee may claim for v) where the labour contract is void as concluded or modified compensation for wrongful termination, if he does not demand for by use of fraudulent or coercion, or taking advantage the continued performance of the labour contract. of the counterparty’s unfavourable position to cause the counterparty to act against its real intention; or The remedies for a successful claim would be reinstatement of the vi) where criminal prosecution is instituted against the employee labour contract or compensation. pursuant to the law. 6.8 Can employers settle claims before or after they are initiated? 6.5 When will an employer be entitled to dismiss for: 1) reasons related to the individual employee; or 2) business related reasons? Are employees entitled Prior to the arbitral award or judicial judgment being rendered by to compensation on dismissal and if so how is the labour dispute resolution institution, employers can settle claims compensation calculated? before or after claims are initiated.
Please see questions 6.1, 6.4 and 6.9. 6.9 Does an employer have any additional obligations if If any of the following circumstances occur when the employer it is dismissing a number of employees at the same dismisses the employee, the employer shall pay compensation to time? the employee: i) where the labour contract is terminated upon negotiation and Under the circumstances laid down by the Labour Contract Law, mutual consent by the employer and the employee; where an employer needs to retrench 20 or more employees or ii) where the employee suffers from an illness or a non-work- where the number of employees to be retrenched is less than 20 but related injury and is still unable to undertake the original job comprises 10% or more of the total number of employees of the duties or other job duties arranged by the employer following employer, the employer shall explain the situation to the trade union completion of the stipulated medical treatment period; or all employees 30 days in advance and seek the opinion of the iii) where the employee cannot perform his job duties and trade union or the employees. After which the employer may then remains to be incapable of performing the job duties after carry out the retrenchment upon reporting the retrenchment scheme training or adjustment of position; to the labour administrative authorities.
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The following employees shall be given priority to be retained in a retrenchment: 7.3 Do employees have to be provided with financial compensation in return for covenants? i) the employee who has entered into a fixed-term labour contract of a longer period with the employer; In respect of non-competition agreement/clause, an employer shall ii) the employee who has entered into an open-ended labour contract with the employer; and pay financial compensation on a monthly basis to the employee during the period of non-competition after the termination of the iii) the employee whose family members are not employed, or labour contract, as pursuant to legal requirements at national level. who needs to support aged or underage family members. In respect of confidentiality agreement/clause, the PRC laws do Where an employer is re-hiring employees within six months
China not stipulate that an employer shall pay any financial compensation after the retrenchment, the employer shall notify the retrenched to the employee. Instead, the employer and the employee could employees, and the retrenched employees shall be given priority for negotiate this matter at their own discretion. Indeed, in practice, employment under the same conditions. employers seldom pay any financial compensation to employees for their confidentiality. 6.10 How do employees enforce their rights in relation to mass dismissals and what are the consequences if an employer fails to comply with its obligations? 7.4 How are restrictive covenants enforced?
The employee is entitled to request the labour dispute resolution With regard to the “period of service”, an employee is required institution to confirm the invalidity of the employer’s unilateral to pay liquidated damages to the employer if he terminates the act of dismissal and demand the employer to recover the labour labour contract within the “period of service”, as stipulated in the relation or pay compensation. If it is confirmed that the employer’s agreement between the employer and employee. unilateral act of dismissal is illegal, the employer will be ordered to As specified in question 7.3, an employer shall pay financial recover the labour relation, or alternatively, to pay compensation compensation to the employee for his obligation of non-compete, when the employee does not request to recover the labour relation. and an employee is required to pay the liquidated damages for breaching his obligation of non-compete, as stipulated in the agreement between the employer and employee. 7 Protecting Business Interests Following Termination 8 Data Protection and Employee Privacy
7.1 What types of restrictive covenants are recognised? 8.1 How do employee data protection rights affect the Where an employer offers the employee professional training and employment relationship? Can an employer transfer employee data freely to other countries? bears the expenses, the employer may conclude an agreement with the employee on a “period of service” during which the employee could not terminate the labour contract. According to the Network Security Law and the newly promulgated Exposure Draft of Measures for the Security Assessment of Where the employee is obliged to keep confidentiality, the employer Personal Information and Important Data to be Transmitted may conclude a non-disclosure agreement with the employee, or Abroad, the transmission of personal information abroad shall be add a confidentiality clause in the labour contract. If the employee approved by the relevant administrative authorities and with the agrees to non-compete, the employer shall grant the employee consent of the owner, unless otherwise provided by laws. economic damages on a monthly basis during the non-competition period. 8.2 Do employees have a right to obtain copies of any personal information that is held by their employer? 7.2 When are restrictive covenants enforceable and for what period? There are no laws or provisions specifically providing that employees are entitled to obtain copies of their personal information In practice, restrictive covenants in relation to non-disclosure are held by their employers. However, an employee could obtain copies enforceable once an employer and an employee execute a non- of his personal information held by his employer if the employment disclosure agreement or a labour contract containing a confidentiality handbook provides so. clause, either of which reflects the consensus between them. In order to rule a non-competition agreement/clause as valid, the following aspects will be considered in a judicial scrutiny: 8.3 Are employers entitled to carry out pre-employment checks on prospective employees (such as criminal i) whether the non-competition agreement/clause reflects the record checks)? true consensus between the employer and the employee; ii) in accordance with the PRC laws, the period of non-compete Employers are entitled to carry out pre-employment checks on cannot exceed two years after the termination of the labour information directly related to the contract of employment in lawful contract; and ways. Employers’ checks through illegal collection of personal iii) whether the agreed-upon scope of non-compete is information may result in the infringement of personal rights or appropriate. If the employer excessively broadens the scope even criminal liability for violating citizens’ personal information. of non-compete, such non-competition agreement/clause In view of relevant laws, some special positions, such as public may be deemed as invalid. servants, teachers and school bus drivers, shall be filled in with employees without any criminal records.
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8.4 Are employers entitled to monitor an employee’s 9.2 What procedure applies to employment-related emails, telephone calls or use of an employer’s complaints? Is conciliation mandatory before a computer system? complaint can proceed? Does an employee have to pay a fee to submit a claim? In the view of practice, when monitoring is necessary for company management, employers could access office equipment, which Where a Labour-dispute Arbitration Committee hears an employment- they have made available to their employees, including working related complaint, it will go through the following stages: 1) computers, mobile phones, iPads, etc., under the following two applicant’s statement on claims and facts; 2) respondent’s defence; conditions: 3) adducing evidence and cross-examination; 4) arbitrator’s query; China i) it is clearly stated in company policy that this equipment can and 5) debate. only be used for work; and Where a People’s Court hears an employment-related complaint, ii) employees agree to such monitoring with prior written it will go through the following stages: 1) plaintiff’s statement on consent. claims and facts; 2) defendant’s defence; 3) adducing evidence and cross-examination; 4) court investigation; 5) court debate; and 6) final statement. 8.5 Can an employer control an employee’s use of social media in or outside the workplace? Conciliation is not mandatory before an employment-related complaint can proceed. But usually, an arbitrator or judge would An employer can request that an employee’s use of social media seek the parties’ consensus on conciliation before a complaint in or outside workplace be in accordance with company rules and proceeds. policies, provided that 1) the employees’ use is related to their An employee has to pay the fee of RMB 10 or less to file a claim work or company’s business, 2) the rules and policies are notified with the People’s Court. in advance to employees, and 3) the employees expressly agree to company rules and policies. 9.3 How long do employment-related complaints typically take to be decided? 9 Court Practice and Procedure Where an employment-related complaint is accepted and heard by a Labour-dispute Arbitration Committee (“Committee”), the 9.1 Which courts or tribunals have jurisdiction to hear Committee shall render the arbitral award within 60 days after its employment-related complaints and what is their acceptance of the complaint. composition? Where an employment-related complaint is accepted and heard by a People’s Court, the People’s Court shall issue the judicial The Labour-dispute Arbitration Committee and the People’s Court judgment within six months after its acceptance or three months if have jurisdiction to hear employment-related disputes. From the the complaint applies to summary procedure. perspectives of procedures, an employment-related dispute shall be first heard by a labour-dispute arbitration committee and thenbe submitted to a People’s Court. 9.4 Is it possible to appeal against a first instance decision and if so how long do such appeals usually take?
Yes, either the employee or the employer is entitled to appeal against the first instance decision. Such appeals usually take three months.
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Weiwei Gu is a partner at Global Law Office. His main practice areas Kelly Cao is an associate at Global Law Office. Her main practice include employment-related matters, dispute resolution, compliance areas encompass employment-related matters, compliance and dispute and antitrust. resolution. Mr. Gu has rich experience in employment-related matters and provides Ms. Cao provides legal service to a multinational corporation with its many international and domestic clients with a variety of legal employment-related matters, including litigation and labour arbitration services, such as perennial consultation, potential dispute prevention, proceeding. She also assists multinational enterprises and well-known negotiation with employees, and labour disputes resolution (through domestic enterprises with their internal compliance investigation and both arbitration and litigation). their disputes in litigation and arbitration. Mr. Gu is also experienced in government investigations, in particular, anti-corruption and antitrust. He also assists his clients with regulatory compliance, which includes carrying out internal investigations and risk control procedures.
The history of Global Law Office dates back to 1984, when it became the first law firm in the People’s Republic of China (the “PRC”) to take an international perspective on its business, fully embracing the outside world. In today’s global economy, we continue to set the pace as the PRC’s most innovative and progressive law firm. In doing so, we build on the energy and creativity of our highly qualified professionals, most of whom have gained qualifications and hands-on experience in law schools and firms throughout Asia, Australia, Europe and North America. Our clients are the most important part of our business. We have attracted clients from all parts of the world, working in countless industries and market areas. Our value is delivered to our international and domestic clients through our deep knowledge and experience across the full range of practice areas and industries affected by Chinese law. As one of the country’s most well-established and respected firms, we can bring our clients the legal and cultural understanding needed for long-term success in the PRC.
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Cyprus Loizos Papacharalambous
Koushos Korfiotis Papacharalambous LLC Marilia Ioannou
1 Terms and Conditions of Employment 1.3 Do contracts of employment have to be in writing? If not, do employees have to be provided with specific information in writing? 1.1 What are the main sources of employment law? No, employment contracts do not need to be in writing. Employment law in Cyprus is a mixture of statutes and case law, Nevertheless, the Provision of Information to the Employee by based on Article 25 of the Cypriot Constitution which guarantees the the Employer Regarding the Terms of Employment Law 2000 right to work. The main statutory instruments are the Termination obliges an employer, within one month from the commencement of Employment Law 1967, the Annual Paid Leave Law 1967, and of the employment, to provide the employee with the substantive the Social Insurance Law 1980. Specific matters arising from the conditions governing the employment relationship. The minimum employment relationship are governed by specific statutes such as information which must be provided includes details about the Protection of Maternity Law 1997, the Equal Treatment at Work the parties’ respective identities, the commencement date of the and Employment Law 2004 and the Safety and Health at Work Law employment contract, duration of annual leave and all the types of 1996. General contractual principles governing the employment emoluments to which the employee is entitled. This information relationship are derived from the Contract Law, Cap. 149. must be in writing and signed by the employer. If the employer fails to fulfil its above obligation, it may be subject to financial sanctions, 1.2 What types of worker are protected by employment although the employment relationship will not be affected. law? How are different types of worker distinguished?
Cyprus employment law distinguishes between a contract of service 1.4 Are any terms implied into contracts of employment? and a contract for services. All statutory rights and obligations are generally implied into The former refers to the employment relationship and is protected employment contracts and any clause purporting to waive them by the various applicable employment laws. In accordance with the is void. The parties, however, may agree to more favourable Termination of Employment Law 1967, an employee is a person terms for the employee than those prescribed by statute, but not who works for another physical or legal person (either a private or a less favourable. Further, the employee’s duty of fidelity to the public legal entity) under a contract of employment or apprenticeship employer is always implied into employment contracts, requiring or under conditions from which an employment relationship can be the employee to abstain from acting in a manner inconsistent and inferred. Within the latter definition, persons employed by the State prejudicial to his/her employer’s interests. and the shareholders of a private company employed by the latter are also included. A contract for services refers to the services of independent 1.5 Are any minimum employment terms and conditions set down by law that employers have to observe? contractors and is regulated by the principles of Contract Law. The issue of whether a worker is to be considered as an employee or an independent contractor is examined ad hoc, taking into Employers must observe specific statutory minimum employment consideration amongst others the degree of control, chance of profit terms in relation to maximum hours of work per week (not more and responsibility of investment/management. than 48 with a few exceptions for specific occupations), statutory minimum salary for certain occupations, annual and other leave The Cyprus Employment Law also distinguishes between full- (e.g., maternity and parental leave) and serving a valid (statutory) time and part-time workers and between workers with fixed-term notice of termination. contracts and unlimited-term contracts. Furthermore, special protective rules apply with regards to the employment of workers who are under the age of 18. 1.6 To what extent are terms and conditions of employment agreed through collective bargaining? Does bargaining usually take place at company or industry level?
Terms and conditions of employment can be agreed through collective bargaining where employers have entered into collective
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agreements with trade unions. Collective bargaining usually any lawful action, including a strike in defence of its interests. takes place at industry level and is particularly prevalent in the Nevertheless, the right to take industrial action must not be exercised tourist industry where most employment terms are agreed through when agreement cannot be reached on issues appropriate for joint collective agreements. consultation. Essentially, the reasons for a strike must be reasonable and based on genuine disputes which cannot be resolved through the mechanisms of the IRC and the applicable collective agreements. 2 Employee Representation and Industrial Relations 2.4 Are employers required to set up works councils? If so, what are the main rights and responsibilities of such bodies? How are works council representatives Cyprus 2.1 What are the rules relating to trade union recognition? chosen/appointed?
The Trade Unions Law 1965 (as amended) provides for extensive Employers are required to set up work councils solely in relation protection and freedom for the registration of trade unions. The trade to Community-scale businesses and Community-scale groups of union’s protection is supplemented by the Law on the Recognition businesses situated in Cyprus. of Trade Unions and the Trade Union Right to Provide Facilities for Recognition Purposes 2012, regulating the procedure to be followed In accordance with the Establishment of European Works Councils in the event of the employer’s refusal to recognise a trade union Law 2011, a Community-scale business must employ: and the Industrial Relations Code (‘IRC’), as established in 1977, ■ at least 1,000 employees within the EU Member States; and laying out in detail the procedures to be followed for the settlement ■ at least 300 employees in two different EU Member States (at of employment disputes. least 150 employees in each state). A Community-scale group of businesses must employ: 2.2 What rights do trade unions have? ■ at least 1,000 employees within the EU Member States; ■ at least two group businesses in different EU Member States; The employees’ right to join any union of their choice or incorporate or their own union with a view to protecting their collective rights is ■ at least one group business with at least 150 employees in one guaranteed by Article 21 of the Cypriot Constitution. EU Member State and at least one other group business with In accordance with the Trade Unions Law 1965, a legally registered at least 150 employees in another EU Member State. trade union within the framework of accomplishing its purposes The employer’s central management, on its own initiative or may possess property, appear before the courts either as a plaintiff or following a written request by at least 100 employees (or their a defendant and is also equipped with the legal capacity to conclude representatives) from at least two businesses or establishments contracts. located in two different EU Member States, must initiate Additionally, the rights of trade unions are specified in: collective negotiations for the establishment of a European Works Council agreements; the IRC, through which collective agreements can be or any other procedure for information and consultation. A special concluded; and statutes which refer to trade unions as “employees’ negotiation team, composed of the trade union members or, in the representatives”. Although lacking any legal foundation, the IRC absence of trade unions, of the employees, must also be instituted. is highly respected and followed by all sides. Its mechanisms for The latter, together with the central management, will be responsible dispute resolution include direct negotiations between the trade for determining the duties and duration of service of the European unions and the employer and its representatives. In the event of a Works Council as well as the procedure for provision of information large-scale redundancy, the employer must notify the union as early to the employees during consultation with them. European Works as possible and initiate consultations. The right to consultation and Councils have the right to meet once a year with the employer’s information of the local union committees has been strengthened central management and be informed and consulted about the by the Law Establishing a General Framework for Informing and development and the prospects of the business. Consulting Employees which requires management and the unions to negotiate practical arrangements for informing and consulting 2.5 In what circumstances will a works council have co- employees in undertakings that employ at least 30 employees. determination rights, so that an employer is unable to The IRC allows categorisation of issues in a collective agreement proceed until it has obtained works council agreement to proposals? as bargainable, consultative and management prerogatives. Where an issue is categorised as appropriate for consultation, the employer must consult the trade union and, although the final decision rests The applicable law does not attribute the European Works Councils with the employer, he/she is bound to pay due regard to the union’s with co-determination rights. The European Works Councils merely views and give reasons for his/her decision. Both sides have the have a reciprocal statutory obligation to work together with the right to request the advice and/or assistance of the Ministry of central management in a spirit of co-operation and mutual respect Labour and Social Insurance in the event of deadlock. for their respective rights and obligations.
2.3 Are there any rules governing a trade union’s right to 2.6 How do the rights of trade unions and works councils take industrial action? interact?
The right to strike is founded on Article 21(1) of the Constitution Trade union representatives may act as employee representatives in of Cyprus. No rules specifically regulating a trade union’s right to the special negotiation team and participate in the European Works strike exist, other than the relevant provisions of the IRC. According Councils. to the latter, if an employer flagrantly violates the provisions of an existing collective agreement, the trade union may resort to
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2.7 Are employees entitled to representation at board 3.5 What remedies are available to employees in level? successful discrimination claims?
No, but the absence of a right to such representation may be Employees are entitled to claim compensation for damages or compensated by the employee’s right to information and reinstatement. consultation when restructuring or transferring a business.
3.6 Do “atypical” workers (such as those working part- 3 Discrimination time, on a fixed-term contract or as a temporary agency worker) have any additional protection? Cyprus
3.1 Are employees protected against discrimination? If Part-time and fixed-time workers enjoy additional protection so, on what grounds is discrimination prohibited? in order to guarantee that they receive the same rights and/or treatment as the full-time and unlimited contract workers through Equal treatment at work is a specific statutory obligation imposed the Part-Time Employees (Prohibition of Discrimination) Law upon every employer, in accordance with the Constitution of and the Employees with Fixed-Term Contracts (Prohibition of Cyprus, the Community acquis and the various International Human Discrimination) Law. The relevant rules highlight the necessity Rights Conventions which Cyprus has ratified. Employees are of observing the principle of non-discrimination and establish protected both against direct and indirect discrimination, as well as the principle of proportionality of employment terms of part- any other conduct in relation to employment which discriminates time employees in relation to comparable full-time employees on the grounds of racial or ethnic origin, religion, beliefs, age and and fixed-term contract employees in relation to unlimited-term sexual orientation (Equal Treatment at Work and Employment Law contract employees, respectively. Amongst others, proportional 2004). Indirect discrimination ensures proportional (not merely salary and benefits, termination of employment, protection of equal) treatment of employees by prohibiting prima facie neutral maternity, annual leave, parental and sick leave are attributed to criteria or practices which are less favourable to an employee. the above categories of atypical workers. Moreover, fixed-term contract employees have the right to be informed about unlimited- 3.2 What types of discrimination are unlawful and in what term posts. circumstances? 4 Maternity and Family Leave Rights Apart from direct and indirect discrimination on the grounds referred to in question 3.1, Cypriot law prohibits specific types of discrimination. More specifically, the unequal payment of 4.1 How long does maternity leave last? employees on grounds of sex, the disproportionate treatment of part- time workers in relation to full-time workers, the disproportionate Maternity rights are secured through the “Maternity Protection treatment of fixed-term contract employees in relation to unlimited- Law” (No 100(1)/1997, as last amended by Law No 64(I)/2002). term contract employees, and sexual harassment at work are all An employed woman who presents a certificate from a registered treated as unlawfully discriminatory. medical practitioner stating the expected week of her confinement is entitled to maternity leave. Maternity leave is provided for 18 3.3 Are there any defences to a discrimination claim? weeks, of which 11 weeks must compulsorily be taken during the period beginning the second week before the expected week of Yes. In accordance with the laws implementing the relevant EU confinement. An employed woman who adopts or takes in to her Directive, discrimination, exception or preference of a characteristic care a child less than 12 years of age for the purpose of adoption is related to any of the grounds referred above (see question 3.1) may allowed maternity leave of 14 weeks. be considered as lawful with regard to the different treatment on grounds of sex and the different treatment of persons with disabilities 4.2 What rights, including rights to pay and benefits, does under the condition that the required characteristic: a woman have during maternity leave? ■ is justified by the peculiarities of the profession concerned; ■ constitutes a genuine and determining occupational Once the employee presents to her employer the relevant doctor’s requirement; certificate it is unlawful for the employer to dismiss the employee, ■ is proportionate; and unless the business activity is discontinued or the employee is guilty ■ serves a legitimate objective. of a serious disciplinary offence or such conduct which justifies the breakdown of the employment relationship. Women who gave birth and are breastfeeding or have increased 3.4 How do employees enforce their discrimination rights? Can employers settle claims before or after responsibilities for the care/raising of the child, can, for a six-month they are initiated? period commencing on the date of birth or maternity leave, interrupt their employment for one hour or go to work one hour later or leave Employees can enforce their discrimination rights via the complaint work one hour earlier. The one-hour excuse period is considered procedure of the Office of the Commissioner for Administration working time. (Ombudsman) which is the designated National Equality Body During the period of maternity leave, the employee receives pay and dealing with all forms of discrimination, or by taking legal action maternity benefits to such extent and under such conditions as the for compensation if the employee incurs damage e.g., through loss Social Insurance Law provides from time to time. of office. Employers may settle claims at any time, before or after they are initiated.
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2003 Law applies to both public and private undertakings which 4.3 What rights does a woman have upon her return to engage in economic activities; however, vessels and ships, work from maternity leave? transfers by share takeovers, transfers of insolvent businesses and restructuring of instruments between public bodies fall outside its Upon her return to work, the employee has the right to return to her scope. position and enjoys the same rights in seniority, promotion or other benefits which relate to employment as she would have had if she remained at work. Additional statutory rights are also attributed to 5.2 What employee rights transfer on a business sale? How does a business sale affect collective her in order to facilitate breastfeeding as well as the increased needs agreements? of the child. Specifically, she has the right to arrive later or leave Cyprus earlier and to discontinue her work for one hour per day for a period On the date of the transfer, all rights and obligations of the transferor, of nine months from the childbirth or, in the case of adoption, from including rights to benefits for old age, disability and supplementary the date the maternity leave commences, without loss of income. occupation retirement are transferred to the transferee. The transferee must preserve the employment terms articulated 4.4 Do fathers have the right to take paternity leave? in the applicable collective agreement, as they would apply to the transferor in accordance with the latter, up to the date of termination Yes. Paternity rights are secured through the “Paternity Protection or expiration of the collective agreement, and in any case for a Law 2017” (No 117(I)/2017). period of at least one year from the transfer. An employee whose spouse gave birth or acquired a child through a surrogate mother, or who, together with his wife, adopted a child up 5.3 Are there any information and consultation rights on to 12 years of age has the right to paternity leave for two consecutive a business sale? How long does the process typically weeks within in the period commencing on the week of birth or take and what are the sanctions for failing to inform adoption and ending after 16 weeks. and consult?
4.5 Are there any other parental leave rights that The transferor and the transferee must promptly inform the employers have to observe? employees or their representatives who are affected by the transfer of the following: Employees of either sex who have completed at least six months ■ The date or proposed date of transfer. of employment with the same employer may claim unpaid parental ■ The reasons for the transfer. leave for a period of up to 18 weeks for caring and raising a child, ■ The legal, financial and social consequences of the transfer under the condition that a prior written notice is provided to the for the employees. employer (Parental Leave and Leave for Reasons of Force Majeure ■ The proposed measures to be taken in relation to the Law 2012). Parental leave may be taken by natural parents employees. following the expiration of maternity leave and prior to their child’s Further, when the transferee or transferor intends to vary the eighth birthday, and by adoptive parents following the expiration employees’ regime, they must engage in consultations with the of maternity leave and prior to the eighth anniversary of adoption, employees or their representatives for the purpose of reaching provided that the child is under 12 years of age at the time the settlement. The transferor and transferee must serve the above parental leave is taken. information to, and engage in consultations with, the employees promptly and, in any event, before their employment terms and 4.6 Are employees entitled to work flexibly if they have conditions are directly affected by the transfer. responsibility for caring for dependants? The duration of the process depends on the complexity of the case and is typically concluded between several weeks and several Generally there is no such statutory entitlement, except for the rights months. The sanctions of an employer who fails to inform or consult attributed to the woman returning from maternity leave with regard with employees is a fine on conviction which does not exceed €854, to breastfeeding and childcare (see question 4.2) and the employee’s whereas the employee is entitled to seek compensation by way of (either female or male) right to unpaid leave for seven days annually damages. for reasons of force majeure such as illness or accident of his dependants. 5.4 Can employees be dismissed in connection with a business sale? 5 Business Sales Employees can be dismissed in connection with a business sale on financial or organisational grounds, necessitating changes in 5.1 On a business sale (either a share sale or asset the workforce. The latter would fall within the category of lawful transfer) do employees automatically transfer to the dismissals, on the basis of redundancies, entitling the employee to buyer? damages from the Redundancies Fund.
As a general rule, on a business sale, employees automatically transfer to the buyer subject to the statutory exceptions mentioned 5.5 Are employers free to change terms and conditions of under question 5.4. In accordance with the Preservation and employment in connection with a business sale? Safeguard of Employee Rights during Transfer of Businesses, Facilities or Business Departments Law 2003 the transfer of a No, any changes must be agreed with the employees. business, establishment or a business department does not itself afford grounds for dismissal by the transferor or transferee. The
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dismissal (see question 6.5). Consequently, the invocation of any 6 Termination of Employment other reason renders the dismissal to be unlawful and attributes the dismissed employee with the right to claim damages. 6.1 Do employees have to be given notice of termination An employee is treated as being dismissed, once he/she is served of their employment? How is the notice period the minimum statutory notice of termination of his/her employment determined? or once he/she resigns by reason of the employer’s conduct (“constructive dismissal”). According to the Termination of Employment Law 1967 (as There is a rebuttable presumption that any dismissal is unlawful and amended), the employer is obliged to serve the employees a written the employer bears the burden of proving that the dismissal is lawful. notice of termination of their employment. The minimum notice Cyprus period, depending upon the weeks of continuous employment, is No consent from a third party is required before an employer can specified by the 1967 Law as follows: dismiss.
Term of Continuous Employment Minimum Notice (weeks) (weeks) 6.4 Are there any categories of employees who enjoy 26–51 One special protection against dismissal? 52–103 Two 104–155 Four Trade union members, pregnant women and employees on sick leave 156–207 Five enjoy special protection against dismissal. Further, the employment 208–259 Six terms and rights on dismissal of public servants, employees in the 260–311 Seven armed forces and the police, are governed by special provisions and 312 and above Eight not by the general rules on dismissal.
An employee may be summarily dismissed if any of the 6.5 When will an employer be entitled to dismiss for: circumstances mentioned in question 6.5 apply (commission of a 1) reasons related to the individual employee; or 2) serious disciplinary or criminal offence, etc.). business related reasons? Are employees entitled Further, the parties may agree to extend the notice period but any to compensation on dismissal and if so how is compensation calculated? contractual provision for the reduction or restriction of the minimum statutory notice period is void ab initio. An employer is entitled to dismiss for reasons related to the individual No minimum notice of termination is required during a probation employee, relying on the grounds exhaustively listed in the statutory period, which is 26 weeks (or up to 104 weeks if the parties so provisions of Termination of Employment Law, which are: agree) from the commencement of the employment. ■ Failure to execute work at a reasonably satisfactory level, The Article 9 of the Termination of Employment Law 1967–2016 excluding temporary disability for employment caused by (as amended) provides the following: illness, injury and childbirth. (6)(a) Subject to the provisions of paragraphs (e) and (f) of Article ■ Redundancy. 5, giving notice to an employee who is absent from work due ■ Force majeure, act of war, civil commotion or act of God. to incapacity to work for up to 12 months, is prohibited for a time period commencing on the first day of such absence ■ Termination at the end of a fixed period of employment. and ending on the last day of the period of time calculated by ■ Display of such conduct rendering the employee subject to adding the period of absence and the period of one quarter summary dismissal, that is, when: (¼) thereof. ■ His/her conduct renders it clear that the relationship of (6)(b) During the period absent employee as provided in paragraph the employee and the employer cannot reasonably be (a), the employer may temporarily replace the absent expected to continue. employee, under the provisions of the Employees with fixed- ■ He/she commits a serious disciplinary offence or criminal term work (Prohibition of Unfavourable Treatment) Law. offence or displays inappropriate or indecent conduct during the execution of his/her duties. 6.2 Can employers require employees to serve a period ■ He/she repeatedly violates or ignores the employment of “garden leave” during their notice period when the rules. employee remains employed but does not have to Otherwise, any dismissal is unlawful and entitles the employee to attend for work? damages which are calculated according to the: ■ minimum compensation which the employee would be Instead of serving a notice of termination, the employer may demand entitled to had she been made redundant; that the employee accepts payment which corresponds to the length ■ maximum of two annual salaries; and of the minimum notice period in lieu of notice of termination and to serve the period of notice as “garden leave”. Further, the employee, ■ circumstances of the case including the employee’s daily having received a notice of termination, may not attend for work in wage, the length of service, career prospects, circumstances of dismissal and the employee’s age. the case of his/her recruitment in another business, without further notification to the previous employer required. An employer is entitled to dismiss an employee for business-related reasons when: ■ The employer discontinues the business or the business in the 6.3 What protection do employees have against location the employee is employed. dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third ■ The number of necessary posts is reduced through business party required before an employer can dismiss? mechanisation or reorganisation, there is a lack of production means, restriction of the volume of business or credit difficulties. The 1967 Law exhaustively articulates the grounds for a lawful
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On such dismissal the employee is paid an appropriate amount by ■ at least 10 employees in establishments which ordinarily the Redundancy Fund if he/she completed an employment period employ between 21 and 99 employees; of 104 weeks or more with the same employer. Redundancy ■ at least 10 per cent of the employees in establishments payments are calculated according to Table 4 of the Termination of which ordinarily employ between 100 and 299 employees; Employment Law 1967, as follows: or ■ at least 30 employees in establishments which ordinarily Cumulative Total Years of Employment employ at least 300 employees. Compensation Compensation Two weeks’ wages per The employer must engage promptly in consultations with the First four years Eight weeks year employed employees’ representatives, aiming to reach settlement upon Two-and-a-half Cyprus Next five years potential ways to avoid or restrict the number of dismissals and weeks’ wages per year 15 weeks (five to 10) reduce their consequences on employees. The employer must also employed provide to the employees’ representatives the relevant information Three weeks’ wages per Next five years (11–15) 15 weeks and disclose in writing the reasons, number and categories of the year employed planned dismissals and the employees to remain employed, the time Three-and-a-half Next five years (16–20) weeks’ wages per year 17.5 weeks of the planned dismissals, the factors for selecting the employees to employed be dismissed and the estimation method for any payment in relation Four weeks’ wages per to the dismissals (excluding payment deriving from the 1967 and Next five years (21–25) 20 weeks year employed 1994 Termination of Employment Laws). The employer must also serve notice to the Ministry of any proposed redundancy dismissal The upper limit for redundancy compensation is 75.5 weeks’ wages. at least one month prior to the proposed date of termination. The notice must include the same particulars as provided to the 6.6 Are there any specific procedures that an employer employees and the employees’ representatives have the right to has to follow in relation to individual dismissals? submit to the Ministry their observations. Planned mass dismissals may not be effected earlier than 30 days from the notification. Apart from the employer’s notice obligations as described in question 6.1, in the case of a redundancy dismissal the employer 6.10 How do employees enforce their rights in relation to must notify accordingly the Ministry of Labour and Social Insurance mass dismissals and what are the consequences if an at least one month before the proposed date of termination, stating employer fails to comply with its obligations? the redundancy’s reasons, the affected business sector as well as the number and personal details of the affected employees. The Employees can enforce their rights by applying to the Industrial employer is further obliged to give priority to redundant employees Disputes Court with a claim for unlawful dismissal. If the employer during the recruitment process of a post which became available breaches his/her statutory duties of consultation, information within eight months from the redundancy, considering, however, its and notification is liable upon conviction to a fine not exceeding business’s operational needs. €1,708. If the employer dismisses employees before the end of the 30-day period, the employer is liable upon conviction to a fine not 6.7 What claims can an employee bring if he or she is exceeding €3,417. dismissed? What are the remedies for a successful claim? 7 Protecting Business Interests Following A dismissed employee can bring a claim for damages for unlawful Termination dismissal before the Industrial Disputes Tribunal or a claim for breach of contract before the District Court. The remedy for a 7.1 What types of restrictive covenants are recognised? successful claim is usually damages. Reinstatement is generally available against employers employing 20 persons or more but Drawing on the constitutional principle that every person is entitled rarely granted in practice. to exercise any lawful profession, the Contract Law establishes that any agreement restraining the exercise of a lawful profession, trade, 6.8 Can employers settle claims before or after they are or business of any kind is void. The Contract Law provides for three initiated? statutory exemptions. Firstly, a person selling the goodwill of its business may agree with the buyer to abstain from exercising similar Claims can be settled before or after initiation of legal proceedings. business within reasonable borders. Secondly, with the dissolution of a partnership, the partners may agree that some or all of them will abstain from exercising any similar business within reasonable 6.9 Does an employer have any additional obligations if it is dismissing a number of employees at the same borders. Thirdly, the partners of an existing partnership may agree time? that some or all of them will abstain from exercising any business, other than that which is exercised by the partnership. Mass dismissals are governed by the provisions of the Mass Dismissals Law 2001, according to which a mass dismissal is 7.2 When are restrictive covenants enforceable and for considered as such when: what period? ■ it is made by the employer; ■ it is made for reasons not related to the individual employees; Restrictive covenants are enforceable given that they are reasonable. and In examining whether a restrictive covenant is reasonable or not, ■ the number of dismissals within a period of 30 days concerns: the competent court will take into consideration the type of activity
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that is restricted and geographical extent. The tendency of Cyprus of the Individual) Law. Such cases include the transmission to be case law is to recognise restrictive covenants of a maximum of six justified and necessary for the protection of the vital interests of the months duration and within very limited geographical borders. data object or in order to safeguard the superior public interest. Further, the employees’ duty of fidelity entitles an employer to Finally, notwithstanding the abovementioned, the transmission of prevent his/her employees from working for a competing business personal data is free to: during the employment term (but not thereafter) whereas he/ ■ the Member States of the European Union; she can protect their business’s confidential information through ■ the Member States of the European Economic Area; and non-disclosure contracts. These are available only in relation to ■ any third countries for which the European Commission information which is classified as a trade secret or is confidential to has ruled that they ensure an adequate level of protection of the extent that equivalent protection is required. personal data. Cyprus
7.3 Do employees have to be provided with financial 8.2 Do employees have a right to obtain copies of any compensation in return for covenants? personal information that is held by their employer?
No, employees do not have to be provided with financial Yes, employees have a right to obtain copies of their personal data compensation in return for covenants. held by the employer, and the latter is obliged to provide them.
7.4 How are restrictive covenants enforced? 8.3 Are employers entitled to carry out pre-employment checks on prospective employees (such as criminal Restrictive covenants are enforced by applying to the court record checks)? for an injunction restraining a former employee who is acting inconsistently with the restrictive covenant or for damages. The personal data of prospective employees enjoy the same protection as the personal data of employees. As such, the employer must collect the personal data necessary and relevant to the nature of the position 8 Data Protection and Employee Privacy for which the candidate has applied, with the consent of the candidate. Criminal record checks are considered as sensitive personal data, 8.1 How do employee data protection rights affect the which cover, amongst others, the employee’s participation in a trade employment relationship? Can an employer transfer union and his/her political or religious beliefs. Their collection and employee data freely to other countries? processing is explicitly prohibited by the applicable law and may exceptionally be lawfully collected and processed under certain The Processing of Personal Data (Protection of the Individual) Law conditions such as, if the employee has been informed in advance imposes upon the employer who, with the explicit consent of its and has provided its consent explicitly and/or the sensitive data employees, maintains records of their personal data with various collection is absolutely necessary for purposes directly linked to the duties aiming to secure the employees’ personal data. The employer needs of the employment relationship. is under the obligation to inform accordingly the Office of the Additional safeguards are also provided by other laws such as the Commissioner for the Protection of Personal Data and maintain and Police Law, according to which access to a person’s criminal records process the records: requires the listing of an application by the person concerned or by ■ fairly and lawfully; a duly authorised (by the latter) person. ■ in accordance with the proportionality principle;
■ for specified and legitimate purposes; 8.4 Are employers entitled to monitor an employee’s ■ only for the period necessary for the attainment of the purpose emails, telephone calls or use of an employer’s of their collection; computer system? ■ in an accurate manner and proceeding to their update when necessary; and If the conditions for a lawful collection and processing (see question ■ to preserve their confidential treatment through the 8.1) are fulfilled, the employer should inform in advance its employees appropriate technical and organisational measures. for any means of monitoring that he/she will employ. The employer must also ensure that all the above conditions are With regard to emails, the employee’s personal email, to which the fulfilled by the various departments of its business which have access employee has access by using his/her own username and password, to the employees’ personal data. is considered and protected as personal data even if it was purely In regards to the transmission of such data to other countries, the provided for use within the framework of the employee’s duties. applicable law provides that transmission of data which have The employer may only exceptionally have access to the employee’s undergone processing or are intended for processing after their personal email (e.g., under the condition that the employee is present). transmission to any country shall be permitted after a licence by the Regarding the employee’s telephone calls, the employer may have Commissioner. The Commissioner shall issue the licence only if he is access only to detailed telephone bills, from which the last three digits satisfied that the said country ensures an adequate level of protection of the listed telephone numbers should be missing. of personal data, taking into consideration, amongst other things, the Lastly, the employer may monitor an employee’s computer system nature of the data, the purpose and duration of the processing and the provided that the employee is informed in advance and in an explicit security measures for the protection of personal data provided by the manner. law of the said country. The Commissioner is permitted to issue such a licence even if the country in issue does not ensure an adequate level of protection under exceptional circumstances, which are defined in an exclusive manner in The Processing of Personal Data (Protection
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8.5 Can an employer control an employee’s use of social 9.2 What procedure applies to employment-related media in or outside the workplace? complaints? Is conciliation mandatory before a complaint can proceed? Does an employee have to The employer may monitor and even prohibit the use of social pay a fee to submit a claim? media; however, only in and not outside the workplace. An employee can apply to the Industrial Disputes Court by filing a petition and paying the required official fees. The employer must 9 Court Practice and Procedure then file a reply dealing with the employee’s allegations andthe case is then heard. Conciliation is not mandatory unless it has been
Cyprus agreed between the parties in the employment contract. 9.1 Which courts or tribunals have jurisdiction to hear employment-related complaints and what is their composition? 9.3 How long do employment-related complaints typically take to be decided? The Industrial Disputes Tribunal has exclusive competence in respect of matters arising from the termination of employment and Where a petition is filed before the Industrial Disputes Court, the the employment relationship. The Industrial Disputes Tribunal procedure may take between several months and a couple of years is composed of a President or a Judge, who is a member of the depending on the complexity of the issues raised. Typically, a judiciary, and two lay members with a consultative role appointed simple claim can be concluded within six to 12 months. on the recommendation of the employer’s and employees’ respective organisations. Alternatively, a person may apply to the competent 9.4 Is it possible to appeal against a first instance District Court for the breach of the employment contract, provided decision and if so how long do such appeals usually that his/her claim exceeds the maximum amount which can be take? ordered by the Industrial Disputes Court (namely, the equivalent of two years’ salary). The District Court is composed of a President or Decisions of the Industrial Disputes Court are subject to appeal to a Judge who is a member of the judiciary. the Supreme Court. Appeals typically take one to three years to conclude.
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Loizos Papacharalambous Marilia Ioannou Koushos Korfiotis Papacharalambous LLC Koushos Korfiotis Papacharalambous LLC 20 Costi Palama Street 20 Costi Palama Street ‘Aspelia Court’, 2nd–4th Floors ‘Aspelia Court’, 2nd–4th Floors Nicosia 1096 Nicosia 1096 Cyprus Cyprus
Tel: +357 2266 4555 Tel: +357 2266 4555 Fax: +357 2267 7485 Fax: +357 2267 7485 Email: [email protected] Email: [email protected] URL: www.kkplaw.com URL: www.kkplaw.com Cyprus Loizos has been a member of the Cyprus Bar Association since Marilia has been a member of the Cyprus Bar Association since 2014. 2004. He graduated from the University of Bristol before going on She joined Koushos Korfiotis Papacharalambous LLC as an advocate to successfully complete the Bar Vocational Course, becoming a in May 2015. member of Gray’s Inn. In 2006, Loizos successfully completed the International and Comparative Commercial Arbitration Diploma with Marilia studied Law at the University of Leicester in the UK and then the Queen Mary College of the University of London. In 2011, Loizos continued with her Master’s Degree in International Commercial Law was admitted as a Member of The Chartered Institute of Arbitrators. also at the University of Leicester. Loizos is currently attending courses to obtain a M.Sc. in Finance and Banking. His main areas of practice are commercial and corporate litigation and representation of banks, investment and insurance companies. Loizos has been the Vice-Chairman of the Cyprus Telecommunications Authority (CYTA), the Vice-President of the Nicosia Bar Association and the Chairman of the Housing Finance Corporation.
KKP LLC comprises more than 20 lawyers based in our offices in Nicosia. KKP is a full-service law firm with an industry focus on financial services including financial, insurance and banking institutions, intellectual property, real estate and construction, corporate and securities. The firm operates in multi-disciplinary teams, which allow us to provide the client with individualised and expert advice. Our team of lawyers counts more than 30 years of experience, combining an extensive knowledge of the Cyprus legal system with an in-depth understanding of international and European law. Partners of the firm are members of professional legal organisations such as the International Trade Mark Association, MARQUES, the International Tax Planning Association, and the Chartered Institute of Arbitrators while a number of them are endorsed and highly rated by the world’s leading international legal directories, including The Legal 500.
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Czech Republic JUDr. Richard Gürlich, Ph.D.
Gürlich & Co. Mgr. Kamila Janoušková
1 Terms and Conditions of Employment 1.4 Are any terms implied into contracts of employment?
1.1 What are the main sources of employment law? Terms stemming from the Labour Code will apply even though the contract does not specify them. The main sources of employment law are: ■ Act no. 262/2006 Sb., Labour Code, as amended. 1.5 Are any minimum employment terms and conditions ■ Act no. 435/2004 Sb., on Employment, as amended. set down by law that employers have to observe?
Minimal conditions are stipulated by the Labour Code; such 1.2 What types of worker are protected by employment conditions include all aspects of the employment relationship and law? How are different types of worker distinguished? the minimal level of employee protection.
Czech employment law does not differ between employees; every employee is protected by employment law, nevertheless, there are 1.6 To what extent are terms and conditions of some special provision concerning rights of managing employees. employment agreed through collective bargaining? Does bargaining usually take place at company or industry level? 1.3 Do contracts of employment have to be in writing? If not, do employees have to be provided with specific Collective bargaining may take place at both levels; however, the information in writing? company level is more popular. Collective agreements may only include rights of individual employees; they shall not impose any Section 34 (2) of the Labour Code expressly stipulates that obligations on the individual employees. employment contracts need to be made in writing. An employment contract must include the type of work to be performed by the employee, the place or places of performance of work and the date 2 Employee Representation and Industrial of commencement of work. Relations If an employment contract does not include the details of the rights and obligations of an employer and an employee, the employer 2.1 What are the rules relating to trade union recognition? shall, within one month of the commencement of employment, provide the employee with information in writing, including: A trade union must be established and registered with the public a) the name and the surname of the employee and the name and register first. The establishment is governed by Act no. 89/2012 Sb., registered office of the employer if the employer is a legal person, or the name and surname and address of the employer the Civil Code, as amended. A trade union is entitled to represent if the employer is a natural person; employees and act on their behalf if: this is included in its Articles of Association; and at least three employees who are being employed b) a detailed specification of the type and place of performance of work; by the employer become members. The trade union is obliged to announce the fulfilment of the conditions to the employer and, from c) information on the duration of annual leave; the day following such an announcement, is entitled to participate in d) information on notice periods; collective bargaining. e) information on the weekly working hours and their distribution; 2.2 What rights do trade unions have? f) information on the salary and manner of remuneration; and g) information on collective agreements influencing the The main rights of trade unions include the right to participate employee’s working conditions and specification of the parties to these collective agreements. in collective bargaining, and the right to enter into a collective agreement and be informed and consulted if the Labour Code
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stipulates an obligation for the employer to do so. The trade union may also discuss and issue its opinions on forthcoming legislative 3.2 What types of discrimination are unlawful and in what amendments and oversee safety in the workplace. circumstances?
The Labour Code expressly prohibits any discrimination, i.e. both 2.3 Are there any rules governing a trade union’s right to direct and indirect discrimination are prohibited. take industrial action?
The right to take industrial action is safeguarded by art. 27 (4) of 3.3 Are there any defences to a discrimination claim? the Charter of Fundamental Rights and Freedoms. The procedure is stipulated by Act no. 2/1991 Sb., on Collective Bargaining, as A difference in treatment shall not be classed as discrimination if it amended. Generally speaking, a trade union may initiate the follows the character of the work to such an extent that a difference
industrial action if ⅔ of the affected employees vote for the action, in treatment is necessary for the performance of the work; the aim Czech Republic providing that at least half of all employees participate in said voting. pursued by such an exception must be genuine and the requirement The industrial action must be set out in writing to the employer. must be proportionate. Furthermore, measures aiming to prevent or compensate disadvantages stemming from membership of a person in a group (defined on the grounds of discrimination) shall not be 2.4 Are employers required to set up works councils? If deemed as discrimination. so, what are the main rights and responsibilities of such bodies? How are works council representatives chosen/appointed? 3.4 How do employees enforce their discrimination rights? Can employers settle claims before or after Employers are not required to set up work councils; however, the they are initiated? employees may create such a council of between three and 15 members, chosen by vote. The Labour Code includes the right for Employees may enforce their rights before courts. They may also such councils to be informed and consulted over stipulated facts. fill in an application to seek help from the Public Defender of Rights; The councils are not commonly established, as trade unions are however, the Defender may only provide them with directions and more popular in the Czech Republic and they also have more rights advice as to how to proceed before the courts. The claim may stipulated in the Labour Code. be settled by mutual agreement either before the proceedings are initiated or after; however, such settlement must be before the judgment is delivered. 2.5 In what circumstances will a works council have co- determination rights, so that an employer is unable to proceed until it has obtained works council agreement 3.5 What remedies are available to employees in to proposals? successful discrimination claims?
There is no such case included in the Labour Code. The victim may demand that the defendant cease the behaviour resulting in discrimination and remedy the consequences of the 2.6 How do the rights of trade unions and works councils discrimination, and also claim reasonable compensation of the interact? incurred harm. If these claims are not sufficient to remedy the situation (for example, because the victim’s dignity or reputation Usually, the employer is obliged to inform and consult both trade suffered), compensation of non-pecuniary loss may be granted by unions and works councils, provided that both have been established; the court. The amount of such compensation will be determined the applicable law does not provide for any mutual rights between a based on the particular circumstances. trade union and works council. 3.6 Do “atypical” workers (such as those working part- 2.7 Are employees entitled to representation at board time, on a fixed-term contract or as a temporary level? agency worker) have any additional protection?
Employment law does not stipulate an obligation for employees Each employee enjoys the same kind of protection, as explained to be represented at board level; however, the employer is free to above. organise the board and include employees in their structure. 4 Maternity and Family Leave Rights 3 Discrimination 4.1 How long does maternity leave last? 3.1 Are employees protected against discrimination? If so, on what grounds is discrimination prohibited? The Labour Code grants female employees the right to maternity leave for a period of 28 weeks; if the employee gives birth to two The Labour Code prohibits any kind of discrimination against or more children at the same time, she is entitled to prolong the employees and ensures equal treatment in relation to working period to 37 weeks. Maternity leave differs from parental leave, conditions, remuneration and provision of other payments, which usually follows the maternity leave and can be enjoyed by vocational preparation and the opportunity to gain promotions. both parents until the child reaches three years of age.
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on employee rights. Those included in the collective agreement 4.2 What rights, including rights to pay and benefits, does remain unchanged only for a limited period of time (as long as the a woman have during maternity leave? collective agreement is effective or until the end of the following calendar year). Female employees have the right to receive payments from the social security system and the right to return to work. They are also protected from termination of employment by notice (exceptions 5.3 Are there any information and consultation rights on a business sale? How long does the process typically apply, for example, if the employer completely shuts down their take and what are the sanctions for failing to inform business). and consult?
4.3 What rights does a woman have upon her return to Prior to the transfer of the rights and obligations (a maximum of work from maternity leave? 30 days before it takes place; further time requirements are not Czech Republic stipulated and therefore depend on the particular situation), the The Labour Code expressly stipulates that if a female employee former employer and the new employer shall inform the trade union decides to return to work straight after maternity leave, she has the and council of employees and consult them, aiming to come to an right to return to the same position at the same workplace. If coming agreement, about the following: back from parental leave, the employee has a right to be assigned a) the date of the transfer; to perform the type of work according to the employment contract. b) the reasons for the transfer; c) the legal, economic and social consequences of the transfer 4.4 Do fathers have the right to take paternity leave? for employees; and d) the intended measures related to employees. Fathers may enjoy so-called parental leave from the day the child is If there is no active trade union or council of employees, the former born until he/she reaches three years of age. and the new employer shall be obliged to inform the employees directly affected by the transfer and consult them. Failing to do so 4.5 Are there any other parental leave rights that may result in a fine of up to CZK 200,000. employers have to observe? 5.4 Can employees be dismissed in connection with a The father may be released for parental leave straight after the child business sale? is born; the mother usually takes parental leave after her maternity leave ends. A social security system payment is also granted. A business sale is not a reason stipulated by the Labour Code for an employer to be allowed to give notice to an employee. However, 4.6 Are employees entitled to work flexibly if they have the employee may terminate their employment due to the sale. If responsibility for caring for dependants? he/she does so, the employment shall expire on the day foregoing the date when the transfer takes place. If notice is given by an The Labour Code includes some benefits for working parents; for employee within two months following the transfer, the employee example, the obligation of the employer to take into account that an may claim that the reason for the notice is a substantial deterioration employee takes care of a child when scheduling shifts, the obligation of working conditions under the new employer. In such cases, the to allow the mother to have breastfeeding breaks or the right to ask new employer is obliged to pay severance payment to the employee. for flexible working hours (which the employer is obliged to satisfy if the operating needs allow for it). 5.5 Are employers free to change terms and conditions of employment in connection with a business sale? 5 Business Sales No, all rights and obligations of the employer are transferred unchanged. Any modification may follow the transfer; however, it 5.1 On a business sale (either a share sale or asset shall not be linked to it. transfer) do employees automatically transfer to the buyer? 6 Termination of Employment According to Section 338 (2) of the Labour Code, if the activities of an employer are being transferred to another employer or if the tasks 6.1 Do employees have to be given notice of termination of an employer are being transferred to another employer, the rights of their employment? How is the notice period and obligations stemming from the employment of every employee determined? affected by the change shall transfer in the full extent to the new employer. Yes; provided that the employer wishes to terminate the employment relationship by notice, the written notice of termination needs to be 5.2 What employee rights transfer on a business given. The Labour Code expressly stipulates that the length of the sale? How does a business sale affect collective notice period is two months; however, it may be prolonged. agreements?
Rights, as well as obligations, are transferred in the full extent to the new employer; please see questions 5.3 and 5.4 for further details
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If the employment is being terminated due to the abovementioned 6.2 Can employers require employees to serve a period reasons (no matter whether by means of agreement or notice), the of “garden leave” during their notice period when the employer is obliged to pay severance payment to the employee in employee remains employed but does not have to the amount of at least: attend for work? ■ 1× the average income if the employment lasted less than one year; Yes, the employer may request that an employee serves garden leave. However, it is not very common in the Czech Republic. ■ 2× the average income if the employment lasted at least one year but less than two years; and ■ 3× the average income if the employment lasted at least two 6.3 What protection do employees have against years. dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third Grounds related to an individual employee are:
party required before an employer can dismiss? a) if the employee cannot further perform the current work due Czech Republic to an accident at work, occupational disease or threat of such An employer may dismiss an employee only on the grounds a disease; expressly stipulated by the Labour Code. Employment may be b) if the employee is unfit to perform the current work in the terminated by means of agreement, notice (please see question long term due to his/her state of health; 6.5 for further details) or immediate termination of employment. c) if the employee fails to fulfil the conditions stipulated by law Furthermore, employment for a fixed period of time may be for the performance of the work or if the employee fails to terminated by the expiration of time, and the Labour Code also fulfil the requirements on proper performance of this work includes a special option to terminate employment during a trial without the employer’s fault; in cases where the insufficient performance is caused by unsatisfactory work results, the period. Generally speaking, an employer may unilaterally decide to employee may be given notice only if the employee has been dismiss an employee on the grounds stipulated by the Labour Code called upon by the employer in writing to improve his/her and, if they wish to do so. The trade union must give its consent performance during the last 12 months, but has failed to do with regards to the dismissal of a member or a former member (in so; this case, within a one-year protection period following the end of d) if there are reasons on the part of the employee based on the member’s activities). For further details on protection against which the employer could terminate the employment by notice, please see question 6.4. immediate termination or which give rise to a gross breach of duty arising out of the legal regulations applicable to the work performed by the employee; in cases of consecutive 6.4 Are there any categories of employees who enjoy small breaches, the employee may be given notice only if special protection against dismissal? he/she has been informed in writing about the possibility of notice with regards to the breach of the duty, by the employer The employer is prohibited from giving notice to an employee when: during the last six months; and a) the employee is found temporarily unfit to work, (unless e) if the employee grossly fails to comply with the regime of an he/she has intentionally caused such health issues or unless employee temporarily unfit to work. the issues represent a direct consequence of the employee’s drunkenness or abuse of drugs) and also when the employee If the employment is being terminated due to the fact that the goes through a treatment in a special medical facility; employee may not continue to perform the current work due to an accident at work, occupational disease or threat of such a disease (no b) the employee performs military practice; matter whether by means of agreement or notice), the employer is c) the employee is fully released from work due to performance obliged to pay severance payment to the employee in the amount of of a public office for the long term; at least 12× the average income. d) a female employee is pregnant or on maternity leave or when a female or male employee is on parental leave; or e) an employee working night shifts is temporarily unfit to 6.6 Are there any specific procedures that an employer perform night work. has to follow in relation to individual dismissals? Exceptions apply, for example, if the employer completely shuts The notice has to be made in writing and delivered to the employee. down their business, the protection is not granted. The notice period needs to be followed and severance payment, if applicable, has to be reimbursed. The employer must also issue and 6.5 When will an employer be entitled to dismiss for: hand over the confirmation of employment to the employee. 1) reasons related to the individual employee; or 2) business related reasons? Are employees entitled to compensation on dismissal and if so how is 6.7 What claims can an employee bring if he or she is compensation calculated? dismissed? What are the remedies for a successful claim? The employer may give notice to an employee only on grounds stipulated by the Labour Code. Business-related grounds are: The employee may claim before the court that the termination a) if the employer or their position is being dissolved; of employment by means of notice or immediate termination (or termination during trial period) was invalid. Such a claim has to b) if the employer or their position is being relocated; or be raised within two months of the termination. In such cases, the c) if the employee becomes redundant due to a decision employee has to notify the employer without undue delay in writing (of the employer or a competent body) on organisational that he/she insists on being further employed by the employer. change, such as change in tasks, technical equipment, reduction of the personnel for the purpose of increasing If the termination is declared not valid by the court, the employment work effectiveness, etc. relationship is deemed as still existing and the employee shall be
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provided with compensation for his/her salary from the date of the notification, until the employer allows the employee to continue his/ 7.2 When are restrictive covenants enforceable and for her work or terminates the employment correctly. what period?
The non-competition covenants may be enforced for a maximum of 6.8 Can employers settle claims before or after they are one year and only after employment is terminated. initiated?
Employers may settle the claims either before or after their initiation, 7.3 Do employees have to be provided with financial the option of settlement is available until the court delivers its compensation in return for covenants? judgment. Yes, employees must be provided with financial compensation in return for covenants. For the period in which the non-competition Czech Republic 6.9 Does an employer have any additional obligations if covenant is effective and observed by the employee, he/she is it is dismissing a number of employees at the same entitled to receive remuneration amounting to at least half of the time? average income per month. Provided there are organisational grounds for the dismissals, the employer is obliged to inform the trade union or the council of 7.4 How are restrictive covenants enforced? employees (or the individual employees directly affected) about: a) the grounds for collective redundancy; Usually, the contractual penalty is agreed together with the non- b) the number and professional qualifications of the employees competition covenant; by paying the contractual penalty, the who are made redundant; obligation stemming from the covenant ceases to exist. The c) the number and professional qualifications of all employees covenants may also be enforced before courts. employed by the employer; d) the time when the collective redundancy will take place; 8 Data Protection and Employee Privacy e) the proposed criteria for the selection of the employees who are made redundant; and f) the severance payments and other rights of the employees 8.1 How do employee data protection rights affect the made redundant, employment relationship? Can an employer transfer employee data freely to other countries? at least 30 days prior to the collective dismissal. The employer is also obliged to inform the Labour Office in Employers are entitled to keep personnel files on employees. A writing about the collective dismissal and related measures which personnel file may include only those documents that are necessary will be taken with regards to the dismissals. The employer is also for the performance of work. The personal data of all employees obliged to inform the employees about the date when the written is protected by Act no. 101/2000 Sb., on the Protection of Personal announcement was delivered to the Labour Office. Data, as amended; the transfer of data within the European Union is not limited. The data may be transferred outside its borders 6.10 How do employees enforce their rights in relation to provided that an international agreement secures such a transfer. mass dismissals and what are the consequences if an employer fails to comply with its obligations? 8.2 Do employees have a right to obtain copies of any personal information that is held by their employer? Employees are entitled to severance payments; the claim may be exercised before court. Employees are also entitled to be informed Yes, according to Section 312 (3) of the Labour Code, an employee that the announcement of the collective dismissal has been delivered has the right to view his/her personnel file and make excerpts and to the Labour Office, as their employment cannot be terminated copies of the documents included in it, all at the employer’s expense. within 30 days following the delivery of such an announcement. The employer must observe the right to inform the employees (please see question 6.9 for further details); failure to do so may 8.3 Are employers entitled to carry out pre-employment result in a fine up to CZK 200,000. checks on prospective employees (such as criminal record checks)?
7 Protecting Business Interests Following The employer may request, from an applicant or from other persons, Termination all necessary information that directly relates to the conclusion of the employment contract.
7.1 What types of restrictive covenants are recognised? 8.4 Are employers entitled to monitor an employee’s emails, telephone calls or use of an employer’s The Labour Code includes the possibility to enter into a non- computer system? competition agreement or to include a non-competition clause in the employment agreement. Non-competition covenants need to be According to Section 316 of the Labour Code, the employer is not made in writing and they shall only bind an employee from whom allowed, without having serious reasons due to the special nature of the observance of the covenants may reasonably be required. the employer’s activities, to secretly monitor an employee’s emails or disturb their privacy at the employer’s workplace and common
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premises by insisting that they open their emails. If there is such a serious reason with respect to the employer, they will be obliged 9.2 What procedure applies to employment-related to inform the employee directly of the scope and the manner of the complaints? Is conciliation mandatory before a complaint can proceed? Does an employee have to control. pay a fee to submit a claim?
8.5 Can an employer control an employee’s use of social The court fee has to be paid by the employee provided he/she is media in or outside the workplace? the plaintiff; however, exceptions apply (for example, the fee does not apply in cases related to a work injury). The procedure in The employer is not allowed, without having serious reasons, to employment law cases is standard as in any other cases; there are disturb the privacy of an employee at his/her workplace and common no procedural exceptions. The trial period for conciliation may be premises by subjecting the employee to secret monitoring, tapping ordered by the court before the hearing; however, it is not mandatory.
and recording of his/her telephone calls, or have control of emails or Czech Republic letters addressed to the employee. Any monitoring of social media 9.3 How long do employment-related complaints typically outside of the workplace shall also not be conducted. take to be decided?
9 Court Practice and Procedure As well as in other branches of law, the length of employment proceedings cannot be predicted and it depends on the case.
9.1 Which courts or tribunals have jurisdiction to hear employment-related complaints and what is their 9.4 Is it possible to appeal against a first instance composition? decision and if so how long do such appeals usually take? There are no special tribunals for employment law. District courts have jurisdiction to preside over the case; the senate consists of one Yes, an appeal against a first instance decision may be filed to judge and two laymen. regional courts. The length of the proceedings cannot be predicted and always depends on the particular case.
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JUDr. Richard Gürlich, Ph.D. Mgr. Kamila Janoušková Gürlich & Co. Gürlich & Co. Politických vězňů 19 Politických vězňů 19 110 00 110 00 Prague 1 Prague 1 Czech Republic Czech Republic
Tel: +420 222 101 591 Tel: +420 222 101 591 Email: [email protected] Email: [email protected] URL: www.akrg.cz URL: www.akrg.cz
Richard Gürlich is the managing partner and founder of Gürlich & Co. Kamila Janoušková is an associate at Gürlich & Co. She graduated He is a graduate of the Law Faculty of Charles University in Prague from the Law Faculty of Charles University in Prague and is a member Czech Republic and a member of the Czech Bar Association and The International of the Czech Bar Association. Her expertise includes commercial law Association for Contract & Commercial Management (IACCM). and business corporations, bankruptcy, civil law, civil procedure and real estate law. Richard has extensive experience in public procurement in the European Union, corporate law and business transactions His expertise also includes legal matters relating to real estate (i.e. the arrangement of developer projects, property transfers, lease and sublease agreements, etc.) and labour law. Richard Gürlich was awarded “Best Lawyer” of the year by ICFM Leading Lawyer 500 in 2016 and by LegalComprehensive in 2017.
GÜRLICH & Co. is a developed law firm with expertise in various branches of law. The firm’s main specialties include public procurement in European Union, intellectual property, real estate, corporate and business law. Our law firm also organises seminars and lectures on the issues of intellectual property, public procurement and on the Civil Code. Our law firm is a member of the Association of European Lawyers (AEL) and as such we are part of an extensive network of independent law firms who work together on cross-border transactions and multi-jurisdictional casework. We have been the winners of many prestigious awards in various areas of Law since 2010. As for the newer ones, in 2017 we were awarded “The Best Law Firm” of the year by LegalComprehensive Golden Global Awards and Law and Real Estate Law Firm of the year in 2017 by Corporate INTL Magazine. We provide legal services in both Czech and English.
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Egypt
Shahid Law Firm Rasha Maurice
employee is permitted to prove the existence of an employment 1 Terms and Conditions of Employment relationship by any form of evidence.
1.1 What are the main sources of employment law? 1.4 Are any terms implied into contracts of employment?
The rules regulating the employer-employee relationship in Egypt ELL has set minimum terms and conditions that have to be implied are set forth in the Egyptian Labour Law No. 12/2003 (the “ELL”), into an employment contract. Yet, it is always recommended to its executive regulations and ministerial decrees, Articles 674 to include other terms, such as the contract duration, a confidentiality 698 of Law No. 131/1948 (Egyptian Civil Code), the Child Law clause, non-compete and non-solicitation provisions, and employee No. 12/1996, the Law Regarding the Rehabilitation of the Disabled data management, especially for senior staff. No. 39/1975 and the Labour Unions Law No. 35/1976. Further provisions are also found in the Social Insurance Law No. 79/1979. 1.5 Are any minimum employment terms and conditions set down by law that employers have to observe? 1.2 What types of worker are protected by employment law? How are different types of worker distinguished? Pursuant to the provisions of the ELL, the employment contract must include the following minimum data: The provisions of the ELL do not apply to public officials of 1. Name of the employer and the address of the place of work. state agencies, domestic service workers or the employer’s family 2. The worker’s name, qualifications and profession or craft, members, whom he/she supports. social insurance number and home address. With exception to the above, the ELL only distinguishes between 3. Information regarding the nature and type of work. workers receiving monthly wages, and those receiving their wages 4. Agreed wage and method and time of its payment, as well as based on production. any other benefits in cash or in kind as agreed between the Another distinction set forth by the ELL and Companies’ Law is the employer and employee. restriction imposed on foreign labour, which should not exceed 10 5. A probationary period of no more than three months must be per cent of the total labour force of an Egyptian company. Hence, all stated in the employment contract. foreign employees must obtain a valid work permit, which requires the submission of specific documents by both the employer and the expatriate employee, as well as the fulfilment of certain requirements. 1.6 To what extent are terms and conditions of employment agreed through collective bargaining? A final distinction is also set forth by the Companies’ Law, which Does bargaining usually take place at company or entitles employees working for commercial entities with a capital industry level? exceeding EGP 250,000, the right to claim dividends, provided that the shareholders/quota-holders come to an agreement on the Collective labour agreements are those made between one or more distribution of the company’s dividends by virtue of a resolution trade union organisation and the employer(s), or one or more of their taken in an ordinary general assembly. In this case, the share of organisations. the employees shall not be less than 10 per cent of the declared Collective negotiations may be held at the level of the establishment, dividends and shall not exceed the total annual wages of the the branch of the establishment, the profession, or the industry, employees working inside the company. whichever the parties deem more appropriate.
1.3 Do contracts of employment have to be in writing? If not, do employees have to be provided with specific 2 Employee Representation and Industrial information in writing? Relations
Employment contracts are required to be in writing, in Arabic, and in triplicate, with the employer, employee and social insurance 2.1 What are the rules relating to trade union recognition? office each keeping a copy of the employment contract. However, in the absence of a written contract, and in case of dispute, the Answer not available at time of print.
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against the employer who has refused to grant the entitlements of 2.2 What rights do trade unions have? the employee, and, finally, the use of periods of leave and vacations which the employee is entitled to. Furthermore, the ELL prohibits Answer not available at time of print. discrimination with respect to the payment of salary based on sex, origin, language, religion or creed. 2.3 Are there any rules governing a trade union’s right to take industrial action? 3.3 Are there any defences to a discrimination claim?
Answer not available at time of print. Claims of discrimination are often based on the perception that Egypt different legal situations may result in a different treatment by the 2.4 Are employers required to set up works councils? If employer of employees holding the same job title or within the same so, what are the main rights and responsibilities of position. However, in defence to such claim, a distinction has to be such bodies? How are works council representatives made between the treatment by the employer in light of a different chosen/appointed? status/position of its employees and discrimination on any other given basis. Answer not available at time of print.
3.4 How do employees enforce their discrimination 2.5 In what circumstances will a works council have co- rights? Can employers settle claims before or after determination rights, so that an employer is unable to they are initiated? proceed until it has obtained works council agreement to proposals? An employee claiming that they have been discriminated against can file a claim before the competent labour office, stating the Answer not available at time of print. circumstances he/she believes are discriminatory. If an amicable settlement with the employer does not ensue, the employee’s 2.6 How do the rights of trade unions and works councils claim will be transferred to the competent court. Employers and interact? employees can settle any claim at any stage of the judicial process.
Answer not available at time of print. 3.5 What remedies are available to employees in successful discrimination claims? 2.7 Are employees entitled to representation at board level? In the event of a successful discrimination claim, a final court order may be issued in favour of the employee. In this case, the employer Answer not available at time of print. must abide by the court order and may be ordered to pay legal costs.
3.6 Do “atypical” workers (such as those working part- 3 Discrimination time, on a fixed-term contract or as a temporary agency worker) have any additional protection?
3.1 Are employees protected against discrimination? If so, on what grounds is discrimination prohibited? There are no additional protections for atypical workers. The provisions of the ELL apply to all types of workers. The Egyptian Constitution provides for the equal treatment of all citizens regardless of their race, religion, gender, age or national 4 Maternity and Family Leave Rights origin. In spite of the fact that no specific employment directives or regulations specifically tackle the issue of discrimination, the 4.1 How long does maternity leave last? principle of equality is, however, emphasised in various laws, such as the ELL, and is further protected as a constitutional right. Provided that the female employee has spent 10 months or more in Although there are no official whistle-blower policies in place the employer’s service, and upon a medical certificate indicating the in Egypt, the inclusion of workers’ complaint right as part of the date on which the delivery will most likely occur, a female employee workplace anti-discrimination policy is imperative and ensures that is entitled to a paid maternity leave of 90 days, including the period the employee is protected in these circumstances. before and after delivery. In any case, a female employee should not be required to work during the 45 days following childbirth. Nevertheless, a female employee is not entitled to maternity leave 3.2 What types of discrimination are unlawful and in what more than three times throughout her term of employment. As a circumstances? measure of protection of female employees, the ELL prohibits the discharge or termination of a female employee during the term of The ELL provides for the principles of non-discrimination and equal her maternity leave. treatment of employees under its section on termination. Further, a female employee working in an establishment employing The ELL prohibits termination based on discrimination on the 50 employees or more has the right to a period of leave without pay, grounds of race, gender, social status, religion, pregnancy or family for childcare, for a period not exceeding two years. However, she obligations, the employee’s activity or affiliation with a syndicate is not entitled to such leave more than twice throughout the term of or union, whether the employee has filed any complaint or lawsuit her employment.
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will be bound to carry on the employment obligations under their 4.2 What rights, including rights to pay and benefits, does previous employer including their previous years of service. a woman have during maternity leave? Furthermore, the ELL states that in the event of multiple employers, the employers shall be jointly responsible for fulfilling all obligations According to the law, the competent social insurance office pays 75 set forth in the Labour Law. per cent of the insured salary of the employee (basic and variable social insurance salaries). The employer is under the obligation to pay the remaining 25 per cent in addition to the rest of her actual 5.2 What employee rights transfer on a business salary. However, in practice, most employers do not make their sale? How does a business sale affect collective employees obtain their payment from the social insurance office. agreements? Egypt Most employers pay the 90 days in full to their employees. If the transfer of the business does not trigger any transfer of shares and results in the transfer of assets (including employees) to another 4.3 What rights does a woman have upon her return to separate entity (the new employer), the current employer will need work from maternity leave? to assess the following: a) The types of employment contracts of the affected employees A female employee has the right, during the 24 months following the (i.e., whether they are employed under definite- or indefinite- date of childbirth, to two breaks for breastfeeding (each no less than term employment contracts). half an hour) in addition to the regular break(s). The two additional b) The obligations arising from the current employment breastfeeding breaks will be counted as working hours and will not contracts (i.e., salaries, unused annual leave, years of result in any salary deductions. experience, or any other financial benefits). c) Whether the employees will accept to submit their 4.4 Do fathers have the right to take paternity leave? resignations with the current employer while obtaining compensation, or if they will submit their resignation without obtaining compensation. This is important to clarify if There are no provisions covering paternity leave under the ELL. the new employer will or will not recognise their years of experience and will certainly be an essential element to 4.5 Are there any other parental leave rights that determine the price of the sale of the business. employers have to observe? However, as stated above, the merger, assignment or sale of an establishment does not in itself trigger the termination of There are no parental leave rights that employers are obliged to employment contracts since the entity (employer) still exists. observe. It is also important to note that collective agreements (if any) are concluded for a definite period of three years at most, or for a period 4.6 Are employees entitled to work flexibly if they have necessary to perform a specific project. If the collective agreement responsibility for caring for dependants? is for the performance of a specific project, which lasts more than three years, this agreement will have to be renewed every three years The ELL is silent with respect to the regulation of flexible working in light of the new economic and social conditions. Accordingly, the hours. However, the Egyptian jurisprudence and earlier court collective agreement shall remain valid until the end of its term. judgments entitle the employer, by virtue of his/her authority to As a conclusion, in the case of a transfer of business, the successor manage and supervise the work, to regulate the daily working hours entity shall be jointly responsible along with the former employers in accordance with the work needs and production conditions. The for the satisfaction of all obligations arising from the transferred employee, on the other hand, shall carry out her work in accordance contracts. Accordingly, this needs to be observed at the sale with such regulations, as long as they comply with the provisions of agreement to avoid any joint liability after the sale. the ELL. Accordingly, the employer may apply a flexible working hours’ scheme, if deemed necessary and provided that it does not violate the generic provisions of the ELL with respect to working 5.3 Are there any information and consultation rights on a business sale? How long does the process typically hours or the terms of the employee’s employment contract. take and what are the sanctions for failing to inform and consult? 5 Business Sales From a legal perspective, there are no consultation or information rights to the benefit of employees. 5.1 On a business sale (either a share sale or asset However, in practice, the sale of a business can be concluded either transfer) do employees automatically transfer to the by (i) the transfer of shares, or (ii) the transfer of assets (machinery, buyer? equipment, land, building, movable and immovable assets).
It is worth noting that a mere transfer of shares does not trigger Regarding the first option, the employees will remain on the payroll any transfer of employees. In fact, the employees are registered on of the company (current employer) and the new shareholders will be the payroll of the legal entity itself (the employer). Accordingly, liable for all their benefits. in the case of a transfer of shares or assets to another entity, the However, for the second option, it is important to assess whether employees will remain under the umbrella of the current employer. (from a contractual perspective) the buyer shall maintain the However, if such transfer of assets will explicitly include a transfer current employees. Should the buyer choose to maintain the current of employees to another legal entity, such transfer of employees will employees, in this case, the employees have to be transferred under need to be done on a resignation and rehiring basis, which shall the payroll of the buyer (new employer) via a resignation and trigger, in return, the affected employees’ approval. In the event of rehiring process. If the employer opts to terminate the employees’ an acquisition of the business by another entity, the acquiring entity contracts, the employer may need to consider pursuing an amicable
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settlement with the affected employees by offering a settlement package, which is equivalent to the compensation for unjustified 6.2 Can employers require employees to serve a period termination in exchange for their resignations. of “garden leave” during their notice period when the employee remains employed but does not have to attend for work? 5.4 Can employees be dismissed in connection with a business sale? The ELL is silent with respect to the term “garden leave”, yet an employee’s attendance to work during the notice period is at the No, employees cannot be dismissed in connection with a business employer’s discretion. It should be noted, however, that irrespective sale. The ELL only confirms the right of the employer to request the of whether or not the employer requires the terminated employee Egypt full or partial closure of the business, or to downsize it, for economic to attend and pursue his/her work during the notice period, the reasons which necessitate the termination of employment of some employer must pay the employee a full wage during such period. or all of its employees. However, the employer is required to obtain Moreover, it is not permissible to decrease the notice period; the prior approval of a special committee with respect to the closure however, the employer and employee may agree to extend it. In of business or its downsizing. The request for closure must indicate practice, however, the notice period does not extend beyond three the cause for such closure or reduction in size, as well as the number months. and job classification of the employees to be terminated. Other than the above, the termination of employment agreements 6.3 What protection do employees have against under ELL is restricted to the below grounds set forth under section dismissal? In what circumstances is an employee 6, Termination of Employment. treated as being dismissed? Is consent from a third party required before an employer can dismiss? 5.5 Are employers free to change terms and conditions of employment in connection with a business sale? The employer’s right to justifiably dismiss any of its employees is restricted to specific grounds, which are limited to: (i) ifthe There is no specific legislation preventing the employer(s) from employee becomes fully incapacitated; (ii) if the employee is finally changing the terms and conditions of the employees’ contracts after sentenced for an honour crime or one against honesty or public the conclusion of a business sale. moral; (iii) if the employee was proven to be incompetent; (iv) if the employee commits an act of gross misconduct, which is listed in Whilst the change is not expressly prohibited, it is subject to whether the ELL; or (v) the employee reaches the retirement age of 60 in the the change will be beneficial or detrimental to the employees, which case of an indefinite employment contract. will be considered on an individual case-by-case basis. If the change will be beneficial, the employer can unilaterally change terms and The employer must follow certain procedures prior to the dismissal conditions/working practices which: of the employee, which includes carrying out an investigation on a) have been contractually agreed; or the reason for the dismissal. It is worth noting that, during the investigation, the employer may suspend the employee for a period b) exist by custom and practice (“acquired rights”), not exceeding 60 days with full pay, if it is believed that such action provided that the required change does not reduce or minimise is in the interest of the investigation, or if the employer has requested the rights of the employees under their old employment contracts the Labour Court to dismiss the employee. (including any acquired rights), is compliant with the provisions of Moreover, the decision of dismissal is to be taken exclusively by the the ELL, and the consent of the employee is obtained. In any event, Labour Court (not by the employer). Therefore, even if the employee any beneficial change is unlikely to be challenged by an employee. committed one of the aforementioned grounds for termination, the In relation to changing policies, consent from the relevant labour employer must follow the aforementioned procedures and report office is required. this to the court in order to issue the dismissal decision.
6 Termination of Employment 6.4 Are there any categories of employees who enjoy special protection against dismissal?
6.1 Do employees have to be given notice of termination of their employment? How is the notice period The only case where the ELL voids the termination of the determined? employment contract and orders the employee to return to his/her job is in the case where termination is due to the employee’s union- Pursuant to the ELL, notice periods differ from one type of related activities. In this case, and if the employee requests so in employment contract to another. In case of indefinite-term the relevant lawsuit, the court will order the company to take the employment contracts, the notice period provided for in the ELL is employee back and grant him/her his/her salary for the suspended two months if the uninterrupted employment period with the same period, unless the employer can prove that the dismissal is not employer is less than 10 years. If this period exceeds 10 years, the related to the employee’s union-related activities. notice period must be three months. Alternatively, no notice period is required by the ELL to ensure that 6.5 When will an employer be entitled to dismiss for: a definite-term employment contract ends upon expiry of its term. 1) reasons related to the individual employee; or 2) However, we recommend that a written notice is sent by registered business related reasons? Are employees entitled to compensation on dismissal and if so how is mail or hand delivered against acknowledgment of receipt prior to compensation calculated? the expiry of its term. The employer’s right to justifiably dismiss any of its employees is restricted to the aforementioned grounds under question 6.3.
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In the event that the employer does not have a justified reason to a) Confidentiality: the employee or former employee must terminate the employment agreement, the employee shall be entitled maintain work and trade secrets so as to protect the employer’s to compensation, which shall not be less than two months’ gross (or former employer’s) interests. salary for each year the employee remained in service, or in the case b) Not to compete: the employee must abstain from engaging, of a definite-term employment contract, the salary for the remainder whether directly or indirectly, in any business competing with of the contract period, in addition to other statutory entitlements. the business of his/her employer or former employer. Such a restriction nonetheless is more relevant and applicable to the managerial level of an institution. 6.6 Are there any specific procedures that an employer c) Work inventions and product: the employer is the sole legal has to follow in relation to individual dismissals? owner of all work products and inventions. Egypt
The employer must follow certain procedures prior to the dismissal of the employee, which includes carrying out an investigation on the 7.2 When are restrictive covenants enforceable and for what period? reason for the dismissal; the decision of dismissal is then to be taken exclusively by the Labour Court. Therefore, even if the employee committed one of the aforementioned grounds for termination, the Post-termination restriction clauses survive upon the termination employer must follow the aforementioned procedures and report of the employment contract. It is possible for these clauses to this to the court in order to issue the dismissal decision. be enforceable for an unlimited period; however, the law does not limit the enforceability thereof to a certain scope of work or geographically. 6.7 What claims can an employee bring if he or she is dismissed? What are the remedies for a successful claim? 7.3 Do employees have to be provided with financial compensation in return for covenants? The employee can claim that they have been unjustifiably terminated. In the case of a successful claim, the employee shall be entitled to No, employees do not need to be provided with financial compensation, which shall not be less than two months’ gross salary compensation in return for covenants. for each year the employee remained in service, or in the case of a definite-term employment contract, the salary for the remainder of 7.4 How are restrictive covenants enforced? the contract period, in addition to other statutory entitlements. Restrictive covenants are enforced through the traditional judicial 6.8 Can employers settle claims before or after they are route. The employer must file a claim before the competent court initiated? district, within which the breach is taking place. As in most other jurisdictions, the employer must provide solid evidence on how Yes, a settlement can be reached between the employer and the the former employee breached his/her obligations and to what employee after initiating or while reviewing the employee’s claim extent such a breach caused damages to the employer. Remedies before the Labour Office or Egyptian courts. for a successful claim can result in an injunctive order (specific performance) against the employee to cease and desist from pursuing an activity in breach of the covenant in question, and 6.9 Does an employer have any additional obligations if where applicable, damages/compensation in favour of the employer it is dismissing a number of employees at the same time? could be decided.
No, employers do not have any additional obligations if dismissing 8 Data Protection and Employee Privacy a number of employees at the same time.
8.1 How do employee data protection rights affect the 6.10 How do employees enforce their rights in relation to employment relationship? Can an employer transfer mass dismissals and what are the consequences if an employee data freely to other countries? employer fails to comply with its obligations?
There are no explicit provisions for data protection rights in Egyptian The ELL does not differentiate between individual and mass legislation except for the protection provided to the sanctity of a dismissals. Employees suffering from mass dismissals enjoy the citizen’s private life stipulated in the Egyptian constitution, as well same rights as individual dismissals. In the event that the employer as specific legislation dealing with issues such as banking and civil fails to comply with its obligations towards one or more of its affairs. That said, the employer is not entitled to transfer/disclose employees and the Labour Court concludes that the employee(s) has such information except to legally authorised persons/entities. If been unjustifiably terminated, such employee(s) shall be entitled to any disclosure by the employer occurs without the employee’s prior the statutory compensation as prescribed by the ELL. consent and causes damage to the employee, the employer shall be liable to compensate the employee. 7 Protecting Business Interests Following Termination 8.2 Do employees have a right to obtain copies of any personal information that is held by their employer?
7.1 What types of restrictive covenants are recognised? Yes, employees have a right to obtain copies of personal information held by their employer, as long as this is limited to the normal course Egyptian law recognises three main restrictive covenants, which are: of business.
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8.3 Are employers entitled to carry out pre-employment 9.2 What procedure applies to employment-related checks on prospective employees (such as criminal complaints? Is conciliation mandatory before a record checks)? complaint can proceed? Does an employee have to pay a fee to submit a claim? Yes, employers are entitled to carry out pre-employment checks on prospective employees. Pursuant to Article (2) of the Minister The Labour Office is the administrative institution before which all of Manpower and Immigration’s Decree No. 185/2003 issuing the labour-related disputes begin. Model Internal Regulations of the Work Place, the employer typically In the event that there is an unresolved dispute as to the application of verifies the employee’s data by requesting several employment the ELL between the employer and an employee, a committee may Egypt documents (including a criminal record) prior to commencement of be formed to resolve this dispute, comprising (i) the representative employment. of the competent administrative authority (usually a public official from the Ministry of Manpower), (ii) a representative of the trade 8.4 Are employers entitled to monitor an employee’s union organisation, and (iii) a representative of the employers’ emails, telephone calls or use of an employer’s organisation. computer system? A non-compulsory conciliation procedure is offered. If a dispute arises concerning the application of the provisions of the ELL, Yes, employers are entitled to monitor an employee’s emails, both the employer and employee must submit the dispute to the telephone calls and use of their computer system. committee within 10 days from the date of the dispute to attempt to resolve the situation amicably. If within 21 days from the date of the submission of the application no settlement is reached, each of the 8.5 Can an employer control an employee’s use of social media in or outside the workplace? parties may resort to the Labour Tribunal within 45 days from the end of the 21-day period, even if the dispute has not been previously submitted to the committee. Such right shall be forfeited after the Yes, employers can control an employee’s use of social media. said period has elapsed. During the aforementioned process, the employee is exempted from any fees or judicial expenses. 9 Court Practice and Procedure 9.3 How long do employment-related complaints typically take to be decided? 9.1 Which courts or tribunals have jurisdiction to hear employment-related complaints and what is their composition? Employment-related complaints typically take 76 days to be either reviewed or resolved by the competent Labour Office. However, in The labour circuit of the Court of First Instance is the competent the event that either party chooses to transfer the said complaint to forum of jurisdiction with respect to employment-related complaints the Labour Tribunal, the Court of First Instance can take up to three and disputes. The court comprises three judges and the representation years to issue its verdict. of both employer and employee is mandatory. 9.4 Is it possible to appeal against a first instance decision and if so how long do such appeals usually take?
Yes, an appeal of a verdict issued by the Court of First Instance can be reviewed before Egyptian courts. Such review can take between two and three years.
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Rasha Maurice Shahid Law Firm 20B Adly Street, Downtown Cairo 11511 Egypt
Tel: +202 2393 3593 Email: [email protected] URL: www.shahidlaw.com Egypt
Rasha Maurice has been a member of the Employment Regulatory Group at Shahid Law Firm since 2007. She specialises in Egyptian labour and social insurance legislation in relation to commercial entities operating in Egypt. Rasha’s experience includes advising corporates on various Egyptian labour matters in relation to their employees, drafting employment contracts, reviewing and advising on work policies and procedures, heading the negotiation team with the clients’ employees with respect to lay-off(s), responding to day-to-day HR legal queries and obtaining exceptional approvals from the Ministry of Manpower regarding expats’ work permits. She is in constant communication with the governmental authorities in relation to various labour-related matters and also settles commercial entities’ past dues for the Social Insurance Authority. Rasha holds an LL.B. from Ain Shams University.
Shahid Law Firm was established in 1987 by Counselor Sarwat Abd El-Shahid, after serving as judge and State Counselor for nearly two decades. Since its inception, the Firm has rapidly grown to include over 70 lawyers and has become one of the leading international law firms operating in Egypt and the region. Such credit, undoubtedly, is largely due to its lawyers’ vast experience, industry insight, and ability to combine their understanding of complex legal matters with a practical solution-oriented approach. The Firm has a team of Egyptian and Western-trained attorneys and legal consultants, with experience in multiple jurisdictions. Our lawyers’ rich and diverse educational backgrounds and language skills have enabled our team to communicate with clients from all over the world. Our Firm is placed among few firms in Egypt and the region that are able to provide services in English, French, Italian, German, Spanish Portuguese, and, of course, Arabic. Our clients include medium-sized to large international corporations, industrial conglomerates, banks, insurance companies, high-net-worth individuals and families, diplomatic representations and governments; and our experience spans various sectors, including pharmaceuticals, energy and power, oil and gas, mining, manufacturing, leisure and hotels, consumer products, foodstuffs, banking and finance, information technology and telecommunications. Over the past three decades, the employment and labour law practice group of Shahid Law Firm has drawn upon the Firm’s longstanding experience in all areas of the Egyptian Labour Law, including litigation and arbitration. We have a reputation for successfully assisting our clients in obtaining Egyptian work permits and visas for foreign nationals, which is a service underpinned by our firm’s tradition of maintaining an excellent professional relationship with the Egyptian Ministry of Manpower, in addition to our deep understanding of the immigration authorities’ focus and concerns. We also assist our clients in obtaining certain exemptions with respect to recruiting expatriates, whenever possible. Due to our profound knowledge of the Egyptian social security system, our employment and labour law practice’s multi-disciplinary approach can handle all aspects of regulatory labour law and social insurance for our clients, from the registration and maintaining of files with the authorities, to providing advice on how to settle disputes in the most effective manner including dealings with labour unions.
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France
Latournerie Wolfrom Avocats Sarah-Jane Mirou
1 Terms and Conditions of Employment 1.4 Are any terms implied into contracts of employment?
1.1 What are the main sources of employment law? As with any contract, an employment contract must be performed in good faith. The sources of employment law are international law, EU law and Employees are therefore obliged to carry out the work specified domestic law. Domestically, the main sources of employment law in the contract personally and conscientiously and to follow the are the French Labour Code (as interpreted by case law), collective instructions given by their employer. In addition, they must not act bargaining agreements, employment contracts and companies’ in a manner contrary to the company’s interests and must not, in internal regulations. particular, engage in any act of competition (duty of loyalty). They are also obliged to respect the confidentiality of any information that they learn during the performance of their duties (duty of discretion). 1.2 What types of worker are protected by employment law? How are different types of worker distinguished? Employers are, in turn, obliged to respect their commitments towards employees and, in particular, to assign them the agreed Any person who carries out paid work in the context of a relationship work and pay them the corresponding salary. They must also of subordination is classified as an “employee” and is protected ensure the adaptation of their employees to the evolution of their by employment law rules. A person may qualify as an employee positions, and, when applicable, ensure that they receive adequate notwithstanding any provision to the contrary agreed upon between training. Employers are also duty-bound to protect the health and the company and the concerned individual (provision of services, safety of their employees. The employer’s failure to respect their agency contract, etc.). commitments vis-à-vis their employees may allow them to seek for constructive termination of their employment contract and thus to obtain both their end-of-contract payments (payment in 1.3 Do contracts of employment have to be in writing? If lieu of notice period, dismissal indemnity) and damages for unfair not, do employees have to be provided with specific termination (cf. question 6.3). information in writing?
There is no legal requirement for an employment relationship to 1.5 Are any minimum employment terms and conditions be formalised by means of an employment contract. However, the set down by law that employers have to observe? collective agreement applicable to the contract of employment may require a written form. Employers are obliged to observe the following minimum employment terms and conditions: In any case, an employment contract not in written form is considered to be a full-time and indefinite-term contract. Therefore, Minimum wage: The wage paid by the employer cannot be less than fixed-term contracts and part-time contracts need to be formalised in the national minimum wage (SMIC). In 2018, the gross monthly writing with specific information provided by law. SMIC, for a 35-hour working week, is €1,498.47. The collective agreement applicable to the contract of employment may also specify Besides, in accordance with EU law, the employer is required, in a minimum wage depending on the employee’s classification. all circumstances, to inform employees of the employer’s identity, their place of work, their job title (or description of the work), the Working time: The statutory working hours are 35 hours per week. date of commencement of the contract, the amount of paid leave, the Employees can, however, work more than the statutory working length of the notice period, the component elements of pay and the hours either on a one-off basis (overtime) or as part of a specific frequency of payment, their working hours and, where applicable, working time arrangement. Specific rules apply both to overtime the collective agreements applicable. and to working time arrangements. In practice, it is strongly recommended to draw up an employment Concerning part-time contracts concluded as of July 1, 2014, the contract. Besides, this employment contract must be drafted working time must be at least either 24 hours per week as provided in French. If not, the company will not be in a position to take by law, or a shorter duration provided by a collective agreement, advantage of its terms against its employees. except in specific cases provided by law or collective bargaining agreement (such as an explicit request of an employee for personal reasons or to have several jobs, a student status, etc.).
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With occasional exceptions, employees must not work more than: (depending on the size of the company) to their union activities, ■ 48 hours per week; are free to move around within the company, and enjoy special ■ an average of 44 hours per week during 12 consecutive protection. In collective bargaining, the employer negotiates, in weeks; and particular, with the union delegates. ■ 10 hours per day. Where the trade union is not representative within the company, it may appoint a representative of the union section (“représentant Also, with the occasional exception, employees must rest at least syndical” in French) whose primary role will be to lead this union once a week during 24 consecutive hours and must not work on section so that the trade union’s vote at the next workplace election Sundays. enables it to be representative. The union representative is entitled Paid leave: Employees are entitled to 25 days’ paid leave per year, as
to dedicate four hours of his/her working time to his/her union France well as public holidays (around 10 days per year). activities.
1.6 To what extent are terms and conditions of 2.3 Are there any rules governing a trade union’s right to employment agreed through collective bargaining? take industrial action? Does bargaining usually take place at company or industry level? Industrial action may be initiated by trade unions or by the employees themselves. Terms and conditions provided for by collective bargaining agreements, or collective agreements entered into at company level, The right to strike is enshrined in the French Constitution. A strike will apply to employment contracts. is lawful if it is based on work-related claims presented to the employer. Except where public services are concerned, a strike may Collective agreements can be drawn up at all levels: company; group be called at any time. of companies; economic and social unit; establishment; industrial sector; cross-industry sector, etc. Numerous collective agreements are the result of negotiations 2.4 Are employers required to set up works councils? If within industrial sectors (e.g.: metallurgy; chemistry; construction, so, what are the main rights and responsibilities of such bodies? How are works council representatives etc.). They are immediately applicable to companies that are chosen/appointed? members of the signatory trade unions. They will be applicable to companies falling within their scope of application if, and as soon Rules governing works councils have been significantly modified by as, an extending decree is published. a decree entered into force on September 22, 2017. All employees Since September 23, 2017, the terms and conditions of any with at least 11 employees must put in place a works council referred collective agreement automatically prevail on employment to as “comité économique et social”. Its members are elected by the contracts. Employees may, however, refuse to apply the provisions employees for a four-year term of office. The number of members of a new collective agreement. To do so, he/she must inform his/her varies with the company’s headcount. Calling and organising employer within a delay of one month as of the date the employer these elections is subject to specific rules and notably includes the discloses the existence and the content of the agreement. Such negotiation of an agreement on the election procedure. refusal may lead to the termination of the employee’s employment The works council’s role will, at least, depend on whether the agreement. company employs less or more than 50 employees. Its composition, functioning and role may be negotiated within each company and 2 Employee Representation and Industrial determined by a collective agreement. Relations The works council’s ensures that employees’ interests are permanently taken into account in the decisions made by the employer. The company is obliged to: 2.1 What are the rules relating to trade union recognition? ■ provide periodic information or information relevant to certain occasions to the works council; and A trade union is representative within a company if it meets the statutory criteria (respect for republican values, independence, ■ inform or consult the works council before taking decisions relating, in particular, to the general running of the company, financial transparency, a minimum of two years’ existence, influence, to working conditions, to a change in the economic or legal members) and if it obtained 10 per cent of the votes cast in the most organisation of the company, etc. recent elections for works council members. The works council is in charge of the company’s social and cultural activities, for which a budget is assigned by the employer. 2.2 What rights do trade unions have?
2.5 In what circumstances will a works council have co- Any trade union with more than one member (i.e., at least two determination rights, so that an employer is unable to members) can form a “union section” (“section syndicale” in proceed until it has obtained works council agreement French) within the company or the establishment. The union section to proposals? can communicate freely with employees, has access to premises and can organise meetings with its members. In general, where the works council expresses a negative opinion on Where this trade union is representative (cf. question 2.1) within a a project, the company will not be prevented from implementing it. company with at least 50 employees, it may appoint one or more The works council’s favourable opinion, lack of objection or consent union delegates (“délégué syndical” in French). In addition to the is required in certain cases, such as: resources made available to the union section, union delegates may ■ appointment and dismissal of the company doctor; dedicate between 10 and 20 hours per month of their working time ■ introduction of personalised working schedules;
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■ replacement of overtime pay with time off in lieu; ■ determination of number of health, safety and working 3.3 Are there any defences to a discrimination claim? conditions committees (CHSCT); and ■ refusal of certain absences. Different treatments are nevertheless possible where based on objective and relevant criteria unconnected with any discrimination.
2.6 How do the rights of trade unions and works councils interact? 3.4 How do employees enforce their discrimination rights? Can employers settle claims before or after they are initiated? Trade unions have the monopoly of presenting candidates at the France first round of the election of the works council members. Thus, Employees can bring a claim before the Labour Court in order to seek generally, trade unions are represented amongst the works council the invalidation of the discriminatory measure and, where applicable, members. Union delegates (cf. question 2.2) also attend works compensation for the damage caused. They may also lodge a complaint council meetings. against the company and/or against the author of the discrimination. Trade unions negotiate collective agreements. A settlement ending the dispute is possible both before, and after, the claim is brought before the Labour Court. 2.7 Are employees entitled to representation at board This settlement does not preclude criminal proceedings, nor does level? it put an end to the proceedings. Discrimination is punishable by a fine of €45,000 and by a maximum of three years’ imprisonment for The works council is represented in the meetings of the board of the company’s representative or for the author of the offence. The directors or the supervisory board in all companies with such a body. company is punishable by a fine of up to €225,000. The works council may also participate in general meetings of shareholders. 3.5 What remedies are available to employees in The works council’s representatives are invited in the same way successful discrimination claims? as the other participants to these meetings and receive the same information. They cannot vote but have the right to express their In successful discrimination claims, the discriminatory measure opinion. will be invalidated. For example, an employee who is dismissed Employees are also represented at board level by one or two on discriminatory grounds will be reinstated within the company representatives, holding voting rights, in public limited companies and will be entitled to payment of the salary that he/she would have (“société anonyme” in French) and in limited partnerships with received between the date of dismissal and the date of reinstatement. shares (“société en commandites par actions” in French) when such a company and its direct or indirect subsidiaries employ, at the end 3.6 Do “atypical” workers (such as those working part- of two consecutive financial years, at least 1,000 employees (if the time, on a fixed-term contract or as a temporary registered office is located in France) or at least 5,000 employees (if agency worker) have any additional protection? the registered offices are located in France and abroad) and when such a company is subject to the implementation of a works council. Atypical workers cannot be discriminated against because of the nature of their employment contract. For instance, their 3 Discrimination remuneration must be equivalent to that of one of the employees holding an indefinite-term employment contract. Also, temporary workers cannot be assigned to particularly dangerous 3.1 Are employees protected against discrimination? If work. so, on what grounds is discrimination prohibited?
Discrimination is prohibited both by the Labour Code (section 4 Maternity and Family Leave Rights L.1132-1) and by the Criminal Code (sections L.225-1 to L.225-4).
4.1 How long does maternity leave last? 3.2 What types of discrimination are unlawful and in what circumstances? The statutory duration of maternity leave (“congé maternité” in French) varies according to the employee’s family situation: French law prohibits any form of direct or indirect discrimination ■ 16 weeks for a single birth in a family with two children in towards a candidate or employee on the basis of his/her: origin; total; gender; morals; sexual orientation; age; family situation; pregnancy; ■ 26 weeks for a single birth in a family with at least three genetic characteristics; belonging or not belonging (whether children; actually or supposedly) to an ethnic group, nation or race; political opinions; union or mutual society activities; normal exercise of a ■ 34 weeks for twins; and right to strike; religious beliefs; physical appearance; name; state of ■ 46 weeks for triplets and more. health; or disability. Maternity leave begins before, and continues after, birth. Besides the damages that the victim may claim, the employee is liable to criminal sanctions. 4.2 What rights, including rights to pay and benefits, does a woman have during maternity leave?
During maternity leave, the employee receives an allowance paid
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by the French Social Security. She is not paid by her employer unless otherwise specified in the collective agreement applicable to 5 Business Sales the company. 5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the 4.3 What rights does a woman have upon her return to buyer? work from maternity leave?
At the end of the maternity leave, the employee is entitled to return In the case of a share sale, employees are not affected as they remain to her previous job or a similar job with at least equivalent pay. employed by the same company.
An employee with at least one year’s service may ask for parental In the case of an asset transfer involving an autonomous France leave (unpaid) or reduced working hours. economic entity, employees will have their contracts of employment automatically transferred to the buyer. An autonomous economic entity is defined by French courts as an 4.4 Do fathers have the right to take paternity leave? “organised group of persons, with its own tangible and intangible assets, allowing the exercise of an economic activity which pursues In addition to three days’ leave at the time of birth, fathers are a specific objective”. entitled to 11 consecutive days of paternity leave (“congé paternité” in French), or 18 days in the case of multiple births, which must be taken within four months of the birth. 5.2 What employee rights transfer on a business sale? How does a business sale affect collective During paternity leave, the employee receives an allowance paid by agreements? the French Social Security. He is not paid by his employer unless otherwise specified in the collective agreement applicable to the Employment contracts are continued with the new employer under company. the conditions in force at the time of the transfer. Collective agreements continue to apply until the entry into force 4.5 Are there any other parental leave rights that of “substitution agreements” negotiated during the survival period employers have to observe? of the agreements (maximum duration of 15 months). During this period, employees also benefit from the agreements in force with Besides the three days’ birth leave, employees are entitled to the new employer. adoption leave: At the end of the survival period, the original company’s collective ■ 10 weeks for the first two children joining the family; agreements will no longer be applicable. If no substitution ■ 18 weeks where the adoption brings the number of children in agreements have been concluded, employees will retain the same the family to three or more; and salary they were paid during the last 12 months for the working time ■ 22 weeks for multiple adoptions regardless of the number of provided by their employment contract. children in the family.
At any time after the birth of a child, employees – who have 5.3 Are there any information and consultation rights on worked at least one year within the company before the birth – a business sale? How long does the process typically may seek additional parental leave (referred to as “congé parental take and what are the sanctions for failing to inform d’éducation” in French) or may move to part-time work of a and consult? maximum period of one year (which can be renewed twice, ending on the third birthday of the child. Except in the case of part-time The works council is informed of, and consulted on, changes to the work, employees’ salaries are not maintained by employers. company’s economic or legal organisation, particularly in the event of a merger, transfer or acquisition and sale of subsidiaries. 4.6 Are employees entitled to work flexibly if they have As with any consultation, this must take place before the decision is responsibility for caring for dependants? taken by the company (therefore, at the project stage). The length of the consultation procedure varies according to the Employees with specific conditions of seniority, or conditions nature and complexity of the proposal. The consultation process related to the caring dependant, are entitled to three different may not last more than one month (increased to two months when schemes of unpaid leave: the works council is assisted by an expert or to three months when ■ 14 months’ leave at a maximum (over a three-year period) for there is more than one works council to be consulted and more than caring for a child suffering from a serious disease, accident or one works council is being assisted by an expert). handicap; in that scheme another employee can give rest days There are also specific consultation requirements in the event of a to the caring employee; public open bid. ■ three months’ leave (renewable once) for caring for a family member who suffers from a life-threatening condition; and Failure to comply with this duty of consultation constitutes the offence of hindering the functioning of the works council. Any ■ three months’ leave (renewable, but subject to a maximum of employer found guilty of this offence is liable to a fine of €7,500 one year) to look after a relative with a disability or loss of independence that is particularly severe. (increased to €37,500 for a corporation). Also, employees may be absent from work and remain paid at least Companies having less than 250 employees and having an annual three days per year, provided that they justify their child’s illness turnover of less than €50 million (or the annual total balance sheet with a medical certificate. Except when provided otherwise by does not exceed €43 million) must inform their employees of any a collective agreement applicable to the company, such leave is project of sale of business (or sale of at least 50 per cent of the unpaid. shares). The purpose of the information is to allow an employee
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buyout. The information must be delivered to the employees either at the same time as the works council is informed and consulted, or 6.3 What protection do employees have against at the latest two months before the contemplated sale when there are dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third no employees’ representatives. Failure to comply with this duty is party required before an employer can dismiss? sanctioned by a penalty corresponding to two per cent of the sale price. A specific procedure must be followed by an employer whois considering the dismissal of an employee (cf. question 6.6). In 5.4 Can employees be dismissed in connection with a principle, the consent from a third party is not required except for business sale? in the dismissal of protected employees (in particular, employees’
France representatives), which requires the prior approval of the Labour Except when the transfer is part of a social plan, employers are inspector. obliged to transfer employment contracts automatically to the new Employees can self-terminate their contract of employment under employer. Employees cannot, therefore, be dismissed in an attempt the mechanism known as “prise d’acte de rupture” if they believe to elude the transfer. Any such dismissal would be null and void and that the employer has breached its contractual obligations (e.g., would entitle the employee concerned to be reinstated and to claim supply of agreed work, payment of salary, etc.). The Labour Court compensation for the damage suffered. will then decide whether the termination amounts to a dismissal However, after the transfer has taken place, the new employer may without cause or to a resignation. In the event that the courts find dismiss employees (for economic or personal reasons). In most that the company has indeed breached its contractual obligations cases, these dismissals will be the result of reorganisation within vis-à-vis its employee, the employer will be sanctioned to pay all the host company. In that regard, they must be based on a justified end-of-contracts payments (dismissal indemnity, payment in lieu of economic reason. notice period) and court-awarded damages.
5.5 Are employers free to change terms and conditions of 6.4 Are there any categories of employees who enjoy employment in connection with a business sale? special protection against dismissal?
The new employer cannot change the contract of employment Certain employees are entitled to special protection aimed at without the employee’s prior consent. preventing their dismissal or establishing a specific dismissal procedure. 6 Termination of Employment These include pregnant women, employees on maternity or adoption leave, employees on sick leave resulting from a work-related illness or accident, employees’ representatives, employment tribunal 6.1 Do employees have to be given notice of termination judges and Labour doctors. of their employment? How is the notice period determined? 6.5 When will an employer be entitled to dismiss for: 1) reasons related to the individual employee; or 2) An indefinite-term employment contract may be terminated business related reasons? Are employees entitled by the employer either as a result of a dismissal (for personal to compensation on dismissal and if so how is reasons or economic reasons) or as a result of retirement initiated compensation calculated? by the company. The employer may also take the initiative for a termination by mutual consent. The employer may dismiss an employee for personal reasons, for The notice period is fixed by law, collective agreement and/or example, in the event of: misconduct; professional incompetence or employment contract. The notice period is generally between one insufficient results; and physical unfitness. and three months. The length of the notice period provided for by The employer may dismiss an employee on economic grounds collective agreement generally varies according to the employee’s where the following cumulative conditions are met: classification, length of service within the company and, sometimes, ■ the termination is the result of the cancellation or alteration his/her age. of the employee’s position or change to the employment No notice is required in the case of a termination by mutual consent. contract which the employee refuses; Besides, employees dismissed for gross misconduct are not entitled ■ the termination is the result of the company’s economic to a notice period. difficulties, technological changes, reorganisation necessary to safeguard the competitiveness of the company or of the business sector of the group to which the company belongs or 6.2 Can employers require employees to serve a period cessation of business; and of “garden leave” during their notice period when the ■ the employee cannot be redeployed in another position within employee remains employed but does not have to the company or group or such redeployment has been refused attend for work? by the employee. Economic difficulties are characterised either by the significant The employer may allow the employee not to serve the notice change of at least one economic indicator such as a drop in orders period. Salary is nevertheless paid. During the notice period, the or sales, operating losses or a deterioration in cash flow or gross employee is free to start a new job. operating surplus, or by any other factor that can justify these difficulties.
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A significant decrease in orders or revenues is constituted when the duration of this decrease is, compared to the same period of the 6.7 What claims can an employee bring if he or she is previous year, at least equal to: dismissed? What are the remedies for a successful claim? ■ one quarter for a company with less than 11 employees; ■ two consecutive quarters for an enterprise with at least 11 An employee can challenge the procedure and grounds for his/her employees and less than 50 employees; dismissal. If the dismissal is considered as deprived of a real and ■ three consecutive quarters for an enterprise with at least 50 serious cause, the employee will be entitled to receive damages. employees and less than 300 employees; and Since a decree entered into force on September 22, 2017, there is ■ four consecutive quarters for a company with 300 or more a minimum and maximum amount of damages depending on the employees. employee’s seniority. In companies of at least 11 employees, the France The materiality of the termination, transformation or modification damages vary from one to 20 months’ salary. Such limits do not of an essential element of the employment contract is assessed at apply when the dismissal is considered as null and void. company level. This action may now be brought within one year of the termination. Economic difficulties, technological change or the need to safeguard the company’s competitiveness are assessed at the level of that 6.8 Can employers settle claims before or after they are company if it does not belong to a group and, if not, at the level of initiated? the sector of activity common to that company and to the companies of the group to which it belongs, established in the national territory. A dispute can be ended before, and after, being brought before the The sector of activity in which the economic cause of the dismissal courts. In order to be valid, the settlement must contain mutual can be assessed is characterised, in particular, by the nature of the concessions. In most cases, the former employee agrees not to take goods or services delivered, the target clientele, and the networks legal action or drops the proceedings that he/she has brought in and distribution methods relating to the same market. return for a settlement payment by the company. Dismissed employees who have at least one year’s service are Besides, the process before the Labour Court begins with a so- entitled to a legal dismissal indemnity amounting to one-fifth of the called “conciliatory hearing”. This hearing is confidential and monthly salary for each year of service for the first 10 years and aims at finding a settlement solution on the matter. The amount two-fifteenths of the monthly salary for each subsequent year. The of the settlement indemnity to be paid by the employer to put an collective agreement usually provides for a conventional dismissal end to a lawsuit, when such a settlement solution is found before indemnity that will replace the legal dismissal indemnity if it is the conciliatory board of the Labour Court, is provided for by the more favourable to the employee. Labour Code. Its amount varies from two to 14 months’ salary, depending on the employee’s seniority within the company. 6.6 Are there any specific procedures that an employer has to follow in relation to individual dismissals? 6.9 Does an employer have any additional obligations if it is dismissing a number of employees at the same A dismissal for personal grounds requires the employer to: time? ■ summon the employee to a preliminary meeting by registered letter or hand-delivered letter, received five working days Where an employer is considering dismissing a number of prior to such a meeting. This letter must state the time and employees for non-personal reasons, it must follow the specific place of the meeting as well as the employee’s right to be procedure applicable to collective dismissals on economic grounds. assisted by a employee of the company or, when applicable, by an outside party; The employer must, first of all, inform and consult the works council (or, failing that, the employees’ representatives). It may also ■ hold the meeting with the employee; and be required to inform and consult its Health & Safety Committee. ■ send the dismissal letter by registered mail after a cooling period of two days. The presentation of the letter to the Where the employer is considering dismissing at least 10 employees employee’s home will be the starting point of the notice during the same 30-day period in a company employing more than period. 50 employees, it must also propose a “job protection plan” (“plan de sauvegarde de l’emploi” in French), about which the works council Dismissal based on economic grounds requires the employer to: must be informed and consulted. The aim of the job protection ■ apply selection criteria to all the employees belonging to plan is to limit the number of dismissals or limit the impact of these the same professional category within which the employer dismissals on the professional career of employees. It generally wishes to cancel the position. The criteria for selecting the terminated employee are determined by law: family situation contains measures such as training, outplacement programmes, (single parents for example); length of service; difficulties support in creating a company, relocation allowance, etc. finding a new job (age or disability); and professional skills; Such a job protection plan may either result from a negotiation ■ offer redeployment positions to the employees whose with trade unions (subject to a limited review from the Labour dismissal is contemplated; Administration) or from a document prepared by the employer ■ comply with the rules governing the summon and the holding (subject to prior approval from the Labour Administration). The of a preliminary meeting; and duration of the works council consultation process is limited in ■ offer either the state subsidiaries redeployment scheme time. It varies from two to four months depending on the number (“contrat de sécurisation professionnelle”) when the of projected dismissals. company employs less than 1,000 employees in Europe or the redeployment leave (“congé de reclassement”) when the company employs more than 1,000 employees in Europe.
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6.10 How do employees enforce their rights in relation to 7.3 Do employees have to be provided with financial mass dismissals and what are the consequences if an compensation in return for covenants? employer fails to comply with its obligations? An employee bound by a post-contractual non-compete obligation Employees are involved, through the works council, in the must indeed receive financial compensation cf( . question 7.2). negotiation of the measures contained in the job protection plan.
Once the dismissal has been announced, employees may challenge 7.4 How are restrictive covenants enforced? the procedure and grounds for their dismissal. Claims relating to the works council’s consultation procedure, the drafting and the content France Restrictive covenants are enforced as follows: of the job protection plan and the decision taken by the Labour Administration in the course of the mass dismissal project, are heard Exclusivity/Confidentiality: Breach of the duty of exclusivity or by Administrative Tribunals (as opposed to the Labour Courts). of confidentiality may lead to a disciplinary sanction (warning, suspension or even dismissal). Employees may still challenge the grounds of their dismissal before the Labour Courts. Such claims may be brought within 12 months Non-compete: If this clause is breached, the Labour Court may as of the date of the termination. order any measures necessary to put a stop to the competition. The employee may be ordered, under threat of penalty, to stop any Employees will receive damages for dismissal without real and competing activity. serious cause if (i) the dismissal is not based on a real and serious economic cause, or (ii) if the employer has breached its prior An employee who fails to observe the non-compete clause may also redeployment obligation. be ordered to pay damages as compensation for the harm suffered by his/her former employer. It should be noted that the new employer who hires the employee 7 Protecting Business Interests Following concerned in knowledge of the existence of the clause may also be Termination ordered to pay damages. The non-compete clause may be accompanied by a penalty clause, 7.1 What types of restrictive covenants are recognised? i.e., one which specifies in advance the amount of compensation that will be owed by the employee if the non-compete clause is breached. The sanction will then be applied automatically without The employment contract may notably specify a duty of exclusivity, the employer having to prove any harm or damage. Note, however, a duty of confidentiality and a post-contractual non-compete that the judge may always revise the amount of the sanction if it is obligation. manifestly excessive or derisory with respect to the harm or damage caused. 7.2 When are restrictive covenants enforceable and for what period? 8 Data Protection and Employee Privacy The following restrictive covenants are enforceable:
Exclusivity: Even if there is no specific clause in the employment 8.1 How do employee data protection rights affect the contract, employees are bound by a general duty of loyalty employment relationship? Can an employer transfer preventing them, inter alia, from carrying out any other activity that employee data freely to other countries? may harm their employer. Besides this duty of loyalty, the employer may want its employees to provide their services on an exclusive Until the European regulation on personal data enters into basis by preventing them, contractually, from carrying out any application on May 25, 2018, data protection rights remain provided activity, whether competing or not, other than that described in the for by a law dated January 6, 1978 and are subject to the control employment contract. The exclusivity clause must be specifically of an autonomous data protection authority, entitled “CNIL” (for mentioned in the employment contract. It must, however, be “Commission Nationale de l’Informatique et des Libertés”). justified by the nature of the task to be accomplished and must be The scope of the legislation is relatively wide as it applies to the proportionate to the objective sought. processing of information relating to identifiable, whether directly Confidentiality: The duty of confidentiality is an extension of the or not, natural persons, and thus to employees. duty of loyalty. The inclusion of a confidentiality clause in the Employers are subject to the obligation to inform employees on how employment contract may, however, be useful, particularly to they use their data, and to notify the CNIL of data processing, and define the scope of this obligation and the nature of confidential even, under specific circumstances, to seek prior approval by the information. CNIL before implementing such data processing. Non-compete: Insofar as it runs contrary to the constitutional French-based employers should only transfer personal data into principle of freedom of work, the non-compete clause must, in order the European Economic Area or into a country offering a level to be valid, be justified by the company’s legitimate interests (and, of protection deemed adequate by the European Commission therefore, be justified by the position held by the employees), be (“adequate countries”). Employers can also transfer the data out of limited in time and space and contain a financial compensation. By those countries where it has obtained the approval of the CNIL, based way of illustration, the majority of collective agreements limit the on the execution of the European Commission Standard Contractual duration of the restriction to between one and two years over an area Clauses or Binding Corporate Rules setting with the importer of the limited to the surrounding regions and provide for compensation data. While consent is a theoretical ground for transferring personal in the amount of 30 per cent of the employee’s monthly pay, paid data in a non-adequate country, CNIL considers this is not a valid monthly throughout the period during which the restriction applies. ground for structural or mass transfers.
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Failure to comply with data protection law may be sanctioned Outside working hours, insulting or otherwise damaging content by a fine decided by the CNIL. Staff representative bodies and/ may lead to a disciplinary sanction if it proves to be published or employees may also take advantage of such violation (for outside the scope of confidentiality of private correspondence (e.g., instance, to challenge the validity of a dismissal that would rely on if the account settings were not set up to ensure confidentiality of information that the company could not validly hold). the content).
8.2 Do employees have a right to obtain copies of any 9 Court Practice and Procedure personal information that is held by their employer?
Employees are entitled to ask their employer whether and how their 9.1 Which courts or tribunals have jurisdiction to hear France personal data is being processed. They can request a copy of such employment-related complaints and what is their data, in plain language. Theoretically, this right is unconditional, composition? provided that the request is not manifestly unreasonable. However, unexpectedly (but opportunely), the CNIL considers that, under Disputes between an employer and employee are, at first instance, specific circumstances, this access right is not applicable to forecast referred to the Labour Court. It is composed of elected, non- career-oriented data. professional judges with equal representation between employers and employees. The Administrative Tribunal and the Social Security Tribunal 8.3 Are employers entitled to carry out pre-employment checks on prospective employees (such as criminal also have jurisdiction in specific areas (e.g., protected workers, record checks)? compensation for a work-related accident, etc.).
Except for certain particularly sensitive jobs which require ethical 9.2 What procedure applies to employment-related conduct, an employer cannot ask for details of a person’s criminal complaints? Is conciliation mandatory before a record. Indeed, in general, any request for information concerning complaint can proceed? Does an employee have to prospective employees’ needs to be related to the employment pay a fee to submit a claim? contract and be justified by what is strictly necessary to a proper performance of the contract; otherwise, the information will be With the occasional exception, the procedure before the Labour considered as part of the employee’s private life. When the request Court consists of two phases: for a criminal record is justified, the employer is not entitled to keep ■ the conciliation phase, in which the parties are invited by two a record of its content, which belongs to a special category of data judges (one employees’ representative and one employers’ (data relating to offences), unless authorised by the CNIL. representative), in a hearing on camera, to find an amicable solution to the dispute; and ■ the judgment phase, in which each party presents its 8.4 Are employers entitled to monitor an employee’s arguments and its exhibits to four judges (two employees’ emails, telephone calls or use of an employer’s representatives and two employers’ representatives). computer system? Introducing a lawsuit before any jurisdiction in France is no longer Employees have a right to privacy, even in the workplace. subject to a tax. Therefore, employers are entitled to access and monitor any office equipment which they have made available to their employees, 9.3 How long do employment-related complaints typically including computer, emails and phone calls, but not where they are take to be decided? unambiguously identified as “personal” or “private” and provided that the conditions set forth in the law are met (see question 8.1). In The duration of the Labour Court procedure varies depending on addition, even if content was not marked as “personal” or “private”, whether the four judges have reached a decision or not. Where they it cannot lead to a disciplinary sanction if it appears that it actually are unable to do so, the case will be referred to another judgment falls within the scope of the employee’s private life. hearing chaired by a “departition judge” (who is a professional judge). The case will thus be heard twice at first-instance level. 8.5 Can an employer control an employee’s use of social On average, the procedure takes between one year and one-and-a- media in or outside the workplace? half years.
During work time, only an abusive use of social media may justify 9.4 Is it possible to appeal against a first instance disciplinary sanction for serious misconduct. Connection time, decision and if so how long do such appeals usually frequency or duration may be used as indicators of such abuse, take? provided that such monitoring has been lawfully implemented (see question 8.1). An appeal is possible before the Court of Appeal, which is made up of professional judges. The case will be decided within an average period of one year.
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Sarah-Jane Mirou Latournerie Wolfrom Avocats 164, rue du Faubourg Saint-Honoré 75008, Paris France
Tel: +31 1 56 59 74 74 Email: [email protected] URL: www.latournerie-wolfrom.com France Sarah-Jane Mirou heads the Labour and Employment department of Latournerie Wolfrom Avocats. She advises companies and groups acting in various areas of activity, on virtually all aspects of French employment law (individual and collective relationships, remuneration and benefits, collective negotiation and agreements, working time regulation, etc.). She also has extensive experience in guiding companies in restructuring issues and assisting them from the preliminary stages of defining the restructuring plan and preparing the documents to present to the works council, through the consultation process to the implementation of the project. In addition, she often represents companies before Labour Courts. She speaks English fluently and advises French and international groups and businesses on a daily basis.
Founded in 1995, Latournerie Wolfrom Avocats is an independent French law firm specialising in business law that has distinguished itself over the years through its strong Private Equity and M&A practice on the one hand, and public-private relationship practice on the other hand. With a continuous development strategy built firmly on the interests of its clients, Latournerie Wolfrom Avocats has acquired multidisciplinary expertise (Mergers & Acquisitions, Private Equity, Public Corporate Law, Capital Market, Finance/Project Finance, Environment, Tax Law, T.I.M.E.D./ Intellectual Property, Economic Law, Employment Law, Commercial Law and Competition Law, and Energy and Natural Resources Law). Armed with approximately 35 lawyers, Latournerie Wolfrom Avocats assists its clients using a partnership approach supported by profound knowledge of their business. Each lawyer acts as a “personal” partner for the client, providing advice and assistance at every stage of the client’s operations, whether the latter are straightforward, complex or innovative.
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Germany Dr. Kerstin Neighbour
Hogan Lovells Dr. Tim Gero Joppich
holiday entitlement, applicable notice periods, sick pay and 1 Terms and Conditions of Employment references to applicable collective agreements (if any).
1.1 What are the main sources of employment law? 1.5 Are any minimum employment terms and conditions set down by law that employers have to observe? The main sources of German employment law are federal laws, collective bargaining agreements, works council agreements and There are numerous statutory minimum employment terms, in case law. There is no consolidated Labour Code. Certain minimum particular relating to wages, working hours, holiday entitlement, labour standards are instead laid down in various acts. The legislation notice periods, sick leave and sick pay, fixed-term contracts and of the European Union as well as the jurisdiction of the European maternity and parental leave. Court of Justice is increasingly impacting German employment law.
1.6 To what extent are terms and conditions of 1.2 What types of worker are protected by employment employment agreed through collective bargaining? law? How are different types of worker distinguished? Does bargaining usually take place at company or industry level? German employment law applies to employees (dependent workers) only, whereas freelancers (self-employed persons) are not covered All employment conditions may be subject to collective bargaining by employee protective laws. With regards to employees there agreements. Collective bargaining agreements are concluded on is no distinction between blue-collar and white-collar workers. both levels, industry and, as the case may be, on company level. Whether a person is an employee or a freelancer is determined by courts and authorities on the basis of several criteria. The most important criterion is the level of dependency when performing 2 Employee Representation and Industrial the work. Employees are typically integrated into the employer’s Relations work organisation and subject to employer’s instructions when performing their daily work. Freelancers typically have the freedom 2.1 What are the rules relating to trade union recognition? to determine the place, time and content of their work. The right to form and join a trade union is a constitutional right. 1.3 Do contracts of employment have to be in writing? If No formal recognition process or official approval is required. not, do employees have to be provided with specific Ultimately, the ability of a union to operate as collective bargaining information in writing? partner can only be reviewed by the labour courts.
The employer is obliged to record the essential contractual terms of employment in writing and to provide a signed version thereof to 2.2 What rights do trade unions have? the employee no later than one month after the start of employment. However, failure to comply will not render the employment agreement Trade unions are entitled to negotiate collective bargaining void. Statute explicitly requires written form for the conclusion of agreements with individual employers or employers’ associations. apprenticeship agreements and fixed-term employment contracts They can monitor compliance with collective bargaining agreements only. and take legal action in case of a breach. Trade unions can call for strikes to enforce the conclusion of such collective bargaining agreements. 1.4 Are any terms implied into contracts of employment? On shop-level, trade unions cooperate with the employer and the works council in many ways, e.g., a union represented in the Contracts of employment typically contain provisions on the start operation can initiate works council elections and partake in works date of employment, the agreed duration, employee’s position/ council meetings. For these purposes as well as for membership tasks and place of work, remuneration (including variable pay, campaigning, trade union representatives must be granted access supplementary grants, etc., if any), regular working time, annual
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to the operation, unless unavoidable operational requirements, specific operation, company or group. By law, matters which are mandatory safety regulations or the protection of trade secrets stand regulated or usually regulated by a collective bargaining agreement in the way. must not be dealt with by the works councils.
2.3 Are there any rules governing a trade union’s right to 2.7 Are employees entitled to representation at board take industrial action? level?
Formally, the union must obtain support for a strike from its Employee representation on board level is mandatory for certain members through a ballot. types of companies and dependent on their size. Companies with To legitimately call for a strike, a trade union must also be more than 500 employees must have a co-determined supervisory Germany competent for dealing with the work conditions of the employees board in which one-third of its members must be employee in the respective industry and region. Except for short warning representatives. In companies with more than 2,000 employees, half strikes, the union must not call for a strike as long as the issue in the supervisory board must consist of employee representatives. question is still regulated by a collective bargaining agreement. A Under certain conditions, employees of group subsidiaries will be strike must be the last resort, which means that the union must at deemed to be employees of the (German) holding company. The least have provided its opponent with its exact demands and that holding company must then establish a co-determined supervisory negotiations in this respect must have failed. Finally, the strike board even if it does not employ more than 500 or 2,000 employees must be “proportionate”, i.e., the means of industrial action chosen itself. by the union must be suitable, necessary and reasonable to achieve the union’s goal. If these conditions are not met, the employer can 3 Discrimination obtain a preliminary injunction.
2.4 Are employers required to set up works councils? If 3.1 Are employees protected against discrimination? If so, what are the main rights and responsibilities of so, on what grounds is discrimination prohibited? such bodies? How are works council representatives chosen/appointed? Employees are protected by the general principal of equal treatment according to which any unjustified unequal treatment of Works council elections can only be initiated by the employees or a employees or different groups of employees is unlawful. Moreover trade union. Employers are not required to set up works councils, the General Equal Treatment Act (AGG) prohibits any direct or regardless of the size of the operation. indirect discrimination of employees on the grounds of race or The works council members are elected by the employees in the ethnic origin, gender, religion or secular belief, disability, age or operation based on a formalised election procedure. Regular works sexual identity. council elections take place every four years, with the next regular election cycle starting in spring 2018. Once elected, the works 3.2 What types of discrimination are unlawful and in what council has a variety of rights which range from mere information circumstances? and consultation rights to co-determination rights, depending upon the subject matter. Any unjustified differentiation of employees based on one of the discrimination grounds as set forth in question 3.1 above is 2.5 In what circumstances will a works council have co- forbidden. This is also the case for any indirect differentiation, determination rights, so that an employer is unable to i.e., any regulation which appears to be neutral but which proceed until it has obtained works council agreement factually puts employees at a disadvantage. Sexual harassment and to proposals? instructions to others to discriminate are also prohibited under the AGG. Employers are obliged to take all measures to protect their Co-determination rights mainly relate to so-called “social matters” employees against discrimination. The AGG also applies to job as defined by statute. Relevant social matters are, inter alia, the applicants. allocation of working time and temporary reduction or increase of working time (in particular, overtime and short-time work), general 3.3 Are there any defences to a discrimination claim? vacation rules, the introduction and implementation of IT systems and technical devices, social welfare matters (such as pension Not all unequal treatment is forbidden. Unequal treatments can systems) and guidelines concerning remuneration systems (such as be justified due to: occupational requirements; religion; belief; or bonuses and premiums for shift work). age, under certain specific circumstances. Also, specific support measures for the prevention of disadvantages or as compensation 2.6 How do the rights of trade unions and works councils for existing disadvantages, may be permissive (affirmative action). interact? Sexual harassment cannot be justified at all.
Trade unions and works councils co-operate in matters concerning 3.4 How do employees enforce their discrimination the operation (see question 2.2 above). Otherwise, trade unions and rights? Can employers settle claims before or after works councils, in principle, deal with different subject matters. they are initiated? Trade unions conclude collective bargaining agreements which regulate general, usually industry-wide, working conditions such as Employees who have suffered from discrimination may claim remuneration, holiday entitlement and notice period. Works council compensation for material and immaterial damage. Claims must matters concern personnel, social and economic issues relating to a be submitted in writing within two months after having gained
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knowledge of the discrimination. Such cases can be settled either Employees on parental leave enjoy special protection against in front of or outside of court. The AGG does not provide for any dismissal. After the end of the parental leave, the employee must administrative or criminal sanctions. be re-instated into their position or re-assigned to a suitable and appropriate job without reduction of pay.
3.5 What remedies are available to employees in successful discrimination claims? 4.6 Are employees entitled to work flexibly if they have responsibility for caring for dependants? Remedies are compensation for material and immaterial damages. In companies with more than 15 employees, employees can take short-term care leave of up to 10 days or unpaid long-term care
3.6 Do “atypical” workers (such as those working part- Germany time, on a fixed-term contract or as a temporary leave for up to six months, if they have to look after dependents in agency worker) have any additional protection? need of care. In companies with more than 25 employees, employees can also By law it is also prohibited to treat part-time employees differently reduce their weekly working time down to 15 hours for a maximum compared to full-time employees. Also, fixed-term employees period of 24 months (“family care leave”). Pay will be reduced must not be treated differently compared to employees in indefinite accordingly during this time but employees can apply for an interest- employment contracts. free state loan. Employees on (family) care leave enjoy special protection against dismissal similar to those on parental leave. 4 Maternity and Family Leave Rights 5 Business Sales
4.1 How long does maternity leave last? 5.1 On a business sale (either a share sale or asset Six weeks prior to the predicted due date, pregnant women must transfer) do employees automatically transfer to the buyer? not be employed unless they explicitly declare their willingness to work. Following childbirth, maternity leave of eight weeks (or 12 weeks in the event of, e.g., a premature birth) is compulsory. Under a share sale, the employment relationships with the target remain unaffected as the employing entity (i.e., the target) does not change. 4.2 What rights, including rights to pay and benefits, does In an asset transfer scenario, the employment relationships belonging a woman have during maternity leave? to a business or a part thereof transfer automatically by virtue of law from the seller to the buyer if a whole operation or a separate, Women enjoy special protection against dismissal throughout operationally and organisationally identifiable unit thereof is their entire pregnancy and for a period of four months following transferred. Case law has developed a criteria test to determine childbirth. They can only be dismissed with the prior consent of the whether or not a transfer of business is at hand. The following competent governmental authority. seven criteria must be considered comprehensively on a case-by- During maternity leave, the employer has to cover the difference case basis: between the woman’s regular remuneration and benefits granted by ■ The nature of the business. either the state or the woman’s health insurance provider. ■ The transfer of tangible assets (e.g., tools, facilities, machinery). ■ The transfer of intangible assets (e.g., goodwill, know-how, 4.3 What rights does a woman have upon her return to IP rights). work from maternity leave? ■ The takeover of the major part of the workforce (either in terms of overall headcount or in terms of key employees). If a woman returns to work after maternity leave, she must be re- ■ The takeover of customers and/or suppliers. instated in her position. If it is not reasonably feasible for her to ■ The degree of similarity between the activities performed return to her old job, the employer must re-assign the woman to a before and after the transfer. suitable and appropriate job without reduction of pay. ■ The duration if any interruption of the activity. Different criteria may have to be weighed differently depending 4.4 Do fathers have the right to take paternity leave? on the type of business in question. By way of example, in manufacturing businesses the transfer of tangible assets will be There is no concept comparable to maternity leave for the father of more decisive than in service or commercial enterprises. the child. However, both father and mother can take parental leave following the birth of the child. 5.2 What employee rights transfer on a business sale? How does a business sale affect collective 4.5 Are there any other parental leave rights that agreements? employers have to observe? As the employment relationships existing at the time of a business Fathers and mothers can take parental leave for up to three years transfer will transfer from the transferor to the transferee by operation without the employer’s consent being required. Parental leave is of law, the individual employment conditions continue to apply. unpaid leave. The employee on leave can however apply for state Collective agreements will not cease to apply but remain valid on benefits. either a collective basis or an individual basis. In the latter case,
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the conditions of the collective agreement will become part of the employee’s individual employment relationship. 6 Termination of Employment The employees can, however, object to the transfer of their employment relationships to the buyer and remain employees of the 6.1 Do employees have to be given notice of termination seller. of their employment? How is the notice period determined? The objection right expires one month after the affected employees have been properly and comprehensively informed about the Employees have to be given notice of termination unless their transfer and its consequences for their employment relationships. employment contract has been concluded for a limited period of time As the legal requirements for the content of the information are very from the outset. Notice of termination has to be given in writing. strict, great care must be taken in drafting the information letter. If Germany insufficient information (or none at all) is provided, the employees’ The applicable notice period is determined by contractual agreement, right to object will not cease after a month’s time. collective bargaining agreement or by statute. Longer statutory notice periods will supersede individually agreed notice periods. The statutory notice periods for employer and employee are (i) two 5.3 Are there any information and consultation rights on weeks during an agreed probationary period, and (ii) four weeks to a business sale? How long does the process typically the 15th or end of a month after such probationary period. Depending take and what are the sanctions for failing to inform and consult? on the employee’s seniority, prolonged statutory notice periods apply for notices of termination given by the employer. They range from In a share deal scenario which leads to a change of control, the one month to the end of a month after two years of service, to seven economic committee or, if no such committee exists, the works months to the end of a month after 20 years of service. council, has to be informed and consulted in due time. In terms of timing, the economic committee must be informed before the share 6.2 Can employers require employees to serve a period sale is concluded, i.e., when, following due diligence, a binding of “garden leave” during their notice period when the offer is submitted that is still subject to contract. However, the only employee remains employed but does not have to potential sanction for failure to comply with this information and attend for work? consultation obligation is an administrative fine being imposed on the target company of up to EUR 10,000 at the maximum. Thus, the Garden leave can only be enforced on an employee if the employer’s economic committee/works council cannot stop or delay the process. interests in not having the employee attend for work outweigh the employee’s interests in working his or her notice. This may, e.g., In case of a business transfer by asset deal it depends on whether an be the case if the employee has competed against the employer or entire operation or only a part thereof is transferred. The transfer of has stolen trade or company secrets. Mutual agreements on garden an entire operation is only subject to information and consultation leave are feasible and fairly common. rights of the works council. The transfer of a part of an operation, however, regularly requires prior negotiations with the works council on a balance of interests and a social plan. The transfer 6.3 What protection do employees have against must not be undertaken until an agreement with the works council dismissal? In what circumstances is an employee has been reached or negotiations ultimately have failed. As there is treated as being dismissed? Is consent from a third no statutory deadline for the negotiations, the process can take up to party required before an employer can dismiss? several months. The dismissal of employees who have been employed for more than six months in an operation with more than 10 regularly employed 5.4 Can employees be dismissed in connection with a persons can only be based on business reasons, personal reasons business sale? (e.g., sickness) or misconduct. This social justification for the dismissal as well as all other prerequisites for the validity of the Employees must not be dismissed only because of the transfer of dismissal will be tested in court if the employee files a claim for business but can be dismissed under the general dismissal rules. If, unfair dismissal. Where a works council exists, it must be informed for instance, the seller cannot assign new positions to the objecting about the employer’s intention to dismiss an employee and the and thus remaining employees, redundancies are inevitable and reasons for the dismissal. Proper and timely information to the permissible. works council is key, as a failure to do so will render the dismissal void. 5.5 Are employers free to change terms and conditions of employment in connection with a business sale? 6.4 Are there any categories of employees who enjoy special protection against dismissal? Employment conditions can be changed after the transfer, however, the general prerequisites for such changes must be observed. Only Special protection against dismissal applies for severely disabled those employment conditions which have been transformed from employees, for pregnant mothers and women in the first four months former collective agreements into part of the employee’s individual after childbirth and for employees on parental leave or (family) care employment relationship, may not be changed to the employee’s leave. These employees can only be dismissed after a mandatory detriment within one year following the business transfer. prior consultation and approval process. Works council members can only be dismissed for good cause and with the prior approval of the works council. Good cause is also required for the dismissal of, inter alia, employees instigating works council elections, election candidates and employees in certain operational functions, e.g., data protection officers.
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6.5 When will an employer be entitled to dismiss for: 6.10 How do employees enforce their rights in relation to 1) reasons related to the individual employee; or 2) mass dismissals and what are the consequences if an business related reasons? Are employees entitled employer fails to comply with its obligations? to compensation on dismissal and if so how is compensation calculated? A failure to properly notify the Employment Agency or to properly consult with the works council will render the notices of Employees enjoying dismissal protection (see question 6.3 above) termination or the termination agreements void. Employees can can only be dismissed for business reasons, personal reasons (e.g., successfully challenge their dismissal in court where such failures sickness) or misconduct. have occurred. Employees who successfully challenge their dismissal in court can Germany only be granted re-instatement as there is no statutory entitlement to receive compensation. The labour courts, however, usually 7 Protecting Business Interests Following propose that the employer pay a severance as part of a settlement. Termination By “rule of thumb”, the severance usually varies between half of, to a full monthly salary, per year of service. The actual amount can, 7.1 What types of restrictive covenants are recognised? however, be higher or lower, depending on the parties’ prospects of success in the dismissal lawsuit and the employee’s prospects in the labour market. During the employment relationship, the employee has to refrain from any competing or soliciting activities, irrespective of whether or not such prohibition is explicitly stipulated in the employment 6.6 Are there any specific procedures that an employer contract. has to follow in relation to individual dismissals? After the termination of the employment relationship the employee is only bound to restrictive covenants, in particular to post- An existing works council must be informed no later than one week contractual non-compete as well as non-solicitation covenants, if prior to giving notice of termination. In the event of a termination they have been agreed in writing and providing compensation has for good cause, this period is reduced to three calendar days. For been granted (see question 7.2 below). dismissals forming part of a mass dismissal, please see question 6.9 below. For prior approval processes due to special dismissal In terms of confidentiality, the employee must not disclose any protection please see question 6.4 above. business and trade secrets of his or her former employees, provided the information has been rightly qualified and marked secret as such.
6.7 What claims can an employee bring if he or she is dismissed? What are the remedies for a successful 7.2 When are restrictive covenants enforceable and for claim? what period?
Dismissed employees can file a claim for unfair dismissal and Restrictive covenants are subject to a judicial review. In principle, demand re-instatement. If no settlement in court can be reached the scope of these covenants needs to be limited to the extent (see question 6.6 above), the court can either declare the dismissal justifiable by legitimate business reasons of the employer. The to be valid or grant re-instatement. In the latter case, the employer employee’s freedom of profession always has to be taken into also has to pay any outstanding salaries in arrears. account. By law, a post-contractual non-compete covenant must not exceed a period of two years. Finally, it is of vital importance with regard to the validity and 6.8 Can employers settle claims before or after they are initiated? enforceability of the non-compete of a post-contractual non-compete clause, that the statutory minimum compensation of half of the last Claims can be settled at any time. A mutual agreement can be remuneration received is granted. Without such explicit wording concluded before a notice of termination is given or following a regarding compensation the non-compete is not enforceable and it notice of termination. would be entirely up to the employee to decide whether to abide by the non-compete and take the lower non-compete compensation, or simply decide to no longer observe the covenant and enter into 6.9 Does an employer have any additional obligations if competing activities. it is dismissing a number of employees at the same time? 7.3 Do employees have to be provided with financial Mass dismissals (as defined by statute) trigger additional notification compensation in return for covenants? and consultation obligations. The employer must notify the Employment Agency prior to giving notice of termination or Yes, please see answer to question 7.2 above. concluding termination agreements. Where a works council exists, the works council must also be informed and consulted, with regards 7.4 How are restrictive covenants enforced? to the mass dismissal and its consequences. In addition, the employer and the works council have to negotiate In case of breach of a post-contractual non-compete covenant the a balance of interests and conclude a social plan to determine the former employer may file for an injunctive relief, if need be,by exact details of the mass dismissal as well as benefits to mitigate the means of a preliminary injunction. In addition, it is usual to agree employees’ financial disadvantages. on contractual penalties in case of the violation of a non-compete prohibition.
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8 Data Protection and Employee Privacy 8.4 Are employers entitled to monitor an employee’s emails, telephone calls or use of an employer’s computer system? 8.1 How do employee data protection rights affect the employment relationship? Can an employer transfer employee data freely to other countries? The monitoring of employees’ electronic communication and computer systems is subject to strict requirements under applicable data protection laws. It can be permissible in individual cases, e.g., From 25 May 2018, employers must comply with the General if the monitoring is required for IT security purposes or to investigate Data Protection Regulation (GDPR). It will be directly applicable concrete suspicions of criminal offences or other misconduct. In in Germany and will replace the previous Federal Data Protection general, permanent monitoring is deemed as inadequate and, Germany Act (BDSG-old). Further to the GDPR, a new version of the thus, unlawful. If the private use of IT systems is permitted, Federal Data Protection Act (BDSG-new) will also apply, as of further restrictions apply which can also affect the business e-mail 25 May 2018. The BDSG-new stipulates certain Germany-specific correspondence and hardware. The monitoring of employees’ provisions, in particular for the processing of employee data. use of the employer’s IT systems can also trigger mandatory co- In general terms, employers can only process personal employee determination rights of the works council, if such a council exists. data if the processing can be based on lawful grounds such as for the purposes of the employment relationship or legitimate interests. The processing of personal employee data must be: fair, lawful 8.5 Can an employer control an employee’s use of social and proportionate; transparent; for specified and lawful purposes; media in or outside the workplace? and restricted to the minimum required to achieve the purposes. Adequate security measures must also be in place. Employers will The employer cannot provide for binding rules on the use of social have to provide employees with comprehensive and transparent media outside the workplace as this affects the employees’ personal information about how their data is used. Any transfer of personal lives. The employer normally has no lawful grounds to monitor employee data to another third party needs to comply with these employees’ private social media accounts either. Publishing posts requirements as well. This requirement also applies to data transfer on social media accounts which insult colleagues or superiors or within companies of a corporate group. There are additional which impair the employer’s reputation can, however, result in restrictions on transferring data outside the EU/EEA unless adequate disciplinary sanctions. If an employer wants employees to use protection for the data is in place, such as EU Standard Contractual social media for business purposes, the employer should provide Clauses. them with business social media accounts. Infringements of data protection laws can result in significant fines under the GDPR, in claims for damages of employees for 9 Court Practice and Procedure the violation of their personality rights, and other disadvantages. Maximum fines for serious breaches of the GDPR amount to up to EUR 20 million or four per cent of worldwide annual turnover of a 9.1 Which courts or tribunals have jurisdiction to hear corporate group (whichever is greater). employment-related complaints and what is their composition?
8.2 Do employees have a right to obtain copies of any Employment complaints are tried in the local labour courts personal information that is held by their employer? (Arbeitsgerichte). A decision in the first instance can be appealed in the Regional Labour Court (Landesarbeitsgericht). The Under the GDPR and the BDSG-new, employees have the right third and final instance is the German Federal Labour Court to request information, e.g., whether their personal data is being (Bundesarbeitsgericht). processed, the origin of the data, the purposes for which data is The panel in the first and second instance each consists of one processed, to whom it is disclosed and the duration for how long professional judge and two lay judges. These lay judges are appointed the data is retained. Employees can request a copy of all personal by the trade unions on the one hand and by the employers’ data which is subject to processing unless this adversely affects the associations on the other hand. A panel at the Federal Labour Court rights and freedoms of others. The employer needs to provide the consists of three professional judges and two lay judges. first copy free of charge.
9.2 What procedure applies to employment-related 8.3 Are employers entitled to carry out pre-employment complaints? Is conciliation mandatory before a checks on prospective employees (such as criminal complaint can proceed? Does an employee have to record checks)? pay a fee to submit a claim?
Pre-employment checks can be carried out lawfully to the extent No fees have to be paid in advance when submitting a claim in the they are strictly limited to what is necessary for lawful purposes, labour court. The decision as to who ultimately has to bear the court reasonable, fair and proportional. This needs to be assessed in a fees (if any) will be made along with the decision on the subject balancing test in the individual case. Pre-employment checks matter. In case of a settlement in court, no court fees are due at all. can be lawful in certain cases, e.g., to meet statutory regulatory requirements (such as under the Money Laundering Act) or to obtain After a claim has been filed, the first court hearing will usually information about particular criminal convictions, to the extent this take place within three to six weeks. In this first hearing, the court is required to assess whether the employee is sufficiently reliable for will work towards an amicable settlement. If no settlement can be a specific position. reached, the court will schedule a date for a second hearing and enjoin the parties to argue their case in detail prior to this second hearing.
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9.3 How long do employment-related complaints typically 9.4 Is it possible to appeal against a first instance take to be decided? decision and if so how long do such appeals usually take? Court proceedings in the first instance usually take between five and nine months before the court reaches a final decision. Preliminary An appeal to the Regional Labour Court has to be filed no later than injunctions can, however, be obtained within one to three weeks. one month after the decision, including the reasons for the judgment, has been provided to the parties in writing. The justification of the appeal must be provided within two months from this date. Appeal procedures usually take between six months and nine months
before the Regional Labour Court renders its decision on the appeal. Germany The parties can settle the case during the appeal proceedings as well.
Dr. Kerstin Neighbour Dr. Tim Gero Joppich Hogan Lovells Hogan Lovells Untermainanlage 1 Kennedydamm 24 60329 Frankfurt 40476 Düsseldorf Germany Germany
Tel: +49 69 962 36 358 Tel: +49 211 13 68 494 Email: [email protected] Email: [email protected] URL: www.hoganlovells.com URL: www.hoganlovells.com
Kerstin Neighbour is a partner in Hogan Lovells’ Frankfurt office and Tim Gero Joppich is a partner in Hogan Lovells’ Düsseldorf office. has extensive experience in transactional employment law advice He brings substantial knowledge and experience, anticipating and and restructuring projects. Apart from her legal expertise, Kerstin is helping international and domestic clients to solve their cutting-edge known for her solution-oriented advice and her instinct and tact when employment law challenges. Tim specialises in co-determination law negotiating balances of interests and social plans with works councils as well as in dismissal law. His legal advice focuses predominantly on and their advisors. Kerstin’s international and domestic clients national and international companies in restructuring processes and have placed their appreciation of her work on record by praising her cross-border transactions, particularly on all issues in the context of “pragmatic and sensible advice” as well as her “ability to ‘get to the transfer of businesses, as well as drafting and negotiating collective point quickly and balance risk and reward effectively’”. agreements. This includes preparing (mass) layoffs and representing clients in litigation. Kerstin heads Hogan Lovells’ European Employment practice with lawyers in 13 offices. She is co-editor of, as well as contributor to, Tim has published various articles in German law reviews and is an the handbook “Beck’sches Formularbuch Arbeitsrecht” (C.H. Beck) experienced speaker at employment law seminars. He is co-author of and contributor to the legal handbooks “Mergers & Acquisitions in the standard reference book on German employment law “Beck’sches Germany” (German Law Publishers) and “Rechtshandbuch Industrie Formularbuch Arbeitsrecht” (C.H. Beck). 4.0 und Internet of Things” (C.H. Beck/Vahlen).
Today’s market challenges Employment law frameworks around the world are complex and pose many challenges for global companies. They affect the way business is conducted and have an impact on how strategy is built and rolled out. The ability to work swiftly and effectively across borders – in a variety of languages and cultures – is essential. How we help We have the geographic reach and local knowledge our clients need. From this platform, we provide sophisticated, coordinated guidance on the most pressing and difficult employment issues, wherever they arise. Our work covers the full spectrum of employment matters. We help navigate workplace policies and practices. We develop comprehensive risk avoidance strategies. We advocate in litigation and arbitration. We negotiate with unions and other employee representatives. And we regularly implement strategic domestic and international initiatives. Our team approaches all of these challenges creatively, strategically and cost-effectively. Over and above being a legal adviser, we aim to be a business partner. And we always put our clients first.
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Hungary Dr. Ildikó Rátkai
Rátkai Law Firm Dr. Nóra Feith
In case of working abroad for more than 15 days, in addition to the 1 Terms and Conditions of Employment above, the employer must inform the employee about the basic terms of such employment (place of work, wage and benefits, currency, 1.1 What are the main sources of employment law? returning to home) at least seven days prior to their departure.
Act I of 2012 on the Labour Code is the main source of employment 1.4 Are any terms implied into contracts of employment? law (only for the private sector; for the public sector other acts are applicable). There are additional regulations related to employment Employment contracts must include at least the base wage and job law: equal treatment; work safety; striking; and data protection position. The period of employment (whether fixed-term or for an rules, etc. The Civil Code is also applicable to some employment- indefinite period of time), the place of work and the daily working related points; furthermore, decisions of the Hungarian Curia also hours are also usual terms of an employment contract. A probation refine daily practice. period is only applicable if the parties expressly agree on it. Rights and obligations arising from the employment relationship 1.2 What types of worker are protected by employment are also covered by the Labour Code if not otherwise agreed in the law? How are different types of worker distinguished? employment contract. Employment contracts may derogate from law mostly only to the benefit of the employee, unless a collective The Labour Code does not specify the term of ‘employee’; bargaining agreement is applicable (which may also derogate from ‘employee’ means any natural person who works under an the Labour Code, to the disadvantage of the employee in some employment contract. Basically, a person may establish an aspects). Internal/global policies of the employer can also be employment relationship above 16 years of age; students receiving implied in the employment contract, but may not deviate from law full-time school education between 15 and 16 years of age may to the disadvantage of the employee. enter into an employment relationship only during school holidays.
Besides the ‘normal’ employees and employment relationships, 1.5 Are any minimum employment terms and conditions the Labour Code prescribes ‘atypical’ types as well, such as fixed- set down by law that employers have to observe? term employees, part-time employees, teleworkers, outworkers, job-sharing employees, employee-sharing, executives, temporary Yes, the Labour Code and other legal regulations set out the basic agency workers and school cooperatives’ employees. In the latter rules, like mandatory minimum wage, protection of pregnant cases the distinguishing factor is mainly based on the type of the women, rules of termination, maximum working hours, minimum employment contract. rest periods and vacation entitlement, equal treatment provisions, work safety rules, etc. 1.3 Do contracts of employment have to be in writing? If not, do employees have to be provided with specific 1.6 To what extent are terms and conditions of information in writing? employment agreed through collective bargaining? Does bargaining usually take place at company or Yes, employment contracts may only be concluded in writing. industry level? However, invalidity on the grounds of failure to set the contract in writing may only be alleged by the employee within a period of 30 Collective bargaining agreements are usually established at company days from the first day on which he/she commences work. level; some industrial collective bargaining agreements are also In addition to the employment contract, within 15 days from the applicable. According to statistics, around 2,100 collective bargaining commencement of the employment relationship the employer must agreements are currently applicable at company level, and 5,000 provide the employee with a written information sheet including collective bargaining agreements are applicable within Hungary the basic terms of employment (working time, benefits, vacation (including the public sector). rules, rules of termination of employment, etc.), provided that the employment relationship exceeds one month or the weekly working hours exceed eight hours.
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2 Employee Representation and Industrial 2.5 In what circumstances will a works council have co- Relations determination rights, so that an employer is unable to proceed until it has obtained works council agreement to proposals? 2.1 What are the rules relating to trade union recognition? The works council and employer shall collectively decide concerning A trade union is defined as every organisation of employees whose the appropriation of welfare funds. Furthermore, the employer primary function is the enhancement and protection of employees’ is required to ask for the opinion of the works council prior to interests related to their employment relationship. The establishment passing a decision with respect of any plans for actions and of a trade union requires at least 10 members and the election of the adopting regulations affecting a large number of employees (like Hungary managing board/officers. A trade union is a legal entity established restructuring, introduction of new technologies, yearly vacation by court registration. plan, training plans, working time arrangement, etc.). In case of transfer of undertakings, the employer shall inform and consult with the works council; the same is applicable for mass redundancies. 2.2 What rights do trade unions have?
Trade unions are entitled to require information from the 2.6 How do the rights of trade unions and works councils employer which is related to the employee’s interest and to initiate interact? consultations with the employer. Trade unions are authorised to represent their members in lawsuits and to enter into collective Trade unions having representation rights within the employer may bargaining agreements with the employer. Trade union officers propose candidates for the works council’s election. According may use working time allowance for their activities and they are to practice, in case of transfer of undertakings/mass redundancies protected against the employer’s termination by notice (approval of employers often negotiate with both the works council and the the higher trade union body is needed). trade unions. Should a collective bargaining agreement concluded by the trade union be applicable to the employer, a works council agreement may not be concluded. 2.3 Are there any rules governing a trade union’s right to take industrial action? 2.7 Are employees entitled to representation at board Strikes – as an industrial action – are allowed in Hungary (in line level? with the particular Act on Strikes) but solidarity strikes may only be initiated by trade unions. Only in terms of the supervisory board is representation mandatory by an employee, provided that the number of employees on the payroll exceeds 200. Works councils may waive the right of 2.4 Are employers required to set up works councils? If participation in the supervisory board. so, what are the main rights and responsibilities of such bodies? How are works council representatives chosen/appointed? 3 Discrimination A shop steward or a works council shall be elected if the average number of employees at the employer or at the employer’s 3.1 Are employees protected against discrimination? If independent establishment or division is higher than 15 or 50, so, on what grounds is discrimination prohibited? respectively. Although it would be a ‘must’, no sanction by law is prescribed if no shop steward/works council has been elected. Discrimination is prohibited (the requirement of equal treatment Employers are not obliged by law to enforce the election; however is prescribed) by the Labour Code (especially with regard to in case of initiative, they shall not hinder it. Depending on the remuneration) and by the Equal Treatment Act. Violation of the number of employees on payroll, a works council can be of three requirement of equal treatment means if a person or a group is to 13 members. Central works councils and company group level treated less favourably than another person or group in a comparable works councils are also allowed by law. situation because of his/her: sex; racial origin; colour; nationality; Candidates for election are proposed by 10% of the employees, 50 national or ethnic origin; mother tongue; disability; medical status; employees entitled to vote, or the trade union having representation religious or ideological conviction; political or other opinion; family rights within the employer. Members of the works council shall status; motherhood (pregnancy) or fatherhood; sexual orientation; be elected by secret ballot and popular vote; each employee has sexual identity; age; social origin; financial status; the part-time one vote. Members shall be candidates acquiring the most votes nature or definite term of the employment or other employment- or at least 30% of the votes; deputy members shall be candidates related relationship; membership in an organisation representing acquiring at least 20% of the votes. A works council is elected for employees’ interests; or other status, attribute or characteristic. five years. Works councils have the right to information affecting the 3.2 What types of discrimination are unlawful and in what employees’ interests and to initiate negotiations with the employer. circumstances? In terms of some employment-related issues, a joint decision or opinion of the works council is required (see question 2.5). The violation of the equal treatment principle means direct and indirect discrimination (on the grounds as detailed under question 3.1), furthermore harassment (including sexual harassment), unlawful segregation (on the grounds as detailed under question 3.1) and retaliation.
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3.3 Are there any defences to a discrimination claim? 4.2 What rights, including rights to pay and benefits, does a woman have during maternity leave? In the field of employment, no discrimination can be established if the differentiation is well-grounded on the basis of the character or During the 24 weeks of maternity leave, mothers are entitled to nature of the work, or moreover is based on lawful and proportionate receive confinement or childcare benefits for 168 days (based on conditions or if the differentiation arises directly from the basic previous insurance). The gross amount is 70% of the daily average characteristic of an organisation established on religious or income from which tax will be deducted (but no health insurance ideological conviction, or national or ethnic roots, provided that the and pension contributions). differentiation is reasonable due to the nature of the work activity After receiving the confinement benefit, the mother can apply for
Hungary and is based on lawful and proportionate conditions. childcare allowance until the child has reached two years of age (in case of twins, three years). This allowance is based on the mother’s 3.4 How do employees enforce their discrimination previously earned salary, and amounts to 70% of the previous year’s rights? Can employers settle claims before or after daily income (paid by the social security), but not more than 70% of they are initiated? twice the mandatory minimum wage. From when the child reaches two years of age, mothers/fathers can In case of discrimination, employees may either turn to the apply for a child support benefit (lump sum) granted from when the Equal Treatment Authority (ETA) (seated in Budapest) or to the child reaches two years of age until the child turns three (in case administrative and labour courts (seated regionally). The employer of twins, up to the time when the children will be obliged to attend may settle the claims (many procedures before the ETA end with a school; in case of a disabled child, until 10 years of age). settlement between the parties). These benefits are based on the social security/family support systems and are not paid by the employer. 3.5 What remedies are available to employees in successful discrimination claims? 4.3 What rights does a woman have upon her return to work from maternity leave? The procedure before the ETA is an administrative process in which the ETA may oblige the employer to finish its unlawful practice, The returning employee must be employed in the same position as may impose fines up to HUF 50,000–6,000,000 [EUR 170–20,000], before their leave, and is entitled to the average yearly wage increase and furthermore may publish its decision condemning the employer executed at the employer during their leave. If the employee on its website. requests to return to a part-time job, the company is legally obliged Before the administrative and labour court – which is a litigation to accept four hours per day of part-time work up until the child process – the employee may ask for compensation for damages reaches three years of age; in case of a returning parent raising three for injuries or for lost wages (in case the remuneration policy or more children, this extends to until the youngest child reaches of the employer was discriminatory), or furthermore for the five. For employees raising a small child(ren), some working time reestablishment of the employment (in case the termination of restrictions are applicable. employment was unlawful due to discrimination).
4.4 Do fathers have the right to take paternity leave? 3.6 Do “atypical” workers (such as those working part- time, on a fixed-term contract or as a temporary Fathers are also eligible to for unpaid childcare leave (see question agency worker) have any additional protection? 4.1). Fathers can apply for five days’ extra vacation, which must be taken Working on a part-time or a fixed-term contract is express grounds within two months after the birth of the child (but not later), and for discrimination according to the Equal Treatment Act. For their salary for these days shall be reimbursed by the State upon the temporary agency workers the Labour Code prescribes additional employer’s request. protection; namely: all basic working conditions shall be met for temporary agency workers; and their wages shall be equal to normal workers’ from the 184th day of temporary work if the employee is 4.5 Are there any other parental leave rights that in an employment relationship for an indefinite period and receives employers have to observe? wages between two temporary employments. In addition to questions 4.1, 4.2 and 4.4, employees are entitled to take childcare sick leave if the child is sick/receives hospital 4 Maternity and Family Leave Rights treatment. Extra vacation days are also granted for all employees with children: two extra days for one child; four days for two 4.1 How long does maternity leave last? children; and seven days in total for three or more children.
Maternity leave can be started 28 days prior to the due date, and lasts 4.6 Are employees entitled to work flexibly if they have for 24 weeks. In addition, both mothers and fathers are entitled to responsibility for caring for dependants? unpaid childcare leave until the child reaches three years of age (in case of eligibility for child support benefits, unpaid leave is granted In addition to question 4.3, the employer shall apply working time until the child reaches 10 years of age). restrictions to mothers from the notification of pregnancy until the child reaches three years of age, and for single parents until the child reaches three years of age. An irregular work schedule may only be
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given upon the employee’s consent, and weekly rest days may not be allocated irregularly; overtime, night shifts and stand-by duty are 5.5 Are employers free to change terms and conditions of not allowed to be scheduled for such employees. employment in connection with a business sale?
The terms set up in employment contracts cannot be unilaterally 5 Business Sales amended by the employer. Operational working conditions like working time arrangement, day of wage payment, etc., can be amended. 5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the buyer? 6 Termination of Employment Hungary
In case of an asset transfer/transfer of an economic entity (organised grouping of material or other resources), rights and obligations 6.1 Do employees have to be given notice of termination arising from employment relationships, existing at the time of of their employment? How is the notice period transfer, are automatically transferred to the transferee employer. determined? Share sales basically do not affect employment relationships. The employment relationship can be terminated (i) by notice, (ii) with immediate effect, and (iii) by mutual agreement. 5.2 What employee rights transfer on a business sale? How does a business sale affect collective In case of termination of employment by notice, the notice period agreements? shall begin at the earliest on the day following the date when the termination letter has been delivered. The notice period shall Employment relationships do not need to be terminated as the begin after the last day of sick leave or absence due to caring for transfer of such relationships is automatic. Employees have the a sick child/close relative. The period of notice is 30 days but right to terminate the employment relationship by notice (within 30 shall be extended in accordance with the years of employment at days after the transfer) if the transfer means a substantial change the employer (only if the employer terminates the employment by in working conditions to the detriment of the employee, and, as a notice). The notice period may be extended by up to six months consequence, maintaining the employment relationship would entail upon agreement. unreasonable disadvantage or would be impossible (notice period and severance payment shall be granted in such case). 6.2 Can employers require employees to serve a period The transferee employer shall maintain the working conditions of “garden leave” during their notice period when the specified in the collective bargaining agreement covering the employee remains employed but does not have to attend for work? employment relationship existing at the time of transfer for a period of one year after the date of transfer, unless the collective agreement expires within one year after the date of transfer, or if the employment The employer shall exempt the employee from work duties for at relationship is covered by another collective agreement. least half of the notice period. The exemption from work duty shall be provided in not more than two parts. During the period of garden leave the employee shall be entitled to absentee pay. 5.3 Are there any information and consultation rights on a business sale? How long does the process typically take and what are the sanctions for failing to inform 6.3 What protection do employees have against and consult? dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third party required before an employer can dismiss? The transferring or, upon agreement, the transferee, employer shall inform in writing the works council/shop steward – or in the absence of these, the employees affected by the transfer – at least 15 days prior The termination by notice shall be in writing and justified (with to the transfer about the basic features of the transfer (reason, date, some exceptions). The reasons shall be true, reasonable (causal) legal, economic and social implications, etc.). If a works council/ and clearly defined. In case of a lawsuit the burden of proof to shop steward exists, the employer shall negotiate with these to reach verify the authenticity and substantiality of the grounds of the an agreement (although such agreement is not required by law). termination is up to the employer. Once the termination letter has been delivered, the employment relationship will cease upon the end The works council may bring an action to the court if the employer of the notice period. violated the rules on information/consultation. This non-contentious proceeding lasts around 40 days. Consent of the higher trade union body is required before termination of employment by notice of a trade union officer. Consent of the Within 15 days following the transfer, the transferee employer shall works council is required before termination of employment by inform in writing the employees affected concerning the transfer of notice of the head of the works council. employment, the transfer of business, the basic company data of the new employer and on changes in working conditions. 6.4 Are there any categories of employees who enjoy special protection against dismissal? 5.4 Can employees be dismissed in connection with a business sale? Employees may not be given termination by notice during pregnancy and maternity leave, unpaid childcare leave, voluntary military The transfer of employment may not in itself serve as a ground service, or for the first six months of IVF treatment. for termination by notice by the employer. However, after the transfer, due to operational or personal reasons, the termination of If the employer is notified about pregnancy or IVF treatment after employment is allowed. the delivery of the termination letter, then the company is allowed
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to unilaterally withdraw the termination letter. Such withdrawal is to execute a mass redundancy, they shall inform the works council only applicable in these cases; under other circumstances it cannot about the features of the mass redundancy and shall initiate be an option. negotiations with the works council to arrange an agreement. Mothers and single fathers of children up to the age of three years, The employer shall also notify the local government employment employees five years before their pension age and disabled persons agency. Furthermore, the employer is required to inform employees are protected as well (termination is allowed under the terms as set about the mass redundancy at least 30 days prior to delivering the out by law). termination letters. In addition, in case of fixed-term employees, termination is only permitted if the employer is undergoing a bankruptcy proceeding, 6.10 How do employees enforce their rights in relation to or because of the employee’s ability, or force majeure. mass dismissals and what are the consequences if an Hungary employer fails to comply with its obligations?
6.5 When will an employer be entitled to dismiss for: A violation of the procedural rules of mass redundancies means that 1) reasons related to the individual employee; or 2) the termination of employment will be considered as unlawful by business related reasons? Are employees entitled to compensation on dismissal and if so how is the court. The works council may also turn to court if the employer compensation calculated? violated the procedural rules.
Employees may be dismissed for reasons related to their behaviour 7 Protecting Business Interests Following or their ability such as low performance, absence of required skills, etc. In general, employers are obliged to justify the termination. Termination Employees may also be dismissed for business-related reasons, such as cease/merger of positions, restructuring, etc. However, transfer 7.1 What types of restrictive covenants are recognised? of employment may not serve as the only reason for termination. In case of termination by notice due to business reasons, employees One type of restrictive covenant is a non-competition agreement, employed for at least three years at the employer are entitled to which means that the employee shall refrain from conduct – for severance payment. Severance payment is basically one month’s up to two years following termination – which endangers the absentee pay which shall be increased in line with the years of economic interests of the employer. The employer is required to employment passed at the employer. Employees under the pension pay compensation for honouring the employee. age are entitled to additional severance payment. Employees may not breach the duty of confidentiality in relation to business secrets. This is applicable without any special agreement 6.6 Are there any specific procedures that an employer and no compensation shall be paid. has to follow in relation to individual dismissals? 7.2 When are restrictive covenants enforceable and for Employees have to be given a written termination letter containing what period? the reasons for termination. The employer is obliged to pay the employee’s salary, compensation of unused vacation days and other Duty of confidentiality is enforceable during the time of the allowances and to deliver the employee’s exit papers by the deadline employment relationship, and after it ends as well. Non-competition as set out by law. agreements are enforceable for up to two years following termination.
6.7 What claims can an employee bring if he or she is 7.3 Do employees have to be provided with financial dismissed? What are the remedies for a successful compensation in return for covenants? claim? Employers are required to pay an adequate compensation for In case of unlawful termination, the employee may ask for (i) honouring an employee’s non-competition obligation, which compensation for damages (compensation for lost wages may not may not be less than one-third of the base wage due for the non- exceed 12 months’ absentee pay), (ii) a lump sum payment, or (iii) competition period. reestablishment of the employment relationship in some special cases (like termination of employment during pregnancy). In addition, an employee may ask for severance payment. 7.4 How are restrictive covenants enforced?
Restrictive covenants may be enforced before the labour courts. 6.8 Can employers settle claims before or after they are initiated? 8 Data Protection and Employee Privacy Yes, employers may settle claims before and after they are initiated.
8.1 How do employee data protection rights affect the 6.9 Does an employer have any additional obligations if employment relationship? Can an employer transfer it is dismissing a number of employees at the same employee data freely to other countries? time? Employees may be obliged to reveal their personal data if it does not Employers have additional obligations in the event of mass violate their personal rights and it is necessary for the establishment, redundancy (termination by notice due to business for a certain fulfilment and termination of the employment. Employers shall number of employees determined by law). If the employer intends inform employees about the processing of their personal data.
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Employers shall be permitted to reveal employees’ personal data to a the employer, computer usage for private purposes such as the usage third person if it is permitted by law or upon the employees’ consent. of social media may not be under the employer’s control, unless Employers may disclose employees’ personal information to a data consented to by the employee. manager; however, they are required to inform employees before According to the recent practice of the Hungarian National transmitting data. Data service for only statistical purposes shall be Authority for Data Protection and Freedom of Information, the permitted without the consent of employees if the processing of data check of the presence of an employee in social media actually does not include the identification of employees. cannot be restricted by legal measures. However, if the employer Within the EEA, personal data may be transmitted upon the terms wishes to use such data (for example: termination of employment and conditions of data process applicable in Hungary. due to unethical posts or pictures), it is firstly obliged to provide the Outside the EEA (third countries), personal data may be transmitted/ right to defence for the employee – the reason is that the authenticity Hungary disclosed upon the unambiguous consent of the employee or on the of such data might be questionable. Such practice might be subject grounds of an EU/bilateral convention or if the laws of the third to change in relation to the GDPR. country afford an adequate level of protection with respect to the control and processing of the personal data that is transmitted. 9 Court Practice and Procedure The General Data Protection Regulation (GDPR) will be applicable from 25 May 2018, also in Hungary. GDPR allows that Member States may prescribe specific rules regarding the data processing at 9.1 Which courts or tribunals have jurisdiction to hear the workplace. Such detailed legislation is expected to be published employment-related complaints and what is their during May 2018. composition?
Special administrative and labour courts seated in each county 8.2 Do employees have a right to obtain copies of any and in Budapest have jurisdiction at first instance for employment personal information that is held by their employer? law litigation (competence depends on the place of work or the employer’s seat). The court is composed of a professional judge and Employees may request the employer to provide information about two assessors. The appeals are decided by the tribunals (composed the data processed, may ask for the rectification of their personal of three professional judges) seated in each county and in Budapest data, and the erasure or blocking of their personal data. Employees at second instance. Extraordinary appeal for review may be may also ask for copies of their data held by the employer. submitted to the Hungarian Curia (composed of three professional judges) which is the Supreme Court, seated in Budapest. 8.3 Are employers entitled to carry out pre-employment checks on prospective employees (such as criminal 9.2 What procedure applies to employment-related record checks)? complaints? Is conciliation mandatory before a complaint can proceed? Does an employee have to Employees may be obliged to reveal their personal data if it does not pay a fee to submit a claim? violate their personal rights and it is necessary for the establishment of the employment. Before employment, an employee may Basically, the general civil procedural rules are applicable but be requested to take a competence test if one is prescribed by special provisions prevail, though in some cases the claim must employment regulations, or if deemed necessary with respect to be submitted within 30 calendar days (like in case of unlawful exercising rights and discharging obligations. termination of employment). Conciliation before the litigation is Employees who are responsible for a person in education, under not mandatory by law but collective bargaining agreements may supervision, care, or medical treatment under 18 years of age cannot prescribe it. be hired if they were registered in criminal records for crimes as set In employment law, litigation procedural fees (including stamp duty out by law. and the attorneys’ fees of the party winning the case – usually 5%) shall be paid at the end of the procedure; the court decides which 8.4 Are employers entitled to monitor an employee’s party shall bear it. emails, telephone calls or use of an employer’s computer system? 9.3 How long do employment-related complaints typically take to be decided? The employer shall distinguish between the employee’s private email account and business email account. The employee’s business According to current practice, depending on the complexity of the email account may be under control even if the employee uses it case, the litigation generally takes one to two years at first instance, for private purposes. The employer may only inspect employees’ six months to one year at second instance and six months to one year business email accounts; private e-mails, calls or social media posts before the Curia. cannot be monitored.
9.4 Is it possible to appeal against a first instance 8.5 Can an employer control an employee’s use of social decision and if so how long do such appeals usually media in or outside the workplace? take?
Internet and social media usage of employees may be controlled if An appeal shall be filed within 15 calendar days starting from the the employer permits the use of IT devices for work purposes and delivery of the written judgment. The second instance procedure has informed the employees about restrictions and the method of usually takes six months to one year depending on the complexity inspections. If computer usage for private purposes was allowed by of the case.
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Dr. Ildikó Rátkai Dr. Nóra Feith Rátkai Law Firm Rátkai Law Firm Damjanich u. 25/C. Damjanich u. 25/C. H-1071 Budapest H-1071 Budapest Hungary Hungary
Tel: +36 1 792 3904 Tel: +36 1 792 3904 Email: [email protected] Email: [email protected] URL: www.ratkai-legal.com URL: www.ratkai-legal.com
Hungary Dr. Rátkai (1977), LL.M. in HR law, attorney at law, is the head of the Dr. Feith (1991) has been a legal trainee at the firm since 2014 and Law Firm. She started her career as a lawyer on the governmental currently is employed as a legal associate. She graduated as a lawyer side of the EU harmonisation of employment law, then worked at an in 2016. Her degree thesis’ topic was the domestic and international international law firm, and later at a Hungarian law firm specialised in practice of multiplied discrimination in employment relationships. labour law as a lawyer. After passing the bar exam, she established Besides her legal studies she acquired a certificate of business and her law firm specialised in employment law (2004). She also graduated financial studies (accounting and management, statistics, tax advice as an economist (Manager of International and EU Affairs). She is a and SPSS software management) as well. She had been performing member of the European Employment Lawyers Association (EELA) professional practice not only at Ratkai Law Firm but also at a local and the American Bar Association (ABA) Labor and Employment Law government in Budapest and at the Ministry for National Economics. Group. During her work she mainly focuses on discrimination cases, EU legislation/practice of the ECJ and litigation. During her work she mainly focuses on cross-border transactions (TUPE, posting) and on multinational companies’ daily HR issues. She is fluent in English. Having wide practical experience in employment law issues, she regularly gives lectures on employment law conferences and in-house training. She is the author/co-author of numerous professional books and articles related to employment law. She is fluent in English and in German.
Rátkai Law Firm is an independent Hungarian law firm specialised in employment law, social security and HR law. As a ‘boutique’ law firm, we provide up-to-date employment law and HR law services at a highly professional level, in line with the working routine of the private sector, in Hungarian, English and German. The law firm mainly carries out legal advice related to employment law and HR issues, including cross-border cases (outsourcing, posting, TUPE) and legal representation in employment law litigations before court and authorities. Typically, we offer our services to employers; next to the multinational companies, small and medium-sized enterprises can also be found among our clients. Using practical knowledge, we often receive assignments to hold employment law training – in Hungarian, English and German – at the managerial level. We also participate in international professional organisations’ events (European Employment Lawyers Association [EELA], American Chamber of Commerce in Hungary [AmCham], American Bar Association [ABA], UK Employment Lawyers Association [ELA], and Europäische Rechtsakademie [ERA]).
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India
Lakshmikumaran & Sridharan Neeraj Dubey
1 Terms and Conditions of Employment Remuneration It regulates the payment of wages to certain classes of persons employed in the industry and provides for the 1.1 What are the main sources of employment law? Payment of Wages Act, responsibility for payment of wages, 1936 fixation of wage period, time and mode Matters related to employment in India are primarily governed of payment of wages and permissible by the Constitution of India, specific laws framed by the Central wage deduction. and State governments, municipal laws, collective and individual To stipulate minimum rates of wages agreements, as well as judicial precedents. These laws cover an that must be paid to skilled and unskilled labours taking into account Minimum Wages Act, 1948 array of issues, which may be general or specific in nature. Based various factors such as the industry, on the objective of the enactment, some key legislation has been location and nature of work to be classified in the table below: undertaken. To obligate employers to pay bonuses Employment conditions to employees and provide the principle Legislation Purpose/objective and formula for the calculation of the Payment of Bonus Act, 1965 To provide for the health, safety, bonus, minimum and maximum bonus welfare, working hours and leave of payable and enforcement of liability Factories Act, 1948 workers in factories (manufacturing for payment of the bonus. units). To provide for the payment of equal To regulate payment of wages, terms remuneration to men and women of service, holidays, leaves, work Equal Remuneration Act, workers and for the prevention of conditions, hours of work, overtime, 1976 (“ER Act”) discrimination, on the ground of Shops & Establishment Acts etc. for people employed in shops sex, against women in the matter of (State-wise) and commercial establishments employment. (such as hotels, restaurants, bakeries, Social security benefits societies, charitable trusts, educational To provide for the payment of institutions (run for gain), etc.). Payment of Gratuity Act, gratuity, a retirement benefit paid upon Contract Labour To regulate the engagement of 1972 cessation of employment. (Regulation & Abolition) contractor and contract labour by the Act, 1970 principal employer. To provide workmen and/or their dependents some relief in case of Workmen’s Compensation Any establishment employing 100 or accidents arising out of or during more workmen is required to regulate Act, 1923 Industrial Employment employment and causing either death and codify conditions of service and Standing Order Act, 1946 or disablement. obtain certification from the concerned regulatory authority. To provide for a scheme wherein both the employee and the employer make Building and other For the benefit of workers engaged in an equal contribution into a national Employees Provident construction workers building and construction activities to fund which attracts a stipulated interest Fund and Miscellaneous (Regulation of employment regulate matters related to their safety, per annum, and the accumulated Provisions Act, 1952 and conditions of service) health and welfare and any other amount is paid on retirement to the Act, 1996 matters incidental thereto. employee along with the interest that Industrial relations has accrued. To provide a machinery for regulating To provide for a scheme wherein the the rights of the employees and employer and the employee must Employees’ State Insurance settlement of industrial disputes contribute a certain percentage of Act, 1948 Industrial Disputes Act, in a peaceful and harmonious the monthly wages to the Insurance 1947 (“IDA”) manner, along with provisions Corporation. for strikes, layoffs, unfair labour practices, lockouts and closure of an Additionally, India has also signed bilateral social security establishment, etc. agreements with several countries to protect the interests of To establish the rights, duties and Trade Unions Act, 1926 “International Workers” in India. obligations of trade unions and (“Trade Unions Act”) facilitate their registration.
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use of his/her former employer’s trade secrets. Nonetheless, for 1.2 What types of worker are protected by employment the sake of clarity, it is always recommended that important and law? How are different types of worker distinguished? essential terms be expressly mentioned in the contract.
Under the Factories Act, 1948, the term “Worker” has been defined as a person employed directly or by/through any agency (including 1.5 Are any minimum employment terms and conditions set down by law that employers have to observe? a contractor) with or without knowledge of the principal employer, whether for remuneration or not, in any manufacturing process, or in any other kind of work incidental to, or connected with, the There are various state-specific and sector-specific laws, which lay down certain minimum terms with respect to wages, working hours,
India manufacturing process or the subject of the manufacturing process, but does not include any member of the armed forces of the Union. leave entitlement, holidays, termination and the like. With respect However, the Factories Act is not the only legislation that protects to employees working in industries such as cinema, docks, mines, all kinds of workers in India. Workers/employees in India have been transport, sales promotion, etc., industry-specific laws govern their identified differently in different legislations as illustrated below: terms of employment. 1. Workmen and non-workmen: The Industrial Disputes Act, 1947 defines a “workman” as any person employed in 1.6 To what extent are terms and conditions of any industry to do any manual, skilled, unskilled, technical, employment agreed through collective bargaining? operational or supervisory work. It does not include Does bargaining usually take place at company or persons carrying out managerial functions or those whose industry level? wages exceed INR 10,000. The “non-workmen” category of employees is mostly protected under the Shops & Collective bargaining is an effective technique to resolve labour Establishments Act of every State. disputes in India and is utilised in cases wherein the number of 2. Government employees and Private Sector Employees: employees are large and represented by trade unions. Trade unions The rules and regulations governing the government can be formed at company level, regional level or industry level. A employees stem from the Indian Constitution. They collective bargaining agreement provides for terms and conditions accordingly enjoy the protection of tenure, statutory service of employment pertaining to wages, working hours, obligation of contentions and an automatic annual increase in salary, along workmen and the employer, dispute resolution, leave, holidays, with a provision for receipt of pension (according to Central Civil Services (Pension) Rules, 1972). In the private sector, benefits and more. the conditions of employment are governed by respective contracts of employment and by legislations which govern both private and government sector employees. 2 Employee Representation and Industrial 3. Employees in Organised or Unorganised Sector: The Relations organised sector is where a place of work has terms of employment and so the employee has assured work. They are registered by the government and have to follow the 2.1 What are the rules relating to trade union recognition? rules and regulations laid down by it in various laws such as Factories Act, Minimum Wages Act, Payment of Gratuity In India, trade unions are registered under the Trade Unions Act. Act, etc. The unorganised sector is a place of work which Recognition of a trade union is a distinct process, which is not is not registered by the Government and where there are no prescribed under the Trade Unions Act; however, the management terms of employment. Legislations like the Beedi and Cigar of the relevant industry/entity can recognise a registered trade Workers Act, 1966, the Plantation Labour Act, 1951 and the union representing the labour force. It is to be noted that neither Mine Act, 1952 apply to employees of this sector. registration nor recognition is mandatory under the Trade Unions Act yet jurisprudence provides that an unregistered trade union has 1.3 Do contracts of employment have to be in writing? If no manner of right whatsoever – this includes rights under IDA. not, do employees have to be provided with specific Apart from central legislations, certain state legislations such as the information in writing? Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 and the Kerala Recognition of Trade Indian labour laws do not mandate the employer to provide a Unions Act, 2010 provide for the recognition and registration of trade written contract of employment to a new employee. A contract of unions in the respective states where such legislation is applicable. employment can be communicated orally as well. Since the objective of an employment contract is to record the terms and conditions of 2.2 What rights do trade unions have? employment including matters related to disclosure of information, non-competition, non-solicitation, etc., it is a predominant practice A registered trade union, in terms of the provisions of the Trade Unions in India to have a written contract of employment. Act is a body corporate by the name under which it is registered. Therefore, upon registration, a trade union attains legal recognition 1.4 Are any terms implied into contracts of employment? and consequentially has perpetual succession and a corporate seal. It also has the right to contract by itself or through agents, hold movable From a contractual perspective, certain terms are implied in a and immovable property in its name, maintain general funds which contract by way of customs, usage and practice. Typically, in an cannot be spent on objects other than those specified in the Trade employment contract, implied terms can be obligations such as Unions Act and sue or be sued subject to immunities provided under duty of care, duty to maintain confidentiality, non-disclosure, etc. the Trade Unions Act, in certain criminal, civil, and contractual Further, Indian courts on numerous occasions have held that in a proceedings. One of the basic functions of a Trade Unions Act is to contract of employment, it is implied that an employee cannot make represent and negotiate on behalf of employees with the employer in matters of dispute and settlement of employment matters.
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2.3 Are there any rules governing a trade union’s right to 3 Discrimination take industrial action?
3.1 Are employees protected against discrimination? If The IDA, inter alia, deals with involvement of trade unions in the so, on what grounds is discrimination prohibited? investigation and settlement of industrial disputes. In terms of the IDA, the first course of dispute resolution shall be the collective The Constitution of India grants several fundamental rights to the bargaining mechanism, which involves negotiation and mediation citizens of India, such as the right to equality, prohibition of the techniques, failing which, voluntary arbitration or compulsory state from discriminating on grounds of religion, race, caste, sex
adjudication is permissible with the active participation of trade India or place of birth and enables the state to frame laws which are in unions. During the pendency of such a dispute before the concerned favour of the under-privileged. The Persons with Disabilities (Equal board, court, tribunal or the arbitrator, a trade union is not permitted Opportunities, Protection of Rights and Full Participation) Act, 1995 to call a strike. prohibits all forms of discrimination during hiring, pay, promotion, etc. against persons with disabilities. The ER Act was enacted to 2.4 Are employers required to set up works councils? If eliminate gender bias and to make sure that men and women are so, what are the main rights and responsibilities of paid an equal salary for the same work. Similarly, the Maternity such bodies? How are works council representatives Benefit Act, 1961 and Sexual Harassment of Women at Workplace chosen/appointed? (Prevention, Prohibition and Redressal) Act, 2013 protects the right of female employees in India. The applicability of these legislations The IDA mandates the formation of a work committee in the event may differ between public and private entities. Whereas certain the number of employees employed in an industrial establishment types of discrimination are illegal uniformly in all sectors, other exceeds 100 or more workmen in the preceding year. The committee types of discriminations based on caste, ethnicity and religion are shall be constituted of members/representatives from both the still prevalent in private sectors. employer as well as the employees. The employee representatives shall be appointed in consultation with the concerned trade union. The primary objective of such a works committee is to promote 3.2 What types of discrimination are unlawful and in what circumstances? measures for securing and preserving amity and good relations between the employer and workmen and to comment upon matters of their common interest or concern. Discrimination based on grounds of religion, race, caste, sex and place of birth are prohibited by the Constitution of India. Additionally, contravention of any provision of the ER Act, leading 2.5 In what circumstances will a works council have co- to discrimination between men and women is unlawful. Further, in determination rights, so that an employer is unable to practice, any discrimination which is not based on skills or merit proceed until it has obtained works council agreement and which is not practised for the upliftment of any section or class to proposals? but merely to cause prejudice to one of the parties, is considered to be unlawful. Under the IDA, co-determination rights have not been provided to a work committee. However, trade unions may, by terms agreed in the collective bargaining agreement, exert influence through their 3.3 Are there any defences to a discrimination claim? representative in the works committee. At the outset, the objective of the works committee is to mediate differences between the There are no standard defences to a claim of discrimination. employer and the employee(s). However, based on facts and circumstances, a defence of difference in the nature of work, place of work, health and safety requirements and the need of affirmative action can be considered as valid 2.6 How do the rights of trade unions and works councils interact? grounds of defence.
As stated earlier, the rights of trade unions and work committees can 3.4 How do employees enforce their discrimination be said to interact with respect to their employee representatives in rights? Can employers settle claims before or after the works committee, who are members of the trade union as well. they are initiated?
Based on the nature of discrimination, employees may approach 2.7 Are employees entitled to representation at board courts or tribunals and file complaints to enforce their discrimination level? rights. In some cases, the concerned organisation/workplace may have labour/HR policies in place, which permits such discriminated Under Indian employment laws, there is no provision that mandates employees to approach a grievance redressal committee or a the appointment of employees in the board. However, under the helpline to resolve complaints pertaining to discrimination. In most Companies Act, 2013, a public limited company shall appoint a cases, the employer can settle claims before or after the initiation Managing Director or a whole-time director, who may be in the full- of complaint. time employment of the company and represent the management’s interests rather than the employees of the organisation. 3.5 What remedies are available to employees in successful discrimination claims?
The remedies available to an employee shall depend on the nature of the claim and statute providing the employees with the right to claim. Most legislation provides for pecuniary fines and terms of
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imprisonment in case of breach of any of its provisions. In cases employer shall allow the employee, four visits a day to the crèche, where the discrimination has led to termination of employment, which shall also include the interval for rest. At the time of the initial a successful claim of discrimination will entitle the aggrieved to appointment of the female employee, every such establishment restoration of his/her job. shall intimate in writing the benefits and facilities provided by the employer in this regard.
3.6 Do “atypical” workers (such as those working part- time, on a fixed-term contract or as a temporary 4.4 Do fathers have the right to take paternity leave? agency worker) have any additional protection? No, the concept of paternity leave does not exist in Indian India No, there is no additional protection accorded to “atypical” workers. employment laws. However, the All India and Central Civil Such workers shall be protected by the same set of laws as is Services Rules allow Central government employees 15 days applicable to any typical workmen or employee in the organisation. of paternity leave. Various corporate offices in India can extend However, there may be variance in the organisational policies and paternity leave to their employees as per internal leave policies. The by-laws applicable to such employees. There are certain state- Paternity Benefit Bill, 2017, which has been presented before the specific or region-specific laws that cover even the unprotected Parliament, pushes for equal ‘parental’ benefits for both the mother workers who do not fall in any of the categories of workers identified and the father. in question 1.2, like The Maharashtra Mathadi, Hamal, and Other Manual Workers (Regulation of Employment and Welfare) Act, 1969 or Pimpri-Chinchwad District Mathadi, Hamai, and Other 4.5 Are there any other parental leave rights that employers have to observe? Manual Workers (Regulation of Employment and Welfare) Scheme, 1992. Besides the benefits and leaves extended under the Maternity Act, employers are not required to observe any other legislation. 4 Maternity and Family Leave Rights 4.6 Are employees entitled to work flexibly if they have 4.1 How long does maternity leave last? responsibility for caring for dependants?
The Ministry of Labor and Employment has recently amended the There are no statutory laws mandating employers to provide Maternity Benefit Act, 1961 (“Maternity Act”) to increase the flexible work timings to their employees. However, as a matter of duration of paid maternity leave available for female employees from internal policy and based on performance and the requirement of the 12–26 weeks. Any female employee who has been in employment employee, employer organisations may extend a variety of benefits of the employer for a period of 80 days in the past 12 months shall to their employees. be eligible to avail this benefit. This benefit can be availed as early as eight weeks prior to the expected delivery date. Maternity leave 5 Business Sales has also been extended to adoptive mothers wherein every woman who adopts a child shall be entitled to 12 weeks of maternity leave, from the date of adoption. 5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the buyer? 4.2 What rights, including rights to pay and benefits, does a woman have during maternity leave? Typically, employees cannot be co-related to the assets of the company and, therefore, do not warrant an automatic transfer, as As per the provisions of the Maternity Act, a female employee part of a business sale. The mechanism of transfer of employees shall be entitled to the average daily wage for the period of her can however, be agreed by the parties, which should be aligned with actual absence. If the nature of work is such that the employee can the provisions of the IDA. Ideally under the IDA, an employee work from home, then based on the mutual agreement between the is entitled to the payment of retrenchment benefits, which include employer and the employee, the employer may extend this comfort notice and severance compensation, upon termination of his/her to female employees. Additionally, female employees shall also employment. However, the IDA culls out an exemption in cases of be entitled to a medical bonus in the event pre-natal and post-natal transfer of undertaking wherein the retrenchment benefits may not benefits are not provided by the employer. The Maternity Act bars be payable if: (i) the services of such workmen are not interrupted the employer from (i) discharging or dismissing a female employee, by the transfer; (ii) the terms and conditions of the employment or (ii) varying the terms of employment to her disadvantage during made by the transferee undertaking is in no manner less favourable the period of maternity leave. than the existing terms and conditions of the employment; and (iii) the new employer honours the continuous employment of the 4.3 What rights does a woman have upon her return to employee and computes his/her retrenchment benefits accordingly. work from maternity leave? The aforesaid mechanism of transfer is only relevant in case of acquisitions by business purchase and not share purchase. A female employee upon rejoining employment is entitled to two nursing breaks in a day, in addition to the interval for rest allowed 5.2 What employee rights transfer on a business by the employer during the course of her daily work. This benefit sale? How does a business sale affect collective is available to the female employee until the child attains the age of agreements? 15 months. Apart from this benefit, every establishment having 50 or more employees shall have a crèche facility within a prescribed As stated in the response to question 5.1, if the provisions of the distance either separately or along with common facilities. The IDA are fulfilled, the buyer or the new employers as pre-condition,
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are required to offer the same terms and conditions of employment Suprit Roy held that obstructing “an employee who has left service to the employees. Based on the above, it is safe to assume that from obtaining gainful employment elsewhere is not fair or proper”. employee rights or the terms of the collective bargaining agreement It is, thus, clear that while the concept is not founded in any legal shall remain unchanged. provisions in India, it may be included in the employment contract; however, it can only be enforced until the employee so restrained is in service of the employer, and not thereafter. 5.3 Are there any information and consultation rights on a business sale? How long does the process typically take and what are the sanctions for failing to inform 6.3 What protection do employees have against and consult? dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third India Employment laws in India do not provide for information and party required before an employer can dismiss? consultation rights on a business sale. However, collective bargaining agreements may contain provisions to this effect empowering the An employee may challenge/dispute the case of his/her termination relevant trade unions. by the employer, in the case of termination for non-performance, either by questioning the procedural aspect of the termination, or by denying the existence of the element of non-performance. 5.4 Can employees be dismissed in connection with a business sale? Therefore, despite complying with all applicable legal requirements, a termination may be construed to be bad in law if the employer fails to prove the existence of the alleged grounds amounting to Employers have the right to terminate the employment of termination. In such an event, the employee may seek any of the any employee, subject to provision of notice and payment of following remedies for his/her wrongful termination: reinstatement retrenchment compensation as per the provisions of the IDA. with back-wages for the period of wrongful termination; damages; or such specific relief as may be appropriate. 5.5 Are employers free to change terms and conditions of Under the IDA, an employee in the workman category who has employment in connection with a business sale? been in continuous service for at least one year cannot be terminated at will of the employer unless the employee is dismissed by way Please refer to our responses to questions 5.1 and 5.2. of disciplinary action or as a result of non-renewal of contract of employment, or terminated on the grounds of continued ill-health, 6 Termination of Employment etc. Termination for any other reason whatsoever, including termination of service on the grounds of reduction in volume of business, amounts to retrenchment and the IDA prescribes a detailed 6.1 Do employees have to be given notice of termination procedure for retrenchment of a workman including compliance of their employment? How is the notice period with the last to come first to go rule, notice, payment of prescribed determined? compensation (i.e., 15 days’ average pay for every completed year of continuous service) filings/prior approvals from the government Employees must be given a notice of their termination by the (if required), etc. employer; however, in case the employer chooses to terminate For termination of services on disciplinary grounds, the procedure the employment with immediate effect, i.e., without any notice, it for dismissal of an employee (who is classified as a “workman” may do so by paying wages/salary to the employee in lieu thereof. under IDA) on account of misconduct and/or indiscipline, would This period is stipulated to be a period of one month under the need to be, in terms of broad principles of natural justice, the IDA IDA and the Shops and Establishment Acts of certain states. This and guidelines evolved from various court decisions as follows: period of notice may be altered as per the terms contained in the (i) issuing a charge sheet; contract between the employer and employee governing the terms of employment. (ii) holding a domestic enquiry; (iii) perusing the report of the enquiry officer; It is pertinent to note that the period of notice or wages thereof is waived off in cases of termination owing to misconduct of the (iv) issuing show cause notice to the employee; and employee, in which case the employer can terminate the employment (v) issuing order of punishment. with immediate effect without any further liability. Under the IDA, Third-party approvals, i.e., government approvals are required in such termination must be carried out after following the due process case of retrenchment (defined u/S. 2(oo) of the IDA) of workmen in prescribed under the Act and after the findings of the domestic compliance with the provisions of the IDA. enquiry conducted to consider the allegation of misconduct, are found to be against the employee. 6.4 Are there any categories of employees who enjoy special protection against dismissal? 6.2 Can employers require employees to serve a period of “garden leave” during their notice period when the There is statutory embargo on the employer not to dismiss or punish employee remains employed but does not have to female employees during the period of their pregnancy under attend for work? Section 21 of the Maternity Benefit Act, 1961. The concept of “garden leave” originated in England wherein Further, an employer shall not dismiss, discharge or reduce or employees are paid their full salary during the period in which they otherwise punish an employee during the period when he/she is in are restrained from competing. However, the concept lacks legal receipt of sickness benefit or maternity benefit and also during the backing in India as the same has been held to be in restraint of trade period in receipt of disablement benefit for temporary disablement and thus hit by Section 27 of the Indian Contracts Act, 1872. The or is under medical treatment for sickness or is absent from work as Bombay High Court in VFS Global Services Private Limited v. Mr. a result of certified illness arising out of pregnancy or confinement
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in accordance with Section 73 of the ESI Act. During said period, the employee is not supported by proof. Under some circumstances, no notice of dismissal or discharge or reduction shall be served on the employee may also allege unfair labour practice on part of the an employee. employer. For a successful claim, workmen can seek their reinstatement with 6.5 When will an employer be entitled to dismiss for: the employer along with back-wages for the period of suspension/ 1) reasons related to the individual employee; or 2) termination. The adjudicating authority can award a penalty lesser business related reasons? Are employees entitled than dismissal, if it finds misconduct on behalf of the workman. to compensation on dismissal and if so how is For a non-workman, the only relief available is that of damages from compensation calculated? the employer as governed by the terms of the service agreement, India unless the employer is a public-sector undertaking in which case Grounds for the termination of workmen in India can be divided reinstatement can also be sought. into three primary categories. These include (i) misconduct, (ii) superannuation, and (iii) retrenchment, layoffs, and closure. An employer can terminate the employment of an employee due to 6.8 Can employers settle claims before or after they are individual reasons such as misconduct, non-performance or loss of initiated? confidence. In each such case, the termination should be preceded by a domestic enquiry. Business-related factors could include: The employers can settle the claims at any time after the dispute (i) redundancy on account of mechanisation; (ii) job elimination arises by way of entering into a settlement agreement on mutually pursuant to outsourcing; (iii) business restructuring; or (iv) closure acceptable terms between the parties. The first stage of an of business unit/downsizing. In case this happens, the procedure as industrial dispute is “Conciliation” wherein both parties can arrive stated in the IDA needs to be complied with. at an appropriate and acceptable solution to the dispute. If the In case of retrenchment of employees, the retrenchment compensation conciliation fails, the failure of conciliation report makes the basis is to be paid to the employees at the rate of 15 days’ wages (for for the reference of the dispute by the appropriate Government. every completed year) to be calculated at the last drawn salary of Notwithstanding the conciliation stage, the parties can mutually an employee. The calculation of compensation is to be based from settle the dispute at any time before or thereafter. the date of appointment and in case an employee has completed 240 days, he/she will be entitled to 15 days’ retrenchment compensation 6.9 Does an employer have any additional obligations if besides one month’s notice or salary in lieu thereof, as if he/she has it is dismissing a number of employees at the same worked for one year. time?
6.6 Are there any specific procedures that an employer In the event the dismissal falls under the category of retrenchment has to follow in relation to individual dismissals? and the number of workmen being dismissed meets the threshold specified in the IDA for such retrenchment, the procedures and For non-workmen category of employees, or contract workers, obligations mentioned therein get triggered. For dismissal of the contract of employment or the Service Agreement governs the non-workmen, and also for workmen by any means other than procedure in case of dismissal and any or all procedures stipulated retrenchment, there are no additional obligations for dismissal of therein must be followed by the employer. In the event the employee employees in the case of several workmen, as compared to dismissal being terminated enjoys statutory protection of employment such of one. as a “workman” as defined in the IDA and/or protection under the state-specific labour laws such as the Shops and Establishments Act, 6.10 How do employees enforce their rights in relation to then prior to terminating such an employee, the employer would mass dismissals and what are the consequences if an have to serve the employee with 30 days’ notice or pay salary in employer fails to comply with its obligations? lieu thereof. The procedure to be followed for termination due to ‘misconduct’ In case of mass dismissal, an industrial dispute can be raised under involves framing of charges and issuance of a charge sheet, the IDA or an appropriate forum can be approached under the Shops conducting a domestic enquiry by an inquiry officer, followed by and Establishment Act of the concerned state. Non-compliance issuance of a show cause notice after which the employee is given with the statutory requirements might render the dismissal invalid an opportunity to submit his/her defence and call upon witnesses to and the employees could also be reinstated. Further, wrongful make his/her representation. Decision to terminate the employment terminations are considered unfair labour practices under certain depends on the gravity of the misconduct on the part of the circumstances and an adverse finding in this regard may be made employee, and a simple warning or suspension letter may also be against the employer and appropriate prescribed punishment shall issued in cases of first offenders or minor offences. be accorded in each case.
6.7 What claims can an employee bring if he or she is 7 Protecting Business Interests Following dismissed? What are the remedies for a successful Termination claim?
An employee is entitled to claim unfair dismissal on the following 7.1 What types of restrictive covenants are recognised? grounds, namely by questioning the procedural aspect (of the termination) and by denying existence of the element of non- Incorporation and subsequent enforcement of ‘restrictive covenants’ performance. Thus, despite complying with requirements of a such as confidentiality, non-disclosure and non-solicitation, intended valid and legal termination, the employer faces a challenge to the to restrict the employees from disseminating confidential and other termination if the evidence of the reasons leading to termination of important information exclusively available with an employer are
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commonly found in employment contracts. While these restraints this information is collected and retained by the employer, the are recognised for as long as the employee remains in the service of onus to maintain reasonable security practices and procedures for the employer, any form of post-employment restraint is considered the protection of such SPDI of the employee to prevent any kind as reducing the economic mobility of the employees and thereby of wrongful loss or wrongful gain to any person also lies on the limiting their personal freedom of right to livelihood. In view of employer. If such wrongful gain takes place due to a default or Section 27 of the Indian Contracts Act, 1872, which renders any lapse of the employer, the employer is liable to pay compensation agreement, which restrains anyone from carrying on a lawful to the relevant employee which could be up to INR 5 crores profession, trade or business void, the courts have prioritised the (approximately US$ 100,000) or even above INR 5 crores if the protection of rights of an employee seeking employment over civil courts are approached. protecting the interests of the employer seeking to protect itself from With regard to onward transfer (within or outside India) of such India competition. However, the validity of such restrictive covenants is information, it can only be done by the employer/data collector tested on the standards of reasonability – involving considerations where specific employee consent has been taken (unless such of duration and space of the restriction in question. transfer is mandated by law), provided the transferee also adheres to similar levels of data protection as mandated under the Information 7.2 When are restrictive covenants enforceable and for Technology Act, 2008. what period? 8.2 Do employees have a right to obtain copies of any Restrictive covenants have been held to be enforceable for the personal information that is held by their employer? period of the service of the employer bound by such covenants, and not thereafter unless the agreement not to carry on business of which Employees have a right to obtain any information that is held by goodwill is sold. Any covenants which cover a post-employment the employer, so long as the information pertains to the employee period have faced difficulty in being enforced, as the courts view themselves. Such a right is not barred under law. them as a restraint to the employee getting gainful employment with a potential employer for reason of being bound by the previous employer. 8.3 Are employers entitled to carry out pre-employment checks on prospective employees (such as criminal record checks)? 7.3 Do employees have to be provided with financial compensation in return for covenants? Prior to confirming the engagement of an employee, the employer/ company may conduct background checks/pre-employment checks While there is no provision of law mandating such compensation, on such candidates, which may include but are not limited to: it is not out-of-the-ordinary for a stipulation to this effect to be verification calls to previous employers/reporting managers; included in the employment agreement. If a non-compete fee is authenticating documents issued from the educational institution(s) paid to the employee then the restrictive covenant would force of the candidate; or conducting any such search of public records the employee to not breach even after employment termination/ as may be available, to ascertain that the candidate does not have cessation as the employer can file a case against such a breach by a criminal record or history of wrongful acts whether financial or the former employee and claim compensation to the extent of the sexual in nature, or to verify the candidates’ address/dependants non-compete fee paid. in the event of the employee absconding, etc. There is no legal provision that gets violated if an employer wishes to procure such 7.4 How are restrictive covenants enforced? publicly available information or through links/contacts provided by the employee himself/herself. It is often an essential condition precedent in the employment contract that such background checks As already discussed, the restrictive covenants are in most cases should be cleared to the satisfaction of the employer and the only enforced for the duration of the service. The same can be confirmation of the offer from the employer is contingent upon the enforced by way of: (i) serving the employee with a Legal Notice; same. (ii) seeking enforcement of undertaking based on clauses of the agreement; (iii) initiating a civil suit seeking injunction/specific performance of contract as well as damages; and (iv) filing a suit for 8.4 Are employers entitled to monitor an employee’s seeking injunction from the acts arising from such breach. emails, telephone calls or use of an employer’s computer system? Damages may be awarded to the employer for the breach of the employment contract, but that requires demonstration of evidence of the damages. Hence, interim relief in the form of injunction is the In order to safeguard its confidential and proprietary information most common remedy that can be availed by the employer. or enforce its obligations agreed under various agreements with its business counterparts, the employer can monitor the activities of the employee, systems, premises, official e-mail ID, company SIM, 8 Data Protection and Employee Privacy handsets or computer systems. The employer can prescribe such IT Policies for employees to ensure data protection. The employer may also have to justify such monitoring if it goes beyond the 8.1 How do employee data protection rights affect the official premises or is found to be violative of the employees’ right employment relationship? Can an employer transfer to privacy, which is guaranteed by the Constitution of India. employee data freely to other countries? The Supreme Court has held in People’s Union for Civil Liberties It is a common practice for employers to collect sensitive personal v. Union of India that a telephonic conversation in private without data or information (“SPDI”) of their employees for various interference would come under the purview of right to privacy as reasons such as for selection processes, record retention purposes, mandated in the Constitution and that unlawful means of phone employee evaluations or other legitimate business purposes. Since tapping is an invasion of privacy. While this constitutional right
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to privacy is only available against state action, the principal is still relevant to a private employer. The employer must have a valid and 9.2 What procedure applies to employment-related legal requirement to obtain monitor its employee’s activities when complaints? Is conciliation mandatory before a complaint can proceed? Does an employee have to the same is done to safeguard the company interests. At the same pay a fee to submit a claim? time, the employer must also tread this line thinly and respect the employee’s need for privacy. Where any industrial dispute exists, or is apprehended, upon initiation of a complaint by the workman, the Conciliation Officer 8.5 Can an employer control an employee’s use of social holds conciliation proceedings in the manner prescribed under media in or outside the workplace? the IDA and a fair and amicable settlement between the disputing India parties is attempted under these conciliation proceedings. In In view of a lack of regulatory provisions in this area, it is reasonable either case, whether the mandatory conciliation is successful or that an employer may control or regulate an employee’s use of not, the Conciliation Officer shall send a report to the government social media in the workplace, more so when the same involves detailing the reasons thereof and the facts of the case. Upon use of the employer’s systems or resources, and even restrict the receipt of the report from the Conciliation Officer, the Government employees from commenting on anything related to the employer, decides whether a reference of the matter to the concerned forum its business counterparts or other employees, or about the business (Central Government Industrial Tribunal (“CGIT”) or Labour of the employer. This can be done by way of a stipulation in the Court cum Industrial Tribunal (“LCIT”)) is warranted or not, service agreement or by way of the company’s IT policy (which and such reference is accordingly notified. Thereafter, the matter governs employees’ IT usage at the workplace) and the Social is adjudicated upon by the CGIT/LCIT as an industrial dispute Media Policy (which can govern the posts/comments in any personal following the due process of law. profile regarding a company/its business counterparts/business of the There is no fee payable by the workmen for these proceedings except company or other employees). Employers may very well restrict such fee as may be paid to avail legal services of an advocate. To their employees’ use of social media at the workplace to maintain that extent, during the conciliation proceedings, it is the workman’s minimum loss of productivity. Needless to mention that with some discretion to be represented through a professional, and until the restrictions, social media use may be permitted when such access is time he/she so chooses to make his/her own case, the management required for the job profile, to achieve business objectives and/or to cannot bring in a professional to represent them at such conciliation create/maintain visibility on social media for the employer/business. as well. On the other hand, a non-workman not protected under the IDA, 9 Court Practice and Procedure can avail the remedies arising out of the service or employment agreement and approach the civil courts by way of filing a civil suit against the employer. In such a case, the appropriate and requisite 9.1 Which courts or tribunals have jurisdiction to hear court fee shall have to be paid. employment-related complaints and what is their composition? 9.3 How long do employment-related complaints typically In the case of workmen governed by the IDA, any employment- take to be decided? related complaint can be heard by and adjudicated upon by the following forums: There is no timeline fixed for adjudication/disposal of employment- (i) Grievance Redressal Committee. related complaints. While timelines are fixed for certain stages under the law, once the dispute is adjudicated to the courts, depending on (ii) Works Committee. the facts and circumstances of each case and also keeping in mind (iii) Conciliation Officers. the vast backlog and pendency of the courts in India, the timeline (iv) Board of Conciliation. varies greatly. This aspect of court cases is often what drives the (v) Courts of Inquiry. employees to settle the disputes at an early stage. (vi) Labour Courts. (vii) Industrial Tribunals and/or National Tribunals. 9.4 Is it possible to appeal against a first instance (viii) Workmen Compensation Commissioner. decision and if so how long do such appeals usually take? For employees not falling under the category of “workmen” under the IDA, the appropriate civil court or the authorities prescribed Yes, it is possible to appeal against first instance decisions, by both under their respective State’s Shops and Establishments Act are the the employees and the employer. The timeline of such appeal, correct forum of law. For sexual harassment, complaints can be however, would depend on the facts and circumstances of each case made before the Internal Complaints Committee of the employer or and cannot be fixed. the District Officer so appointed under the aforesaid legislation by the government.
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Neeraj Dubey Lakshmikumaran & Sridharan 404–406, 4th Floor, World Trade Centre South Wing, Brigade Gateway Campus 26/1, Dr. Rajkumar Road, Malleswaran West 560055 Bangalore India
Tel: +91 80 4933 1859 / 4933 1800 Email: [email protected]
URL: www.lakshmisri.com India
Mr. Neeraj Dubey is a Joint Partner and heads the Corporate Division of the Bangalore office of Lakshmikumaran & Sridharan. He is a corporate lawyer with around 13 years of legal experience encompassing the vast gamut of business law, contract management, IP, employment and technology law. He routinely counsels manufacturing and service industry companies on a wide range of compliance matters in all elements of commerce and business, including contracts, corporate governance, competition, labour and employment, health, safety and environment. Neeraj’s industry focus spreads across automobile, aviation, banking, chemicals, defence, energy, food, pharmaceuticals, information technology and waste management. Neeraj regularly contributes to conferences as a speaker and/or moderator, and has spoken at several national as well as international events, including the I-Techlaw Conference and Inter-Pacific Bar Association Conference, and in forums like the Associated Chambers of Commerce of India, Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry, Bangalore Chamber of Industry and Commerce, etc. He holds a degree in Law from the Campus Law Centre, Faculty of Law, University of Delhi.
Founded by Mr. V. Lakshmikumaran and Mr. V. Sridharan in 1985, Lakshmikumaran & Sridharan is a full-service law firm having experience and expertise in offering legal services in Taxation, International Trade Laws, Competition Law, Corporate and Commercial Laws, Labour & Employment, Environment, Food Laws, Pharmaceutical Laws, Technology Laws, Aviation & Defence Laws, Energy, Insurance, Banking & Securitisation, Private Equity, Infrastructure & Real Estate, Retail, Litigation & Dispute Resolution and Intellectual Property Rights, spread across 13 offices (11 offices in India at New Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad, Ahmedabad, Pune, Chandigarh, Gurgaon & Allahabad, and one each in Geneva and London). We were the first Asian law firm to set up an office in Geneva to handle WTO matters. Lakshmikumaran & Sridharan has more than 400 professionals across India. Lakshmikumaran & Sridharan has handled more than 35,000 cases at all levels for clients including several Fortune 500 companies, Indian industry leaders and groups, small and medium-sized enterprises, and entrepreneurs and start-ups.
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Indonesia Allova Herling Mengko, S.H.
Sulaiman & Herling Attorneys at Law Valery Sarumpaet, S.H.
(8) The place and date where the work agreement is made. 1 Terms and Conditions of Employment (9) The signatures of the parties involved in the work agreement.
1.1 What are the main sources of employment law? 1.6 To what extent are terms and conditions of employment agreed through collective bargaining? The main source of Employment Law in Indonesia is Law No. 13 of Does bargaining usually take place at company or 2003 on Manpower (“Labor Law”). industry level?
The Labor Law refers to Collective Labor Agreements (“CLA”) 1.2 What types of worker are protected by employment law? How are different types of worker distinguished? which are similar to collective bargaining agreements in other jurisdictions. CLA are a result of negotiation between a registered labour union or several registered labour unions, and the employer In Indonesia, workers are distinguished according to length of or several employers or employer organisations. An employer is service, the nature of the job and the type of job. Employment law in not obliged to have a CLA, but at the same time, no provisions Indonesia applies to three types of workers: fixed-term employees; in the Labor Law prohibit an employer from taking the initiative permanent employees; and expatriates/foreign employees. to propose a negotiation of a CLA. In practice, the initiative to negotiate a CLA typically comes from the labour union(s). It should 1.3 Do contracts of employment have to be in writing? If also be noted that the Labor Law requires an employer to have at not, do employees have to be provided with specific least 10 employees in order to have a company regulation (“CR”). information in writing? A company regulation is different to a CLA. A company regulation needs to be ratified by the relevant local office of the Ministry of Contracts of employment for permanent employees can be in Manpower and Transmigration (“MOMT”), depending on the writing or verbal. However, for fixed-term and foreign employees, employer’s location. the contract has to be in writing. If this is not in writing the fixed- The bargaining for CLA or company regulation usually take place term employee will automatically become a permanent employee. at the company.
1.4 Are any terms implied into contracts of employment? 2 Employee Representation and Industrial There are no terms implied into contracts of employment. Relations
1.5 Are any minimum employment terms and conditions 2.1 What are the rules relating to trade union recognition? set down by law that employers have to observe? With regards to labour unions, the main source of law refers to Law The minimum terms of a contract employment regulated in No. 21 of 2001 on labour unions. A labour union would not be Employment Law are as below: recognised until it is registered with the local office of the MOMT. (1) The name, address and line of business. A labour union has to notify (i) the local office of the MOMT in (2) The name, sex, age and address of the employee. writing for registration purposes, and (ii) the employer in writing (3) The occupation or the type of job. after it has registered with the local office of the MOMT, on which the employer has no right to object. (4) The place where the job is to be carried out. (5) The amount of wages and how the wages shall be paid. 2.2 What rights do trade unions have? (6) The job requirements stating the rights and obligations of both the entrepreneur and the employee. (7) The date the work agreement starts to take effect and the The rights of the trade unions, among others, are: period during which it is effective. (1) To negotiate a collective labour agreement with the management.
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(2) To represent employees in industrial dispute settlements. 3 Discrimination (3) To represent workers/labourers in manpower institutions. (4) To establish an institution or carry out activities related to efforts to improve employees’ welfare. 3.1 Are employees protected against discrimination? If (5) To carry out other manpower or employment-related activities so, on what grounds is discrimination prohibited? that do not violate prevailing laws or regulations. As regulated in the 1945 Indonesian Constitution, Law No. 21 of 1999 and the Labor Law, employees are protected against any 2.3 Are there any rules governing a trade union’s right to discrimination. Every person available for a job shall have the same take industrial action? opportunity to hold a job without discrimination and enjoy the right to
receive equal treatment without discrimination from their employer. Indonesia The Labor Law does recognise the employees’ right to take industrial action, i.e., strike, in a case of unsuccessful negotiation. ‘Unsuccessful negotiation’ means the failure to reach an agreement 3.2 What types of discrimination are unlawful and in what for the settlement of an industrial relations dispute which is caused circumstances? by the employer’s unwillingness to negotiate with the employees (or the labour union) or caused by a deadlock in negotiation. The Labor The following provides the types of discrimination prohibited under Law defines ‘strike’ as an action of the employees that is planned the relevant Indonesian regulations: and implemented collectively and/or by the labour union, to stop 1. According to the elucidation of Article 5 of the Labor or delay work. Law, discrimination means when an employee does not have the same rights or chances as others with regard to (i) applying for a job, and (ii) obtaining a viable standard of 2.4 Are employers required to set up works councils? If living regardless of his/her gender, ethnicity, race, religion, so, what are the main rights and responsibilities of skin colour or politics. This includes equal treatment for a such bodies? How are works council representatives disabled employee. chosen/appointed? 2. Under Law No. 21 of 1999, discrimination in employment and occupation includes discrimination in the provision of Indonesia labour laws acknowledge works councils as a Bipartite training and skills development based on ethnicity, race, Cooperation Body (“BCB”). Every company employing more religion, skin colour, politics, nationality or origin. than 50 employees must establish a BCB. A BCB functions as a 3. Under Government Regulation No. 8 of 1981, employers communications and consultancy forum focusing on manpower may not discriminate between the salaries of male and female matters in the company. The membership of a BCB consists of the employees performing work of equal value. element of the employer and the element of employees, appointed 4. Under Minister of Manpower Decree No. Kep.68/MEN/ democratically by the employees to represent their interests. IV/2004, employers may not discriminate against employees because they have HIV/AIDS or are believed to be infected with the HIV virus. 2.5 In what circumstances will a works council have co- determination rights, so that an employer is unable to proceed until it has obtained works council agreement 3.3 Are there any defences to a discrimination claim? to proposals?
The Labor Law does not provide any specific regulations in relation If a company has established a BCB, every employment dispute to the defences to a discrimination claim. must go through bipartite negotiation facilitated by the BCB. If the bipartite negotiation fails, then one or both parties can submit the dispute to the local manpower office to obtain their recommendation. 3.4 How do employees enforce their discrimination Should a settlement not be reached after the recommendation, one rights? Can employers settle claims before or after or both parties can submit the dispute to Industrial Relation Court they are initiated? (“IRC”). The Labor Law regulates that if an employee gets discriminatory treatment when they are working, then he/she can ask the company 2.6 How do the rights of trade unions and works councils to conduct a bipartite negotiation. The sanction of the violation of interact? the discrimination rights in the company is administrative sanction.
Under the Labor Law and its implementing regulation, there is no clear provision on how labour unions and BCB should interact. 3.5 What remedies are available to employees in However in practice, it is usually one way or the other. In our successful discrimination claims? experience, if a labour union exists, BCB is rarely utilised. Available remedies are not specifically addressed in the Labor Law or its implementing regulations. 2.7 Are employees entitled to representation at board level? 3.6 Do “atypical” workers (such as those working part- Nothing in the Labor Law and the Labor Union Law gives member(s) time, on a fixed-term contract or as a temporary agency worker) have any additional protection? of a labour union the right to sit in the company’s management or at board level. There is no additional protection for atypical workers in Indonesia. As far as rights and protection are concerned, the provisions in the employment agreement will play a significant part.
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4 Maternity and Family Leave Rights 5.2 What employee rights transfer on a business sale? How does a business sale affect collective agreements? 4.1 How long does maternity leave last? Upon their agreement to continue working with the buyer, all of the The Labor Law regulates that a worker is entitled to one-and-a-half employees’ applicable rights may or may not be transferred to the months’ (90 days) maternity leave before giving birth and another buyer. A business sale may give rise to the right of the labour union one-and-a-half months (90 days) after giving birth. This can be to negotiate new terms of employment; however the determination extended, if the employee receives a letter from an obstetrician of which shall be subject to the existing CLA. which requires further leave days. In practice, they can take leave
Indonesia after giving birth for three months. 5.3 Are there any information and consultation rights on a business sale? How long does the process typically 4.2 What rights, including rights to pay and benefits, does take and what are the sanctions for failing to inform a woman have during maternity leave? and consult?
The worker is entitled to a full salary (basic salary and fixed Under the Indonesian Company Law, a company must inform its allowance) and medical reimbursement during maternity leave. employees at least 30 days before acquisition to give them and Additional benefits may be regulated in the employment agreement, related parties an opportunity to convey complaints if they think that company regulation and/or CLA. the sale will disadvantage them. There are no sanctions for failing to do so under the prevailing laws. 4.3 What rights does a woman have upon her return to work from maternity leave? 5.4 Can employees be dismissed in connection with a business sale? The female employee has the right to breastfeed her baby at any time including during office hours if necessary. CR may regulate Yes. If a company dismisses their employees due to a business sale, further rights for the employee. then they must pay the statutory termination payment.
4.4 Do fathers have the right to take paternity leave? 5.5 Are employers free to change terms and conditions of employment in connection with a business sale? Yes, fathers are entitled to two days of paternity leave excluding annual leave. No, employers are not free to change terms and conditions of employment in connection with a business sale.
4.5 Are there any other parental leave rights that employers have to observe? 6 Termination of Employment
Yes, employers are required to observe other parental leave rights, i.e., where employees marry off their children, have their sons 6.1 Do employees have to be given notice of termination circumcised or have their children baptised, or in the event of the of their employment? How is the notice period death of an employee’s child. determined?
There is no notice of termination in Indonesian Law. However, if 4.6 Are employees entitled to work flexibly if they have the company wants to terminate their employees they have to obtain responsibility for caring for dependants? approval from the IRC or if they signed a Mutual Agreement then the Mutual Agreement should be registered with the IRC. There is no entitlement to work flexibility provided under the Labor Law. 6.2 Can employers require employees to serve a period of “garden leave” during their notice period when the 5 Business Sales employee remains employed but does not have to attend for work?
5.1 On a business sale (either a share sale or asset Indonesian law does not recognise garden leave. However, garden transfer) do employees automatically transfer to the leave is similar to suspension given by the company during the buyer? termination process. During the suspension period the company is still obligated to pay the employee’s salary. Employees do not automatically transfer to the buyer in business sales. The employees have the right to be given an option to continue working for the buyer or to be terminated. 6.3 What protection do employees have against dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third party required before an employer can dismiss?
An employee cannot be terminated unilaterally. The company can only terminate their employees after obtaining approval from the
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IRC. This is conducted by filing a lawsuit, unless the company and will issue a recommendation and they will then sign a Mutual employee can settle the dismissal by signing a Mutual Termination Termination Agreement. If they do not reach a settlement, Agreement which would then be registered with the IRC. one of the parties will have to file a lawsuit with the IRC. 3. The IRC will examine the case and issue a decision related to the termination. Please note that the losing party have the 6.4 Are there any categories of employees who enjoy right to submit an appeal to the Supreme Court. special protection against dismissal?
The Labor Law does not provide specific protection for certain 6.7 What claims can an employee bring if he or she is employees. However, the Labor Law does prohibit an employer dismissed? What are the remedies for a successful claim? from dismissing an employee for the following reasons: (1) The employee joins in matrimony. Indonesia Depending on the legality of his/her termination and the reason of (2) The employee is absent due to illness of less than 12 months termination, an employee may request for a bipartite negotiation consecutively. with the employer. Failing that, the employee may refer the (3) The employee performs a role in a trade union. unsuccessful bipartite negotiation to the local office of the MOMT (he/she may either choose to go through a mediation, arbitration or 6.5 When will an employer be entitled to dismiss for: conciliation) and ultimately the IRC. 1) reasons related to the individual employee; or 2) For a termination of a definite period employment agreement business related reasons? Are employees entitled (permanent employment), the remedies may vary from reinstatement to compensation on dismissal and if so how is of employment to statutory termination payment which consists of compensation calculated? severance, long-service pay and compensation of rights. As for termination of the fixed-term employment, any party that terminates 1. The employer can initiate the termination of an individual employee for the following reasons: (i) a violation of the a definite period employment agreement before its expiry is employment agreement, CR or CLA; (ii) the employee has obligated to pay the other party compensation in the amount equal been detained by the authorities and six months later, the to the definite period employee’s salary up until the definite period employee is still unable to work due to criminal proceedings; employment agreement should have expired. (iii) the employee is ill for 12 consecutive months, as certified by a doctor; (iv) the employee has been absent for five days without notifying the employer and has been served proper 6.8 Can employers settle claims before or after they are notice twice; (v) the employee has reached retirement age; initiated? and (vi) the demise of the employee. 2. The employer can initiate the termination of employees for Yes, the company can settle claims before or after they are initiated the following business-related reasons: (i) a change of status, at the IRC. The settlement has to be elaborated in a Mutual merger, consolidation or acquisition/change of company Termination Agreement. ownership; (ii) the employer becoming insolvent; (iii) the employer having suffered continuous losses for two years 6.9 Does an employer have any additional obligations if consecutively as proven by its financial reports for the last it is dismissing a number of employees at the same two years, that have been audited by a public accountant; and time? (iv) the employer permanently closing down the business in which the employees are employed because the company wishes to improve efficiency. The Labor Law does not differentiate an employer’s obligations for dismissing a number of employees whether at the same time or not. There are many different circumstances and events which may lead to termination. Similarly, there are a number of combinations of severance pay, a service period recognition payment and 6.10 How do employees enforce their rights in relation to compensation depending on the reason for the termination and the mass dismissals and what are the consequences if an length of service which may apply. Therefore, they must be calculated employer fails to comply with its obligations? on a case-by-case basis. However, in general, permanent employees’ severance packages will be calculated based on their years of service, The procedure for termination remains the same whether it is a mass amount of monthly salary (basic salary + fixed allowance (if any)), or individual termination (see question 6.6). If the employee(s) has and the applicable severance package calculation. reasons to believe that the employer has failed to comply with the mandatory requirements, the employee may refer the dispute to the local office of the MOMT and ultimately, the IRC. 6.6 Are there any specific procedures that an employer has to follow in relation to individual dismissals? 7 Protecting Business Interests Following The termination procedures are as below: Termination 1. The company and employee have to conduct bipartite negotiations within 30 days. Should they reach a settlement, then they will sign a Mutual Termination Agreement. If they 7.1 What types of restrictive covenants are recognised? do not reach any settlement, one of the parties have to submit a mediation petition to the local office of the MOMT. The Labor Law does not recognise restrictive covenants. However, 2. The mediation process will take 30 working days. Should in practice, they can be agreed between the parties in the mutual they reach a settlement before the mediation, the mediator termination agreement.
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owner. However, if an employer’s computer system is used, then 7.2 When are restrictive covenants enforceable and for it is advisable to regulate this matter in the CR or CLA. what period?
If regulated under the Mutual Termination Agreement, restrictive 8.5 Can an employer control an employee’s use of social media in or outside the workplace? covenants can be enforced by filing a civil lawsuit.
Yes, an employer can control an employee’s use of social media if 7.3 Do employees have to be provided with financial this is regulated in the CR or CLA. compensation in return for covenants?
Indonesia Whether or not employees have to be provided with financial 9 Court Practice and Procedure compensation in return for covenants depends on the agreement between the parties. 9.1 Which courts or tribunals have jurisdiction to hear employment-related complaints and what is their 7.4 How are restrictive covenants enforced? composition?
There is a similar jurisprudence during the Dutch colonial period The IRC hears employment-related complaints. A case will be which categorises this as an unlawful act. Thus, any party breaching examined with three judges, one of whom acts as the head of the its provision may file a civil lawsuit against the party breaching this panel of judges. agreement. 9.2 What procedure applies to employment-related complaints? Is conciliation mandatory before a 8 Data Protection and Employee Privacy complaint can proceed? Does an employee have to pay a fee to submit a claim? 8.1 How do employee data protection rights affect the employment relationship? Can an employer transfer The termination procedures are as below: employee data freely to other countries? ■ The company and employee have to conduct bipartite negotiations within 30 days and should they reach a settlement Data protection is not specifically addressed in the Labor Law. they will then sign a Mutual Agreement. If they do not reach Law No. 11 of 2008 on Electronic Information and Transaction any settlement, then the process is that one of the parties will (“EIT Law”) and its implementing regulations remain the main have to submit a mediation petition to their local manpower office. regulation that addresses the use of an individual’s private or personal information through electronic media. In essence, the EIT ■ The mediation process will take 30 working days; should they reach a settlement before the mediation issue a Law strictly requires the consent of the individual concerned to recommendation, they will sign a Mutual Agreement. If they use their private or personal information through electronic media. do not reach any settlement, then the process is that one of Consequently, an employer cannot transfer employee data to other the parties will have to submit a lawsuit to the IRC. The countries without the prior consent of the data owner. IRC will examine the case and issue a decision related to the termination. Please note that the losing party has the right to submit an appeal to the Supreme Court. 8.2 Do employees have a right to obtain copies of any personal information that is held by their employer? ■ A court fee will not be charged for claims under IDR 150 million. For a claim above IDR 150 million, a court fee will be charged based on the panel’s discretion. There are no specific provisions in the Labor Law which address this. However, in general, the necessity to protect the confidentiality of an individual’s personal data covers all individuals, regardless 9.3 How long do employment-related complaints typically of whether they are employees, contacts or dependants of the take to be decided? employees, or other individuals somehow related to the entity that will collect, use, process, transfer and disclose their data. By law, the IRC must issue a ruling within 50 working days of the first hearing and another nine months if they appeal to the Supreme Court. However in practice, the case will have a final and binding 8.3 Are employers entitled to carry out pre-employment checks on prospective employees (such as criminal decision in more than one year. record checks)? 9.4 Is it possible to appeal against a first instance From a regulatory perspective, in Indonesia other than pre-employment decision and if so how long do such appeals usually medical check-ups, most pre-employment background checks are not take? specifically regulated. However, in practice, some employers do carry out pre-employment screening on prospective employee candidates. Yes it is possible to appeal against a first instance decision. An appeal to the Supreme Court can be submitted against a first ruling (IRC) and only for disputes over rights and termination disputes. 8.4 Are employers entitled to monitor an employee’s emails, telephone calls or use of an employer’s An appeal in the Supreme Court will take nine months if they appeal computer system? to the Supreme Court.
The EIT Law in essence prohibits a breach of privacy of the data
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Allova Herling Mengko, S.H. Valery Sarumpaet, S.H. Sulaiman & Herling Attorneys at Law Sulaiman & Herling Attorneys at Law RDTX Tower, 12th Floor Zone F RDTX Tower, 12th Floor Zone F Suite 1201 Prof. Dr. Satrio Kav., EIV Suite 1201 Prof. Dr. Satrio Kav., EIV No.6, Mega Kuningan No.6, Mega Kuningan Jakarta, 12940 Jakarta, 12940 Indonesia Indonesia
Tel: +6221 5790 6210 Tel: +6221 5790 6210 Email: [email protected] Email: [email protected] URL: www.shlaw.co.id URL: www.shlaw.co.id
Allova Herling Mengko has extensive experience in the areas of Valery Sarumpaet has extensive experience in the areas of corporate, Indonesia corporate, employment, land, environment and litigation/dispute employment, land, mining, oil & gas, and commercial dispute (out-of- resolution. Prior to establishing the firm, he worked with another first- court settlement). Before starting his law career, Valery represented tier law firm in Indonesia for six years and worked as a legal manager in Indonesia in the 2005 Manfred Lachs International Space Law an Indonesian retail company for one year. He has been a member of Mootcourt Competition in Sydney and the 2006 Phillip C. Jessup Indonesian Advocates Association (Perhimpunan Advokat Indonesia – Public International Law Mootcourt Competition in Washington, D.C. PERADI) since 2008 and is also a licensed administrator and receiver. Prior to joining the firm, he worked with some first-tier law firmsin Indonesia, including Baker McKenzie, for more than five years.
As a response to the economic turbulence, S&H have gained market recognition as the emerging employment law boutique firm, by assisting numerous companies in restructuring workforces to avoid industrial relation dispute in the future. Furthermore, our legal experts are also proficient in drafting employment agreements, company regulations and collective labour agreements. In the area of industrial relations dispute settlement, S&H have successfully assisted international clients in compensation claims against one of the largest publicly-listed mining companies in Indonesia. We also represented many multinational companies in implementing their redundancy plans, helping them avoid unnecessary payments and easing the potential difficulties of the redundancy process.
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Ireland Mary Brassil
McCann FitzGerald Stephen Holst
Details of paid leave and rate of pay or method of calculation of 1 Terms and Conditions of Employment pay must also be communicated to the employee, and an employer may refer an employee to other documents in this regard. However, 1.1 What are the main sources of employment law? for ease of reference they are usually included in the contract of employment. While the employment relationship is primarily one governed by contract law and the parties are free to choose the law that applies 1.4 Are any terms implied into contracts of employment? to their working relationship, there are certain mandatory laws that will apply to employees working in Ireland which set out certain Terms can be implied into an employment contract by legislation, minimum protections. These mandatory laws are set out in primary any agreed collective agreements, principles of employment law legislation, much of which derives originally from European Union (such as the implied duty of trust and confidence) or by virtue of directives and regulations. longstanding custom and practice with either the employer in which Irish common law (judge-made law) also provides employees with the employee works, or the particular industry. significant protections, particularly in requiring employers to apply fair procedures when dealing with employees, including on dismissal. 1.5 Are any minimum employment terms and conditions set down by law that employers have to observe? 1.2 What types of worker are protected by employment law? How are different types of worker distinguished? Yes. Irish employment law regulates numerous areas of employment law including: Irish law distinguishes between an individual who is an employee (1) unfair dismissal; (that is, working under a contract of service) and an individual (2) minimum notice; who is either self-employed or an independent contractor (that is, (3) minimum wage rates; working under a contract for services). The majority of statutory employment rights apply to employees only. However, certain (4) redundancy compensation; employment law rights can apply to others, such as protection on (5) health and safety; making a protected disclosure (i.e., whistleblowing) which applies (6) protection for whistleblowing; to ‘workers’ (a broader concept which includes contractors) and (7) equality and discrimination; protections for agency workers. (8) maternity and paternity protection; (9) adoptive and parental leave; and 1.3 Do contracts of employment have to be in writing? If (10) working time. not, do employees have to be provided with specific information in writing? 1.6 To what extent are terms and conditions of While a written contract of employment is not required, under employment agreed through collective bargaining? Does bargaining usually take place at company or the Terms of Employment (Information) Acts 1994 to 2014, an industry level? employer must provide its employee with a written statement setting out certain particulars of the terms of employment within two There is provision for collective bargaining at both company and months of the commencement of that employment. Such particulars industry level under Irish law. Collective bargaining is more include, among others: common at company level, where a trade union is recognised, (1) full name of employer and employee; than at industry level. It is more common in heavily unionised (2) address of employer and place of work; employments, such as the public sector, than the private sector. (3) title of job or nature of work; (4) hours of work; (5) date employment started; and (6) details of rest periods and breaks as required by law.
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2 Employee Representation and Industrial 2.6 How do the rights of trade unions and works councils Relations interact?
There are no statutory provisions which determine the relationship 2.1 What are the rules relating to trade union recognition? between trade unions and works councils in Ireland. However, in practice, works councils are very rare in Ireland, and if a works Employees in Ireland have a constitutional right to join a trade union council and recognised trade union co-existed in a workplace, but employers in Ireland are not required to recognise or negotiate it is likely that in the event of a dispute the trade union would with trade unions. However, the law on collective bargaining take precedence due to its ability to institute industrial action. was reformed by the Industrial Relations (Amendment) Act 2015 Furthermore, in collective consultation processes such as on a Ireland which provides for an enhanced framework for workers seeking collective redundancy or transfer of undertaking, the employer to improve their terms and conditions where collective bargaining would generally consult with the trade union. is not recognised by their employer. However, importantly, the voluntarist nature of the Irish industrial relations system remains and does not oblige employers to engage in collective bargaining 2.7 Are employees entitled to representation at board per se or require formal recognition of trade unions. level?
The Worker Participation (State Enterprises) Acts 1977 to 2001 2.2 What rights do trade unions have? provide for employee representation and participation at board and sub-board level in certain State enterprises. However, this is a very There is no legal obligation on an employer to negotiate with a limited right and, in general, unless it is agreed, employees are not union on behalf of an employee member, unless previously agreed. entitled to management representation. If recognised, however, trade unions may have rights to be consulted with on certain business changes, such as collective redundancies and transfers of undertakings. Trade unions also have certain 3 Discrimination statutory protections when acting in the interests of their members.
3.1 Are employees protected against discrimination? If 2.3 Are there any rules governing a trade union’s right to so, on what grounds is discrimination prohibited? take industrial action? The Employment Equality Acts 1998 to 2015 prohibit direct and The rules relating to the right to take lawful industrial action are indirect discrimination on nine grounds, namely: complex and trade unions must carefully follow these to avoid an ■ gender; employer having a right to seek a Court order preventing industrial ■ civil status; action. These include an obligation to arrange a secret ballot and to ■ family status; provide the employer with notice of the industrial action. So long as the statutory rules are complied with, striking employees are granted ■ sexual orientation; certain immunities from liability which they might otherwise incur ■ religious belief; for action in contemplation of, or in furtherance of, a trade dispute. ■ age; ■ disability; 2.4 Are employers required to set up works councils? If ■ race; and so, what are the main rights and responsibilities of ■ membership of the Traveller community. such bodies? How are works council representatives chosen/appointed? 3.2 What types of discrimination are unlawful and in what The Transnational Information and Consultation of Employees circumstances? Act 1996 applies with regard to European Works Councils, and the Employees (Provision of Information and Consultation) Act 2006 Direct discrimination occurs if an employee is treated less favourably applies with regard to domestic works councils. Works councils are because of a protected characteristic. Specific protections apply in not mandatory and can be established at the initiative of the employer respect of discrimination in relation to: or following an employee request that meets certain criteria (such ■ access to employment; as, the employer having at least 50 employees and that the request ■ conditions of employment; comes from a minimum threshold number of employees). If set up, ■ training or experience for or in relation to employment; the role of the works council will be determined by agreement or, ■ promotion or re-grading; otherwise, there are statutory default rules. Works councils are not common in Ireland. ■ classification of posts; and ■ equal remuneration for like work.
2.5 In what circumstances will a works council have co- Indirect discrimination occurs where an “apparently neutral determination rights, so that an employer is unable to provision” puts people who share a protected characteristic at a proceed until it has obtained works council agreement particular disadvantage. However, indirect discrimination can to proposals? be objectively justified if the employer can show that it was an appropriate and necessary means of achieving a legitimate aim. There are no statutory co-determination rights for works councils The Employment Equality Acts also provide employees with in Ireland. protection against harassment and sexual harassment, as well as
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making it unlawful to victimise an employee who asserts their conditions as if they had been directly employed by the hirer under rights under the Employment Equality Acts. a contract of employment. Employees who suffer from a disability have the right to require the The treatment of part-time employees is governed under the terms employer to put in place reasonable accommodations. of the Protection of Employees (Part-Time Work) Act 2001. A part- Discrimination is also not permitted when advertising for prospective time employee has the right not to be treated in a less favourable employees. manner than a comparable full-time employee in respect of his or her conditions of employment (with certain narrow exceptions), unless objectively justified. 3.3 Are there any defences to a discrimination claim? Ireland There are a number of technical defences available, depending on 4 Maternity and Family Leave Rights the type of discrimination alleged. In particular, in cases of indirect discrimination or when setting a compulsory retirement age, it may 4.1 How long does maternity leave last? be possible to objectively and reasonably justify such discrimination by a legitimate aim, so long as the means of achieving that aim are appropriate and necessary. Female employees are entitled to take maternity leave of up to 42 weeks (26 weeks’ “ordinary maternity leave” and 16 weeks’ In harassment and sexual harassment cases, while the employer may “additional maternity leave”) provided the employer is given at be vicariously liable for the acts of its employees, it is a defence for least four weeks’ notice of the commencement of that leave. The the employer to show that it took such reasonable practicable steps maternity leave must include at least two weeks’ absence before the as it could to prevent the harassment. birth and at least four weeks’ absence after the birth. If the birth In a disability claim, it is a defence to show that the “accommodation” occurs more than two weeks before the expected date of birth, required would not be reasonable. female employees are entitled to take further maternity leave, the duration of which is equal to the duration of the premature birth. 3.4 How do employees enforce their discrimination Female employees are also entitled to attend antenatal appointments rights? Can employers settle claims before or after during their working hours. they are initiated?
4.2 What rights, including rights to pay and benefits, does If the matter cannot be resolved with the employer, the employee a woman have during maternity leave? can take a complaint to the Workplace Relations Commission. Claims can be settled before or after they are initiated. An employer is not obliged to pay the employee during maternity leave, but the state provides a maternity benefit of up to €230 3.5 What remedies are available to employees in per week during the first 26 weeks’ leave. The employee is also successful discrimination claims? entitled to take up to 16 weeks’ additional maternity leave at her own expense. Depending on the nature of the discrimination, an adjudicator may Save for rights to remuneration, women’s employment rights are award one or more of the following: preserved during periods of maternity leave, i.e., the period of leave ■ an order for equal treatment; is reckonable service for employment rights purposes. If general ■ an order for equal pay and up to three years’ arrears of pay pay or other conditions have improved while on maternity leave from the date of the claim; then she is entitled to these benefits on return to work. Dismissals ■ an order for compensation of up to two years’ pay or arising from taking maternity leave are deemed automatically unfair €40,000, whichever is greater, for acts of discrimination, and any attempted dismissals during a period of maternity leave are discriminatory dismissal and/or for acts of victimisation; void. ■ an order for re-instatement or re-engagement; ■ an order for compensation of up to €13,000 for a complainant 4.3 What rights does a woman have upon her return to who is not an employee of the respondent; and/or work from maternity leave? ■ an order to a specified person to take a specified course of action. An employee is entitled to return to work to the same job with the same contract of employment. If this is not reasonably practicable, 3.6 Do “atypical” workers (such as those working part- then the employer must provide suitable alternative work on terms time, on a fixed-term contract or as a temporary not substantially less favourable than those of the previous one. agency worker) have any additional protection?
4.4 Do fathers have the right to take paternity leave? Fixed-term employees are entitled to be treated no less favourably than a comparable permanent employee unless such treatment can A father has the right to take two consecutive weeks’ paternity be justified on objective grounds. There are also some exceptions leave under the Paternity Leave and Benefit Act 2016. This Act, in relation to pension entitlements. The Protection of Employees applicable to births and adoptions on or after 1 September 2016, (Fixed-Term) Work Act 2003 gives fixed-term workers other rights permits a “relevant parent” to take two consecutive weeks’ statutory including, in particular, rights for fixed-term employees to obtain a paternity leave from his or her employment on the birth or adoption “contract of indefinite duration” in particular circumstances. of a child. This leave must be taken within 26 weeks of the birth or The Protection of Employees (Temporary Agency Work) Act 2012 adoption of the child in question. In addition to statutory paternity affords temporary agency workers the right to equal treatment leave, a relevant parent will be entitled to receive a social welfare with regular workers as regards basic working and employment payment of €230 per week, the same rate as the maternity benefit.
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The remit of the Paternity Leave and Benefit Act 2016 is not confined share sale unless there is an agreement to do so (for example, in a to the father of the child and same-sex couples are provided for on collective agreement or in a works council agreement). an equal basis with other couples. The European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (“TUPE Regulations”) apply to 4.5 Are there any other parental leave rights that transactions involving the sale of businesses or assets. Under the employers have to observe? TUPE Regulations the transferor and transferee must inform, and in certain circumstances consult with, the representatives of affected Adoptive leave and parental leave (including force majeure leave) employees. This process must commence, in most cases, at least 30 are available. Carers’ leave is also available. days prior to the date of transfer.
An employee or an employee representative can make a complaint in Ireland respect of a contravention of the TUPE Regulations. Compensation 4.6 Are employees entitled to work flexibly if they have responsibility for caring for dependants? not exceeding four weeks’ remuneration may be awarded for a breach of the information and consultation obligations, and compensation not exceeding two years’ remuneration or reinstatement or re- The Parental Leave Acts 1998 and 2006 give parents the right to 18 engagement may be awarded for a breach of any other provision of weeks’ unpaid leave for each child. The leave must be taken before the TUPE Regulations. the child is eight years old (subject to extension for an adopted child or a child with a disability or long-term illness) and can be taken as a continuous period, in portions or, with the agreement of the 5.4 Can employees be dismissed in connection with a employer, by working reduced hours. business sale? Employees who have been employed for a minimum period of 12 months can in limited circumstances take between 13 and 104 Employees can only be dismissed in connection with a business sale weeks’ unpaid carer’s leave to care for an incapacitated dependant. for “economic, technical or organisational reasons”. State carer’s benefit or carer’s allowance may be payable. An employee can take force majeure leave on full pay for urgent 5.5 Are employers free to change terms and conditions of family reasons owing to an injury or illness requiring the employee’s employment in connection with a business sale? immediate presence. The employee can take three days in any 12-month period, with a maximum of five days in any 36-month Harmonisation of employment terms can only be implemented post- period. transfer with the employees’ agreement.
5 Business Sales 6 Termination of Employment
5.1 On a business sale (either a share sale or asset 6.1 Do employees have to be given notice of termination transfer) do employees automatically transfer to the of their employment? How is the notice period buyer? determined?
On a share sale, where there is no change in employer, the employees’ Under the Minimum Notice and Terms of Employment Acts 1973 to employment simply continues with the same employer with no 2005, minimum statutory notice periods apply to all employees who change in terms and conditions. Under the European Communities have completed 13 weeks of continuous service with the employer. (Protection of Employees on Transfer of Undertakings) Regulations The duration of statutory notice required will depend on the length 2003, (“TUPE”) on a business transfer (primarily asset sales or of service of the employee (between one week and eight weeks). changes in service providers), employees automatically transfer to The employment contract can, and frequently does, set out longer the purchasing entity along with the business and assets. periods.
5.2 What employee rights transfer on a business 6.2 Can employers require employees to serve a period sale? How does a business sale affect collective of “garden leave” during their notice period when the agreements? employee remains employed but does not have to attend for work? On a share sale, employees continue on the same terms and conditions with no change. Yes, employers can require employees to serve a period of garden On an asset sale to which TUPE applies, all rights and obligations leave during their notice period but only if provided for in the arising from contracts of employment (with an exception for certain employment contract. pension rights), as well as any rights under collective agreements, are automatically transferred to the transferee. 6.3 What protection do employees have against dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third 5.3 Are there any information and consultation rights on party required before an employer can dismiss? a business sale? How long does the process typically take and what are the sanctions for failing to inform and consult? The Unfair Dismissal Acts 1977 to 2015 provide an employee with a means of questioning the fairness of a dismissal. The rights under There is no legal requirement to consult with employees ahead of a these Acts generally only apply once the employee has one year’s service (exceptions apply).
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The Employment Equality Acts 1998 to 2012 protect employees relation to any dismissal. Employers should have regard to the Code from discriminatory dismissal. of Practice on Grievance and Disciplinary Procedures (SI 146 of Wrongful dismissal is a dismissal in breach of contract where an 2000). In order for an employer to dismiss an employee (even in employee can bring a common law claim in the civil courts. Such a circumstances of gross misconduct), the employer is required: breach may include a breach of an employee’s fair procedure rights. ■ to have a clear and documented procedure in place, which is Employees may seek an injunction restraining a dismissal if the fair and reasonable; and dismissal would be a wrongful dismissal. ■ to follow that procedure. Employees can also seek to restrain a dismissal if the dismissal is by The general principles of “full and fair” procedures and “natural reason of the employee having made a ‘protected disclosure’ (i.e., justice” include, but are not limited to:
Ireland if a whistleblower). ■ an entitlement to be accompanied to meetings; The consent of a third party is not required in order to dismiss an ■ access to documentary evidence; employee. ■ compliance with the principle of proportionality; ■ confidentiality; and 6.4 Are there any categories of employees who enjoy ■ allowing employees an opportunity to respond to allegations special protection against dismissal? against them.
Usually, an employee must have one year’s continuous service with an 6.7 What claims can an employee bring if he or she is employer in order to rely on the Unfair Dismissals Acts 1977 to 2015. dismissed? What are the remedies for a successful However, in certain circumstances this is not necessary. This includes claim? situations where dismissals are connected with certain specific matters, such as: pregnancy; religion; politics; race; age; having made The primary remedy available to employees is under the Unfair a protected disclosure; or trade union membership/activity. Dismissal Dismissals Acts 1977 to 2015. If the dismissal is found to have on any of these grounds is deemed automatically unfair. been unfair, the employee may be reinstated or re-engaged or, more Furthermore, any attempted dismissal while an employee is on a period commonly, may receive compensation for the loss of earnings of protective leave (e.g., maternity leave, adoptive leave, etc.) is void. caused by the dismissal. Generally, the maximum compensation Employees with disabilities are protected under the Employment is two years’ pay unless the dismissal followed the making of a Equality Acts 1998 to 2015, and a process is generally required to protected disclosure within the meaning of the Protected Disclosures avoid discrimination claims when dismiss such employees. Act 2014 where the maximum compensation is five years’ pay. If the dismissal is a discriminatory dismissal, then the employee can bring a claim under the Employment Equality Acts, under which 6.5 When will an employer be entitled to dismiss for: damages of up to two years’ remuneration can also be awarded. 1) reasons related to the individual employee; or 2) business related reasons? Are employees entitled If a wrongful dismissal, or if the dismissal is by reason of having to compensation on dismissal and if so how is made a protected disclosure, the employee can seek to restrain the compensation calculated? dismissal.
It is permissible for an employer to dismiss an employee in 6.8 Can employers settle claims before or after they are accordance with his or her notice entitlement. However, under the initiated? Unfair Dismissals Acts 1977 to 2015, a dismissal shall be deemed not to be unfair if it results wholly or mainly from one or more of Yes, claims can be settled at any time. the following: ■ the capability, competence or qualifications of the employee for performing work of the kind which he or she was 6.9 Does an employer have any additional obligations if employed by the employer to do; it is dismissing a number of employees at the same time? ■ the conduct of the employee; ■ the redundancy of the employee; There are special statutory rules for collective redundancies. ■ that the employer was prohibited by statute from continuing Collective redundancies arise where, during any period of 30 to employ the individual in the job; and consecutive days, the number of employees being made redundant ■ that there were some other substantial grounds justifying the are: dismissal. ■ five employees where 21–49 are employed; Where the termination of employment arises by reason of ■ 10 employees where 50–99 are employed; redundancy, the employer is required under the Redundancy ■ 10% of the employees where 100–299 are employed; or Payments Acts 1967 to 2014 to make a statutory redundancy lump sum payment to the employee where the employee has accrued 104 ■ 30 employees where 300 or more are employed. weeks’ continuous service. Employers may also make an ex gratia The employer is obliged to enter into consultations “with a view payment in addition to the statutory lump sum; however, there is no to agreement” with employee representatives. These consultations legal obligation on employers to do so. must occur at least 30 days before the notice of redundancy is given and should consider whether there are any alternatives to the redundancies. The employer is required to provide specific 6.6 Are there any specific procedures that an employer has to follow in relation to individual dismissals? information in writing to the employee representatives and the Minister for Business, Enterprise and Innovation. Under the Unfair Dismissals Acts 1977 to 2015, employers must act “reasonably” and afford employees full and fair procedures in
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6.10 How do employees enforce their rights in relation to 8 Data Protection and Employee Privacy mass dismissals and what are the consequences if an employer fails to comply with its obligations? 8.1 How do employee data protection rights affect the employment relationship? Can an employer transfer An employee (whether directly or through their representatives) employee data freely to other countries? may bring a claim to the Workplace Relations Commission for failure to inform and consult on behalf of the affected employees. If The Data Protection Acts 1988 and 2003 currently regulate how successful, compensation of up to four weeks’ remuneration may be employers collect, store and use personal data held by them about awarded to each affected employee. their employees (past, prospective and current). However, the Ireland Breach of collective redundancy consultation is also an offence. legal framework for data protection will change when the General Data Protection Regulation (GDPR) enters into force on 25th May 2018. When enacted, the Data Protection Bill 2018 will be the main 7 Protecting Business Interests Following Irish legislative instrument that will give effect to, or provide for Termination exemptions from, certain provisions of the GDPR. Infringement of the GDPR can lead to: 7.1 What types of restrictive covenants are recognised? ■ investigation by the Data Protection Commission (as it will then be known); Express covenants which protect an employer’s legitimate proprietary ■ administrative fines of up to €20 million or 4% of worldwide interests (such as customer connections or goodwill, trade secrets or turnover (whichever is the greatest); confidential information) are recognised. ■ criminal penalties in certain limited circumstances; and/or ■ compensation claims from affected employees.
7.2 When are restrictive covenants enforceable and for With the exception of the administrative fines regime, many of what period? these penalties are similar to those currently in place under the Data Protection Acts 1988 and 2003. Post-termination restrictive covenants are presumed unenforceable Employers should not provide employee data to third parties as a restraint of trade and are contrary to public policy, unless: otherwise than in accordance with the principles and processing ■ they go no further than is reasonably necessary in scope, conditions set out in the GDPR and the Data Protection Bill once duration and geographical extent to protect an employer’s enacted. It may be necessary to obtain express consent from the legitimate proprietary interests; or employee to such disclosure in the absence of a legitimate business ■ they do not otherwise offend public policy. purpose for the disclosure and depending on the nature of the If the covenant specifies a period that is longer than necessary to information and the location of the third party. Where a disclosure protect the employer’s legitimate business interests, then a court is based on consent, an employer will have to satisfy itself that the may strike down the clause in its entirety as unenforceable. This consent is freely given, fully informed, specific and unambiguous, is very much case specific depending on the facts but the generally in accordance with the requirements under the GDPR. Where the recognised maximum is nine to 12 months (and only then for the data is being transferred to a third party within the EEA, a written most senior employees). contract should be entered into whereby the recipient agrees to process the data in accordance with the instructions of the transferor and comply with the security obligations set out in the GDPR. 7.3 Do employees have to be provided with financial Where the third party is based outside the EEA, the GDPR prohibits compensation in return for covenants? the transfer of data unless that country ensures an adequate level of protection for personal data or one of a series of limited exceptions No, employees do not have to be provided with financial apply. compensation in return for covenants although the agreement under which these are set out must contain consideration to make these contractually binding. 8.2 Do employees have a right to obtain copies of any personal information that is held by their employer?
7.4 How are restrictive covenants enforced? The GDPR extends the rights of data subjects which previously existed under the Data Protection Acts 1988 and 2003. Once the Where an employer is aware of an actual or potential breach of GDPR comes into force employees, as data subjects, may make restrictive covenants and where appropriate undertakings cannot be various data subject requests which will entitle them, in certain obtained from the employee, proceedings can be brought to seek an circumstances, to: order seeking enforcement of restrictive covenants in the High Court. ■ be informed as to what personal data is held about them and These proceedings are taken as an interlocutory injunction and will to whom it is disclosed; be heard within a number of weeks of an action commencing. ■ obtain a copy of their personal data; Damages may also be awarded for breach of these covenants. ■ have personal data amended or deleted if incorrect; ■ have personal data erased; ■ restrict the manner in which their data is used; and ■ object to the processing of their data (where consent is used as a legal basis).
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8.3 Are employers entitled to carry out pre-employment 9 Court Practice and Procedure checks on prospective employees (such as criminal record checks)? 9.1 Which courts or tribunals have jurisdiction to hear employment-related complaints and what is their Employers must comply with fair collection and processing composition? obligations under the Data Protection Acts and, from 25th May 2018, under the GDPR and the Data Protection Bill once enacted. Save for claims for wrongful dismissal (which go before the Potential employees should be notified of the nature and extent of civil courts), an Adjudication Officer of the Workplace Relations background checks. Either their consent should be obtained or the Commission hears most employment law complaints at first instance. Ireland processing must be necessary in the employer’s legitimate interests when balanced against the rights of the potential employee. Given the requirements applying to the use of consent under GDPR, it is 9.2 What procedure applies to employment-related recommended that consent is not used as a justification for processing complaints? Is conciliation mandatory before a where possible. It is an offence to require an employee to lodge data complaint can proceed? Does an employee have to pay a fee to submit a claim? access requests for the purpose of obtaining a background check.
A claim form is submitted to the Workplace Relations Commission. 8.4 Are employers entitled to monitor an employee’s No fee is applicable. Voluntary mediation may be available (if the emails, telephone calls or use of an employer’s Workplace Relations Commission deem the case appropriate for computer system? mediation).
Employers may only do so where the right to do so is set out and communicated under a policy of which employees are made aware. 9.3 How long do employment-related complaints typically All such monitoring is subject to compliance with data protection law take to be decided? and must therefore be proportionate and in pursuit of the employer’s legitimate interest. Certain types of monitoring may also be subject Up until recently, employment cases took approximately 18 months to restrictions under the Postal and Telecommunications Services until a first hearing, with decisions only issuing a few months Act 1983 and the EC (Electronic Communications Networks and thereafter. However, since the establishment of the Workplace Services) (Privacy and Electronic Communications) Regulations Relations Commission in October 2015, recent cases have been 2011. In order to comply with data protection law, employees scheduled for hearing within approximately three to six months, should be notified of any monitoring that may be carried out, as well depending on geographic location, with decisions issuing one month as its purpose. to six weeks later.
8.5 Can an employer control an employee’s use of social 9.4 Is it possible to appeal against a first instance media in or outside the workplace? decision and if so how long do such appeals usually take? Yes, provided an employer has a relevant and reasonable social There is an appeal to the Labour Court, which must be filed within media policy which is notified in advance to employees. 42 days of the Adjudication Officer’s decision. Depending on the circumstances of a case, appeals can be heard and decided within six to 12 months. A further appeal on a point of law only then lies to the High Court. These cases can take one to two years to be heard and decided.
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Mary Brassil Stephen Holst McCann FitzGerald McCann FitzGerald Riverside One Riverside One Sir John Rogerson’s Quay Sir John Rogerson’s Quay Dublin 2 Dublin 2 Ireland Ireland
Tel: +353 1 607 1219 Tel: +353 1 511 1517 Email: [email protected] Email: [email protected] URL: www.mccannfitzgerald.ie URL: www.mccannfitzgerald.ie Ireland Mary is a Partner in McCann FitzGerald and advises on all aspects Stephen is a Partner in McCann FitzGerald and advises clients of employment law with particular experience in advising domestic in operational, transactional and crisis issues in the workplace, in and international clients on the employment, equality and industrial particular on: senior executive appointments; complex investigations; relations law issues arising from mergers and acquisitions, Transfer employee engagement and terminations; and the drafting and of Undertakings Regulations issues, corporate restructurings, cross- negotiation of key employment documentation. border mergers, outsourcings and redundancy situations. Stephen has significant experience before various employment law She advises on all matters arising out of the employer-employee tribunals and the High Court (including the Commercial Court), as well relationship (such as drafting and negotiating contracts of employment, as through mediation. He also assists clients in conducting complex advising on the implementation of appropriate HR and IR policies and employee investigations. Stephen’s work has a particular focus on procedures, management of ongoing employee issues, advising on whistleblowing (including the Protected Disclosures Act 2014) and termination of employment and restrictive covenants). executive remuneration; his dual qualification as a Chartered Tax Adviser provides an additional perspective in employee remuneration She represents employers in contentious employment law disputes. matters. She has significant experience of advising clients in the financial services sector on executive remuneration. Stephen also regularly advises on the employment and industrial relations aspects of outsourcings, procurement and restructurings, Mary writes and lectures widely on all topics relating to her practice including on redundancy law, union issues, consultation and TUPE. area and recently contributed the Irish chapter of “Global Legal Insights – Employment and Labour, 6th Edition”.
With almost 600 people, including over 390 lawyers and professional staff, McCann FitzGerald is one of Ireland’s premier law firms. We are consistently recognised as being the market leader in many practice areas and our pre-eminence is endorsed by clients and market commentators alike. Our principal office is located in Dublin and we have overseas offices in London, New York and Brussels. We provide a full range of legal services, primarily to commercial, industrial and financial services companies. Our clients include international corporations, major domestic businesses and emerging Irish companies. We also have many clients in the State and semi-State sector. McCann FitzGerald has a well established reputation for innovation and was named as a Top 50 innovative firm in theFT Innovative Lawyer Awards in 2016 and again in 2017. The firm was also awarded “Law Firm of the Year 2016” at The Lawyer European Awards.
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Isle of Man Leanne McKeown
DQ Advocates Limited Jessica McManus
obligation to provide within four weeks after the beginning of 1 Terms and Conditions of Employment the employee’s employment, written particulars of employment including: the parties to the contract; job title; employment start 1.1 What are the main sources of employment law? date; term and any continuity of service; place of work; pay rates and intervals; hours of work and holiday entitlement; sick pay; The main source of employment law is found in the legislation set out pension details; normal retirement age; notice period; and whether within various Acts of Tynwald (the Parliament of the Isle of Man), the contract is subject to any collective agreements. and associated secondary legislation, such as Regulations and Orders. A written statement need not contain all of the specified particulars In addition, Codes of Practice will be issued to provide practical provided that it refers the employee to some other document guidance to employers, employees and their representatives on containing the information required. Isle of Man employment law. Save that non-compliance with any Code will not give rise to liability, any Code of Practice issued 1.4 Are any terms implied into contracts of employment? under the Employment Act 2006 (EA 2006) will be admissible in evidence before an Employment Tribunal and any provision of the Implied terms may be derived from various sources. A term can only Code which appears to the Employment Tribunal to be relevant to be implied if: any question arising in the proceedings is required to be taken into a) it is necessary to give the contract ‘business efficacy’; account in determining that question. b) it represents the custom and practice in that employment and is Other rights will be set out in contracts of employment. reasonable, certain and notorious; or c) it is an inherent legal duty central to the relationship between 1.2 What types of worker are protected by employment employer and employee – for example, a woman’s right to equal law? How are different types of worker distinguished? treatment in employment, the duty to provide a safe system of work or the duty not to undermine trust and confidence. Employees have the most extensive rights under the law. The EA 2006 defines an employee as an individual who has entered into or 1.5 Are any minimum employment terms and conditions works under (or where the employment has ceased, worked under) set down by law that employers have to observe? a contract of employment. A contract of employment will exist where: (1) an individual agrees Employees have certain minimum legal rights, for example: to provide his own work and skill in the performance of some service ■ An employer must provide an employee with more than to his employer (‘mutuality of obligation’); (2) the employer exerts two years’ continuous employment with one weeks’ notice control over the individual in the performance of that service; and for each complete year of continuous employment, up to a (3) there is nothing inconsistent with an employment relationship. maximum of 12 weeks. An individual will be a worker where he/she is obliged to undertake, ■ Employers must also observe the appropriate rate of the minimum wage, being, for the majority of workers aged 25 or personally, work or services and does not carry on a business. The over, £7.50 per hour. definition of a worker can be extended in limited circumstances. Unlike an employee, a worker is not protected against unfair ■ Workers have an annual entitlement to four weeks’ paid leave. dismissal and has no entitlement to statutory redundancy pay. A number of family rights are also subject to statutory minimum Individuals who are self-employed attract limited rights under the entitlement, to include periods of maternity, paternity and parental EA 2006. leave.
1.3 Do contracts of employment have to be in writing? If 1.6 To what extent are terms and conditions of not, do employees have to be provided with specific employment agreed through collective bargaining? information in writing? Does bargaining usually take place at company or industry level?
Contracts do not have to be in writing and can be express (whether Generally, on the Isle of Man, it is only the very large employers oral or in writing) or implied, save that employers have a legal who use collective bargaining, most commonly in the public sector.
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2 Employee Representation and Industrial 2.4 Are employers required to set up works councils? If Relations so, what are the main rights and responsibilities of such bodies? How are works council representatives chosen/appointed? 2.1 What are the rules relating to trade union recognition? There is no legislation in the Isle of Man requiring employers to set In order for a trade union, or a trade union official or member, to act, up works councils; nor are there any statutory provisions governing it must first be registered by application of seven or more members works councils set up voluntarily. to the Chief Registrar. The Chief Registrar may refuse registration if, inter alia, the applicants do not have standing, the application is 2.5 In what circumstances will a works council have co- not made in accordance with the legislation or the purposes of the Isle of Man determination rights, so that an employer is unable to trade union are unlawful. proceed until it has obtained works council agreement Annual returns must be filed with the Chief Registrar comprising to proposals? certain financial information and accounts, the trade union rules, a note of changes of offices, any report made by an auditor and any Please see question 2.4. other document required by the Chief Registrar. There is no right for trade unions to be recognised by employers; 2.6 How do the rights of trade unions and works councils however, guidance is available detailing the circumstances in interact? which it is considered reasonable for an employer to recognise a trade union, including where a union can demonstrate conclusively Please see question 2.4. that it has at least 50% of employees in membership. If a union cannot conclusively prove membership, but 10% of employees are in membership, a ballot of employees must be held. If the ballot 2.7 Are employees entitled to representation at board level? shows that 50% of the employees voting and 40% of those entitled to vote are in favour, it is reasonable for the employer to recognise the union. The law affords no general statutory right to representation at board level. The procedure for resolving a dispute about recognition exists via the Manx Industrial Relations Service (MIRS) and thereafter, a Court of Inquiry. 3 Discrimination
2.2 What rights do trade unions have? 3.1 Are employees protected against discrimination? If so, on what grounds is discrimination prohibited? Trade unions have no specific rights in relation to their dealings with employers. It will depend upon the terms of the recognition There exists only limited and piecemeal discrimination legislation at agreement between the trade union and the employer. The Code present in the Isle of Man, which prohibits discrimination in specific of Practice on the Recognition of Trade Unions 2001 emphasises circumstances on grounds of: voluntary resolution of disputes by way of an employer’s agreement ■ sex, marriage or civil partnership; to the recognition of trade unions for the purpose of collective ■ race; bargaining between the employer, employee and trade union. Please also see question 2.1 regarding disputes as to recognition. ■ sexual orientation; ■ religion or belief; and Notwithstanding that a trade union is unincorporated, it is capable of making contracts; all property is vested in trustees in trust for ■ trade union grounds. the union; the union can sue or be sued in its own name; and any However, the Equality Act 2017 introduces a more comprehensive judgment against the union shall be enforceable against any property set of ‘protected characteristics’ upon which discrimination and held in trust for the union. harassment will be unlawful: age; disability; gender reassignment; marriage and civil partnership; pregnancy/maternity; race; religion or belief; sex; and sexual orientation. The Act received Royal 2.3 Are there any rules governing a trade union’s right to take industrial action? Assent on 18 July 2017 and is subject to a phased implementation, with all provisions anticipated to be operational by January 2020. The Equality Act 2017 (Appointed Day No. 3 and Transitional Where industrial action would normally constitute a breach of Provisions) Order 2017 sets out the implementation dates for the contract of employment between the employee and employer, a main equality provisions in the Equality Act 2017. Protection registered trade union and its officials are immune from civil or is currently limited to the existing listed grounds above until the criminal liability if the action is in contemplation or furtherance full suite of protected characteristics under the Equality Act 2017 of a trade dispute. However, in order to ensure that immunity is come into force; therefore, there will be further changes to come as maintained, trade unions must follow a specific procedure. This implementation continues. includes ensuring the rules for lawful ballots are followed, ensuring that the industrial action is supported by a majority of those voting The remainder of this note addresses the law as it currently stands. in a ballot and making certain notifications of the intentions to the employer and MIRS.
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terms they would have benefitted from but for the dismissal. 3.2 What types of discrimination are unlawful and in what Re-engagement is an order on such terms as the Employment circumstances? Tribunal sees fit, that the employee be engaged by the employer or its successor in either employment comparable to that which Unlawful discrimination can be broadly categorised into three the employee was employed in prior to dismissal, or other suitable categories: direct discrimination; indirect discrimination; and employment. Orders for reinstatement or re-engagement are rare in victimisation. the Isle of Man. Direct discrimination occurs where an employee is treated less favourably as a result of one of the grounds listed at question 3.1. 3.6 Do “atypical” workers (such as those working part- Indirect discrimination occurs where a standard is applied to all time, on a fixed-term contract or as a temporary agency worker) have any additional protection? Isle of Man employees but which puts certain employees who are affected by one of the grounds at question 3.1 at a particular disadvantage, and which cannot be justified as proportionate to achieving a legitimate Part-time workers have the right not to be treated less favourably aim. (on a pro rata basis) than comparable full-time workers, unless the Victimisation occurs where an employee is treated less favourably difference in treatment can be objectively justified. for asserting their employment rights or for reporting or supporting another’s allegations of discrimination. 4 Maternity and Family Leave Rights In respect of discrimination on the grounds of race, sexual orientation, religion or belief and trade union grounds, the protection exists only in circumstances where there is a claim for unfair dismissal. 4.1 How long does maternity leave last? In respect of discrimination on the grounds of sex, marriage or civil partnership, the protection exists throughout the employment An employee is entitled to 26 weeks of ordinary maternity leave relationship, including dismissal. (OML), and thereafter (subject to certain conditions) is entitled to take a further 26 weeks of additional maternity leave (AML). An employee must take a minimum of two weeks’ leave after the 3.3 Are there any defences to a discrimination claim? child is born.
In claims of sex discrimination, an employer is vicariously liable for the acts of its employees, unless it can show that it took 4.2 What rights, including rights to pay and benefits, does reasonably practicable steps to prevent the employee from doing the a woman have during maternity leave? discriminatory act. Terms and conditions of employment are protected during OML, With regards to a claim for unfair dismissal by reason of save for remuneration. discrimination, employers may have a defence if they can show that the dismissal was justifiable. This is to be contrasted with the employee’s position during AML when only certain contractual provisions remain in force, for example the employee’s right to a redundancy payment, the right 3.4 How do employees enforce their discrimination to receive notice, etc. During AML, there is no entitlement to rights? Can employers settle claims before or after they are initiated? contractual annual leave in excess of the statutory minimum. Subject to certain conditions in relation to length of employment Employees can contact MIRS who provide a free and impartial and minimum earnings, Maternity Allowance is a social security conciliation service for employers and employees to try and resolve benefit that is paid to pregnant women and to women whohave disputes in the first instance. If conciliation proves unsuccessful recently given birth, for a maximum of 39 weeks at a maximum of (and in any event), employees can bring a claim in the Employment £179.85 a week. Tribunal. Claims can be settled at any time before they are initiated, after 4.3 What rights does a woman have upon her return to or during proceedings. Whilst either party can request that an work from maternity leave? Industrial Relations Officer endeavours to promote settlement of the claim without the involvement of the Employment Tribunal, the An employee returning after OML is entitled to return to the job in process of conciliation via MIRS is, in practice, automatic. which she was employed before her absence. An employee returning after AML is entitled to return to the job 3.5 What remedies are available to employees in in which she was employed before her absence, unless it is not successful discrimination claims? reasonably practicable, in which case she is entitled to return to another job which is both suitable and appropriate for her to do in Successful discrimination claims usually attract compensation as a the circumstances. remedy and the award can be unlimited in value. In certain cases, It is unlawful for a woman to be subjected to any detriment by any the Employment Tribunal may also make an award for injury to act or deliberate failure to act by her employer by reason of the fact feelings (maximum £5,000.00). that she is pregnant, has given birth or has tried to take/has taken In circumstances where the employee has been dismissed, they may OML or AML. require the Employment Tribunal to make an order for reinstatement or re-engagement. Reinstatement has the effect of putting the 4.4 Do fathers have the right to take paternity leave? employee in the position they would have been had they not been unfairly dismissed, including the imposition of any improved Fathers who have been in continuous employment for not less
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than 26 weeks, ending with the week immediately preceding the employee remain. The transferee is not obliged by law to employ 14th week before the expected week of the child’s birth, are entitled the transferring employees on the exact same terms of employment to either one or two weeks’ paternity leave, to be taken within 56 as previously enjoyed; this includes the terms of any collective days of the child’s birth. Subject to certain conditions, men will be agreements made. However, any change in terms will be the subject entitled to Paternity Allowance at a maximum of £179.85 a week. of a trial period by the employee. If the employee rejects the new contract terms, the employee is treated as redundant as of the date the original contract (with the transferor) would have ended. It will 4.5 Are there any other parental leave rights that employers have to observe? often be a matter of agreement between the parties to the business transfer transaction who is liable for the costs arising in this situation. Employees who adopt a child are entitled to similar rights, to
ordinary and additional adoption leave, as under the maternity 5.3 Are there any information and consultation rights on Isle of Man provisions. a business sale? How long does the process typically take and what are the sanctions for failing to inform An employee who has been continuously employed for a period and consult? of not less than a year and has or expects to have responsibility for a child who is entitled to receive disability living allowance, is There are no collective consultation rights in force in the Isle of entitled to be absent from work for the purposes of caring for that Man. child. An employee is entitled to 18 weeks’ leave in respect of any individual child who meets the above criteria, to be taken before the child’s 18th birthday. No more than four weeks’ leave per child may 5.4 Can employees be dismissed in connection with a be taken in any one year. business sale?
An employer must have a fair reason for any dismissal (see question 4.6 Are employees entitled to work flexibly if they have 6.5) and a fair procedure must be adopted. The Redundancy responsibility for caring for dependants? Payments Act 1990 deals with the situation where there is a change of employer by a transfer of an undertaking and the transferor has Employees with at least 26 weeks’ continuous service have the terminated the employment immediately prior to the transfer. If the right to request changes in their hours or place of work in order to transferee renews the employee’s contract of employment or re- care for dependants. The request must contain specific information engages the employee under a new contract (under the same terms and, unless approval is granted by the employer, a meeting must previously employed), the employee is not regarded as having been be held to discuss the request. Employers may only refuse such an dismissed by reason of redundancy and the employee retains their application on the basis of specified reasons, to include the burden continuous period of employment. of additional costs, detrimental effect to ability to meet customer demand and inability to reorganise existing staff or recruit additional staff. The employee thereafter has the right to appeal any refusal by 5.5 Are employers free to change terms and conditions of the employer. employment in connection with a business sale? Failure by an employer to follow the proper procedure, or where a refusal is based on incorrect facts, can result in the Employment Except for a mere change in the name of the employer, if the Tribunal making a declaration ordering the employer to reconsider provisions of any new contract of employment differ (wholly or in the decision, as well as making an award of compensation of up to part) from the previous contract, the employee is entitled to a four- eight weeks’ pay (maximum £4,320.00) to the employee. A claim week trial period. If, during the trial period, either side reasonably for discrimination could also be brought (there being no minimum terminates the contract, unless a further renewal or re-engagement service requirement). is offered, the employee will be treated as having been dismissed by reason of redundancy. During the trial period, the employer can only terminate for a reason connected with or arising out of the 5 Business Sales change.
5.1 On a business sale (either a share sale or asset 6 Termination of Employment transfer) do employees automatically transfer to the buyer? 6.1 Do employees have to be given notice of termination Where a business is transferred from one owner to another, the of their employment? How is the notice period determined? period of employment of an employee at the time of transfer counts as a period of employment with the transferee (i.e. the buyer). The period of continuous employment is not broken and, save for Save for where the employee is dismissed for gross misconduct, any intervening act (such as the dismissal of the employee by the they must be given notice of termination of their employment as transferor by reason of redundancy), employees will automatically set out in the employment contract or, as a minimum, the statutory transfer upon a change in ownership. entitlement (see question 1.5).
5.2 What employee rights transfer on a business 6.2 Can employers require employees to serve a period sale? How does a business sale affect collective of “garden leave” during their notice period when the agreements? employee remains employed but does not have to attend for work?
A business transfer does not break the continuity of the period of An employee can be required to go on “garden leave” if this right employment and accordingly all statutory rights acquired by the
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is reserved for the employer in the employment contract. During An employee will be made redundant if the employer has ceased “garden leave” the employment continues during the notice period or intends to cease the business, or the demand has diminished or but the employee is not required to attend work. It is often used to is expected to diminish for an employee to do that kind of work. If prevent outgoing senior employees competing with the employer. an employee is dismissed for wholly or mainly this reason, they are entitled to a statutory redundancy payment of one week’s pay up to a maximum amount of £540.00 for each complete year for which the 6.3 What protection do employees have against dismissal? In what circumstances is an employee employee has been continuously employed. treated as being dismissed? Is consent from a third party required before an employer can dismiss? 6.6 Are there any specific procedures that an employer has to follow in relation to individual dismissals? An employee has the right not to be unfairly dismissed if they have Isle of Man one year’s continuous employment. Employers must follow a fair procedure to avoid a finding of unfair An employee is treated as dismissed if: dismissal being made. a) they are dismissed by the employer subject to the relevant The Code of Practice on Disciplinary and Grievance Procedures notice being given; 2007 provides guidance on the procedures that ought to be b) if they are dismissed without notice as a result of breaching followed by an employer. The Employment Tribunal will take into the employment contract; or account the provisions of the Code in establishing whether or not a c) if they claim constructive dismissal (following a resignation dismissal was fair; however, what is fair will often depend on the by reason of a fundamental breach of contract by the circumstances of the dismissal and the individual facts. Generally employer). speaking, an employer will be required to provide an employee with Third-party consent is not required before an employer can dismiss. a warning as to the risk of dismissal and give them an opportunity to respond and/or take steps to improve or deal with the employer’s concerns. Where the employee is dismissed, a right to appeal the 6.4 Are there any categories of employees who enjoy decision should be given. special protection against dismissal?
Dismissal is automatically unfair if it is: for reasons connected 6.7 What claims can an employee bring if he or she is with family leave; for taking action in the interests of health and dismissed? What are the remedies for a successful safety; for asserting a right to annual leave; for whistleblowing; claim? for asserting a statutory employment right; for partaking in trade union activities; for seeking to enforce the minimum wage; for An employee may bring a claim in the Employment Tribunal seeking flexible working; for seeking the right to be accompanied for unfair dismissal. There are two types of unfair dismissal: (1) at a grievance hearing; for taking protected industrial action; on the automatic unfair dismissal; and (2) actual and constructive unfair grounds of racial or religious discrimination; or on the ground of the dismissal. A claim for automatic unfair dismissal arises where the employee’s sexual orientation. No minimum period of service is reason for dismissal is automatically unfair. This is usually where required to bring such a claim. an employee has been dismissed for exercising an employment right (see question 6.4). Otherwise, a dismissal may still be unfair Special protections also apply for employees where the dismissal if the dismissal was not for a fair reason and/or the employer did not is: in connection with industrial action; for refusing to work on a follow a fair procedure (see questions 6.5 and 6.6). Sunday or holiday; in respect of temporary replacement employees; or in connection with spent criminal convictions. In certain A claim for constructive dismissal may arise where the employee circumstances, dismissals for these reasons will always be unfair. resigns following a fundamental breach of the employment contract by the employer. Except in the case of automatic unfair dismissal where no qualifying 6.5 When will an employer be entitled to dismiss for: 1) reasons related to the individual employee; or 2) period applies, an employee must have one year’s continuous business related reasons? Are employees entitled employment and be under the employer’s normal retirement age in to compensation on dismissal and if so how is order to bring a claim for unfair dismissal. compensation calculated? See question 6.5 for the financial remedies that the employee may be entitled to. The Employment Tribunal may also make an order for The burden is on the employer to show that the dismissal was reinstatement or re-engagement of the employee. justified in the circumstances, i.e. fair, unless it was automatically A claim for wrongful dismissal may be brought in the Isle of unfair (see question 6.4). Man High Court of Justice on the grounds that the dismissal is in A dismissal will be potentially fair if it related to the employee’s breach of the employment contract. There is no qualifying period conduct, capability or qualifications, if their continued employment for a claim in the High Court. Damages recoverable are limited to would be illegal or if there is some other substantial reason contractual rights and the notice period, and unlike compensation justifying the dismissal. (In order to be fair, a fair procedure must for unfair dismissal, there is no limit on the damages that the High also be followed in effecting the dismissal (see question 6.6).) If Court may award. the dismissal is fair, compensation will not be payable. If the dismissal is unfair, the employee can claim compensation, 6.8 Can employers settle claims before or after they are which comprises a basic award of one week’s pay for each completed initiated? year of employment up to termination and a compensatory award based on the employee’s loss suffered, including expenses and other Claims brought can be settled both before and after commencement benefits, up to a maximum of £56,000.00. An employee may also of such proceedings. Please also see question 3.4. be entitled to an award for injury to feelings.
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6.9 Does an employer have any additional obligations if 7.4 How are restrictive covenants enforced? it is dismissing a number of employees at the same time? If an employer is aware or suspects that a former employee is breaching, or is intending to breach, restrictive covenants, they can Isle of Man employment law does not require employers to follow issue injunctive proceedings in the High Court of Justice of the Isle of specific collective consultation procedures when undertaking a Man to prevent the former employee from acting in breach. Depending number of dismissals (to include redundancies). However, to avoid on the nature of the known or suspected breach, proceedings can either unfair dismissal claims, it is good practice for employers to consult be issued with or without notice, the latter being more appropriate with employees, employee representatives and trade unions where where the ex-employee could do serious damage if given notice of possible, and to adopt fair and reasonable procedures. impending proceedings to restrain their actions. Isle of Man A claim for damages may arise where the employer has suffered loss 6.10 How do employees enforce their rights in relation to in consequence of the breach. mass dismissals and what are the consequences if an employer fails to comply with its obligations? 8 Data Protection and Employee Privacy Employees may enforce their rights following dismissal by bringing an unfair dismissal claim before the Employment Tribunal. 8.1 How do employee data protection rights affect the employment relationship? Can an employer transfer 7 Protecting Business Interests Following employee data freely to other countries? Termination Employers must comply with the Data Protection Act 2002 (DPA) when recruiting and employing. It applies to computerised 7.1 What types of restrictive covenants are recognised? information or information held in a structured filing system about employees or potential employees and regulates the way it is collected Post-termination covenants preventing former employees: dealing and processed during the recruitment process, in maintaining with, and/or the solicitation of, the employer’s clients and/or staff; employee records and ongoing monitoring of employees. Employers or competition by the employee, are commonplace in the contracts must make clear what information they are collecting and what it will of senior employees, as are express confidentiality clauses. be used for and must also allow reasonable access. The eighth data protection principle deals with the transfer of data abroad which, in summary, provides that personal data shall not 7.2 When are restrictive covenants enforceable and for what period? be transferred outside the Isle of Man unless an adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data exists. If transfers are made to A restrictive covenant will be deemed unenforceable as contrary to countries within the European Economic Area (EEA), they are public policy, unless it can be justified as being reasonable to the presumed to have an adequate level of protection. A number of interests of the parties and the public. Thus, a restrictive covenant factors must be taken into account in relation to transfers outside will only be enforceable if: the EEA. a) it protects a legitimate interest (being an advantage or asset inherent in the business); and The General Data Protection Regulation (GDPR) will be in force in the Isle of Man from 24 May 2016 and is fully enforceable from 25 b) it is no greater than reasonably necessary for the protection of the employer in his business. May 2018. The duration of the covenant will be key to determining the reasonableness of the same. If the period is longer than that which 8.2 Do employees have a right to obtain copies of any is reasonably necessary to protect the employer’s business interests personal information that is held by their employer? then it will fail. In determining the appropriate duration, employers should consider: In addition to having the right to find out what information is held ■ industry practice; about them, employees can make a data subject access request for copies of that information to their employers. A fee of £10.00 can be ■ the life-cycle of the business transaction; and charged by the employer who must provide the information sought ■ how much time the employer would properly require to replace within 40 calendar days. Employers must supply the details in an the departing employee. intelligible form. Post-termination restrictions usually last between three and 12 months. Under the GDPR any subject access request will not attract a fee and must be provided without undue delay and in any event within 7.3 Do employees have to be provided with financial one month of receipt of the request, save that this timescale may be compensation in return for covenants? extended by a further two-month period when necessary.
No compensation is required in return for an employee agreeing to 8.3 Are employers entitled to carry out pre-employment covenants (it often being the case that the offer of and/or continued checks on prospective employees (such as criminal employment acts as consideration to effect a binding contract). In record checks)? practice, however, where the terms of the employment contract are being changed to include more extensive restrictive covenants, for example Employers are entitled to carry out pre-employment checks to verify following promotion, the employer will include some consideration the accuracy of information provided by a prospective employee; the for the changes, by way of incentive, i.e. an accompanying pay rise. prospective employee should be told that this will be done and how.
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Given its high level of intrusiveness, the employer should exercise caution before carrying out any ‘vetting’ exercise, i.e. by making its 9 Court Practice and Procedure own enquiries, from third parties, about the prospective employee’s background or circumstances and it is recommended that vetting 9.1 Which courts or tribunals have jurisdiction to hear is limited to areas of special risk and should be aimed at obtaining employment-related complaints and what is their specific information rather than general intelligence gathering. composition? Where it is appropriate for exception occupations, offices, and professions identified within the DPA, criminal record checks can be The Employment Tribunal determines complaints arising under the undertaken by getting a ‘disclosure’ from the Disclosure and Barring employment protection legislation, for example, unfair dismissal Service, Disclosure Scotland, Access Northern Ireland or an equivalent claims, claims for minimum wage and sex discrimination complaints. The Employment Tribunal usually consists of three members: a legally
Isle of Man organisation. The level of disclosure will depend upon whether the applicant seeks to work with vulnerable people or children. qualified chairperson; a member drawn from a panel nominated by employers’ organisations; and a member drawn from a panel Employers cannot force prospective employers to make a subject nominated by employees’ organisations. The chairperson of the access request to obtain the information required, with such enforced Employment Tribunal may sit alone to hear and determine certain subject access being a criminal offence under the DPA. prescribed matters. Breach of contract claims, i.e. wrongful dismissal, will often be 8.4 Are employers entitled to monitor an employee’s pursued in the High Court. There is no statutory limit on any award emails, telephone calls or use of an employer’s made by the High Court and thus it can represent the more appropriate computer system? forum in high-value claims. Claims for personal injury suffered during the course of employment will also be determined in the High Court. Prima facie, an employer is entitled to monitor an employee’s emails, telephone calls or use of an employer’s computer system if it relates to the business. It can be done for a number of reasons including, 9.2 What procedure applies to employment-related for example: as a way of monitoring the employee’s performance; complaints? Is conciliation mandatory before a in order to monitor the type of business being undertaken or clients complaint can proceed? Does an employee have to pay a fee to submit a claim? being serviced; or in order to ensure systems are working correctly. This may, however, fall under data protection law and therefore Conciliation is not mandatory before a claim can be filed with the the employer should be open and transparent about the reasons for Employment Tribunal. Generally, claims must be lodged within monitoring and how it will be done and should continually monitor three months of the dismissal date. Unless an extension is sought, whether it is justified and/or can be done in a less intrusive way. the employer then has 28 days from the date the claim is sent by the Employers should not deliberately monitor private communications Employment Tribunal to respond. The MIRS receives copies of the or use of the computer system. However, excessive or unacceptable claim and response forms from the Employment Tribunal and will use of the employer’s computer system for private matters may go often seek to facilitate conciliation without request by the parties to an employee’s behaviour and work performance. and with a view to avoiding the need for a hearing. Employers should, before monitoring, carry out an ‘impact It is the practice of the Employment Tribunal on the Isle of Man to assessment’ in order to weigh up the benefits to the employer in await confirmation from MIRS that a case is unlikely to be resolved monitoring against the adverse impact for the worker(s) concerned at conciliation before then listing the matter for substantive hearing. and to consider the likely consequences for those affected by the In advance of any hearing, the parties will exchange relevant monitoring if it takes place. documents and witness statements. Employers are recommended to have a clear policy on monitoring No fees are payable upon filing a claim before the Employment and personal use of its computer systems. Tribunal. Claims filed in the High Court will attract a fee (based on the value of the claim). 8.5 Can an employer control an employee’s use of social media in or outside the workplace? 9.3 How long do employment-related complaints typically take to be decided? Employers often seek to control an employee’s use of social media both internally and outside the workplace insofar as it may affect the A statistical report for the period ending 31 December 2016 indicates employee’s behaviour and performance and in an effort to safeguard that, on average, a claim will take 28 weeks from the date of filing the employer’s reputation. to the first hearing date (including time at conciliation). Using the Whilst an employer would not in ordinary circumstances be justified same statistical report, a decision of the Employment Tribunal will in deliberately monitoring an employee’s private use of social media, usually take four weeks. an employee could not reasonably expect privacy in circumstances where use of that social media made it a work issue. For example, an employee should be allowed to use social networking subject to 9.4 Is it possible to appeal against a first instance decision and if so how long do such appeals usually the employee not engaging in any activity on social media that would take? bring the employer’s reputation into disrepute. Depending upon all the circumstances, it may be that an employer would be justified in An appeal from a decision of the Employment Tribunal may be disciplining the employee on the basis of their use of social media. made to the High Court, in accordance with the Rules of the High In order to minimise issues, employers should have a clear policy on Court. The appeal must be on a point of law and must be filed the use of social media in and outside the workplace which should within 42 days of the first instance decision. The duration of the balance the employee’s right to privacy with the employer’s own appeal process will be dependent on a number of factors, including needs. the Court’s availability.
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A decision or order of the Employment Tribunal may also be the Acknowledgment subject of a review, undertaken by the Employment Tribunal, which may see the decision revoked or varied. The authors would like to acknowledge Tara Cubbon, senior associate at DQ Advocates, for her assistance during the preparation of this chapter. Isle of Man Leanne McKeown Jessica McManus DQ Advocates Limited DQ Advocates Limited The Chambers, 5 Mount Pleasant The Chambers, 5 Mount Pleasant Douglas, IM1 2PU Douglas, IM1 2PU Isle of Man Isle of Man
Tel: +44 1624 632957 Tel: +44 1624 632981 Email: [email protected] Email: [email protected] URL: www.dq.im URL: www.dq.im
Leanne is a well-known and highly respected employment lawyer, Jessica is an associate in DQ’s employment team. As part of her who sits on the Isle of Man’s Chamber of Commerce Employment & varied practice, Jessica assists on a wide range of employment Skills committee, and regularly advises on all areas of employment law matters acting for both employers and employees, including cases and related litigation, whilst also providing support to DQ’s corporate in the Isle of Man Employment Tribunal, drafting and advising on and commercial team in relation to employment and/or immigration employment contracts and policies and advising employers on the matters arising in corporate transactions. Island’s unique work permit system. Jessica is also well-versed in the new Isle of Man Equality Act 2017 and has produced guidance for Isle Leanne is described in The Legal 500 as “a highly skilled lawyer with of Man businesses on the implications of the Act for them. excellent presentation ability” and a “very savvy and vibrant litigator”. In addition, Leanne has been individually ranked by Chambers & Partners Europe Guide 2014, and Chambers & Partners UK Guide 2015, 2016 and 2017 as a Star Associate (Employment – Isle of Man). As noted within the 2017 Guide, clients hail Leanne for her “exceptionally clear and practicable” advice, with it being noted that she enjoys a strong reputation in a wide range of contentious and non- contentious employment matters. Leanne is listed as a Leading Individual in Employment within the 2017 edition of The Legal 500.
DQ is a leading Isle of Man-based law firm with an international reach. We offer a full range of legal, regulatory and compliance services to our local and global clients. We are accessible, responsive and commercial with client-oriented strategies and goals. Our specialist lawyers are recommended as leading lawyers in Chambers and The Legal 500. Our thriving and dynamic practice has seen phenomenal growth over the past few years. We provide our clients with a cost-effective, speedy and tailored approach to their legal and business requirements. Our client base is extensive and global. We advise HNWIs, large corporate entities, institutions and industry leaders to start-up businesses and local service providers. DQ has one of the largest dedicated employment law teams on the Isle of Man and we are recognised specialists in this area, being described by clients as “one of the strongest employment teams on the island” and “a first port of call for commercially-important disputes” (The Legal 500, 2017).
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Israel
Erdinast, Ben Nathan, Toledano & Co. Advocates Miriam Kleinberger-Attar
working hours; pension allocations; travel expenses; and where 1 Terms and Conditions of Employment a collective agreement is applicable, the name and address of the workers’ union. 1.1 What are the main sources of employment law? 1.4 Are any terms implied into contracts of employment? The main sources of Israel’s Employment law are: statutory rights, as set out in laws, regulations and case law; rights set by extension Employment relationships are subject to an intensified degree orders of general collective bargaining agreements (“collective of good faith and loyalty. Employees are obligated to respect agreement”); general and special collective agreements; and the confidentiality of any information that they learn during the protective labour legislation and international standards, especially performance of their duties. the International Labour Organisation conventions adopted by the In addition, there are some sources of employment law that apply State of Israel, as well as European standards that are often used by certain rights to some or all employment contracts in Israel; the Israeli government and labour courts as guidelines with respect protective labour legislation (as elaborated in question 1.5) protects to various labour law related matters, even though they are not the minimal rights that every employee in Israel is entitled to. These binding. are cogent rights that employees cannot waive and are considered a part of every employment contract. Extension orders of general 1.2 What types of worker are protected by employment collective agreements implement standards and rights on all or part law? How are different types of worker distinguished? of employees (travel expenses, pension allocation, etc.).
All employees are, generally, protected by employment law. Being 1.5 Are any minimum employment terms and conditions an employee is a matter of status, thus a person may qualify as an set down by law that employers have to observe? employee notwithstanding any provision to the contrary that has been agreed upon (such as provision of services, agency contract, Protective labour legislation, general collective agreements and etc.). Self-employed persons (such as independent contractors) extension orders that apply to all employees in Israel, set minimum who do not have the status of employees, are not protected by employment terms that employers have to observe. Israel’s employment law. protective labour legislation is extensive and concerns different Some groups of employees are provided with a higher standard of types of employees and employment. Violation of such rules has protection due to special characteristics (such as contract workers, both criminal and civil aspects. These are the main rights: women, people with disabilities, etc.). Wages: Minimum wage; and wage protection (pay date, delay in Collective agreements and extension orders that apply to different wage compensation, pay deduction prohibition, etc.). sectors provide additional protection and rights to employees within Work and Leave: Work and rest hours (overtime); sick leave; their scope of application. annual leave; and holidays. Terms of Employment: Terms of employment (notice); the right 1.3 Do contracts of employment have to be in writing? If to seat while working; employment by Manpower Contractors; not, do employees have to be provided with specific prior notice of termination; severance pay; pension allocations; information in writing? travel expenses; youth and apprenticeship labour; reinstatement of discharged soldiers; and prohibition of receipt of collateral from an There is no obligation to have a written employment contract. employee. According to Israeli law, an employer has to provide all employees with a written notice regarding the terms of employment. The Equality: Equal opportunity employment; equal rights for notice must include these details: the employer’s and employee’s handicapped persons; women’s labour (regarding pregnancy, birth, identity; place of work; term of employment (indefinite or limited- maternity leave, etc.); equal pay to male and female workers; and term); job title (or description of work); employee’s supervisor; retirement age. commencement date; salary; annual leave; sick leave; day of rest; Compliance: Prevention of sexual harassment; protection annual recreation allowance; the component elements of pay; of exposures of offences of unethical conduct and improper administration; and work safety orders.
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2. Employment terms. 1.6 To what extent are terms and conditions of 3. Job acceptance or job-offer rejection or termination of employment agreed through collective bargaining? employment. Does bargaining usually take place at company or industry level? 4. Disagreement about rights and obligations arising from employment relationship. An employer who is a member of an employers’ association, is The notice must be submitted to the Chief Labour Relations Officer subjected to the terms and conditions of collective agreements in the Ministry of Labour and delivered to the other party to the to which said association is party to. These are general collective dispute, 15 days prior to a strike or lockout. The rationale behind agreements, which apply to the relevant industry or branch or this provision is to allow for a cool-off period. The Chief Labour countrywide. National and sectorial collective agreements may also Relations Officer may decide to conduct conciliatory measures Israel be expanded by extension orders by the Ministry of Labour, Social during such cool-off period. After the 15 days are up, he is not Affairs and Social Services (“Ministry of Labour”). Such extension entitled to postpone the strike if the parties did not reach an orders will apply to a relevant industry or branch or even countrywide. agreement. A sole employer may be party to a special collective agreement, in case A strike is lawful if it is based on work-related claims presented to there is a “representative union” in the workplace. The employer must the employer and commenced 15 days after a dispute was declared. bargain with the union in good faith to reach a collective agreement. The right to strike is not specifically mentioned in the statutes. However, there is no obligation to reach a collective agreement. However, the Supreme Court and the National Labour Court have held that such a right derives from the constitutional freedom of Terms and conditions provided for by collective agreements association. This is a right which must be balanced against other or extension orders apply to employment contracts. In case of constitutional rights and freedoms, such as the employer’s property contradiction, the provisions which are more favourable to the right. employee shall prevail.
2.4 Are employers required to set up works councils? If 2 Employee Representation and Industrial so, what are the main rights and responsibilities of Relations such bodies? How are works council representatives chosen/appointed?
2.1 What are the rules relating to trade union recognition? No, employers are not required to set up works councils, as these establishments do not exist in Israel. A trade union must meet the following statutory criteria in order to be recognised as representative for the purposes of a special collective agreement: 2.5 In what circumstances will a works council have co- determination rights, so that an employer is unable to 1. It has the largest number of organised employees to whom proceed until it has obtained works council agreement the agreement will apply. to proposals? 2. The amount of members is not less than one-third of all employees to whom the agreement will apply. This is not applicable. In a case of a general collective agreement, the organisation with the largest number of members among the employees to whom the 2.6 How do the rights of trade unions and works councils agreement will apply, will be recognised as representative. interact?
2.2 What rights do trade unions have? This is not applicable.
Once recognised as representative the employer must negotiate or 2.7 Are employees entitled to representation at board consult with the trade union about different employment matters level? (collective agreement, M&A, downsizing, etc.). Subject to certain terms the union can declare a labour dispute and This is not applicable. to strike. The union may be party to a collective agreement regarding the 3 Discrimination employees represented by that union, and it may represent individual employees as well. The union and its members are protected by law from any 3.1 Are employees protected against discrimination? If interference; unions are allowed to enter the employer’s premises in so, on what grounds is discrimination prohibited? order to promote the right of association. Discrimination is prohibited by specific labour protective laws and the Labour Court rulings. Employees are protected against 2.3 Are there any rules governing a trade union’s right to discrimination on the grounds of disability, sex, gender, sexual take industrial action? orientation, personal status, pregnancy, fertility treatments, parenthood, age, race, religion, nationality, country of origin, Industrial actions by unions in Israel are governed by the Settlement residence, conception, political affiliation and army reserve duty (in of Labour Disputes Law – 1957 and Labour Court rulings. Unions different aspects). or workers may declare a labour dispute on these issues: It is also prohibited to provide different terms of employment and 1. Conclusion, renewal, change, or cancellation of a collective compensation to female and male employees. agreement.
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3.2 What types of discrimination are unlawful and in what 4.2 What rights, including rights to pay and benefits, does circumstances? a woman have during maternity leave?
Any discrimination committed by an employer on the grounds During the first 15 weeks of maternity leave an employee is elaborated above, with respect to hiring, firing, employment terms, entitled to income, provided by the National Insurance Institute. The work, promotion, professional training, severance pay or benefits employee’s seniority will continue to accumulate and her employer and payments due to termination of employment or retirement, is is to continue pension fund allocations for her during this period. considered unlawful. The protection applies to employees, job An employee’s employment cannot be terminated during maternity
Israel applicants and Manpower Contractors’ employees. leave. Such dismissal is void and considered a criminal offence.
3.3 Are there any defences to a discrimination claim? 4.3 What rights does a woman have upon her return to work from maternity leave? Different treatment will not be considered unlawful when based upon objective and relevant characteristics inherent to the position Employers may not dismiss an employee for a period of 60 days or type of work. following her return from maternity leave. During such period the employee is entitled to work and keep the same scope of employment 3.4 How do employees enforce their discrimination and salary. The employee should be given a true opportunity to rights? Can employers settle claims before or after reintegrate at the workplace. they are initiated? Employees who work a full-time position, or at least 174 hours per month (whichever is lower), are granted an hour of paid leave each Employees can enforce their discrimination right in several ways: day for a period of four months after the return to work. 1. By submitting a civil claim to a labour court. 2. By filing a complaint to the Ministry of Labour (criminal 4.4 Do fathers have the right to take paternity leave? procedure). Such complaint may result in criminal proceedings or a fiscal sanction. A father is entitled to paternity leave if the child is in his custody 3. By submitting a claim with the applicable government and the father is the only caretaker due to the mother’s illness or agency. disability. Settlement is not prohibited by law, but can only cover civil aspects A male employee whose wife gave birth will be entitled to a partial of a discrimination claim. paternity leave under the following terms: his wife is entitled to maternity leave, was on maternity leave at least six weeks after birth, 3.5 What remedies are available to employees in and has waived her right to the remaining weeks. Additionally, an successful discrimination claims? employee whose wife gave birth is entitled to a seven-day paid maternity leave simultaneously to his wife (provided that she The labour courts are authorised to award damages without proof of waived her right to payment for such period). actual economic damage (the most common remedy). In addition, if the employee proves real damages, labour courts are authorised 4.5 Are there any other parental leave rights that to award for these damages. In rare cases, labour courts may also employers have to observe? reinstate an employee that was unlawfully dismissed. Israeli law provides employees who are responsible for caring for a 3.6 Do “atypical” workers (such as those working part- child, with the right to use certain paid parental sick leave days due time, on a fixed-term contract or as a temporary to child illness. agency worker) have any additional protection? Adoptive parents and foster parents also have rights for maternity leave. No, such atypical workers do not have any additional protection. According to Israeli law if the employer gives female employees certain parental rights, such as a shorter work day, the employer 4 Maternity and Family Leave Rights must give these rights to male employees, given that the employee’s wife has not used a parallel right.
4.1 How long does maternity leave last? 4.6 Are employees entitled to work flexibly if they have responsibility for caring for dependants? Maternity leave lasts for 26 weeks (the law allows an employee to shorten her maternity leave to a 15-week period only). An employee No, employees are not entitled to work flexibly where they have that was employed by her employer less than 12 months prior to the responsibility for caring for dependants. However, such entitlement birth is entitled to 15 weeks of maternity leave. might rise from a collective agreement or if such right is customary The law also allows an employee to take a leave of absence in the workplace. following her maternity leave under certain terms. In addition to leave due to child illness, an employee may also use The law grants an employee rights to a longer maternity leave in certain paid sick leave/annual leave days to care for an ill parent or special circumstances (such as the birth of two or more children, a life-partner. hospitalisation of the mother or newborn, etc.).
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described above, and subject to specific limitations set by the law 5 Business Sales (such as regarding maternity leave) or collective agreements.
5.1 On a business sale (either a share sale or asset 5.5 Are employers free to change terms and conditions of transfer) do employees automatically transfer to the employment in connection with a business sale? buyer? Subject to the limitation set forth in question 5.2 above, the employer No, in cases of sale of business, employees do not automatically may reach a new agreement with the employees, and with the union transfer to the buyer. In case of a share sale, the employer remains (if relevant). It is costumed not to change the terms of employment the same, and thus, it is not considered as a transfer of employees. when the employees are transferred. Israel However such sale may result in consultation or negotiation obligations. In the case of asset transfer the employees do not automatically transfer. 6 Termination of Employment
5.2 What employee rights transfer on a business 6.1 Do employees have to be given notice of termination sale? How does a business sale affect collective of their employment? How is the notice period agreements? determined?
In a share sale the continuity of employment and all rights is full, Prior notice is obligatory according to Israeli law, and it has to and all agreements continue to apply. be provided by the party initiating the termination. With respect In a change in employers (due to asset sale or merger), there are two to hourly employees the prior notice period is one day for every kinds of rights that apply: month worked during the first year of employment, 14 days during 1. Rights that derive from seniority in the workplace (even the second year of employment, 21 days during the third year of in a change of employer), sick leave and annual leave employment, and 30 days after three years of employment. With accumulation, severance pay, convalescence pay and other respect to employees who receive a monthly salary the notice period rights regarding the protection of women or employees who is one day for every month worked during the first six months of serve in the reserve army. employment, from the seventh month of employment six days in 2. Rights of employees that apply to the new employer by law: addition to two-and-a-half days’ notice for each additional work a. The application of collective agreements that applied to month, and 30 days’ prior notice after the first year of employment. the former employer. The notice period may be longer if the parties agree to that. b. The right to sue the new employer for debts created by the former employer regarding wages and pension/provident 6.2 Can employers require employees to serve a period fund payments. of “garden leave” during their notice period when the If the employees are fired and rehired, employees’ rights are not employee remains employed but does not have to transferred automatically and the buyer can set the terms of attend for work? employment. Yes, employers are entitled to require employees to serve a period of garden leave during their notice period, where they will remain 5.3 Are there any information and consultation rights on employed but not attend work. a business sale? How long does the process typically take and what are the sanctions for failing to inform and consult? 6.3 What protection do employees have against dismissal? In what circumstances is an employee There are consultation and negotiation duties, the guidelines of treated as being dismissed? Is consent from a third which have been developed in case law. Consultation should be party required before an employer can dismiss? conducted before the employer makes any decision relating to the subject matter. The company is required to inform the representative Dismissal is part of the employer’s prerogative. An employer can union of the contemplated transaction. Furthermore, the company dismiss an employee in good faith (“bona fide”), subject to the is required to provide the union information with respect to the limitations set by the law (see question 6.4 below), by case law contemplated transaction, especially to the extent it may have an (see question 6.6 below) and by agreements (including collective impact on the employees. If the contemplated transaction will have agreements which usually set the reasons for dismissal and the need an impact on the employees, such as termination of employment or for the union’s consent or consultation). change of employment terms, there may also be an obligation to An employee who resigned may be eligible to severance pay as if conduct negotiations with the union. dismissed in certain circumstances elaborated in the Severance Pay There is no strict limited period for consultation and negotiation, Law, 5723-1963 (“Severance Pay Law”) (e.g., resignation due to and it may change according to the circumstances. Violation of the caretaking of a child after giving birth or a significant worsening these duties may result in court proceedings or a labour dispute and of employment conditions). strike. The consent of a third party for an employee’s dismissal may only be required in the case of an employee who is entitled to special 5.4 Can employees be dismissed in connection with a protection against dismissal by the law (as elaborated under the business sale? following question), or if an employee’s employment is under a collective agreement (then the consent of the union or a special Yes, employees can be dismissed in connection with a business committee might be needed). sale, subject to fulfilling the negotiation and consultation duties as
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6.4 Are there any categories of employees who enjoy 6.7 What claims can an employee bring if he or she is special protection against dismissal? dismissed? What are the remedies for a successful claim? Israeli law prohibits dismissal of a pregnant employee, during her maternity leave and for a period of 60 days following her The claims may range from claims deriving from the employment return to work. The law enables the Ministry of Labour to grant and its termination (usually claims that certain rights were not paid employers specific permits allowing such dismissal in certain cases to the employee in accordance with the law or agreement) or with as elaborated in the law. regards to flaws in the dismissal process (such as lack of a hearing procedure), and claims such as discrimination, bad faith, emotional Israel Under certain terms, the law also prohibits dismissal of an employee during fertility treatments, during an adopting process, while hiding distress, invasion of privacy, defamation, workplace bullying, etc. in a shelter for battered women, etc. According to court rulings, in case of unjust dismissal the court may In certain terms, dismissal of employee due to army duty or army grant an employee monetary remedy (a variable number of salaries) reserve duty is also prohibited. and additional compensation due to mental anguish and loss of earning ability. In rare cases, courts may enforce employment. Employees are also protected against dismissal due to discrimination (see question 3.1), complaining against sexual harassment, whistleblowing, etc. 6.8 Can employers settle claims before or after they are initiated?
6.5 When will an employer be entitled to dismiss for: Yes, employers can settle claims either before or after they are 1) reasons related to the individual employee; or 2) initiated. In case the claim was served to the court, a settlement business related reasons? Are employees entitled to compensation on dismissal and if so how is is subject to the court’s approval. In case of class action there are compensation calculated? additional terms to the approval of a settlement.
Other than the rules and limitations specified above, an employer 6.9 Does an employer have any additional obligations if may dismiss an employee due to individual-related reasons or it is dismissing a number of employees at the same business-related reasons. time? With regards to compensation on dismissal, the Severance Pay Law provides an employee who was employed for a continuous period of No, an employer has no additional obligations when dismissing a at least 12 months and was dismissed, with the right to a severance number of employees at the same time. This is subject to collective payment equal to the employee’s last monthly salary and multiplied agreements which, generally, require the employer to inform, by the number of years of employment. (Such severance pay can consult and negotiate with the union prior to such dismissal. be reduced or denied, subject to certain terms, if the employee was dismissed for cause.) 6.10 How do employees enforce their rights in relation to Section 14 of the Severance Pay Law allows employers to make mass dismissals and what are the consequences if an monthly contributions towards a designated pension fund, which employer fails to comply with its obligations? will eventually replace the obligation to pay severance payment upon dismissal. Upon termination, the funds contributed towards An employee may address the court individually for injunction, such designated pension fund will be released to the employee, and annulment of an employee’s dismissal or compensation. The union the employer will not be liable for any additional severance payment may also address the court or announce a labour dispute and a strike. (whether the employment was terminated by the employee or by the employer). In the event that Section 14 of the Severance Pay Law was not applied, the general rule regarding the calculation of the 7 Protecting Business Interests Following severance payment mentioned above will apply. Termination According to the General Extension Order Regarding Pension Insurance (2008), all employees in Israel are entitled to pension 7.1 What types of restrictive covenants are recognised? insurance under which at least six per cent of the salary must be insured with respect to severance payment. Such insurance should Confidentiality is recognised as part of an employee’s fiduciary be provided up to the average wage in Israel or up to the employee’s obligation. Restrictive covenants, such as non-compete, non- wage (whichever is lower). solicitation and non-disclosure clauses are recognised under highly strict conditions, since they restrict the freedom of occupation. 6.6 Are there any specific procedures that an employer has to follow in relation to individual dismissals? 7.2 When are restrictive covenants enforceable and for what period? Israeli Labour Court rulings state that employees have the right to a preliminary hearing procedure before being dismissed; the employer Such restrictive covenants are not easily enforced, as they are must provide the employee with a hearing invitation, elaborating considered as violating the freedom of occupation. The courts examine all the reasons for the contemplated dismissal. The employee must different parameters, such as: the amount of risk to an employer’s be provided with enough time to prepare for the hearing, and the trade secrets and confidential information; the employee’s position hearing must be held with good faith (the employer should let the and seniority and resulting fiduciary obligation; compensation; the employee argue and truly and open-heartedly listen). After the severity of the employee’s violation; the scope and reasonability of the hearing the employer must take all the information and claims into restrictive covenants; or who initiated the termination. Such periods account and make an informed and a reasoned decision. are of a few months and, in very rare cases, may be up to 12 months.
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7.3 Do employees have to be provided with financial 8.5 Can an employer control an employee’s use of social compensation in return for covenants? media in or outside the workplace?
No, employees do not have to be provided with financial Employers are entitled to block the use of social media on company compensation in return for covenants. However, it is an important equipment and forbid employees from using social media (such parameter which may highly assist in enforcing such covenants. as Facebook) while working. Employers are not entitled to forbid employees from using social media outside the workplace and on employee equipment, unless it is a matter of state defence, etc. 7.4 How are restrictive covenants enforced? Israel If Labour Court finds the restrictive covenant enforceable it may 9 Court Practice and Procedure grant an injunction, a mandatory order or a monetary remedy.
9.1 Which courts or tribunals have jurisdiction to hear 8 Data Protection and Employee Privacy employment-related complaints and what is their composition?
8.1 How do employee data protection rights affect the Reginal Labour Courts have jurisdiction to hear employment- employment relationship? Can an employer transfer related complaints (in certain terms the claim will be held by the employee data freely to other countries? National Labour Court).
Employees’ rights of privacy are highly protected. Thus, monitoring Reginal Labour Courts usually have a panel that includes a judge, computers, cell phones, putting cameras in the workplace or an employer’s public representative and an employee’s public recording phone calls, the use of biometric clocks and using representative. employee data are all subject to specific rules set by the law and The National Labour Court usually has a panel that includes three supervising authority. The database has to be registered and judges, one or two employer’s public representatives and one or two monitored, and the transfer of employee data is subject to those rules employee’s public representatives. and to the relevant international law as well. The public representatives usually have a wide knowledge of and experience in labour relationships. 8.2 Do employees have a right to obtain copies of any personal information that is held by their employer? 9.2 What procedure applies to employment-related complaints? Is conciliation mandatory before a Yes, employees have the right to obtain copies of personal complaint can proceed? Does an employee have to information held by their employer. pay a fee to submit a claim?
Employees or employers can both file a claim with Labour Court. 8.3 Are employers entitled to carry out pre-employment During the first hearing a judge/registrar will offer the parties a checks on prospective employees (such as criminal record checks)? conciliation, but this is not mandatory for a complaint to proceed. Employees are released from court fees only with regards to certain Criminal record checks on employees are forbidden, except for claims (such as salary claims). specific employers as specified by the law (such as the police force, IDF, Ministry of Education, etc.), and other certain employers, 9.3 How long do employment-related complaints typically with regards to paedophiles. Employers are entitled to carry out take to be decided? personality tests, interviews, tests to assess a prospective employee’s compatibility, etc. An employment-related complaint that is fully heard by Labour Court (and is not settled, for example) typically takes a few years to be decided. 8.4 Are employers entitled to monitor an employee’s emails, telephone calls or use of an employer’s computer system? 9.4 Is it possible to appeal against a first instance decision and if so how long do such appeals usually An employer may monitor the use of company computers or emails take? only with respect to professional data. In order to avoid violating an employee’s privacy the case law sets strict rules as to the policy It is possible to appeal against a first instance final decision (interim an employer must adopt and the kinds of consent (or court orders) decisions require an approval to appeal, which is rarely given). An needed to execute such monitoring. appeal may take months or years.
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Miriam Kleinberger-Attar Erdinast, Ben Nathan, Toledano & Co. Advocates Museum Tower, 4 Berkowitz St. Tel Aviv, 6423806 Israel
Tel: +972 3 777 0120 Email: [email protected] URL: www.ebnlaw.co.il Israel
Miriam Kleinberger-Attar, partner at Israeli law firm Erdinast, Ben Nathan, Toledano & Co. Advocates, is head of the firm’s Labour Law and Employment Department. Miriam’s practice includes: the provision of labour law advice in M&A transactions; labour law litigation including collective and individual labour disputes; class actions; non-competition and non-strike issues; drafting and handling diverse collective and individual labour agreements, including those on executive compensation and (employee) stock option plans; and labour dispute negotiations. Miriam also advises the firm’s corporate clients, as well as other clients, on all aspects of labour law, including employee recruitment, employment terms and termination. Miriam speaks English fluently and her international and domestic clients find her knowledgeable and resourceful and value the real- world advice that she provides to employers. Miriam has been a member of the Israel Bar since 1989, and a certified mediator since 2003.
Erdinast, Ben Nathan, Toledano & Co. Advocates is a premier full-service law firm in Israel. The firm has played a pivotal role in some of the country’s most complex legal proceedings and transactions, always with an outstanding record of commitment, excellence and innovation. The firm is consistently recognised byChambers Global, The Legal 500, IFLR1000 and Israeli ranking guides as a leading law firm, and its industry insights attract clients from various sectors, including among others, global corporations, banks and financial institutions, start-ups, investment funds and hi-tech companies. EBN’s Labour Law Department is particularly valued by domestic and international clients for the team’s depth of knowledge and breadth of services. Focused on providing commercial and real-world advice to employers, the department provides ongoing consultation and advice to clients on the legal ramifications of all aspects of employment (hiring, terms of employment including benefits and stock options, termination of employment, etc.). The department provides consultation regarding personal and collective bargaining and its expertise in litigating and mediating labour law issues.
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Italy Giuseppe Bulgarini d’Elci
Carnelutti Law Firm Marco Sartori
there are specific data (e.g., salary, place of work, working hours) 1 Terms and Conditions of Employment which the employees have to be provided with within 30 days from the hiring date. 1.1 What are the main sources of employment law? The written form is mandatory for specific clauses (such as the termination date of a fixed-term contract, non-competition covenants, The main sources of Italian Employment Law are: trial period, etc.). ■ European Union Law; “Self-employment contracts” have to be in writing (pursuant to ■ Italian Law; Law No. 81/2017, the employer’s refusal thereto entitles the self- ■ collective labour agreements, mainly subdivided into: employee to claim damages). (i) National Collective Labour Agreements; and (ii) territorial as well as company-level collective labour 1.4 Are any terms implied into contracts of employment? agreements. Collective labour agreements are not binding as the Law, as they have to be complied with, essentially, There are many legal duties deriving from law that govern the by employers that (i) are members of the Employers’ employment relationship, even if they are not expressly referred to Associations executing collective agreements, or (ii) by individual parties, such as: make reference to the provisions of collective agreements, expressly or implicitly; ■ anti-discrimination duties upon the employer; ■ company practices, which become binding if, and to the ■ the employer’s duty to perform the contract in fairness and extent that, the employer grants (on a voluntary basis) a good faith; and favourable treatment, for a considerable time period; and ■ the duty of employees to observe the maximum care and ■ the individual employment contract. loyalty towards their employer. Moreover, case law also plays a leading role as a source of Italian employment law, even if precedents are not binding as is the case in 1.5 Are any minimum employment terms and conditions common-law jurisdictions. set down by law that employers have to observe?
We could consider, among others: 1.2 What types of worker are protected by employment law? How are different types of worker distinguished? ■ pursuant to a very general rule set forth by the Constitution (which has to be specifically implemented, case by case, by the applicable collective labour agreement), employees must Workers can be classified in the following main categories: be assigned with a salary level that is proportional to the ■ “employees”, who traditionally benefit from the strongest quantity and the quality of performed job duties and, in any protections under employment law; and case, sufficient to ensure the employee and their family an ■ “self-employees”, who have recently been granted specific independent and dignified life; protections by Law No. 81/2017. ■ the daily rest period to be observed by employees must be There is also a “grey area” of “long-term consultants” lying in between equal to 11 consecutive hours per day; and the above categories. Pursuant to Article 2, Legislative Decree No. ■ the annual paid leave period must be not lower than four 81/2015, such relationships are subject to regulations on employment weeks per year. (with specific exceptions expressly set forth by the Decree itself), if the activities of the consultant are: (i) performed on a personal basis 1.6 To what extent are terms and conditions of only; (ii) performed on a continuous basis; and (iii) organised by the employment agreed through collective bargaining? employer, including with reference to working hours and workplace. Does bargaining usually take place at company or industry level?
1.3 Do contracts of employment have to be in writing? If Collective bargaining could cover several labour issues, with not, do employees have to be provided with specific information in writing? reference to execution and performance as well as termination of employment. “Employment contracts” do not have to be in writing. However,
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Recently, company-level collective agreements have had a more ■ works councils promoted by Trade Unions that (i) executed widespread and growing application in Italy, because of two main the collective labour agreement applied to the relevant factors: business unit, or (ii) took part in the relevant bargaining (so- called, “RSA”); or ■ through Article 51, Legislative Decree No. 81/2015, company level agreements have been expressly allowed to set forth ■ works councils which, inter alia, are promoted by Trade regulations governing many features of employment, such Unions that executed the framework national collective as fixed-term contracts, temporary agency work, part-time labour agreements related to Trade Union representation in contracts and events which allow the employer to downgrade Italy (so-called, “RSU”). job duties assigned to employees (including without their The main difference between the above works councils lies in how
Italy consent) pursuant to the rephrased Article 2103 of the Italian they are set up; mainly appointed by the relevant Trade Union (as Civil Code (hereinafter, “ICC”); and per the RSA) or elected by the employees (as per the RSU). ■ since 2016, the execution of a company-level agreement is As to the rights which the works councils are attributed, we could the key to implement variable remuneration and company welfare programmes, with both significant cost-saving consider (among others): (i) the right to call meetings related opportunities for employers and increased purchase power to union matters (including during work time); (ii) paid “trade- for the employees. union” leave to perform activities related to union matters; and (iii) information and consultation rights on the occurrence of specific events (e.g., transfers of undertakings and redundancy procedures). 2 Employee Representation and Industrial
Relations 2.5 In what circumstances will a works council have co- determination rights, so that an employer is unable to proceed until it has obtained works council agreement 2.1 What are the rules relating to trade union recognition? to proposals?
The general rule is given by the freedom of Trade Union Generally, the events requiring the employer to undertake an organisation, which is basically set forth under Article 39 of the information and consultation procedure with Trade Unions and/or Italian Constitution. works councils do not imply that an agreement is executed, except for a few cases. 2.2 What rights do trade unions have? Among the latter, in the event of transfers of businesses (or lines of businesses) involving companies affected by insolvency procedures, The main rights attributed to Trade Unions are: the agreement with the works council could allow the employer, ■ the general right to associate and perform any activity on on specific conditions, to override the relevant legal protections for behalf of represented employees; employees (e.g., overriding their right to automatically continue ■ the right to strike; the employment relationships with the new employer on the same ■ the right to execute collective bargaining agreements; and terms and/or the right to maintain the financial treatment applied to employment unchanged). ■ the right to be informed and consulted when specific events – provided either by the Law or by the collective labour agreements – occur, affecting the business carried out by the 2.6 How do the rights of trade unions and works councils company. interact?
It depends on the specific case, in the light of the rules provided in 2.3 Are there any rules governing a trade union’s right to take industrial action? the articles of association of the concerned Trade Union.
The typical extrajudicial industrial action is the right to strike, which 2.7 Are employees entitled to representation at board has a specific discipline only with reference to companies operating level? in the sector of essential public services (Law No. 146/1990). Furthermore, specific legal action for anti-union behaviour, set forth Italian law has not implemented a rule setting forth representation by Article 28, Law No. 300/1970, could be started by local bodies at board level yet. of Trade Union organisations, whenever interested therein, if the employer’s conduct results in preventing or limiting the freedom 3 Discrimination and Trade Union activity or the right to strike. The case could lead to a court order to immediately stop the anti- union behaviour and to remove its effects. 3.1 Are employees protected against discrimination? If so, on what grounds is discrimination prohibited?
2.4 Are employers required to set up works councils? If The system of anti-discrimination rules regards all the phases of the so, what are the main rights and responsibilities of such bodies? How are works council representatives employment relationship (i.e., its execution, its performance and its chosen/appointed? termination) and covers, inter alia, the following areas: ■ involvement in a Union organisation and participation in a The setup of works councils under Italian law is not compulsory. strike (Law No. 300/1970); There are two main types of works councils (admitted in business ■ racial and ethnic origin (Legislative Decree No. 215/2003, implementing “Council Directive 2000/43/EC of 29 June units employing more than 15 employees), which, from a very 2000”); general standpoint, could be subdivided as follows:
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■ religion, belief, disability, age and sexual orientation (Legislative Decree No. 216/2003, implementing “Council 4 Maternity and Family Leave Rights Directive 2000/78/EC of 27 November 2000”); and ■ gender, pregnancy and marital status (Legislative Decree No. 4.1 How long does maternity leave last? 198/2006 (as amended by Legislative Decree No. 5/2010), implementing “Directive 2006/54/EC of the European Parliament and of the Council of 5 July 2006”). There are two main periods: ■ the “compulsory” maternity leave, which generally lasts from (i) the beginning of the second month preceding the probable 3.2 What types of discrimination are unlawful and in what date of confinement, to (ii) the end of the third month after circumstances? such date; and Italy ■ the “optional” leave, which could be benefitted from by the Discrimination could be: mother or father, provided that the child is not older than 12 ■ “direct”, when a person is treated less favourably than another years. Generally, the total aggregate period of “optional” expressly because of a discriminatory ground; or leave for the mother/father cannot be more than 10 months ■ “indirect”, when an apparently neutral provision, criterion or overall (extended to 11 months, if the father benefits from the practice would place individuals in a particular disadvantage leave for a period of more than three months, including in the compared with other persons, in fact, due to a discriminatory split period). ground. Collective labour agreements are entitled to regulate terms and conditions as to benefit from the “optional” leave on an hourly-basis.
3.3 Are there any defences to a discrimination claim? 4.2 What rights, including rights to pay and benefits, does Generally, the burden of proof is upon employees who consider a woman have during maternity leave? themselves wronged by an act of discrimination. During maternity leave the economic treatments are mainly In some events (e.g., discrimination against ethnic origin), the burden regulated as follows: of proof is shifted upon the employer, if the employee manages to provide “facts” (such “statistical data” on hiring, attributing job ■ during “compulsory” leave, the Italian Social Security Body duties, transfers and career opportunities as well as the dismissal by (hereinafter, “INPS”) pays an allowance equal to 80% of the average global daily salary. NCLAs could provide for the the concerned employer) where it may merely be implied that there payment of the residual 20% remuneration by the employer; has been discrimination. and As a defence, the employer could demonstrate that the alleged ■ during the “optional” leave, INPS pays an allowance equal discrimination was adopted for a fair objective reason. to 30% of the average global daily salary, for specific periods provided under the Law. 3.4 How do employees enforce their discrimination rights? Can employers settle claims before or after 4.3 What rights does a woman have upon her return to they are initiated? work from maternity leave?
Discrimination rights are usually enforced, among others, before the After the maternity leave, women are entitled to the following: Court. ■ the right to return (i) to the same business unit where they Discrimination claims can always be settled, both before and after were working at the beginning of the pregnancy period, or (ii) they are initiated. to another business unit located in the same municipality; ■ the right to be attributed the same job duties (or equivalent job duties) as the ones assigned prior to maternity leave; 3.5 What remedies are available to employees in successful discrimination claims? ■ the right to benefit from any contractual increases (provided either by the Law or by collective labour agreements) which they would have been entitled to during the leave period; and In successful discrimination claims, the employer may be required to cease the conduct and remove the negative effects. In addition, ■ the right not be terminated within one year from the birthdate. the employee may be entitled to the compensation for any damages Women are entitled to resign from employment in the period suffered. between the beginning of the pregnancy and the first anniversary of the date of birth (i) without serving a notice period, and (ii) being entitled to be paid an amount equal to the indemnity in lieu of notice 3.6 Do “atypical” workers (such as those working part- time, on a fixed-term contract or as a temporary period provided in the event of dismissal. agency worker) have any additional protection? 4.4 Do fathers have the right to take paternity leave? Part-timers, fixed-term employees and temporary agency workers are specifically protected by Legislative Decree No. 81/2015, which During “compulsory” leave, the father is entitled to the period which expressly sets forth the principle that such “atypical” workers are would have been benefitted from by the mother (wholly or partially, entitled to economic and legal conditions no lower than the ones depending on the period effectively benefitted from by the latter), if applied to comparable open-ended and full-time employees working one of the following events occurs: in the same company. ■ the death or serious disability of the mother; ■ child abandonment by the mother; or ■ custody of the child to the father on an exclusive basis.
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During the “optional” leave, the rules in question 4.1 above apply. 5.3 Are there any information and consultation rights on a business sale? How long does the process typically 4.5 Are there any other parental leave rights that take and what are the sanctions for failing to inform employers have to observe? and consult?
Both the period prior to the date of confinement and the one after In an “asset transfer” event, if the transaction involves a company with such date are protected by the Law as such: more than 15 employees overall, an information and consultation ■ during the pregnancy period, women can take specific paid procedure with the Unions has to be undertaken pursuant to Article leave for medical exams; and 47, Law No. 428/1990. The seller and the buyer must give written Italy ■ after the date of birth and until the first anniversary of such notice to the Unions at least 25 days before executing the instrument date, two hours per day (decreased to one hour per day if the triggering the transfer, or a binding agreement is reached between working time is lower than six hours) can be taken as specific the parties, if earlier. daily leave, to feed babies. In a “share sale” event, an information and consultation procedure with the Unions could be required by applicable collective labour 4.6 Are employees entitled to work flexibly if they have agreements, pursuant to Legislative Decree No. 25/2007 (which responsibility for caring for dependants? implemented “Directive 2002/14/EC of the European Parliament and of the Council of 11 March 2002”). The right to work flexibly, with specific regard to the responsibility Failing to inform and consult can be grounds for a legal action for for caring dependents, is provided, inter alia, by the part-time anti-union behaviour, pursuant to Article 28, Law No. 300/1970. discipline. To such effect, a priority right to convert a full-time employment contract into a part-time employment contract is set forth, among others, in the event of oncological diseases or serious 5.4 Can employees be dismissed in connection with a business sale? chronic and degenerative diseases of the relatives of the employee (husband/wife, parents and children). An “asset transfer” event does not constitute in itself a lawful reason to terminate an employment contract. 5 Business Sales It means that, if the transfer is the sole reason for the termination of one or more employees, the resulting dismissal will be held to be null and void. 5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the buyer? 5.5 Are employers free to change terms and conditions of employment in connection with a business sale? In a “share sale” event (which does not imply any change of the relevant employing company), the concerned employment No, employers are not free to change terms and conditions of relationships are not affected at all by the transaction between the employment in connection with a business sale (see answer at seller and the buyer. question 5.2 above). In an “asset transfer” event (which, on the contrary, implies a change The change of terms and conditions of employment is allowed of the relevant employer company), the concerned employment provided that very specific conditions occur (see answer at question relationships are automatically transferred from the seller (old 2.5 above). employer company) to the buyer (new employer company), pursuant to Article 2112 of the ICC. 6 Termination of Employment
5.2 What employee rights transfer on a business sale? How does a business sale affect collective 6.1 Do employees have to be given notice of termination agreements? of their employment? How is the notice period determined? In the “asset transfer” event: ■ the concerned employment relationships automatically In an open-ended employment relationship, employers can serve continue with the buyer starting from the effective date of the dismissal by (i) giving a notice period whose length is set forth by transfer, irrespective of the intention of the parties; the applicable collective agreement, or (ii) paying an indemnity in ■ the employees involved in the transfer retain all rights and lieu of the relevant notice period. remuneration entitlements acquired at the service of the The notice period (as well as the indemnity in lieu thereof) is not due seller, including those relating to accrued seniority; and when a “cause” occurs, i.e., a fact attributable to the employee which ■ the buyer must apply the economic and legal treatments does not allow the continuation of the employment relationship set forth by national, territorial and plant-level collective even on a temporary basis (hereinafter, “Cause”). agreements, if any, until their expiration date, unless they are replaced with other collective labour agreements already applied by the buyer. Replacement occurs only between 6.2 Can employers require employees to serve a period collective agreements of the same level. of “garden leave” during their notice period when the employee remains employed but does not have to attend for work?
Under Italian law there is no legal regulation regarding “garden
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leave”. However, it is not uncommon to mutually agree on a garden leave period as (one of) the conditions of a settlement agreement 6.6 Are there any specific procedures that an employer related to an amicable termination of the employment relationship. has to follow in relation to individual dismissals?
In the event of Disciplinary Dismissal, the employer must follow a 6.3 What protection do employees have against specific “disciplinary procedure” set forth under Article 7, Law No. dismissal? In what circumstances is an employee 300/1970, which is mainly aimed to provide the employee with a treated as being dismissed? Is consent from a third party required before an employer can dismiss? written notification of the facts grounding the misconduct and, as such, allow the employee to provide the employer with his or her
counter-arguments, if any. Italy The protections against unfair dismissal are set forth below at question 6.7. In the event of Economic Dismissal, the employer must follow an administrative procedure set forth under Article 7, Law No. 604/66, Generally, the employee is treated as being dismissed once he or she which is aimed to reach, if possible, a settlement agreement with the has received a dismissal letter. employee. Such procedure is compulsory (i) only with reference to The consent from a third party is not required as a requirement of the dismissal of employees hired until March 6, 2015, and (ii) if the the dismissal. company employs more than 15 employees in each working unit (or in different working units in the same municipality) or more than 60 6.4 Are there any categories of employees who enjoy employees overall. special protection against dismissal?
6.7 What claims can an employee bring if he or she is Dismissal is null and void (with the remedies below at question 6.7 dismissed? What are the remedies for a successful being applicable), inter alia, if it is served in the following main events: claim? ■ during the period between the application for marriage publications with the municipality until the first wedding As to the remedies against unfair dismissal, there is a broad distinction anniversary; or between: (I) open-ended employees hired until March 6, 2015; and ■ between the beginning of the pregnancy period and the first (II) open-ended employees hired on or after March 7, 2015. anniversary of the date of birth. I. Remedies applicable in case of unfair dismissal served on Still, such rule does not apply if one of the following events occur: employees hired until March 6, 2015 (i) gross misconduct of the female employee; (ii) discontinuance of If the company employs more than 15 employees in each the operations of the business where the female employee was hired; working unit (or in different working units in the same (iii) expiration of the term of a fixed-term employment relationship; municipality) or more than 60 employees overall, then the or (iv) failure to successfully complete the trial period. following remedies are applicable: ■ in case of unfair Disciplinary Dismissal: 6.5 When will an employer be entitled to dismiss for: a) if the Court holds that the event grounding the dismissal 1) reasons related to the individual employee; or 2) (i) does not exist or, (ii) is punished by the applicable business related reasons? Are employees entitled collective labour agreement with a conservative to compensation on dismissal and if so how is sanction (such as a mere suspension from work), then compensation calculated? the employer is subject to (i) reinstate the employee, and (ii) pay the monthly salary accrued from the date of dismissal up to the date of reinstatement, with a As to point 1) (hereinafter, “Disciplinary Dismissal”), an employee can maximum of 12 monthly salaries, plus the relevant be dismissed: (i) without notice period, on the grounds of Cause; or social security contributions. The employee has the (ii) with notice period, on the grounds of a subjective justified reason, option to decide whether to return to work or to be paid which is constituted by a severe breach of the employment obligations. additional compensation equal to 15 gross monthly As to point 2) (hereinafter, “Economic Dismissal”), the dismissal salaries; has to be justified by production, organisational and/or economic b) in any other event, the Court declares the employment reasons, which have caused the company to reorganise the business terminated and orders the employer to the payment of in a different perspective, downsize employment levels and/or an indemnity for damages between 12 and 24 gross eliminate one or more specific professional positions. monthly salaries, depending on several circumstances of the substance of the case as evaluated by the Court; As to the relevant compensation, dismissal implies for the employer, ■ in case of unfair Economic Dismissal: the following costs/risks: c) if the Court holds that the objective reasons are totally ■ in any event including Cause, end-of-service allowances, inexistent, then the employer could, alternatively, be such as: the severance pay (so-called “TFR”, i.e., an amount subject (depending upon a discretionary decision of annually set aside by the employer and calculated by adding, the Court) to the remedies under point a) above, or the for each year of service, an amount equal to the total gross remedies under point b) above; salary due for such year divided by 13.5, plus periodical revaluation); the pro rata supplementary instalments; and the d) if the Court decides the dismissal to be unlawful, but compensation for any accrued and unused holidays and paid at the same time rules that the business reasons are leave; not totally inexistent, the employer is subject to the economic sanctions described under point b) above; ■ the notice period or the indemnity in lieu thereof, if a Cause and does not occur; and ■ if the Court states that the dismissal is lawful, but the ■ if the dismissal is disputed by the employee before an procedures at question 6.6 above were breached, the employment Court which holds the dismissal to be unlawful, employer is subject to pay the employee an indemnity then the remedies described below at question 6.7 are between six and 12 monthly salaries depending on the applicable. kind of procedural breach.
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If the company (i) does not employ more than 15 employees be undertaken, which could lead (pursuant to specific requirements in each working unit (or in different working units in the under the Law) to the payment of a prefixed indemnity, based onto same municipality), and (ii) does not employ more than 60 the seniority of the concerned employee, that is exempted from both employees overall, the company would be ordered to pay taxation and social security contributions. an indemnity between a minimum of two-and-a-half and a maximum of six overall gross monthly salaries, depending on the number of employees on payroll, the size of the company, 6.9 Does an employer have any additional obligations if the employee’s seniority and the condition and behaviour of it is dismissing a number of employees at the same the parties. time? II. Remedies applicable in case of unfair dismissal served on Italy employees hired on or after March 7, 2015 Pursuant to Article 24, Law No. 223/1991, collective dismissal a) Both in the event of unfair Disciplinary Dismissal and in regulations apply when a company employing more than 15 the event of unfair Economic Dismissal, the employer is employees (i) intends to make redundant, within a period of 120 subject to the payment of an indemnity which: days, at least five employees who work in the same working unit, (i) is not subject to social security contributions; or in different working units established within the territory of the (ii) is equal to two monthly salaries (calculated as the same province, (ii) as consequence of a reduction or transformation last salary which has to be taken as reference to of the business or work, and (iii) with reference to all dismissals calculate severance pay) for each year of service; and that, in the same period of time and in the same area, are in any way (iii) cannot in any event be less than four monthly salaries related to the same reduction or transformation. or higher than 24 monthly salaries. To such effect, is has to be mainly considered that: b) In the specific event of unfair Disciplinary Dismissal A. under a formal standpoint, where an employer is contemplating determined because of the inexistence of the alleged a collective dismissal, it has to undertake an information and material fact, remedies substantially equivalent to the consultation procedure with the Unions, that could also include ones under point I.a) above are applicable. a specific phase before the Administrative Authorities; and c) In the specific event of Disciplinary Dismissal, if the B. under a substantial standpoint, redundant employees are Court states that the dismissal is lawful, but the procedure identified – with reference to technical, productive and ruled by Article 7, Law No. 300/1970 was not correctly organisational needs of the company – in accordance with the followed, the employer is subject to the payment of an selection criteria provided for by the agreement with Unions indemnity which: or, if an agreement is not executed, in accordance with the (i) is not subject to social security contribution; following legal selection criteria: family burdens; seniority of service; and technical, productive and organisational (ii) is equal to one monthly salary (calculated as the last requirements. salary which has to be taken as reference to calculate the severance pay) for each year of service; and (iii) cannot in any event be less than two monthly salaries 6.10 How do employees enforce their rights in relation to and higher than 12 monthly salaries. mass dismissals and what are the consequences if an employer fails to comply with its obligations? d) If the company (i) does not employ more than 15 employees in each working unit (or in different working units in the same municipality), and (ii) does not employ As to the remedies against unfair collective dismissal, there is a broad more than 60 employees overall, the relevant indemnities distinction between: (A) open-ended employees hired until March 6, provided under points a) and c) above are halved and, in 2015; and (B) open-ended employees hired on or after March 7, 2015. any case, cannot be higher than six monthly salaries. A. Remedies applicable in case of unfair dismissal served on III. Remedies applicable in case of a dismissal that is declared employees hired until March 6, 2015 null and void ■ If the Court holds that the dismissal is unlawful because of Finally, in the event of a dismissal that is declared null and the breach of the information and consultation procedure void (e.g., oral dismissal, discriminatory dismissal, dismissal set forth at question 6.9 above, then the remedies at served between the beginning of the pregnancy period until question 6.7, point I.b) above are applicable. the first anniversary of the date of birth), the following ■ If the Court holds that the dismissal is unlawful because of remedies are applicable both to employees under section I) the breach of the selection criteria set forth at question 6.9 above and employees under section II) above: above, then the remedies at question 6.7, point I.a) above ■ the employer is subjected to (i) reinstate the employee, are applicable. and (ii) pay the monthly salary accrued from the date of B. Remedies applicable in case of unfair dismissal served on the dismissal up to the date of the reinstatement, with a employees hired on or after March 7, 2015 minimum of five monthly salaries, plus the relevant social security contributions; and ■ If the Court holds that the dismissal is unlawful because of the breach of either the information and consultation ■ the employee has the option to decide whether to return procedure (set forth at question 6.9 above) or the selection to work or be paid with an additional compensation in an criteria (set forth at question 6.9 above), then the remedies amount equivalent to 15 monthly salaries. at question 6.7, point II.a) above are applicable.
6.8 Can employers settle claims before or after they are initiated? 7 Protecting Business Interests Following Termination Yes, it is possible to settle the dispute both before and after the beginning of a claim. 7.1 What types of restrictive covenants are recognised? With particular reference to the dismissal served on employees hired on or after March 7, 2015, a special conciliation procedure could The most common restrictive covenants are the following:
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■ confidentiality agreements, aimed to prevent the disclosure of secret information of the company; 8.2 Do employees have a right to obtain copies of any ■ non-solicitation covenants, aimed to prevent employees from personal information that is held by their employer? inducing employees and/or clients into leaving the company; and Upon express request, the “Data Controller” (meaning the natural ■ non-competition covenants (aimed to prevent the employee or legal person, public authority, agency or other body which, alone from undertaking activities in competition with the employer or jointly with others, determines the purposes and means of the after termination of the relevant employment relationship). processing of personal data) shall provide the employee with a copy of their relevant personal data under processing. The GDPR
provides that the Data Controller may charge a reasonable fee based Italy 7.2 When are restrictive covenants enforceable and for on administrative costs for any further copies of their personal data what period? requested by the employee. From a general standpoint, the restrictive covenants listed at question 7.1 above are enforceable provided they were executed in writing. 8.3 Are employers entitled to carry out pre-employment checks on prospective employees (such as criminal With particular reference to the non-competition covenant, according record checks)? to Article 2125 of the Italian Civil Code: ■ it has to be limited to a specific subject matter and territory; In all phases of employee recruitment and selection, the ■ it has to be fairly compensated; and employer should refrain from any type of discrimination. This ■ its duration cannot be more than three years (extended to five principle concerns investigation on political opinions, Trade Union years in case of executives). memberships, as well as any facts that are not consistent to assess if the prospective employees are suitable for the job, regardless of 7.3 Do employees have to be provided with financial the circumstance that the facts are secret, confidential, contained in compensation in return for covenants? official documents or, anyway, of common knowledge.
The compensation requirement is mandatory only with reference to 8.4 Are employers entitled to monitor an employee’s the non-competition covenant (see answer to question 7.2 above). emails, telephone calls or use of an employer’s Italian law does not specify the amount due as consideration for the computer system? non-compete covenant, but the Italian case law (i) has considered fair compensation ranging between 15% and 25% of the annual gross Article 4 of Law No. 300/1970 – which was rephrased by Article salary and, in any case, states that (ii) the amount of compensation 23 of Legislative Decree No. 151/2015 – provides, inter alia, that should be determined in connection with the subject matter, the any information collected through “working tools” and “equipment geographical area, the duration of the non-compete restriction and to record accesses and attendance at work” (which today no longer the role of the employee. require the prior approval of the Trade Unions or the minister of labour) may be used for all employment-related purposes on the condition that: 7.4 How are restrictive covenants enforced? ■ employees were appropriately informed on how the tools and equipment would be used and on how monitoring would be Restrictive covenants are usually enforced by a specific legal action implemented; and before the Court, possibly by special interim urgent proceedings. ■ privacy regulations (Legislative Decree No. 196/2003, and, from May 25, 2018, also GDPR) are complied with for all the 8 Data Protection and Employee Privacy relevant employees. If only one of these conditions is not met, then data cannot be used by the employer – for purposes related to the employment 8.1 How do employee data protection rights affect the relationship – regardless of the purpose of their collection. employment relationship? Can an employer transfer employee data freely to other countries? 8.5 Can an employer control an employee’s use of social From a very general standpoint, the new “Regulation (EU) 2016/679 media in or outside the workplace? of the European Parliament and of the Council” (so-called, General Data Protection Regulation, “GDPR”), which will enter in force on Any consultation or monitoring of social media by the employer May 25, 2018 and will add to the Italian “Data Protection Code” should be restricted to professional profiles of the employees, (Legislative Decree No. 196/2003), provides that the personal data – excluding their private lives, not only in respect of privacy including that related to employees – should be processed lawfully, regulations, but also under the right not to be discriminated based fairly and in a transparent manner, collected for specified, explicit on political ideas, social engagement or other aspects of the personal and legitimate purposes, adequate, relevant and limited to what is or family sphere. necessary in relation to the purposes, as well as accurate and, where necessary, kept up to date. A transfer of personal data from EU countries to “third party” countries (not belonging to the EU) is generally prohibited, unless such country guarantees, inter alia, an “adequate” level of protection of the data assessed by a European Commission decision.
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Currently, a conciliation procedure before a complaint is no longer 9 Court Practice and Procedure mandatory, but is merely optional. However, the Judge must undertake a conciliation attempt at the first hearing of the first 9.1 Which courts or tribunals have jurisdiction to hear degree procedure. employment-related complaints and what is their Generally, the amount of the contribution to submit a claim is composition? calculated on the value of the claim itself.
Our system of justice is subdivided into the following levels, each of which has the following composition: 9.3 How long do employment-related complaints typically take to be decided? Italy ■ first degree (so-called,Tribunale ), composed of a sole Judge; and The time depends mostly upon the type of litigation as well as the ■ second degree (so-called, Corte d’Appello), a Court territorial location of the Court having jurisdiction, even if we could composed of three Judges. very roughly consider – for each level of justice – a range between a There is also a Supreme Court (so-called, Suprema Corte di minimum of six months and a maximum of four or five years. Cassazione) which is composed of five Judges and is competent for issues related to breach of Law. 9.4 Is it possible to appeal against a first instance decision and if so how long do such appeals usually 9.2 What procedure applies to employment-related take? complaints? Is conciliation mandatory before a complaint can proceed? Does an employee have to After a first instance decision, it is possible to appeal before the pay a fee to submit a claim? Court of Appeal. As to the duration, please refer to the answer at question 9.3 above. A special procedure is applicable to employment-related complaints (pursuant to Article 409 of the Italian Code of Civil Procedure), which mainly features more speediness and the amplest powers the Judge are attributed.
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Giuseppe Bulgarini d’Elci Marco Sartori Carnelutti Law Firm Carnelutti Law Firm Via Principe Amedeo 3 Via Principe Amedeo 3 Milan, 20121 Milan, 20121 Italy Italy
Tel: +39 02 65585 1 Tel: +39 02 65585 1 Email: [email protected] Email: [email protected] URL: www.carnelutti.com URL: www.carnelutti.com Italy
Giuseppe Bulgarini d’Elci is a partner at Carnelutti Law Firm. Marco Sartori is a partner at Carnelutti Law Firm. He is the head of the firm’s labour law department. He has been He is a member of the firm’s labour department, where his practice working for more than 20 years in the area of labour law and labour focuses on labour/employment and social security law, representing relations. clients in both contentious and non-contentious matters. He is a regular contributor to the leading business newspaper “Il Sole He handles all labour-related issues with specific reference to employment 24 Ore”. He teaches at Scuola di Alta Formazione in Diritto del Lavoro, contracts, all phases of the employment relationship, compromises and organised by AGI (Association of Italian Labour Lawyers). settlement of claims, along with collective and individual dismissals. Giuseppe is a member of AGI, the Italian Labour Lawyers Association, He graduated “magna cum laude” from the Bocconi University of Milan. and of EELA, the European Employment Lawyers Association. He regularly writes on employment law matters for prestigious He is a lecturer on labour and employment law matters and has written publications and is invited as a key-note speaker to seminars in his field extensively in such areas. He is the author of several publications, of expertise. such as the books “Nuovo Codice dei contratti di lavoro e modifiche Prior to joining the firm, Marco worked for high-ranking Italian law firms, delle Mansioni” (New Code of Employment Contracts and Changes specialising in labour law. to Employment Duties) and “Il licenziamento del dirigente” (Executive Dismissals), both published by Giuffré Editore. Marco is a member of AGI, the Italian Labour Lawyers Association. Prior to joining Carnelutti, he worked for leading domestic law firms. He was admitted to the Italian Bar in 2009. He is recommended as a labour law expert by The Legal 500 and TopLegal 2015. Giuseppe was admitted to the Italian Bar Association in 1996, and has held rights of audience/representation before the Italian High Court since 2009.
The labour law team in Carnelutti Law Firm, staffed by highly qualified and experienced lawyers, provides its expertise in human resources management and compliance with employment laws and regulations to leading multinational groups and companies operating in all sectors, such as manufacturing, services, publishing, automotive, banking and financial industries. This broad client base, along with an in-depth expertise, gives Carnelutti’s labour law practice a cutting edge across the complete spectrum of labour and employment law, enabling its lawyers to advise its clients on Italian employment and labour law, social security law, relations with Trade Unions and related litigation. The firm’s lawyers have particularly detailed knowledge and experience in handling issues triggered by corporate restructuring and reorganisation and in the management of industrial relations.
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Japan Shiho Ono
Mori Hamada & Matsumoto Yuko Kanamaru
should be made based on the person’s actual working conditions (not 1 Terms and Conditions of Employment only by job title or the form or name of the contract) by taking into account various factors such as whether: (i) he/she has any discretion 1.1 What are the main sources of employment law? to refuse assignments; (ii) he/she is under someone’s control and should follow specific instructions regarding his/her work; (iii) the The two principal sources of employment law are the Labour place and time for work are fixed; (iv) other persons are allowed Standards Act (the “LSA”) and its Enforcement Ordinance, both to do the work; and (v) he/she is receiving wages in exchange for of which provide minimum standards for the terms and conditions providing the work. of employment contracts. In addition, the Labour Union Act (the Workers who are protected by employment law can be classified “LUA”) governs collective labour relationships, while the Labour into the following categories: Contract Law (the “LCL”) governs individual labour relationships i) non-fixed-term workers (the so-called regular“ workers”); by providing for the principles under which a labour contract ii) fixed-term workers, whose term of employment must not is to be entered into or changed through voluntary negotiations exceed three years (or five years in certain cases stipulated in between a worker and an employer. The LCL also governs other the LSA); basic matters concerning labour contracts. Other important sources iii) part-time workers, whose prescribed working hours are of employment law include the Industrial Safety and Health Act, shorter than those for regular workers; and the Employment Security Act, the Act on Improvement, etc. of iv) temporary workers or dispatched workers, who are employed Employment Management for Part-Time Workers, and the Act for by temporary staffing agencies and dispatched to other Securing the Proper Operation of Worker Dispatching Undertakings companies under the Temporary Staffing Services Law. and Improved Working Conditions for Dispatched Workers (the “Temporary Staffing Services Law”). 1.3 Do contracts of employment have to be in writing? If The Japanese government is currently discussing draft legislation not, do employees have to be provided with specific to amend employment regulations (including the LSA and the information in writing? LCL) and improve the working environment, focusing mainly on the problems of long working hours and wage gaps between An employment contract does not have to be in writing; an oral regular workers and non-regular workers. The draft legislations are agreement for employment is effective. However, an employer expected to be submitted to and discussed in the Diet in 2018. is required to expressly provide certain key employment terms Some important court decisions also function as a source of law. and conditions in writing to their workers. These key terms and The decisions of the higher courts, especially the Supreme Court, conditions include matters concerning: are seen as a source of law for lower courts, which usually hesitate i) the period of the employment contract; to render judgments that contradict higher court rulings as such ii) the place of work and job description; judgments would likely be overruled at the higher courts. iii) the start time and the end time for working hours, possible overtime work, break-time, rest period, rest days, and change 1.2 What types of worker are protected by employment in shifts (if the worker will work two or more shifts); law? How are different types of worker distinguished? iv) the determination, calculation and payment of wages (except retirement allowance and extraordinary wages (such as The LSA defines a “worker” as someone who is employed at and bonuses)), and the dates for the calculation of wages, payment receives wages from a business or office, regardless of the type of wages and wage increases; and of occupation, and a worker is protected by Japan’s employment v) the termination of employment (including regarding law. Independent contractors or self-employed people who enter resignation, retirement, dismissal or any other cause for into an outsourcing contract with a company and certain company termination). executives, such as board members and corporate officers, who can work at their own discretion, are not protected under employment 1.4 Are any terms implied into contracts of employment? law as they are not considered “workers”. The distinction between an independent contractor and a company executive on the one The minimum standards set out in the LSA are implied into hand, and a worker protected by employment law on the other hand, employment contracts with fixed-term workers (see question 1.2), if
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the contract is silent, or if it provides terms which are less favourable viii) An employer must pay at least the minimum wage under the for the workers than the minimum standards set out in the LSA. Minimum Wages Law. Minimum wages are fixed according to regulations for each district or for certain industries. If a certain employment term is applied repeatedly and continuously for a long period of time, it is possible for that term to be implied into the employment contract on the basis of an implied agreement and 1.6 To what extent are terms and conditions of general custom or practice. employment agreed through collective bargaining? Does bargaining usually take place at company or In addition, under the LCL, a fixed-term employment contract may be industry level? deemed renewed: (i) if the status of the fixed-term employment contract is not substantively different from a non-fixed-term employment contract
As long as both the employer and the union (the collective Japan due to repeated renewals; or (ii) when the continuation of employment bargaining parties) have the authority to agree on the subject terms can reasonably be expected even after the expiration of the term of the and conditions, which must not be less favourable for the workers fixed-term employment contract, unless there is a justifiable reason not than the minimum standards set out in the LSA, they can agree on to renew the fixed-term employment contract upon expiration and non- any terms and conditions during collective bargaining. In practice, renewal is deemed to be socially acceptable. collective bargaining agreements generally include major terms and conditions of employment such as wages and other benefits, 1.5 Are any minimum employment terms and conditions days off, paid leave, notice periods, promotions, transfers and set down by law that employers have to observe? disciplinary procedures. The employer is not required to discuss or agree on matters concerning the company’s organisation and high- The LSA and its Enforcement Ordinance set down minimum level management which are not directly related to employment employment terms and conditions, such as the following terms. conditions. i) An employer can require their workers to work longer than Collective bargaining usually takes place at the company or the statutory maximum hours, i.e., eight hours a day and 40 workplace level, but it can take place at the industry level as well. hours a week, only if they enter into a labour-management agreement (known as an “Article 36 Agreement”) with a union organised by a majority of the workers at the workplace 2 Employee Representation and Industrial or, where no union exists, with a worker representing a majority of such workers, and file such agreement with the Relations local Labour Standards Inspection Office. ii) If an employer extends the working hours beyond the statutory 2.1 What are the rules relating to trade union recognition? maximum hours, the employer must pay higher wages for each overtime hour equal to 125 per cent of the normal The LUA defines “labour unions” as organisations or federations wages per work hour. For each overtime hour in excess of 60 overtime hours in one month, the rate for each overtime hour of unions formed voluntarily by and composed mainly of workers increases to 150 per cent of the normal wages per work hour. for the main purposes of maintaining and improving working Small- and medium-sized employers, defined as employers conditions and raising the economic status of the workers; however, whose capital amount, amount of investment or number of the following groups are not “labour unions”: workers falls below certain thresholds, are currently exempt i) a group which admits persons who represent the interests of from the 150 per cent overtime rate; however, the LSA is the employer including directors and workers in supervisory expected to be amended to abolish this exemption in 2019. positions; iii) An employer is also required to pay higher wages equal to ii) a group which receives the employer’s financial assistance in 135 per cent of the normal wages per work hour for work on paying the organisations’ operational expenditures; holidays. iii) a group whose purposes are confined to mutual aid service or iv) An employer must also pay an additional 25 per cent of the other welfare services; and normal wages per work hour for work from 10pm to 5am. iv) a group whose purposes are principally political or social If a worker works overtime between 10pm to 5am, the movements. employer must pay wages at the rate of 150 per cent of the normal wages per work hour (i.e., 125 per cent as overtime A union is not required to file any application with authorities to be pay plus 25 per cent as night shift pay). If a worker works recognised as a “labour union”, but it is required to file evidence between 10pm to 5am on holidays, the employer must pay with the Labour Relations Commission and demonstrate that all wages at the rate of 160 per cent of the normal wages per the requirements described above are satisfied when it takes legal work hour (i.e., 135 per cent as holiday pay plus 25 per cent actions, including applications for examination of cases of unfair as night shift pay). labour practice. v) An employer is required to give break times during working hours for at least 45 minutes when working hours exceed six hours, and for at least one hour when working hours exceed 2.2 What rights do trade unions have? eight hours. vi) An employer is required to give workers at least one day off The establishment of a labour union and its activities are guaranteed per week; however, this rule does not apply to an employer as basic labour rights by the Constitution of Japan and the LUA who provides workers with four days off or more over any which stipulates these rights in detail. A labour union has the right to four-week period. request an employer to enter into collective bargaining on any issue, vii) An employer is required to grant the stipulated minimum provided that the issue relates to the labour union itself or the status number of days of annual paid leave to a worker in accordance of a worker who is a member of the union, regardless of the number with the length of service of a worker, if the worker has been of members. An employer is required to accept such a request and employed continuously for six months and has worked at faithfully negotiate with the labour union; and the refusal of an least 80 per cent of the working days during such six-month employer to enter into collective bargaining without proper reasons period. could be an unfair labour practice which is prohibited by the LUA.
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In addition, the following acts of an employer are prohibited as unfair practices: 2.7 Are employees entitled to representation at board level? i) discharging or discriminating against an employee due to him/her being a member of a labour union, having tried to join or organise a labour union, or having performed proper Workers have no statutory entitlement to representation at the board acts of a labour union; level. ii) making it a condition of employment that an employee must not join or must withdraw from a labour union; 3 Discrimination iii) controlling or interfering with the formation or management
Japan of a labour union; iv) giving financial support to defray the labour union’s 3.1 Are employees protected against discrimination? If operational expenses; and so, on what grounds is discrimination prohibited? v) treating an employee in a disadvantageous manner because he/she has filed a complaint with the Labour Relations The LSA provides that employers must not use the nationality, creed or Commission. social status of any worker to discriminate against him/her with respect An employer must hear the opinion of the labour union organised by to wages, working hours or other working conditions. The LSA also a majority of the workers at a workplace concerning certain labour provides for the principle of equal wages for men and women. matters, including setting up or amending employment rules of the workplace. 3.2 What types of discrimination are unlawful and in what Furthermore, a labour union has the right to act collectively, which circumstances? includes the right to strike. The LUA gives workers who engage in proper and justifiable actions immunity from criminal and civil In addition to the general rules under the LSA mentioned in question liabilities and protection from unfavourable treatments by their 3.1, other rules which prohibit discrimination include the following: employer. i) The Employment Security Law prohibits employers from discriminating against a person by reason of any previous profession, membership of a labour union, race, nationality, 2.3 Are there any rules governing a trade union’s right to creed, sex, social status and family origin. take industrial action? ii) The Act on Securing, etc. of Equal Opportunity and Treatment between Men and Women in Employment (the “Equal Industrial actions (or labour dispute actions) should be taken Employment Opportunity Act”) prohibits discriminatory “properly” in order to enjoy the protection of the LUA. The LUA treatment based on sex in relation to the following matters: provides that in no case should acts of violence be construed as a) discrimination in recruitment and employment; justifiable acts of labour unions, but does not provide specific rules as to what constitutes a proper industrial action. Generally, courts b) assignment (including allocation of duties and grant of authority), promotion, demotion and training; take into account the purpose and manner of an action in deciding whether or not it was proper. c) loans for housing and other similar fringe benefits as provided by ordinance; With respect to procedural requirements, many labour unions are d) change in job type and employment status; and required to conduct a vote among their members before calling a strike under their constitutions, and a prior notice of a strike is sometimes e) encouragement to retire, mandatory retirement age, required by the collective bargaining agreement between the union dismissal, and renewal of the employment contract. and the employer; however, these are not statutory requirements. iii) The Equal Employment Opportunity Act also prohibits the disadvantageous treatment of female employees due to marriage, pregnancy, childbirth, and requesting absence from 2.4 Are employers required to set up works councils? If work which is allowed under the LSA. so, what are the main rights and responsibilities of iv) When the employer solicits or recruits potential employees such bodies? How are works council representatives through advertisements on job information websites or taking chosen/appointed? other similar actions, the advertisements must not specify restrictions on age and gender of potential employees except Employers are not required to set up works councils in Japan. in certain cases stipulated in the ministry ordinances under the Employment Measures Act and the Equal Employment Opportunity Act. 2.5 In what circumstances will a works council have co- determination rights, so that an employer is unable to proceed until it has obtained works council agreement 3.3 Are there any defences to a discrimination claim? to proposals? Generally speaking, most of the rules explained in questions 3.1 Not applicable, please see question 2.4. and 3.2 do not require an employer to grant the same terms and conditions to all workers, and thus, if an employer successfully 2.6 How do the rights of trade unions and works councils demonstrates that the alleged discriminatory treatment is based interact? on justifiable grounds, the treatment may be deemed to be not discriminatory. Not applicable, please see question 2.4. When a discriminatory act in question is done by one worker or more, and is not a company-wide problem, the court may find that the employer is not liable for the discriminatory conduct if the employer has taken adequate measures to prevent such discriminatory conduct.
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labour market, and having a balance with the wage levels 3.4 How do employees enforce their discrimination of workers who engage in the same types of duties at the rights? Can employers settle claims before or after companies receiving the temporary staffing services. they are initiated? In addition, as stated in question 1.1, the Japanese government is currently discussing draft labour legislation including amendments, Workers have different ways of enforcing their discrimination rights with one focus being on wage gaps between regular workers depending on the situation. These ways include filing a civil lawsuit and non-regular workers. The draft legislation is expected to be or an application for a labour tribunal proceeding, and requesting submitted to and discussed, in the Diet in 2018. the court or labour tribunal to:
i) declare the treatment (such as the discriminatory dismissal, Japan transfer or assignment order) as null and void; 4 Maternity and Family Leave Rights ii) order the employer to reinstate him/her (in case of dismissal); and 4.1 How long does maternity leave last? iii) order the employer to compensate him/her for any damage which he/she has suffered due to the discriminatory treatment. In Japan, a worker cannot request punitive damages but can Mandatory maternity leave lasts 14 weeks in general (six weeks request damages for mental suffering. before childbirth, and eight weeks after childbirth). The LSA prohibits an employer from: Employers can settle claims at any time before or after they are initiated. i) making a female worker who is expecting to give birth within six weeks (the period should be increased to 14 weeks in the case of multiple foetuses) work, if she requests maternity 3.5 What remedies are available to employees in leave; and successful discrimination claims? ii) having a female worker work within eight weeks after childbirth (unless she has requested to work six weeks after Please see question 3.4. childbirth, and a doctor confirms that returning to work has no adverse effect on her).
3.6 Do “atypical” workers (such as those working part- In addition, a worker is entitled to take childcare leave for a child time, on a fixed-term contract or as a temporary of less than one year of age (or until the child turns two years old, if agency worker) have any additional protection? some requirements are met). i) Fixed-term workers 4.2 What rights, including rights to pay and benefits, does Under the LCL, if a labour condition of a fixed-term labour a woman have during maternity leave? contract is different from the counterpart labour condition of a non-fixed-term labour contract, the difference in the A female employee is not entitled to salary during maternity leave or conditions is not necessarily unreasonable, considering childcare leave, unless her employment contract or the employment the differences in the duties of the workers, the extent of responsibility accompanying the said duties, the changes in rules of her employer stipulate otherwise. However, she is entitled the duties and work locations, and other factors. to the following allowances under insurance laws. ii) Part-time workers First, a female employee who gives birth is entitled to receive The Act on Improvement, etc. of Employment Management childbirth allowance equal to two thirds of her daily salary from the for Part-Time Workers provides for the following rules: health insurance association she has joined. a) With regard to a part-time worker: whose work Second, a female employee who takes childcare leave is entitled to description and level of work responsibilities are equal to receive childcare allowance from the health insurance association those of regular workers at the same place of business; she has joined, until the child turns one year old (or until the child who has signed a labour contract without a definite turns one and a half years old, if some requirements are met). period; and whose job description and assignment are likely to be changed within the same range as those of regular workers, then in light of the practice at said place 4.3 What rights does a woman have upon her return to of business and other circumstances, throughout said part- work from maternity leave? time worker’s employment period, the employer must not engage in discriminatory treatment regarding wages, Employers are prohibited from treating a female employee in a education and training, use of welfare facilities and other disadvantageous manner because of maternity leave or childcare dealings by reason of being a part-time worker. leave. Thus, an employer is generally required to enable a female b) An employer should endeavour to decide the wages employee to return to her original work after her maternity leave or (excluding commutation allowances, retirement allowances childcare leave. Assigning her to a different position or reducing and others specified by ordinance) of part-time workers her wages can be deemed unlawful, if either is due to her taking with due consideration to a balance with regular workers, maternity leave or childcare leave. and by taking into consideration relevant matters such as job description, job performance, job motivation, and In addition, a female employee who is raising an infant under one abilities or experience of the part-time workers. year old is entitled to time to care for the infant for at least 30 iii) Temporary workers minutes twice a day, in addition to the normal rest periods. The Temporary Staffing Services Law, which was amended in 2015, provides that temporary staffing agencies should 4.4 Do fathers have the right to take paternity leave? endeavour to decide the wages of the temporary workers they employ and dispatch to other companies with consideration A male employee is entitled to childcare leave. He is entitled to only to the working conditions of workers and conditions of the one period of childcare leave in general; however, if the first period
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of childcare leave ends within eight weeks from the childbirth, he is entitled to a second one. He is not entitled to salary during such 5.3 Are there any information and consultation rights on leave, unless his employment contract or the employment rules of a business sale? How long does the process typically take and what are the sanctions for failing to inform his employer stipulate otherwise. and consult?
4.5 Are there any other parental leave rights that On a business sale either by a share transfer or an asset transfer, employers have to observe? a worker does not have any specific statutory rights regarding information and consultation, but generally speaking, the employer An employee who is taking care of a child under elementary school should provide sufficient information and faithfully consult with the Japan age is entitled to take a day off to take care of an injured or sick child workers when asking them to consent to the transfer. There is no for up to five working days per fiscal year (or up to 10 working days statutory requirement regarding the time necessary for the process. if the worker has two or more children under elementary school age). He/she is not entitled to salary during such leave, unless 5.4 Can employees be dismissed in connection with a his/her employment contract or the employment rules of his/her business sale? employer stipulate otherwise.
A business sale by itself will not justify the dismissal of employees, 4.6 Are employees entitled to work flexibly if they have and thus, the general rules on dismissals apply to dismissals in responsibility for caring for dependants? connection with a business sale (see question 6.3).
An employee is entitled to take a day off to take care of a family 5.5 Are employers free to change terms and conditions of member who requires nursing care for up to five working days per employment in connection with a business sale? fiscal year (or up to 10 working days if the worker has two or more family members requiring nursing care). This leave can be taken in An employer cannot freely change the terms and conditions of half-day increments. An employee is not entitled to salary during employment in connection with a business sale. If an employer such leave, unless his/her employment contract or the employment would like to change the terms and conditions of individual rules of his/her employer stipulate otherwise. employment contracts, they are required to obtain the consent of the workers. If they would like to make changes to the work rules 5 Business Sales which are disadvantageous to the workers, justifiable reasons for the changes are required.
5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the 6 Termination of Employment buyer?
When a business is sold through a share transfer, no transfer will 6.1 Do employees have to be given notice of termination of their employment? How is the notice period take place because there will be no change in employer. determined? In a business sale through an asset transfer, employees do not automatically transfer. The transferee (the buyer) and the transferor Yes. An employer is required to provide at least 30 days’ advance (the seller) may agree to include employment contracts in the notice to the employee, or to pay the average wage the employee business being sold, but if a worker refuses to consent to the transfer would earn for a period of not less than 30 days in lieu of notice of his/her employment contract, the employment contract will not (“Payment in lieu of Notice”). The number of days for the advance transfer to the transferee. notice can be reduced by the number of days for which the employer pays the average wage. 5.2 What employee rights transfer on a business sale? How does a business sale affect collective 6.2 Can employers require employees to serve a period agreements? of “garden leave” during their notice period when the employee remains employed but does not have to In a share sale, the employment conditions and status will not attend for work? change. Collective agreements entered into before the share sale, and in force as of the share sale, will continue to be in force and their Yes, an employer can require employees to serve a “garden leave” if conditions will not change merely because of the share sale. the employer pays wages to the employees during that period. In an asset transfer, an employment contract can be transferred to the buyer transferee (i) by including the employment contract in 6.3 What protection do employees have against the business to be sold, or (ii) by having the worker resign from dismissal? In what circumstances is an employee the transferor and enter into a new employment contract with the treated as being dismissed? Is consent from a third transferee. In the former case, the terms and conditions of the party required before an employer can dismiss? employment contract will remain the same even after the transfer unless otherwise agreed between the transferee and the worker. In An employer may only terminate or dismiss an employee on grounds the latter case, the terms and conditions may change depending on that are objective, justifiable and reasonable, and any termination or the work rules of the transferee or the new employment contract. dismissal which is not on those grounds is invalid and deemed an Collective labour agreements will not transfer, unless otherwise abuse of the rights of the employer. In general, the reasons can be: agreed between the transferor, the transferee and the union.
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i) incapacity (due to health or performance-related reasons) and vii) having reported a violation in accordance with the Whistle- lack of qualification; blower Protection Act. ii) misconduct; Also, an employer cannot dismiss a part-time employee who is iii) operational necessity; or considered to be equivalent to an ordinary employee, only due to iv) request from a labour union based on a union shop agreement. the reason that he/she is a part-time employee. Japanese courts strictly interpret the requirement of an ‘objective, justifiable and reasonable’ ground. Usually a dismissal is deemed 6.5 When will an employer be entitled to dismiss for: lawful only where: the cause of dismissal is of a significant degree; 1) reasons related to the individual employee; or 2) there is no other way to avoid the dismissal; and there is almost no business related reasons? Are employees entitled to compensation on dismissal and if so how is Japan factor on the employee’s side that could be taken into consideration compensation calculated? in favour of the employee.
In cases of dismissal due to business reasons of the employer, the Please see questions 6.3 and 6.9. following general requirements have been formulated by Japanese Employees are not entitled to compensation on dismissal. However, courts in determining the validity of the dismissal: an employer is generally required to make Payment in lieu of Notice i) necessity of labour reduction, such as financial deterioration (see question 6.1). In addition, since the validity of a dismissal is of the employer; strictly examined by Japanese courts if disputed, employers often ii) necessity in selecting dismissal over other available measures provide employees with severance payment to facilitate voluntary (for example, whether the employer could have avoided resignation. The amount of severance pay varies significantly with dismissal by using other means such as soliciting for early each company; however, in many cases, it is calculated based on the retirement); employee’s length of service. iii) appropriateness of the selection of the employee being dismissed; and iv) appropriateness of the dismissal procedure (for example, 6.6 Are there any specific procedures that an employer whether the employer provided sufficient explanation and has to follow in relation to individual dismissals? opportunities for consultation). If an employee does not dispute the validity of the dismissal, the As a general rule, advance notice of termination (see question 6.1) dismissal will become effective. But if the employee disputes the is required. In addition, any termination procedures stipulated validity of the dismissal, he/she would ultimately be considered under the employment rules or collective labour agreements must to have been duly dismissed only if the court determines that the be followed. above-mentioned criteria have been met. It is also desirable to notify the employee of the reasons for the If a collective labour agreement requires an employer to obtain the dismissal and provide him/her an opportunity for self-vindication. consent of a labour union to dismiss employees, a dismissal without Further, if so requested by the employee, an employer is required to such consent will be considered null and void. provide him or her, without delay, with a certificate which certifies the period of employment, the type of work of the employee, the employee’s position, the wages, or the cause of retirement (if the 6.4 Are there any categories of employees who enjoy cause for retirement is dismissal, the reason for the dismissal must special protection against dismissal? also be provided).
Yes, there are categories of employees who enjoy special protection against dismissal. An employer is prohibited from dismissing the 6.7 What claims can an employee bring if he or she is following categories of employees: dismissed? What are the remedies for a successful claim? i) an employee during a period of absence from work for medical treatment with respect to work-related injuries or illnesses or within 30 days after his/her recovery; and An employee can bring a claim against the employer for declaratory judgment (determining that the dismissal is void and invalid) or a ii) a female employee during a period of absence from work decision to confirm his/her position as an employee, by filing a petition before and after childbirth which is taken in accordance with the LSA or within 30 days thereafter. for labour tribunal proceedings, provisional injunction or litigation. In addition, an employer is not entitled to dismiss an employee on If the court (in the case of provisional injunction or litigation) or the any of the following grounds: the labour tribunal (in the case of labour tribunal proceedings) determines that a dismissal is null and void, the employer must i) nationality, creed or social status; reinstate the employee and pay the employee’s wages or salary ii) being a labour union member or having performed justifiable since the date of dismissal (so-called “back pay”) with interest. In acts of a labour union; principle, if the dismissal is judged to be invalid and the employee iii) sex and, for a female worker, marriage, pregnancy, childbirth is reinstated, the employee cannot claim for damages. However, or having taken leave from work before and after childbirth; if any communication or action by the employer in relation to the iv) having taken childcare leave or family care leave under the dismissal is considered to be a tortious act, a claim for damages may Act on the Welfare of Workers who Take Care of Children be admitted. or Other Family Members Including Child Care and Family Care Leave; v) having reported the employer’s breaches of employment 6.8 Can employers settle claims before or after they are protection laws to the relevant government agencies; initiated? vi) having sought the advice of, or filed an application for mediation by, the head of the Prefectural Labour Offices; and Yes, employers can settle claims at any time before or after they are initiated.
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the employer does not give financial benefits to compensate the 6.9 Does an employer have any additional obligations if employee for a non-competition covenant, courts tend to decide that it is dismissing a number of employees at the same this factor would not be satisfied. In some cases where the employee time? receives a high salary, courts have decided that factor iv) has been satisfied since the compensation for the non-competition covenant Yes, an employer does have additional obligations when dismissing was included in the basic salary even though the company did not a number of employees at the same time. In case of any of the grant compensation specifically for the non-competition covenant. following dismissals, the employer must notify the competent With respect to a non-solicitation obligation, there are no major public job-placement office of the dismissal of: court precedents or well-established views regarding the validity and
Japan i) 30 or more employees within one month; enforceability of a non-solicitation covenant, but there are a few ii) five or more employees who are aged 45 years or older within precedents where courts have determined that a former worker’s one month; or solicitation of his/her former employer’s existing workers constitutes iii) an employee with disability. tort and ordered the worker to compensate the former employer where With respect to dismissals due to business reasons of the employer, the solicitation was done in a manner that is not socially acceptable. please see question 6.3. If a worker has agreed to a confidentiality covenant or confidentiality obligations are included in the work rules regarding certain 6.10 How do employees enforce their rights in relation to confidential information of the employer, the worker must abide mass dismissals and what are the consequences if an by that covenant. If a confidentiality covenant does not limit its employer fails to comply with its obligations? scope in relation to geographical area, the covenant is generally considered as being effective even outside Japan. A confidentiality Employees can dispute the validity of mass dismissals by filing a covenant without any duration may be considered as unnecessarily petition with a court or a labour tribunal. and unreasonably restrictive and therefore the court may interpret that the covenant is valid only for a limited time. If the four criteria discussed in question 6.3 are not satisfied, the dismissal will be considered null and void, in which case the employer must reinstate the dismissed employees and provide back 7.3 Do employees have to be provided with financial pay (see question 6.7). compensation in return for covenants?
There is no statutory requirement that an employer must provide 7 Protecting Business Interests Following workers with financial compensation in return for covenants, but Termination the provision of financial compensation is an important factor in deciding whether a covenant is valid (see question 7.2).
7.1 What types of restrictive covenants are recognised? 7.4 How are restrictive covenants enforced? In a typical case, restrictive covenants include non-compete clauses, non-solicitation clauses and confidentiality clauses. Covenants are normally enforced through a provisional remedy. A provisional remedy (preliminary injunction) is a temporary remedy which is granted by the court before deciding on the merits to avoid 7.2 When are restrictive covenants enforceable and for what period? substantial damage or imminent danger to the petitioner. The court will order a provisional remedy only if there exists: Generally speaking, a non-competition covenant is considered a i) a right that needs to be preserved; and restriction on the free choice of employment, which is considered ii) a necessity to preserve that right. a basic human right in Japan, and thus deemed invalid and Unlike in a decision on the merits (main lawsuit), the level of proof unenforceable except where there are reasonable grounds (under case for provisional remedy is merely prima facie. law). Based on court precedents, courts take the following factors An employer may also claim for damages suffered due to the former into consideration when deciding the validity and enforceability of worker’s breach of a covenant. non-competition covenants: i) whether there is a clear non-competition clause in the employment contract or the rules of employment; 8 Data Protection and Employee Privacy ii) whether there is a necessity for the employer to have the non- competition covenant; 8.1 How do employee data protection rights affect the iii) whether the restriction is necessary and reasonable in scope; employment relationship? Can an employer transfer and employee data freely to other countries? iv) whether the employee is sufficiently compensated for the restriction. Employees’ data, insofar as it falls within “personal information”, With respect to factor ii), if the worker’s position is close to top is protected under the Act on the Protection of Personal Information management or the worker deals with very important or sensitive (the “APPI”), its Enforcement Ordinance and related guidelines. confidential information of the company, it is generally understood An employer is obliged to comply with the APPI as a “personal that there is a necessity for the employer to impose a non-competition information-handling business operator” in dealing with employees’ covenant on the worker to protect their legitimate interest. With personal information. The obligations of a personal information- respect to factor iii), generally speaking, the period and scope of handling business operator under the APPI include the following: restriction in relation to geographical area and business categories i) undertaking necessary and appropriate measures to safeguard are considered. With respect to factor iv), generally speaking, if personal information;
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ii) not using personal information except to the extent necessary of some kinds of sensitive personal information of job applicants, for the purposes disclosed to the subject individuals; including regarding race, ethnicity, opinions and creed, or history of iii) not disclosing personal information to any third party (subject union memberships. to certain exemptions); and iv) conducting necessary and appropriate supervision over 8.4 Are employers entitled to monitor an employee’s employees and contractors. emails, telephone calls or use of an employer’s The first significant amendment to the APPI entered into force on computer system? 30 May 2017. Under the amended APPI, in providing personal information of an employee to a third party in a foreign country, the The email accounts, telephones, and computer systems belong to employer is obliged to: the employer and should be used only for business operations in Japan i) obtain the employee’s consent in advance to the provision to general. From this perspective, as a general rule, such equipment a third party in a foreign country; or can be monitored if the monitoring is carried out for a business ii) ensure that the third party in a foreign country has a system necessity. However, in carrying out the monitoring, an employer for continuously taking actions equivalent to those that a must take the following measures below, regarding personal personal information-handling business operator must take in information of employees. handling personal information, pursuant to the provisions of When a personal information-handling business operator has an the APPI. employee handle personal information, it must exercise necessary Without taking the above-mentioned measures, the employer is and appropriate supervision over that employee to ensure control of prohibited from transferring employees’ personal information to a the security of personal information. This supervision may include third party in a foreign country. things such as monitoring the employee’s actions online, or video monitoring the employee. 8.2 Do employees have a right to obtain copies of any The Guidelines Concerning Measures to be Taken by Entities to personal information that is held by their employer? Ensure the Proper Handling of Personal Information Relating to Employment Management highly recommend an employer who The APPI generally entitles an individual to demand a personal wants to monitor employees to take certain measures, including: information-handling business operator to disclose the retained i) communicating the purpose of the monitoring to the personal information that can identify him/her. Thus, an employee employees in advance; has the right to know what kind of personal information is held ii) clearly identifying the manager responsible for managing the by the employer, unless there is a reason for the employer not to monitoring; disclose the retained personal information. iii) drawing up internal rules regarding monitoring and It is generally understood that an employer may refuse to disclose, communicating them to the employees in advance; and for example, details of a personnel evaluation as it may seriously iv) auditing the monitoring programme to ensure that it is being interfere with them implementing their business properly. carried out appropriately.
8.3 Are employers entitled to carry out pre-employment 8.5 Can an employer control an employee’s use of social checks on prospective employees (such as criminal media in or outside the workplace? record checks)? An employer can control and restrict an employee’s personal use Yes, an employer may carry out background checks, insofar as it of social media in the workplace, as employees are obliged to acquires personal information of job applicants lawfully. devote themselves to performing their work at the workplace. Under the APPI, an employer must notify or make public the The employer, however, may not control or restrict an employee’s purpose for which it intends to use the personal information they personal use of social media outside the workplace, except in have acquired, when acquiring personal information (except in limited circumstances, for example, where an employee intends to some cases, including where, judging from the circumstances, it can leak business secrets or defame the company. be said that the utilisation purpose is clear). Also, an employer is prohibited from acquiring sensitive personal information (such as information regarding race, ethnicity, and criminal history) of a job 9 Court Practice and Procedure applicant without his/her consent. In practice, however, an employer usually requires a job applicant to submit a filled-in template CV 9.1 Which courts or tribunals have jurisdiction to hear which contains questions regarding personal information, including employment-related complaints and what is their criminal records. Such acquisition and use of personal information composition? of the job applicant by the employer would be deemed lawful and valid, because the applicant is deemed to have given his/her consent There are two main venues which have jurisdiction to hear when he/she submitted the CV to the employer, and, given the employment-related complaints: circumstances in which the CV was submitted, it can be recognised i) an ordinary court, consisting of one or three qualified judges; that the utilisation purpose is clear. and While criminal records are held by the police and employers do ii) a labour tribunal consisting of one qualified judge and not have the means to check them directly, a typical template CV two laypersons who have specialised experience in labour enables an employer to obtain and utilise such information legally relations. for the purpose of background checks. On a separate note, the ancillary guidelines to the Employment Security Law, as a general rule, restrict an employer’s acquisition
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9.2 What procedure applies to employment-related 9.3 How long do employment-related complaints typically complaints? Is conciliation mandatory before a take to be decided? complaint can proceed? Does an employee have to pay a fee to submit a claim? It takes approximately 12 months (on average) for an employment- related complaint before an ordinary court to be decided. If the At an ordinary court, once an action is brought, it will go through complaint is brought before the labour tribunal, deliberations can the submission of pleadings, oral proceedings and the examination take anywhere from 75 days to 90 days in general. of evidence. In these proceedings, conciliation is not mandatory before a complaint can proceed. Japan 9.4 Is it possible to appeal against a first instance On the other hand, proceedings at the labour tribunal are usually decision and if so how long do such appeals usually held for up to three hearings to hear the allegations of both parties take? and examine evidence. In these proceedings, conciliation is mandatory before a decision can be rendered by the tribunal, if there Yes, both decisions by an ordinary court of first instance and is a possibility for the case to be resolved by settlement. a labour tribunal can be appealed. If a case which was pending In both proceedings, the employee has to pay a fee to the court to before a labour tribunal is appealed, it will automatically move to submit a claim or a petition. The amount of the fee is based on the an ordinary court. The average deliberation period at the appellate amount demanded by the employee in his/her claim or petition. court is approximately six months.
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Shiho Ono Yuko Kanamaru Mori Hamada & Matsumoto Mori Hamada & Matsumoto Marunouchi Park Building Marunouchi Park Building 2-6-1 Marunouchi, Chiyoda-ku 2-6-1 Marunouchi, Chiyoda-ku Tokyo 100-8222 Tokyo 100-8222 Japan Japan
Tel: +81 3 6266 8542 Tel: +81 3 6266 8542 Email: [email protected] Email: [email protected] URL: www.mhmjapan.com/en URL: www.mhmjapan.com/en Japan
Shiho Ono is a partner at Mori Hamada & Matsumoto. Ms. Ono Yuko Kanamaru is a senior associate at Mori Hamada & Matsumoto. has a strong track record in representing corporations in labour- Ms. Kanamaru deals with a wide range of domestic and international related dispute resolution proceedings (including litigation, provisional disputes, especially in labour-related matters, including litigation dispositions, labour tribunal proceedings, and prefectural labour relation and labour tribunal proceedings. Her litigation experience includes commission proceedings) across a broad spectrum of matters, such two major dispute resolution proceedings in labour-related cases in as dismissals, claims for unpaid wages, staffing changes, workplace Japan. She also regularly advises clients in a range of labour-related harassment, unfair labour practices, and claims for employee invention matters, such as formulation and implementation of employment rules, remuneration. She also has broad experience in providing advice to regulations and systems, personal information matters, overwork foreign corporations doing business in Japan. She is fluent in both issues, workplace harassment and unfair labour practices. She is Japanese and English. fluent in both Japanese and English.
Mori Hamada & Matsumoto (MHM) is one of the largest full-service Tokyo-headquartered international law firms with domestic branches in Fukuoka, Nagoya and Osaka. A significant proportion of the firm’s work is international in nature, representing clients in cross-border transactions, litigation and other dispute resolution proceedings. MHM has over 400 lawyers and other professionals and over 500 business services and other support staff. The firm’s senior lawyers include a number of highly respected practitioners and leaders in the Japanese and international legal community, including a past secretary general of the Inter-Pacific Bar Association, prominent law professors at the University of Tokyo, and previous Prosecutor-Generals of the Public Prosecutors Office. MHM also has experienced lawyers with primary legal qualifications in non-Japanese jurisdictions, including Australia, England and Wales, Hong Kong, India, Indonesia, Malaysia, Myanmar, the People’s Republic of China, the Philippines, Singapore, Thailand, the United States and Vietnam. MHM is highly recognised by both clients and legal professionals in the following practice areas: mergers and acquisitions, joint ventures, finance, international capital markets (including JREITS), asset management, loans and securitisations, private equity, infrastructure/energy, PFI/PPP, insolvency/restructuring, intellectual property, antitrust and competition. Other core practice areas include tax and labour law. MHM has a strong presence in South and South-East Asian countries with offices in Beijing, Shanghai, Singapore, Yangon, Bangkok, and an MHM “Jakarta desk” in AKSET Law offices. On 1 January 2017, leading Thai law firm Chandler & Thong-ek was successfully integrated into the MHM network. This significant integration enhances MHM’s capability to serve clients throughout ASEAN.
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Korea Steve Ahn
SEUM Law Byungil Lee
terms such as the amount of wages, required work hours, designated 1 Terms and Conditions of Employment holidays, paid annual leave and the number of days of annual paid leave. 1.1 What are the main sources of employment law? 1.4 Are any terms implied into contracts of employment? The main source of employment law is the Labour Standards Act which covers a broad range of common and fundamental issues If a contract of employment is silent on an issue, the employer must related to employment such as minimum working conditions, provide the employee with the minimum terms required under the employee wages, discrimination, termination and workplace safety. Labour Standards Act. If the company has adopted employment There are a number of other statutes that cover specific subjects such rules or other workplace policies, such rules will also apply to the as the following: parties. The terms of any collective bargaining agreements negotiated between the employer and employees must also be respected. ■ The Employment Retirement Benefit Severance Security Act. Minimum wage ■ The Minimum Wage Act. 1.5 Are any minimum employment terms and conditions ■ Act on the Protection of Fixed-term and Part- set down by law that employers have to observe? Part-time and time Workers. temporary agency workers ■ The Act on the Protection of Temporary The Labour Standards Act requires employers to provide minimum Agency Workers. terms and conditions of employment including, minimum terms ■ The National Pension Act. with respect to wages, severance, work hours, overtime pay, leave, ■ The Medical Insurance Act. termination and mass layoffs. Other laws such as the Minimum Wage Social insurance ■ The Employment Insurance Act. Act and the Employment Retirement Benefit Security Act also require employers to provide minimum terms and conditions. ■ The Industrial Accident Compensation Insurance Act. There are a couple of major changes to these minimum terms and ■ The Trade Union and Labour Relations conditions that will come into effect in 2018. Most notably, minimum Labour unions and Adjustment Act. wage was increased significantly in 2018. Minimum wage is usually labour councils ■ The Act on the Promotion of Workers’ increased at a rate consistent with inflation. However, in 2018, the Participation and Cooperation. minimum wage was increased by a considerably higher rate (16.4%) based on the new presidential administration’s policies. Furthermore, the Minimum Wage Act was amended to remove exemptions that 1.2 What types of worker are protected by employment previously applied to unskilled labour workers on probation. law? How are different types of worker distinguished? Also, beginning May 2018, employees in their first year of employment with a company will be entitled to 11 additional days The Labour Standards Act protects all “workers”, meaning any person, of annual leave under an amendment to the Labour Standards Act. regardless of occupation, that offers labour for the payment of wages. Under the pre-amendment Labour Standards Act, employees were There are separate laws in place to protect “part-time workers” not entitled to any annual leave during their first year of service. (those working 15 hours or less per week), “fixed-term workers” Employees would earn annual leave only upon completion of one (those who have agreed to work for a fixed period), and “temporary years’ service, provided an employee could use annual leave that he/ agency workers” (those who are employed by a temporary agency and she expected to earn upon completion of the first year of service in dispatched to work at a client’s workplace). There are also statutes to advance (a maximum of one day per month) and have it deducted specifically protect construction workers and foreign workers. from the annual leave earned upon completion of the first year. Under the amended Labour Standards Act, employees will earn one 1.3 Do contracts of employment have to be in writing? If day of leave per month during the first year of service in addition not, do employees have to be provided with specific to the annual leave that employees earn upon completion of the first information in writing? year. Since the amendment becomes effective May 2018, employees starting new jobs after May, as well as employees that have not yet Contracts of employment must be in writing and specify the key finished their first year of service, will benefit from this amendment.
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an equal number of representatives from management and employees 1.6 To what extent are terms and conditions of with three to 10 members from each side. Members representing the employment agreed through collective bargaining? employees must be elected by a majority vote of the employees or by a Does bargaining usually take place at company or trade union, if there is a trade union representing a majority of workers. industry level? The Act on the Promotion of Workers’ Participation and Cooperation Any terms and conditions of employment can be negotiated specifies which matters require a report to the council (such as overall through collective bargaining. However, most collective bargaining management plans, production plans and the financial status of the agreements focus on wages, work hours and paid leave. Bargaining company), which matters are subject to consultation by the council usually takes place at the company level. Most company-specific trade (setting up or amendment of work rules, employee stock option plans, unions will be members of an industry trade union. If the industry installation of surveillance facilities within the workplace, etc.) and Korea trade union does not have a union specifically for the company, the which matters require the council’s approval (establishment of plan industry trade union may handle the collective bargaining directly. for education and training, establishment of welfare facilities and employee welfare fund, etc.).
2 Employee Representation and Industrial 2.5 In what circumstances will a works council have co- Relations determination rights, so that an employer is unable to proceed until it has obtained works council agreement to proposals? 2.1 What are the rules relating to trade union recognition? The Act on the Promotion of Workers’ Participation and The Trade Union and Labour Relations Adjustment Act (“Trade Cooperation provides that the following matters are subject to a Union Act”) sets forth the rules with respect to the formation and resolution of the labour-management council: (i) establishment of a operation of trade unions. Trade unions must file a report with the basic plan for education and training of workers; (ii) establishment Ministry of Employment and Labour (“Ministry of Labour”), and management of welfare facilities; (iii) establishment of an in- stating their title, location, number of members, the contact house employee welfare fund; (iv) matters which are not resolved information of their representatives and other matters. by the grievance handling committee; and (v) establishment of labour-management joint committees. 2.2 What rights do trade unions have? 2.6 How do the rights of trade unions and works councils Trade unions have the right to negotiate and enter into collective interact? bargaining agreements with employers and conduct “industrial actions” (strikes, lock-outs and other similar activities) in accordance Generally, there is little overlap in the rights of trade unions and with the Trade Union Act. Trade unions also have the right to seek work councils. The rights of work councils are more limited as they dispute resolution through mediation and/or arbitration with the only have the rights provided specifically by statute. Trade unions, Labour Relations Commission (“LRC”), which is an administrative however, can engage in collective bargaining which can cover any organisation established under the Ministry of Labour. terms and conditions of employment. Thus, trade unions usually negotiate key terms such as wages while works councils address 2.3 Are there any rules governing a trade union’s right to administrative and operational matters. take industrial action? 2.7 Are employees entitled to representation at board The Trade Union Act sets forth various rules with respect to industrial level? actions and trade unions are responsible for managing industrial actions to comply with the rules. First, a trade union must obtain a majority Board members are appointed by shareholders and employees do vote of its members by an anonymous ballot, approving the industrial not have any right to representation at the board level. action. When conducting the industrial action, the trade union must ensure that it conducts the action lawfully, avoiding interference with persons who intend to work. The trade union must also ensure that the 3 Discrimination action does not threaten others to participate in the action and does not involve violence or cause an interference which may endanger public 3.1 Are employees protected against discrimination? If safety. Employers, on the other hand, must not hire new employees so, on what grounds is discrimination prohibited? or engage existing employees to perform any work interrupted by the industrial action, providing they can decide not to pay employees who Employees are provided protection under the Labour Standards Act have stopped working as part of the industrial action. from discrimination based on gender, nationality, religion and social status. There are also laws prohibiting age discrimination as well as 2.4 Are employers required to set up works councils? If discrimination against persons with disabilities. Employers are also so, what are the main rights and responsibilities of prohibited from discriminating against fixed-term, part-time and such bodies? How are works council representatives temporary agency workers as described under question 3.6. chosen/appointed?
Employers with 30 or more employees must establish a “labour- 3.2 What types of discrimination are unlawful and in what management council” composed of members of management and circumstances? employees, which holds meetings quarterly to discuss matters affecting employees. The labour-management council must be comprised of Employers must provide equal opportunity with respect to recruitment
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and hiring. Employers are also prohibited from providing less favourable terms or conditions to employees based on the grounds 4.2 What rights, including rights to pay and benefits, does described under question 3.1. a woman have during maternity leave? Sexual harassment is also prohibited under the Equal Employment Employees taking maternity leave are entitled to pay and benefits for 60 Opportunity and Work-Life Balance Assistance Act. The National days of maternity leave (75 in the case of a pregnancy with two or more Assembly adopted amendments to the Act in November 2017 children) from the employer. The government may provide additional that will require employers to comply with stricter laws in this support under the Equal Employment Opportunity and Work-Life respect. Effective from May 2018, employers will be subject to Balance Assistance Act. Employees taking leave for miscarriage are heightened obligations, including the requirement to hold sexual also entitled to pay and benefits during the leave period. Korea harassment prevention training annually and to take more robust action upon receiving a sexual harassment complaint. Violations of sexual harassment in the workplace will be subject to more severe 4.3 What rights does a woman have upon her return to punishments as well. work from maternity leave?
Employers must allow the employee to return to the same work at 3.3 Are there any defences to a discrimination claim? the same wage levels as before the maternity leave.
With regards to discrimination claims, there are no legal defences under statute or court precedent to exempt liability such as a 4.4 Do fathers have the right to take paternity leave? business necessity or occupational qualification rule. Yes, fathers have the right to at least three days of paid paternity leave. Fathers can ask for up to two additional days of unpaid 3.4 How do employees enforce their discrimination rights? Can employers settle claims before or after paternity leave. Paternity leave must be used within the first 30 they are initiated? days after childbirth.
Employees can file a claim with the LRC or file a civil lawsuit 4.5 Are there any other parental leave rights that before the courts. Employees can also file a report with the Ministry employers have to observe? of Labour to cause an investigation into the company. If an employee is genuinely willing to settle a claim, the employer Employees, both male and female, are entitled to one year of leave can enter into a settlement agreement with the employee before or for childcare if the employee has a child that is younger than eight after a claim is filed. Employers cannot settle claims that have not years old or has not yet entered the third grade. Employers cannot been vested (e.g., via a waiver clause in the employment agreement). dismiss an employee for taking parental leave and must reinstate the employee to the same work at the same wage as before the childcare leave. 3.5 What remedies are available to employees in successful discrimination claims? 4.6 Are employees entitled to work flexibly if they have For discrimination claims alleging unfavourable treatment, the responsibility for caring for dependants? employee can seek monetary damages. For a termination claim, the employee can seek reinstatement and back pay. Any employee that is eligible for childcare leave, as described in question 4.5, has the right to apply for a reduction of work hours in lieu of taking the childcare leave. In such case, the total work hours 3.6 Do “atypical” workers (such as those working part- will be reduced to 15–30 hours of work per week. time, on a fixed-term contract or as a temporary agency worker) have any additional protection? 5 Business Sales Yes. Every part-time, fixed-term and temporary agency worker has the right to the same basic pay and other working conditions as regular employees performing the same or similar job. 5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the buyer? 4 Maternity and Family Leave Rights In the case of a share sale, there is no legal change in the relationship between the employer and employee and thus, employees do not 4.1 How long does maternity leave last? have any special rights related to the change in shareholder, unless the employee(s) collectively have a specific agreement regarding Maternity leave is 90 days, although women who are pregnant a change of control with the employer. In the case of a merger, with two or more children at one time are entitled to 120 days of the surviving company must take over all legal obligations of the maternity leave. Employers must allow the employee to use at least merged company including employment obligations. 45 of the 90 days after childbirth (60 days in the case of a pregnancy For other business sales, the key question is whether the sale is an with two or more children). Employers must also grant leave to asset transfer or a business transfer. Employees do not have a right pregnant women who experience a miscarriage. The period of leave to employment with the buyer of an asset transfer, but for business depends on the length of the pregnancy before the miscarriage. transfers, employees of the business are transferred automatically to the buyer, although employees have the right to retain employment with the seller.
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5.2 What employee rights transfer on a business 6.2 Can employers require employees to serve a period sale? How does a business sale affect collective of “garden leave” during their notice period when the agreements? employee remains employed but does not have to attend for work? If the business sale is a merger or business transfer (as opposed to a share sale or asset transfer), the relevant employees have the Yes, in lieu of providing 30 days’ notice, employers can require right to continued employment with the surviving company/buyer employees to serve garden leave for 30 days. at the same terms and conditions as those that were granted by the seller. The surviving company/buyer must also respect collective
6.3 What protection do employees have against Korea agreements and trade unions that existed with the seller. dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third party required before an employer can dismiss? 5.3 Are there any information and consultation rights on a business sale? How long does the process typically take and what are the sanctions for failing to inform Employers are not required to obtain third-party consent to dismiss and consult? an employee, unless there is a collective bargaining agreement which requires consent to dismissals. However, all employers There are no statutory information or consultation rights for a with five or more employees, regardless of whether there isa business sale. Often, collective bargaining agreements will require collective bargaining agreement, must have “just cause” to dismiss information or consultation. Even if a collective bargaining an employee. agreement includes such a requirement, a breach by the employer The Korean statutes do not define the term “just cause” or provide will not prevent or nullify the business sale. The employees can guidance on its meaning, and it is often difficult to determine with only seek damages through a breach of contract claim. certainty whether there is just cause for dismissal. Generally, the courts impose a high threshold for the “just cause” requirement. It 5.4 Can employees be dismissed in connection with a can be said with certainty that courts will not find just cause for poor business sale? performance, but will find just cause for intentional misconduct such as self-dealing or embezzlement. Many of the cases in between this As discussed in Section 6, an employer can only dismiss employees range are difficult to determine and for this reason, employers offer if they have “just cause”. A business sale does not itself grant the a severance package in exchange for voluntary resignation. buyer or seller a right to dismiss an employee; the employer must have “just cause”. An employer will be found to have just cause 6.4 Are there any categories of employees who enjoy if there is an urgent managerial necessity for the dismissal and an special protection against dismissal? urgent managerial necessity may be found for a transfer, merger or acquisition of a business that is executed to prevent managerial All employees (working for a company with five or more deterioration. employees) enjoy protection from dismissal. Fixed-term workers, however, only enjoy protection from dismissal during the fixed term of employment. In order to prevent employers from circumventing 5.5 Are employers free to change terms and conditions of this protection by hiring fixed-term workers and continuing to employment in connection with a business sale? renew the term indefinitely, fixed-term employees gain the right to seek permanent employment with the employer after two years Employers cannot unilaterally change the terms and conditions of of fixed-term employment. Once the employee obtains permanent employment unfavourably under any circumstances, including in employment, he/she will have protection under the “just cause” the event of a business sale. Often the employment terms offered by requirement for dismissal. the buyer are not the same as the seller and the buyer will negotiate new terms with the employees in order to avoid having multiple employment terms and conditions after the closing of the business 6.5 When will an employer be entitled to dismiss for: 1) reasons related to the individual employee; or 2) sale. business related reasons? Are employees entitled to compensation on dismissal and if so how is compensation calculated? 6 Termination of Employment Employers with five or more employees must have just cause to 6.1 Do employees have to be given notice of termination dismiss employees, regardless of whether the reason is related to the of their employment? How is the notice period individual employee or the business. As discussed in question 6.3, it determined? is difficult to show that there is a reason for dismissal that is related to the individual employees. All employees must be given at least 30 days’ written notice of For business-related reasons, the employer will only be entitled to termination, unless the employee has negotiated a longer notice dismiss employees if there is an “urgent managerial necessity” for period with the employer. The notice period cannot be shortened by the dismissal. In order to meet this requirement, employers must agreement. However, the employer may be exempt from the notice make every effort to avoid dismissal, establish and follow reasonable requirement if the employee is causing a considerable hindrance to and fair criteria for the selection of employees to be dismissed, the business or intentionally inflicting damage to company property. provide 50 days’ notice of the dismissal to employees, and engage in good-faith consultation with the labour union or representative of
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employees. The employer must also give the dismissed employees priority for hiring if the employer hires new workers within three 7.2 When are restrictive covenants enforceable and for years of the dismissal. what period? All employees that have worked for an employer for one year or Non-compete, non-solicitation and confidentiality covenants are longer are entitled to a severance payment, regardless of whether enforceable. The enforceable period will be determined by the the employee is dismissed or voluntarily resigns from the company. courts on a case-by-case basis considering the relevant facts, The amount of the severance is equal to approximately one months’ and if the period is deemed excessive, the court may shorten the salary for each year of service. There is no additional compensation period of restriction. The courts will consider various factors required for dismissal, although as mentioned in question 6.3, such as the interests of the employer, the employee’s position and Korea employers often offer additional compensation in exchange for access to company assets, whether the employee was compensated voluntary resignation. adequately, the scope of the restriction (applicable territory and type of work) and other factors. Generally, the courts will recognise 6.6 Are there any specific procedures that an employer longer periods of restriction for non-solicitation and confidentiality has to follow in relation to individual dismissals? covenants.
Employers must provide written notice to employees. If the 7.3 Do employees have to be provided with financial employer has established internal procedures related to dismissals, compensation in return for covenants? the procedures must also be followed. Often, internal procedures require the employer to hold a disciplinary hearing with the Employers do not have to provide separate financial compensation employee before deciding on the dismissal. in exchange for covenants. However, compensation will be considered by the courts in reviewing whether the period and scope 6.7 What claims can an employee bring if he or she is of restriction is reasonable. dismissed? What are the remedies for a successful claim? 7.4 How are restrictive covenants enforced? If an employee believes he/she has been wrongfully dismissed, the employee can seek nullification of the dismissal with the LRC Employers can file for an injunction and also seek a claim for or with the civil courts. If successful, the employee is entitled to damages for a breach of the covenant. reinstatement and back pay. 8 Data Protection and Employee Privacy 6.8 Can employers settle claims before or after they are initiated? 8.1 How do employee data protection rights affect the Employers can settle claims before or after they are initiated. employment relationship? Can an employer transfer employee data freely to other countries? However, the courts will not enforce an agreement by employees to waive or settle claims before they have been vested. During the hiring process and before the employment relationship begins, the employer will have to comply with data protection 6.9 Does an employer have any additional obligations if rights. Employers must comply with the Personal Information it is dismissing a number of employees at the same Protection Act (“PIPA”) when collecting, using and storing time? personal information during the hiring process by obtaining the candidate’s consent. Consent is also required to disclose any Yes, employers do have additional obligations when dismissing a personal information to third parties, but separate consent is not number of employees at the same time. Please see question 6.5 required to transfer data to another country. Thus, if the employer regarding dismissal for business-related reasons. intends to transfer employee data to a third party in another country, it must obtain employee consent, but the employer does not have 6.10 How do employees enforce their rights in relation to to obtain consent to store the employee data in its own offices or mass dismissals and what are the consequences if an servers overseas. employer fails to comply with its obligations?
8.2 Do employees have a right to obtain copies of any Employees that have been subject to a mass dismissal can file a personal information that is held by their employer? wrongful dismissal claim with the LRC or a lawsuit with the civil courts seeking reinstatement and back-pay. Yes, employees have a right to obtain copies of personal information held by the employer under PIPA. 7 Protecting Business Interests Following Termination 8.3 Are employers entitled to carry out pre-employment checks on prospective employees (such as criminal record checks)? 7.1 What types of restrictive covenants are recognised? Employers are not permitted to conduct criminal record checks. Non-compete, non-solicitation and confidentiality covenants are However, employers can conduct reference checks and drug tests recognised by the courts. In some cases, companies also impose a with the candidate’s consent. non-disparagement covenant, which is also enforceable.
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8.4 Are employers entitled to monitor an employee’s 9.2 What procedure applies to employment-related emails, telephone calls or use of an employer’s complaints? Is conciliation mandatory before a computer system? complaint can proceed? Does an employee have to pay a fee to submit a claim? Employers are not prohibited from monitoring communications and activities conducted on the company’s devices and systems. In order to file a grievance with the LRC, the employee must file this Employers will usually inform employees that such monitoring may within 90 days of the related event. The LRC will hold hearings and occur so that the employees can avoid any unwanted disclosure of issue a decision similar to a trial. There is no mandatory conciliation personal information. required for the complaint and there are no special fees to submit a claim with the LRC. The statute of limitations for an employment- Korea related civil lawsuit is three years. The court may recommend 8.5 Can an employer control an employee’s use of social mediation, but mediators’ recommendations are not binding. The media in or outside the workplace? employee must pay filing fees and submit a deposit to file a civil lawsuit. Employers can control employees’ use of social media by implementing rules regarding the use of the internet with company devices and at the workplace and through the application of 9.3 How long do employment-related complaints typically technical measures on the company’s network systems and devices. take to be decided? If the employee is subject to confidentiality and non-disparagement covenants, social media would not be exempt from such covenants. It usually takes two to three months from the filing of the complaint However, employers do not have any legal justification to prohibit for the LRC to issue a decision. District court cases usually take six an employee’s personal use of social media outside of the workplace months to one year for a judgment. using personal devices. 9.4 Is it possible to appeal against a first instance decision and if so how long do such appeals usually 9 Court Practice and Procedure take?
9.1 Which courts or tribunals have jurisdiction to hear First instance decisions by the LRC regional commissions may be employment-related complaints and what is their appealed to the central commission, and such appeals typically take composition? about two months. District court decisions may be appealed to the appellate courts, and such appeals take about three to five months The LRC has jurisdiction to hear employment-related complaints. to be rendered. The LRC is composed of regional commissions, and employees must file the complaint with the applicable regional commission. The regional commission’s decision can be appealed to the central commission, and central commission decisions can be further appealed to an administrative court. Employees can choose to file a civil lawsuit with the district courts in lieu of a complaint with the LRC.
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Steve Ahn Byungil Lee SEUM Law SEUM Law 211 Teheran-ro, KFAS Building, 13F 211 Teheran-ro, KFAS Building, 13F Gangnam, Seoul Gangnam, Seoul Korea 06141 Korea 06141
Tel: +82 2 562 3133 Tel: +82 2 562 3117 Email: [email protected] Email: [email protected] URL: www.seumlaw.com URL: www.seumlaw.com Korea
Steve is a U.S. attorney partner focusing his practice on representing Byungil is a litigation partner and co-founder of SEUM. He focuses foreign companies with operations in, or desiring to enter, the Korea his practice on a wide range of disputes and litigation matters market as well as entrepreneurs. Steve’s practice covers a broad related to employment and labour issues, management and range, including company formation, commercial/employment law, shareholder disputes, intellectual property and tax administration. venture capital financing, M&A and blockchain/cryptocurrency matters, Moreover, Byungil frequently advises companies on establishing and and he provides advice for market entry and legal solutions for day- implementing employment policies and also represents companies in to-day operations. Prior to SEUM, Steve served as TriBeluga’s Chief employment litigation before the Labour Relations Commission and Legal Officer and helped establish the Korea office of TriBeluga, a in civil and criminal court. Prior to founding SEUM, Byungil worked startup incubator, and served as the Head of Korea thereafter. Before at one of the leading Korean law firms representing large domestic TriBeluga, Steve worked at one of the leading Korean law firms corporations and international companies in a number of landmark representing multinational companies and private equity funds with employment cases. respect to a wide range of matters including investments, acquisitions, joint ventures, commercial agreements and employment issues. Steve is also active in the startup community serving as a mentor and lecturer for government sponsored incubation programmes, and frequently speaks on topics such as practical issues facing foreign businesses and cryptocurrency-related topics.
SEUM is a boutique law firm founded by attorneys from Korea’s top firms. SEUM provides general corporate and litigation legal services in a variety of practice areas and is the leading Korean law firm with respect to startups, technology companies and venture capital funds. SEUM works with Korean and international clients on a regular basis, handling a broad range of local and cross-border matters, to provide clear and practical advice regarding the Korean market. The Korean legal profession struggles to keep pace with the rapid speed of technology and to understand modern companies and entrepreneurs. SEUM takes a different approach by embracing change and striving to be at the forefront of innovation both in Korea and globally. Not only does SEUM enjoy working with clients to advise on novel legal issues, but like many of its clients, aims to create a firm culture that is innovative, inclusive and more in-line with the international community in the 21st century.
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Kosovo Ardian Rexha
Deloitte Kosova Sh.p.k. Vjosa Misini
unspecified period of time. Furthermore, a contract for afixed 1 Terms and Conditions of Employment period of time that is expressly or tacitly renewed for a continued period of employment of more than 10 years shall be implied to be 1.1 What are the main sources of employment law? a contract for an indefinite period of time.
The main sources of employment law in the Republic of Kosovo 1.5 Are any minimum employment terms and conditions are: Constitution of the Republic of Kosovo; Law on Labour No. set down by law that employers have to observe? 03/L-212; Law on Safety and Health at Work No. 04/L-161; Law on Foreigners No. 04/L-219; Law on the Protection of Breastfeeding The Kosovo Labour Law provides for a minimum age for entering No. 05/L-023; Law No. 04/L-011 for Organizing Trade Union in into employment (15 years of age), minimum days of annual Kosovo; and Law No. 03/L–200 On Strikes. The employment of leave (four weeks), minimum salary which is set annually by the civil servants is governed by separate laws and regulations. Other Government of Kosovo, and minimum break periods (30 minutes). sources of employment law include a number of administrative The minimum salary is set by the Socio-Economic Council (SEC) instructions. based on the criteria and procedures laid down in the Administrative Instruction of the Ministry of Labour and Social Welfare. 1.2 What types of worker are protected by employment law? How are different types of worker distinguished? 1.6 To what extent are terms and conditions of employment agreed through collective bargaining? The Law on Labour foresees special protection for employees Does bargaining usually take place at company or in the private and public sectors, as well as employees whose industry level? employment is regulated through a special Law, if the special Law does not provide for a solution for certain issues deriving from the The Kosovo Labour Law provides that the terms and conditions of employment relationship. The employment law also protects foreign employment to be agreed in a Collective Contract, which is defined employees and persons without citizenship who are employed in the as an agreement between employees’ and employers’ respective territory of the Republic of Kosovo. The employment law accords organisations that lays down rights, duties and responsibilities special protection to employed, pregnant and/or breastfeeding deriving from an employment relationship. The Collective Contract women, employees under the age of 18 as well as employees with may not contain any less favourable rights for the employee and disabilities. employer than the rights defined in the Law on Labour.
1.3 Do contracts of employment have to be in writing? If 2 Employee Representation and Industrial not, do employees have to be provided with specific Relations information in writing?
Article 10 of the Law on Labour specifies that employment contracts 2.1 What are the rules relating to trade union recognition? have to be in writing and must be signed by both parties – the employee and the employer. In accordance with the Law for Organizing Trade Union in Kosovo, workers’ organisations must be registered at the Ministry of Labour 1.4 Are any terms implied into contracts of employment? and Social Welfare (MLSW). A Trade Union Association must have at least 10 members. An employment contract must, at least, contain the following mandatory terms and conditions: details of the employer and 2.2 What rights do trade unions have? the employee; job description; place of work; working hours; commencement date and end date of employment; salary and After the registration at the MLSW, a Trade Union is recognised other allowances or incomes; and details of annual leave. If the as a legal person and is entitled to represent its members before employment contract contains no indication of the duration of the employers and public authorities in relation to any matter involving employment, it is implied that the term of employment is for an
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collective negotiations for employees, particularly in the promotion opinion, national extraction or social origin, language or trade- of social dialogue, economic and social rights and labour relations, union membership, which has the effect of nullifying or impairing as well as managing its resources for protecting the rights of equality of opportunity or treatment in employment, is prohibited. employees, etc.
3.2 What types of discrimination are unlawful and in what 2.3 Are there any rules governing a trade union’s right to circumstances? take industrial action? All types of discrimination are unlawful. Discriminatory behaviour According to the Law for Organizing Trade Union in Kosovo, a that is motivated by more than one ground or which is committed
Kosovo trade union can undertake actions such as protests and employee more than once, or which has lasted for a long period of time or strikes in accordance with international conventions, applicable had harmful consequences especially for the victim, is considered laws and trade union Statute in order to exercise pressure for the as a severe form of discrimination. Any differentiation, exclusion fulfilment of a trade union’s requirements. The taking of industrial or priority given in relation to a specific workplace, based on action is also governed by the Law on Strikes, which guarantees the determined criteria required for that workplace, would not be elementary right of the employee and trade union bodies. The use considered discrimination. of violence and undertaking of punitive measures by the employer against employees who have participated in a protest or a Trade 3.3 Are there any defences to a discrimination claim? Union strike is prohibited.
Associations, organisations or other legal entities may initiate or 2.4 Are employers required to set up works councils? If support legal procedures on behalf of claimants, with their consent, so, what are the main rights and responsibilities of for the development of administrative or judicial procedures such bodies? How are works council representatives foreseen for the implementation of obligations set in the Law on chosen/appointed? Protection from Discrimination.
According to the Law for Organizing Trade Union in Kosovo, there is no such requirement; however, the employers may create an 3.4 How do employees enforce their discrimination employer’s organisation, which the employer can join at their own rights? Can employers settle claims before or after they are initiated? discretion for the protection of their organisation’s and own rights.
Any person who claims to be a victim of discrimination, under the 2.5 In what circumstances will a works council have co- provisions of the Law on Protection from Discrimination, has the determination rights, so that an employer is unable to right to file a lawsuit against the defendant and to take all legal proceed until it has obtained works council agreement actions to the competent court. to proposals?
There are no provisions contained in the Law on Labour regarding 3.5 What remedies are available to employees in co-determination rights. successful discrimination claims?
The possible remedies are: prohibition of performance of activities 2.6 How do the rights of trade unions and works councils which violate or may violate the right of the employee, or to compel interact? the employer to eliminate all discriminatory actions from the employee; compensation of material or non-material damage caused Since the above-mentioned Law does not define the employer’s by the infringement of the rights protected by this Law according organisation requirement, it is implied that the interaction between to compensation on lawsuit; ordering of temporary measures in these two unions may be regulated by a mutual agreement. accordance with the provisions of the Law on Contentious Procedure (if the plaintiff has proven credible that his/her right for equal 2.7 Are employees entitled to representation at board treatment has been violated and, if deemed necessary, ordering a level? measure with the aim of eliminating the risk of irreparable damages, especially for severe violations of the right on equal treatment, or This is a matter left to the agreement between the employer and with the aim of preventing violence); ordering of a shorter deadline the employee. of execution than the one defined in the Law on Enforcement Procedure; and publishing in the media the court decision, which proves the violation of the right to equal treatment. 3 Discrimination
3.6 Do “atypical” workers (such as those working part- 3.1 Are employees protected against discrimination? If time, on a fixed-term contract or as a temporary so, on what grounds is discrimination prohibited? agency worker) have any additional protection?
The Constitution of the Republic of Kosovo, the Law on No special protection in relation to discrimination is envisaged by Labour and the Law on Protection from Discrimination provide the Law for these types of workers. The Law on Labour provides for employees with protection against all forms of discrimination. special measures in terms of the protection and the health and safety Any discrimination that includes exclusion or preference made on of minors, pregnant women and employed mothers, employees with the basis of race, colour, sex, religion, age, family status, political disabilities, etc.
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4 Maternity and Family Leave Rights 5 Business Sales
4.1 How long does maternity leave last? 5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the An employed woman is entitled to maternity leave of up to 12 months. buyer?
In such event, the previous employer is obliged to inform, in writing, 4.2 What rights, including rights to pay and benefits, does all employees of the transfer of obligations and responsibilities to a woman have during maternity leave? the next employer. Kosovo Compensation during maternity leave is divided as follows: during the first six months of maternity leave, the payment is doneby 5.2 What employee rights transfer on a business the employer and is an amount equal to 70% of the employee’s sale? How does a business sale affect collective agreements? basic salary; and during the next three months, maternity leave is paid by the Government of Kosovo, and is an amount equal to 50% of the average salary in Kosovo. The employed woman In cases of statutory change (change of employer, respectively) then has the right to extend her maternity leave for another three and in compliance with the Collective Contract and employment months without payment. The employer may not terminate the contract, the new employer shall take over all obligations and employment relationship of a woman whilst they are on maternity responsibilities of the previous employment relationship that are leave. applicable, on the day of the change of the employer. Furthermore, the previous employer is obliged to inform, properly and entirely, the new employer, of the rights and obligations from the Collective 4.3 What rights does a woman have upon her return to Contract and employment contract to be transferred. work from maternity leave?
The Law on Protection of Breastfeeding specifies that every 5.3 Are there any information and consultation rights on a business sale? How long does the process typically employed breastfeeding woman is entitled to one or two hours of take and what are the sanctions for failing to inform paid time each day, at the beginning, in the middle or at the end and consult? of the working hours, in agreement with the employer. In order to claim such time, she shall notify the employer in writing and According to the Law on Labour, and as specified above, the provide the certificate issued by the doctor, which confirms that the employer must inform the employees in writing of such event. employed woman is breastfeeding. The Law does not foresee the timeline of the process or sanctions for failing to comply with this requirement. 4.4 Do fathers have the right to take paternity leave? 5.4 Can employees be dismissed in connection with a The father of the child may assume the rights of the mother if the business sale? mother dies or abandons the child before the end of the maternity leave. If the employee refuses the transfer to the new employer or does not declare within five days from the day, the announcement, the 4.5 Are there any other parental leave rights that previous employer may terminate the employment contract. employers have to observe? 5.5 Are employers free to change terms and conditions of The father of the child has the right to: (i) three days’ paid leave at employment in connection with a business sale? the birth or upon adoption of the child; and (ii) two weeks’ unpaid leave after the birth or upon adoption of the child, at any time Unilateral changes are not permitted. The terms and conditions before the child reaches the age of three. The employee must shall remain in compliance with the Collective Agreement and inform the employer of his intention to take leave at least 10 days employment contract as stated above. in advance.
6 Termination of Employment 4.6 Are employees entitled to work flexibly if they have responsibility for caring for dependants? 6.1 Do employees have to be given notice of termination Employers cannot extend the working hours of a single parent of their employment? How is the notice period with: a child under three years’ old; or a child with disabilities. determined? Furthermore, night shifts may only be performed by single parents and women with children younger than three years of age or with In the case where the employment relationship is terminated children with permanent disabilities, with their consent. Mothers by the employer, the employee must be given prior notice of the with children up to three years of age and single parents, as well termination. The length of the notice of termination varies and as persons with disabilities, are entitled to an additional two days depends on whether the employment contract was stipulated for a of annual leave. definite or indefinite term. If an employee has a definite-term contract, the notice must be given 30 days before, whereas for employees that have an indefinite-term
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contract, the following notice periods are applicable: (i) between six months and two years of employment, 30 calendar days; (ii) 6.7 What claims can an employee bring if he or she is between two and 10 years of employment, 45 calendar days; and dismissed? What are the remedies for a successful claim? (iii) above 10 years of employment, 60 calendar days.
In the case of a dismissal, the employee is entitled to make a 6.2 Can employers require employees to serve a period complaint to the employer or its relevant bodies. Moreover, of “garden leave” during their notice period when the if he/she is not satisfied with the decision of the employer orits employee remains employed but does not have to relevant bodies, the employee may submit an appeal to the Labour attend for work? Inspectorate. If the decision of the Labour Inspectorate is in favour
Kosovo of the employee, he/she may file a complaint at the respective court. The employer may deny the employee access to the premises of Depending on the decision of the respective body, the employee the company during the period of notification, namely prior to may return to his/her workplace or receive compensation. terminating the employment contract.
6.8 Can employers settle claims before or after they are 6.3 What protection do employees have against initiated? dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third party required before an employer can dismiss? Any eventual dispute, which may arise regarding the employment relationship, may be settled amicably and in good faith through The employees may initiate internal procedures for resolving issues direct negotiations between the parties. deriving from the termination of an employment contract, if this is envisaged under the employment contract and employer’s internal 6.9 Does an employer have any additional obligations if policies. Employees can also submit an appeal to the Labour it is dismissing a number of employees at the same Inspectorate requiring protection with regard to his/her dismissal time? and, as a last resort, take the matter to court. The Law on Labour provides for collective dismissal, and involves the dismissal of at least 10% of the employees but not less than 20 6.4 Are there any categories of employees who enjoy special protection against dismissal? employees discharged within a six-month period. In the case of a collective dismissal, the employer is obliged to make severance payment to its employees who have an indefinite contract. The The Law on Labour provides that it is prohibited to terminate the amount varies and depends on their period of employment with the employment relationship during pregnancy, maternity leave and company: absence from work due to special care for a child, except in cases of a collective dismissal. ■ between two and four years of service, one month’s salary; ■ between five and nine years of service, two months’ salary; ■ 6.5 When will an employer be entitled to dismiss for: between 10 and 19 years of service, three months’ salary; 1) reasons related to the individual employee; or 2) ■ between 20 and 29 years of service, six months’ salary; and business related reasons? Are employees entitled ■ from 30 years of service, seven months’ salary. to compensation on dismissal and if so how is compensation calculated? 6.10 How do employees enforce their rights in relation to The employer is entitled to terminate the employment contract mass dismissals and what are the consequences if an employer fails to comply with its obligations? of an employee in cases where: such termination is justified for economic, technical or organisational reasons; the employee is no longer able to perform the job; the employee has committed In accordance with the Law on Labour, an employee may not be serious cases of misconduct; the employee’s performance of dismissed until the employer provides the severance payment. If work duties is unsatisfactory; the employee is guilty of repeating the employer fails to comply with its obligations, the employees are a minor misconduct or breach of obligations; or the employee’s entitled to issue a complaint to the respective court. performance remains unsatisfactory in spite of a written warning. Upon dismissal, the employee is entitled to receive his/her salary 7 Protecting Business Interests Following until the last day of work and also be compensated for unused annual leave days. Termination
6.6 Are there any specific procedures that an employer 7.1 What types of restrictive covenants are recognised? has to follow in relation to individual dismissals? The applicable legislation in Kosovo does not stipulate restrictive An employer who wants to terminate an employment relationship, covenants. In practice, these covenants are usually contractual, must respect the notification period as prescribed by Law. In meaning they are stipulated in the employment contract or in addition, the employer must serve the employee with a written internal regulations of any particular company in the form of non- decision for the termination of the employment contract; such competition or non-solicitation clauses, and would be applicable decision shall include the grounds for the dismissal. for a certain period of time after the termination of an employment contract.
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7.2 When are restrictive covenants enforceable and for 8.4 Are employers entitled to monitor an employee’s what period? emails, telephone calls or use of an employer’s computer system? Since the applicable legislation in Kosovo does not expressly provide for restrictive covenants, the parties to the employment According to the applicable laws, yes, the employer is entitled contract may agree to the general terms and conditions on this to monitor an employee’s emails, phone calls and the use of the clause. employer’s computer system.
8.5 Can an employer control an employee’s use of social
7.3 Do employees have to be provided with financial Kosovo compensation in return for covenants? media in or outside the workplace?
This is not applicable. According to applicable laws, the employer is entitled to use all publicly available sources if the consent of the employee has been given or if it “is necessary for the purposes of fulfilling the 7.4 How are restrictive covenants enforced? obligations and specific rights of a data controller (in this case the employer) in the field of employment…”. The law does not provide the enforcement of restrictive covenants; however, the parties may submit a complaint to the respective court for any breach of contract that may arise from the employment 9 Court Practice and Procedure contract. The enforcement of such covenants would be decided by the relevant courts of the Republic of Kosovo. 9.1 Which courts or tribunals have jurisdiction to hear employment-related complaints and what is their 8 Data Protection and Employee Privacy composition?
According to the Law on Courts, the employment disputes shall be 8.1 How do employee data protection rights affect the submitted to the Basic Court- General Department. The Basic Court employment relationship? Can an employer transfer is a court of first instance. Unless otherwise provided by Law, all employee data freely to other countries? cases before the General Department of the Basic Court shall be adjudicated by one professional judge. The Law on Protection of Personal Data stipulates that the consent of the employee should be given and an approval from the National Agency for Protection of Personal Data (NAPPD) should be 9.2 What procedure applies to employment-related issued, for the transfer of employee data to other countries. complaints? Is conciliation mandatory before a complaint can proceed? Does an employee have to pay a fee to submit a claim? 8.2 Do employees have a right to obtain copies of any personal information that is held by their employer? According to the Law on Labour, and upon the parties’ agreement, the protection of rights may also be resolved through a mediation The Law on Protection of Personal Data, specifically Article 22, process. Rules and procedures for resolution of labour disputes specifies that data subjects are entitled to request, and the data through mediation are determined by the provisions of the Law controller is obligated to provide, among other things: 1) the personal on Mediation and other applicable legal provisions. The Law on data stored about him or her; 2) the purposes of the processing and Contested Procedure regulates the procedure for employment- the categories of personal data being processed; 3) the legal basis for related complaints. The claim has to be submitted in writing before the processing; and 4) the origin of the data. the competent Basic Court. The contesting party shall pay a fee, which is based on the administrative instruction issued from the Kosovo Judiciary. The plaintiff should attach the certificate of the 8.3 Are employers entitled to carry out pre-employment checks on prospective employees (such as criminal paid court taxes to the claim. record checks)? 9.3 How long do employment-related complaints typically According to the Law on Protection of Personal Data, pre- take to be decided? employment checks, such as criminal record checks, medical records, etc., are classified as sensitive personal data. In this regard, According to the Law on Contested Procedure, the defendant has Article 6 of the aforementioned Law stipulates, among other things, to reply to the claim within 15 days after receiving the official that sensitive personal data may be processed “if the processing is documents from the court. Within 30 days from receiving the reply necessary for the purposes of fulfilling the obligations and specific by the defendant, the court sets the preparatory session. Article 420 rights of a data controller in the field of employment…”. With this of the same Law specifies that the main hearing be held within 30 in mind, the employer could justify the pre-employment checks with days from the end of the preparatory session. As said, the procedure the aforementioned provision. will go through two court hearings and, as such, it shall not take longer than one year, but due to the large number of outstanding cases at the basic court, the decision on employee disputes may take longer than one year.
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This can be done through means of attack foreseen by the legal 9.4 Is it possible to appeal against a first instance provisions of this Law. With regards to a complaint in the Court decision and if so how long do such appeals usually of Appeal, as the second instance court, the procedure is similar to take? that of the first instance stipulated in question 9.3, and it may also last up to one year. Pursuant to the Law on Contested Procedure, the parties have the right to submit a complaint against the first instance court judgment. Kosovo
Ardian Rexha Vjosa Misini Deloitte Kosova Sh.p.k. Deloitte Kosova Sh.p.k. “Lidhja e Pejes” Street, no. 177 “Lidhja e Pejes” Street, no. 177 Zona Industriale 10000 Zona Industriale 10000 Prishtina Prishtina Kosovo Kosovo
Tel: +386 49 780 430 Tel: +386 49 780 764 Email: [email protected] Email: [email protected] URL: www.deloitte.com/al/en URL: www.deloitte.com/al/en
Ardian Rexha is a Senior Legal Associate in the Tax & Legal Vjosa Misini is a Senior Legal Associate in the Tax Department of Department of Deloitte Kosova Sh.p.k. Ardian holds a Bachelor’s Deloitte Kosovo Sh.p.k. She graduated in Law from the University of Degree in Law from the University of Pristina, Faculty of Law, and an Prishtina. Prior to joining Deloitte, she had five years of experience advanced Masters Degree in International and European Economic in economic and commercial law, working in the banking sector. Her Law from the Maastricht University, Faculty of Law (LL.M.). areas of expertise include commercial law, including contract and corporate law, economic law, banking law, property law, and insurance Ardian has successfully passed the Bar Exam and prior to joining law. Vjosa is fluent in Albanian (native speaker) and English. Deloitte, he worked as a Legal Associate at a law firm and as a Senior Legal Researcher at the Kosovo Judicial Council. His areas of expertise include civil law, commercial law including contract and corporate law, administrative law, labour law and banking law. Ardian is fluent in Albanian (native speaker) and English. He also has basic knowledge of German and Serbian.
Deloitte Kosova Sh.p.k. is an affiliate of Deloitte Central Europe Holdings Limited, a member firm in Central Europe, of Deloitte Touche Tohmatsu Limited. Deloitte Kosova Sh.p.k., founded in 1999, has extensive knowledge of the local market and best practices from around the world. With more than 15 years of operations in Kosovo, Deloitte Kosova Sh.p.k. is a reputable firm and enjoys the distinction of being the leading professional services organisation in the country, delivering world-class assurance, tax, legal, consulting, financial advisory and technology services. The practice serves many of the country’s largest companies, public institutions, and successful, fast-growing companies. In 2011, Deloitte Albania and Deloitte Kosova agreed on a closer cooperation by forming the Deloitte Albania & Kosovo cluster. Comprising over 300 people across the two offices, this collaboration enables Deloitte Albania & Kosovo professionals to use their combined size, scale and expertise to offer a greater breadth and depth of service to our clients where and when they are needed.
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Luxembourg
Wildgen S.A. Jackye Elombo
■ the nature of employment (e.g., a description of the tasks 1 Terms and Conditions of Employment involved); ■ the employee’s daily or weekly standard working hours; 1.1 What are the main sources of employment law? ■ the employee’s standard working schedule, if any; ■ the employee’s remuneration and bonuses; Individual employment relationships are governed in order of ■ the length of the employee’s paid holiday or the method for priority by: determining this; ■ EU regulations; ■ the length of the employee’s notice period when the contract ■ the Labour Code; is terminated; ■ grand-ducal regulations; ■ the length of the employee’s trial period; ■ collective bargaining and collective agreements; ■ any complementary provisions; ■ employment agreements; ■ any collective agreements that govern the employee’s ■ internal regulations; and working conditions; and ■ common practices in certain circumstances. ■ any supplementary pension scheme. In addition, fixed-term agreements must include details of: ■ the agreement’s aims, including the names of any absent 1.2 What types of worker are protected by employment law? How are different types of worker distinguished? employees (as the case may be); ■ the termination date or minimum employment duration; and Employment law protects any employee working in Luxembourg ■ any renewal clauses. under the following conditions: ■ the provision and performance of effective work or services; 1.4 Are any terms implied into contracts of employment? ■ compensation granted for the work performed; ■ the subordination of the employee to the employer; and Employment relationships must respect the Labour Code and ■ the employer’s power of direction and control over the collective agreements, which are binding, even if not referred to in employee. the employment contract. Any clause that aims to restrict the rights provided by the Labour Code or a collective agreement would be If one of these conditions is not met, the employment relationship invalid. The general principle of good faith also governs the terms may be qualified as a self-employment agreement (e.g., a service or and conditions of employment relationships. Internal regulations, consulting agreement and mandate), not governed by employment which cover internal policies setting out disciplinary rules and law. instructions and guidelines for the proper performance of work, also Senior executives qualify as a special type of worker, to whom govern employment relationships. different rules may apply, i.e., having a higher remuneration, effective and real management power and significant independence in organising their work. 1.5 Are any minimum employment terms and conditions set down by law that employers have to observe?
1.3 Do contracts of employment have to be in writing? If Yes. Should a provision be less favourable to an employee than the not, do employees have to be provided with specific Labour Code, such provision will be considered null and void. information in writing?
Employment contracts must be evidenced in writing and contain the 1.6 To what extent are terms and conditions of following details: employment agreed through collective bargaining? Does bargaining usually take place at company or ■ the names of the parties; industry level? ■ the date of commencement of the employment relationship; ■ the place of employment (or employer’s address if there are Collective agreements are generally binding in specific professional various places of employment); sectors and apply automatically to employment relationships
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executed within such sectors. These agreements provide for uniform employment conditions and social guarantees and may be 2.5 In what circumstances will a works council have co- negotiated at both, company and industry level. determination rights, so that an employer is unable to proceed until it has obtained works council agreement to proposals? 2 Employee Representation and Industrial Relations It is mandatory for employers to obtain works councils’ prior consent to apply (i) any installation monitoring the behaviour or performance of employees, (ii) any measures relating to health and 2.1 What are the rules relating to trade union recognition? safety of employees, (iii) general criteria of personal selection in case of hiring, appraisal or dismissal, or (iv) internal regulations or collective agreements. Luxembourg Trade unions are recognised as professional groups that are independent from the state, financially autonomous and composed of employees with an organised internal structure whose interest lies 2.6 How do the rights of trade unions and works councils in the protection of professional interests, collective representation interact? and the improvement of labour and general living conditions of their members. Trade unions and works councils interact in defending employees’ Unions acquire recognition as a national representative body of interests. Both may, for instance, be involved in the establishment employees through an election process at the chamber of employees, of collective agreements or social plans in case of collective where at least 20% of the votes must be in their favour. dismissals.
2.2 What rights do trade unions have? 2.7 Are employees entitled to representation at board level? Under certain conditions, trade unions have the right to negotiate (and be party to) collective agreements, social plans prior to Employees are entitled to be represented in the board of directors or collective dismissals or the establishment of employment safeguard the supervisory committee if their employer is a Luxembourg public plans. limited liability company employing at least 1,000 employees Trade unions also advise employees and represent them before over the last three years or having received a specific financial national institutions, political bodies or employer organisations. contribution from the government.
2.3 Are there any rules governing a trade union’s right to 3 Discrimination take industrial action?
Trade unions must follow conciliation proceedings prior to 3.1 Are employees protected against discrimination? If so, on what grounds is discrimination prohibited? supporting any industrial action.
Employees are protected against discrimination by the Luxembourg 2.4 Are employers required to set up works councils? If Labour Code and Penal Code, based on the principle of equal so, what are the main rights and responsibilities of treatment. such bodies? How are works council representatives chosen/appointed? 3.2 What types of discrimination are unlawful and in what A joint works council must be set up in companies employing at circumstances? least 150 employees over the last three years. Its main rights and responsibilities are to take decisions regarding Any direct or indirect discrimination based on ethnic origin, skin the monitoring of employees’ performance and behaviour colour, gender, sexual orientation, family situation, age, health, and measures regarding their health and security, the hiring and disability, way of life, political or philosophical opinions, trade appraisal process, as well as the application of internal rules and union membership, non-membership or activities (either true or collective agreements. Works councils must be consulted prior to supposed) of a particular ethnic group, nationality, race or religion any decision having an impact on the work environment, structure is prohibited. of the company or level of employment. Any other type of discrimination (e.g., based on nationality), albeit In case of redundancy the employer must negotiate a social plan not provided for by the Labour Code or labour laws, could be with the works council. considered unlawful if not justified by the professional nature of the activity or its conditions of exercise. Employees and employers and equally represented in works councils. 3.3 Are there any defences to a discrimination claim? The employer may appoint his/her representatives on the terms determined at his/her discretion while the employees elect their representatives amongst themselves through secret ballot and using The defence consists of proving that there is no breach of the a list system. principle of equality. Exceptions to the principle of equality may be considered lawful if they are legitimate and proportionate with respect to the pursued purpose.
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3.4 How do employees enforce their discrimination 4.5 Are there any other parental leave rights that rights? Can employers settle claims before or after employers have to observe? they are initiated? As a basic principle, each parent is, under certain conditions, entitled A victim of discrimination may take legal action against the to full-time or part-time parental leave for a child under the age of tormentor who may be held liable before a Criminal or Civil Court six (respectively under the age of 12 in case of adoption). (according to criminal and civil sanctions under the Penal Code and Labour Code). 4.6 Are employees entitled to work flexibly if they have The employer can settle civil claims before, during or after the trial. responsibility for caring for dependants? Luxembourg 3.5 What remedies are available to employees in The Labour Code does not provide for any specific flexibility for an successful discrimination claims? employee caring for a dependant person. To this date, Luxembourg law only provides for family leave in case of serious illness of a The victim may claim for damages (for any loss or harm, including child. moral harm), by proving the act of discrimination, the harm and a causal relation between the act and the harm. 5 Business Sales Any discriminatory written provision shall be declared null and void. A dismissal based on discrimination will be deemed null and void and, under certain conditions, the employee is entitled to the 5.1 On a business sale (either a share sale or asset reinstatement of the company. The employee may also terminate transfer) do employees automatically transfer to the the employment agreement for gross misconduct of the employer buyer? and claim for damages. A share sale of the employer does not affect the employment, whereas employees are automatically transferred to the transferee 3.6 Do “atypical” workers (such as those working part- pursuant to a transfer of undertakings (e.g., asset transfer). time, on a fixed-term contract or as a temporary agency worker) have any additional protection? 5.2 What employee rights transfer on a business The same protection against discrimination applies to “atypical” sale? How does a business sale affect collective workers. agreements?
All employment conditions (and thus all employees’ rights) are 4 Maternity and Family Leave Rights automatically transferred to the transferee. The transferee must further observe the provisions of a collective 4.1 How long does maternity leave last? agreement signed by the transferor until its termination.
Maternity leave comprises a prenatal leave of eight weeks and a 5.3 Are there any information and consultation rights on postnatal leave of 12 weeks. a business sale? How long does the process typically take and what are the sanctions for failing to inform and consult? 4.2 What rights, including rights to pay and benefits, does a woman have during maternity leave? Employers have a duty to inform and consult the employees’ representatives before and after the decision to transfer (regarding The employee is protected during her leave against dismissal. the expected date of transfer, the reasons and consequences of the The period of maternity leave is considered as working time in all transfer and the contemplated measures towards the employees). respects (seniority, annual leave, and entitlement to all advantages Information must be communicated in an effective time (which is acquired prior to maternity leave). not defined by the law) before the realisation of the transfer and During such leave, the employee is entitled to maternity allowance in any case, before that the employees are directly affected in their paid by the Social Security. work and employment conditions. The employment law does not provide for sanctions in case of failure to inform or consult. 4.3 What rights does a woman have upon her return to work from maternity leave? 5.4 Can employees be dismissed in connection with a business sale? The Employee is entitled to (i) resume her former position or a similar position, corresponding to her qualifications and remuneration at A business sale is not a valid reason for dismissal. Indeed, under least equal to the former remuneration, (ii) take a parental leave, or TUPE, all transferred employees must keep the same rights and (iii) not resume her position and reapply for a similar position within same duties for a minimum period of around six or eight months a period of one year. according to the Luxembourg case law after the restructuring has been completed. Although not expressly provided by law, dismissals/ 4.4 Do fathers have the right to take paternity leave? restructuring (in particular, collective redundancies) occurring further to a business sale may trigger a risk of requalification. Since 2018, fathers enjoy 10 days’ paternity leave.
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accept an amendment to his/her employment contract is deemed a 5.5 Are employers free to change terms and conditions of dismissal and may lead to an unfair dismissal claim. employment in connection with a business sale? No third-party consent is, in principle, required prior to dismissal. In case of collective dismissals, the decision to dismiss is however In principle, the terms and conditions of employment are transferred limited and submitted to prior negotiations with the employees’ to the transferee. Such terms and conditions can, however, be representatives. changed to the benefit of the employee. If the business sale entails a substantial change of the employment conditions at the expense of, and not accepted by, an employee, the latter is deemed to have been 6.4 Are there any categories of employees who enjoy dismissed (by unfair dismissal). special protection against dismissal?
Luxembourg During justified absences for sickness, pregnancy, or maternity, 6 Termination of Employment paternity or parental leave, employees cannot be dismissed (not even for gross misconduct).
6.1 Do employees have to be given notice of termination In case of sickness leave, such protection remains valid for a of their employment? How is the notice period maximum period of 26 weeks. For family leave, such protection determined? covers the entire leave period. Staff representatives and their alternates cannot be dismissed during The dismissal has to be notified to the employee in writing. Unless their mandate and for six months following the end thereof. The the agreement is terminated with immediate effect, a notice period same protection is granted to any official candidates to a staff must be given in accordance with the length of the employee’s delegation. service. The notice period is of two months for five years of service and up to six months for more than 10 years. 6.5 When will an employer be entitled to dismiss for: The statutory notice periods (that apply to any dismissal) are: 1) reasons related to the individual employee; or 2) ■ two months for a length of continued services of less than five business related reasons? Are employees entitled years; to compensation on dismissal and if so how is ■ four months for a length of continued services of more than compensation calculated? five years and less than 10 years; and ■ six months after a length of continued services of at least 10 An employee may be dismissed either for personal reasons related years. to the employee’s attitude (e.g., lateness, professional disability or deficiency, insubordination, absence without leave, or disrespect) or The length of the notice may be doubled by collective agreement in for economic reasons related to the business (e.g., in case of loss of areas such as the Bank and Insurance sector. profit, workforce reduction or restructuring). In case of dismissal for any reason other than gross misconduct, 6.2 Can employers require employees to serve a period employees are entitled to statutory severance payment after at least of “garden leave” during their notice period when the five years’ seniority with the employer. employee remains employed but does not have to attend for work? The amount of severance pay is fixed in accordance with the years of uninterrupted service. Yes, employers may exempt employees from working during the The statutory severance indemnity (that applies to any dismissal) notice period; the remuneration and benefits of the employee are is equal to: maintained during such garden leave. ■ one month’s salary for a length of continued services of at least five years; 6.3 What protection do employees have against ■ two months’ salary for a length of continued services of at dismissal? In what circumstances is an employee least 10 years; treated as being dismissed? Is consent from a third ■ three months’ salary for a length of continued services of at party required before an employer can dismiss? least 15 years; ■ six months’ salary for a length of continued services of at Each employer, having the management power over his/her least 20 years; company, can decide to dismiss an employee at any time (unless a ■ nine months’ salary for a length of continued services of at special protection applies) if he/she has a serious ground to proceed least 25 years; and with the termination. ■ 12 months’ salary for a length of continued services of at least In case of dismissal for serious misconduct or if so requested by the 30 years. employee in case of dismissal with notice period, the employer must In case of unfair dismissal, the employee is entitled to compensation provide adequately detailed, true and serious grounds for dismissal to be fixed at the discretion of the court. by writing to the employee. Such motivation letter must allow the employee to know and verify the accuracy of the grounds for dismissal and consider the opportunity of a judicial action for unfair 6.6 Are there any specific procedures that an employer dismissal. If the employee challenges the reasons for dismissal the has to follow in relation to individual dismissals? burden of proof lies with the employer. Employers with more than 150 employees must conduct an The dismissal becomes irrevocable once the employer has expressed, interview before issuing a termination notice, which may be notified orally or by writing, the decision to dismiss the employee. The only on the first business day following that interview and within an termination of employment resulting from an employee’s refusal to eight-day deadline.
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The notification is either sent to the employee by registered mail or hand-delivered, both with acknowledgment of receipt. 7 Protecting Business Interests Following Termination If the grounds for dismissal are requested by the employee (within one month upon receipt of the dismissal letter), the employer must (within one month upon receipt of such request) provide these by 7.1 What types of restrictive covenants are recognised? registered letter. Failure to notify the grounds within the deadline will be punished by a judicial requalification as unfair dismissal. The Labour Code recognises non-competition clauses and establishes the conditions for such clauses to be valid. Together with 6.7 What claims can an employee bring if he or she is non-competition clauses, Luxembourg labour law also recognises dismissed? What are the remedies for a successful non-solicitation duties as enforceable restrictive covenants. claim? Luxembourg 7.2 When are restrictive covenants enforceable and for In case of an infringement of a substantial procedural requirement, what period? the employee may request damages for a maximum lump sum of one month’s salary. A restricted covenant may be valid if it does not prevent employees The employee may also claim material and moral damages based from performing their work. It must further be (i) provided in on wrongful or unfair dismissal. The proceedings must be initiated writing, (ii) time limited (up to 12 months after termination), within a certain deadline after the termination. (iii) limited to a certain geographical area, and (iv) limited to the The appraisal of the seriousness of the grounds for dismissal and the employer’s professional activities. amount of compensation lies with the court. If the dismissal is declared unfair and the employer is sentenced to 7.3 Do employees have to be provided with financial pay damages, they may appeal against the decision. compensation in return for covenants?
No financial compensation is required, unless such covenant aims to 6.8 Can employers settle claims before or after they are initiated? restrict an employment activity with a competitor of the employer. However, recent case law shows that Labour courts are entirely likely to admit validity of restrictive covenants with financial Employers may settle claims before, during or after the trial. compensation in return.
6.9 Does an employer have any additional obligations if it is dismissing a number of employees at the same 7.4 How are restrictive covenants enforced? time? Courts decide on the enforceability of restrictive covenants. Failure The rules for collective redundancy are applicable if: (i) seven or to respect restrictive covenants may result in the payment of more employees are dismissed within 30 days; or (ii) 15 or more damages. employees are dismissed within 90 days. In any case, a minimum of four terminated contracts qualify as 8 Data Protection and Employee Privacy collective redundancies if the contracts are terminated for reasons that are not directly related to the employees in question. When these conditions are met, the employer must apply strict rules 8.1 How do employee data protection rights affect the employment relationship? Can an employer transfer and negotiate a social plan. employee data freely to other countries? Employers with at least 15 employees are bound by the Ministry of Labour and Employment to declare dismissals for economic Privacy rights for employees must be balanced with an employer’s grounds. This declaration duty triggers the impossibility to general rights to monitor employee performance. In general, circumvent the rules of negotiation of a social plan. employees must be informed of the employer’s monitoring processes in order to enforce their rights under data protection rules 6.10 How do employees enforce their rights in relation to and the EU General Data Protection Regulation. mass dismissals and what are the consequences if an employer fails to comply with its obligations? 8.2 Do employees have a right to obtain copies of any personal information that is held by their employer? The staff representatives will mainly enforce the protection of employees’ rights. If the employer fails to comply with its legal Employees are entitled to access any personal data that is held by obligation in the context of collective dismissals, the employee may their employers. The employment law does not provide such right take legal action to claim damages either for unfair dismissal or for to a copy. However, the EU General Data Protection Regulation dismissal to be declared null and void. provides for such entitlement.
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8.3 Are employers entitled to carry out pre-employment 9.2 What procedure applies to employment-related checks on prospective employees (such as criminal complaints? Is conciliation mandatory before a record checks)? complaint can proceed? Does an employee have to pay a fee to submit a claim? During the recruitment process, an employer may request police clearance or criminal record checks based on the needs of the job Alternative dispute resolution (ADR), such as arbitration, is advertised (for example, if a driving licence is a prerequisite for applicable to employment-related disputes, but is rarely used in the job or in case of employment involving contact with children). Luxembourg labour law. Health-related information or credit checks are covered by personal Alongside the labour courts, where the judge’s main role is and private data provisions and thus cannot be subject to inquiries conciliation, an individual conciliation service also exists at the
Luxembourg from employers. Inspectorate of Labour and Mines (ITM). Further, the ITM has an informal mediation role. The Mediation Centre of the Luxembourg 8.4 Are employers entitled to monitor an employee’s Bar offers the possibility of open mediation for labour law. Finally, emails, telephone calls or use of an employer’s arbitration is determined by the New Civil Procedure Code. computer system? ADR is not a compulsory prerequisite to legal proceedings. However, parties may be obliged to have recourse to ADR depending Privacy rights for employees must be balanced with an employer’s on the provisions of the agreement or contract which defines their general rights to monitor employee performance. legal relationship. In general, employees must be informed of employer monitoring As labour courts are competent to hear disputes between employers processes in order to enforce their rights under data protection rules and employees, they also determine the enforcement conditions. and the EU General Data Protection Regulation. Any infringement of an agreement (which is binding for the parties thereto) may be referred to the labour courts. An oral procedure applies to employment-related complaints ruled by labour courts. 8.5 Can an employer control an employee’s use of social media in or outside the workplace? Arbitration sentences are binding and enforceable contrary to conciliation decisions and mediation agreements, which lack legal The European Court of Human Rights recently ruled that employees force and are not legally binding. cannot open professional social media accounts, use them for The employee does not have to pay a fee to submit the claim. personal purposes and expect privacy rules to be enforced in their favour. 9.3 How long do employment-related complaints typically However, employees must be informed of the existence, nature and take to be decided? extent of such surveillance, if it is limited and proportionate, as per the data protection principles. A trial can take between six and 18 months to reach a first-instance As of 25 May 2018, with the entry into force of the EU General decision in a main proceeding. Summary proceedings may last up Data Protection Regulation, this type of surveillance must be listed to six months. in the registry of treatment held by the employer, along with details of the requirements that make such surveillance lawful. 9.4 Is it possible to appeal against a first instance decision and if so how long do such appeals usually 9 Court Practice and Procedure take?
Either party can appeal a labour court judgment within 40 days of 9.1 Which courts or tribunals have jurisdiction to hear the date on which the judgment is notified to the parties by the court employment-related complaints and what is their clerk. Appeals are lodged with the Court of Appeal and are sent to composition? the chamber that handles labour matters. The procedure takes place according to the written proceedings Labour courts located in an employer’s registered seat or where (i.e., submissions are exchanged on a monthly basis according to an employee habitually carries out his/her work have territorial timetables issued by the court). Once all arguments have been jurisdiction to rule on disputes between the two parties. An discussed, the parties may ask for the closing of the debates. The employer can bring court proceedings against an employee in the court sets a date for the hearing (i.e., oral pleadings), during which jurisdiction where the employee is domiciled. the parties will resume their grounds, claims and arguments. Labour courts may rule in summary proceedings when a claim After examining the case, the Court of Appeal will issue its cannot be obviously challenged (e.g., in the case of unpaid leave or judgment. Generally, but not necessarily, a judgment is rendered salary) or for temporary measures (e.g., the grant of unemployment one or two months after the pleadings have taken place (confirming benefits after a dismissal with immediate effect). The courts can or overruling the first judgment). also rule in main proceedings (e.g., claims for unfair dismissal and the grant of damages). Appeal decisions are subject to cassation, which is a formal procedure that is strictly limited to questions of law and an analysis Labour courts are composed of one judge and two assessors of whether the Court of Appeal applied the law correctly. representing employees and employers.
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Jackye Elombo Wildgen S.A. 69, Boulevard de la Pétrusse L-2320 Luxembourg
Tel: +352 40 49 60 1 Email: [email protected] URL: www.wildgen.lu
As a lawyer, Jackye has represented clients in their strategic and operational challenges as well as before the courts. Head of the Luxembourg Pragmatic Labour Law dedicated offering, she advises clients on workplace relationships, whether involving employment law, partnership law or shareholder’s rights and assists them to respond quickly and effectively to issues that arise in the workplace. Jackye has developed a reputation for empowering clients, by being able to express complex legal issues in simple terms and pragmatic actions. In 2017, during the HR One Gala in Luxembourg, she won the Best Social and Legal Partner award. The quality of services and the pragmatism of innovative and timesaving solutions (https://www. wildgen.lu/what-we-do/dedicated-services/pragmatic-labour-law) she provides her clients with convinced the jury members. Jackye regularly contributes to Luxembourg case law in respect of the legal rights and obligations of employees and employers and is frequently invited to speak at national and international conferences.
Since 1923, Wildgen S.A. has been at the heart of law practice in Luxembourg. It is today one of the best-known and most well-respected independent business law firms in Luxembourg, possessing a strong track record and continuing to offer sound technical expertise. For decades, we have served our clients as a full-service corporate, financial, investment fund, tax, and business law firm. Our dedicated team creates innovative and tailor-made solutions in all areas of employment and labour law. The approach offered by our lawyers is simple: efficient, pragmatic and saving our clients’ time and money. Our lawyers provide our clients with a wide range of in-depth legal services applying to both contentious and non-contentious issues. They have a strong tradition in advising domestic and international companies, insurance companies, investment funds, banks and financial institutions. Their expertise has been acquired over the years through numerous dealings with all aspects of the employment relationship.
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Macau Miguel Quental
FCLAW – LAWYERS & PRIVATE NOTARIES Paulo Cordeiro de Sousa
leadership and management positions), paid sick leave (six days), 1 Terms and Conditions of Employment maternity leave (56 days), paternity leave (two days unpaid), etc.
1.1 What are the main sources of employment law? 1.6 To what extent are terms and conditions of employment agreed through collective bargaining? The main sources of employment law in Macau are the Labour Does bargaining usually take place at company or Relations Law (Law No. 7/2008) and the Law for the employment industry level? of non-resident workers (Law No. 21/2009). The Labour Relations Law does not contain provisions regarding collective bargaining. Collective bargaining is not usual in Macau at 1.2 What types of worker are protected by employment company or industry level. However, employers and employees may law? How are different types of worker distinguished? reach agreements with contractual terms different from the ones set forth by the Labour Relations Law, provided that implementation of The Labour Relations Law distinguishes between resident and non- these terms does not result in working conditions less favourable to resident workers. The employment contracts for resident workers the employees than those established by the Labour Relations Law. can be classified into two categories: permanent contracts; and If the working conditions agreed by contract are less favourable to term contracts (which have a maximum period of two years and the employees than the ones established in the Labour Relations may be fixed-term contracts or, in some special cases, variable- Law, such terms shall be deemed null and void and shall be replaced term contracts). Non-resident workers may only be employed by the provisions of the Labour Relations Law. under fixed-term contracts that may never convert into permanent contracts. Part-time work shall be subject to special legislation (not yet published). 2 Employee Representation and Industrial Relations 1.3 Do contracts of employment have to be in writing? If not, do employees have to be provided with specific information in writing? 2.1 What are the rules relating to trade union recognition?
Permanent contracts are not subject to any special form and may Under Article 27 of the Macau Basic Law, all employees have the be concluded verbally or in writing. Fixed- or variable-term labour right to form representative organisations and to join trade unions. contracts and juvenile labour contracts (acceptable in certain cases) However, this right has not yet been defined or regulated by law. must be in written form. For this reason, there are still no formal labour unions in Macau SAR.
1.4 Are any terms implied into contracts of employment? 2.2 What rights do trade unions have? The Labour Relations Law does not have any reference to terms implied into contracts of employment. See the answer to question 2.1 above. There are still no formal labour unions in Macau SAR.
1.5 Are any minimum employment terms and conditions set down by law that employers have to observe? 2.3 Are there any rules governing a trade union’s right to take industrial action? Yes. There are many statutory minimum labour standards regarding working hours (eight hours per day, 48 per week), annual leave (six See the answer to question 2.1 above. There are still no formal days), maximum probation period (30 days for term contracts, 90 labour unions in Macau SAR. days for permanent contracts and 180 days for permanent contracts with employees whose work is of a highly technical nature or involving special qualifications, as well as for employees who hold
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discrimination. Nevertheless, the employer who treats an employee 2.4 Are employers required to set up works councils? If or a job applicant in an unjustifiable discriminatory manner may be so, what are the main rights and responsibilities of fined. An employee who has been discriminated against may claim such bodies? How are works council representatives for civil damages in civil courts. chosen/appointed? Both parties can settle claims at any time during, before or after the There are no provisions in the Labour Relations Law regarding claim is initiated. the setting up of work councils or any other form of representative bodies for employees. 3.5 What remedies are available to employees in successful discrimination claims? Macau 2.5 In what circumstances will a works council have co- determination rights, so that an employer is unable to If the discrimination claim is successful, the employee is entitled to proceed until it has obtained works council agreement receive compensation for the damages that he has suffered. to proposals?
3.6 Do “atypical” workers (such as those working part- See the answer to question 2.4 above. The Labour Relations Law time, on a fixed-term contract or as a temporary does not provide for co-determination rights of employees. agency worker) have any additional protection?
2.6 How do the rights of trade unions and works councils There are no legal provisions regarding additional protection to interact? “atypical” employees.
See the answers to questions 2.1 and 2.4 above. 4 Maternity and Family Leave Rights
2.7 Are employees entitled to representation at board level? 4.1 How long does maternity leave last?
No. Employees are not entitled to representation at board level. Female employees are entitled to not less than 56 days of maternity leave. Of the 56 days of maternity leave, 49 days must be taken immediately after birth, and the days left may be taken consecutively 3 Discrimination or separately, before or after birth, at the discretion of the female employee.
3.1 Are employees protected against discrimination? If so, on what grounds is discrimination prohibited? 4.2 What rights, including rights to pay and benefits, does a woman have during maternity leave? Yes. Under the Labour Relations Law, all employees shall have equal opportunities for employment based upon non-discrimination Female employees whose term of employment has lasted more than conditions. No employee or applicant for employment shall be one year on the birth date of their child are entitled to receive the unduly privileged, or discriminated against or deprived of any right basic remuneration corresponding to the period of maternity leave. or exempted from any duty on the grounds of, inter alia, national or Female employees whose term of employment reaches one year social origin, descent, race, colour, gender, sexual orientation, age, during maternity leave are entitled to receive the basic remuneration marital status, language, religion, political or ideological beliefs, corresponding to the remaining period of maternity leave after the membership of associations, education or economic background. completion of one year’s service. Female employees shall not be instructed to perform work 3.2 What types of discrimination are unlawful and in what incompatible with their physical condition during pregnancy circumstances? and within three months of delivery, and the employer shall not unilaterally terminate the employment with female employees See the answer to question 3.1 above. during pregnancy or within three months of delivery, except with just cause. In the case of non-compliance with the above, the employer shall 3.3 Are there any defences to a discrimination claim? be liable to pay compensation to the dismissed female employee equivalent to 56 days of remuneration, without prejudice to any Yes. A difference in the treatment of employees regarding a situation additional compensation that may be legally due. in which discrimination would be prohibited may not constitute illegal discrimination if, due to the nature of the work or the context in which it is carried out, such a different treatment constitutes a 4.3 What rights does a woman have upon her return to justifiable and decisive requirement for the performance of the work. work from maternity leave?
See the answer to question 4.2 above. Female employees shall 3.4 How do employees enforce their discrimination not be instructed to perform work incompatible with their physical rights? Can employers settle claims before or after they are initiated? condition within three months of delivery and the employer shall not unilaterally terminate the employment with a female employee within three months of delivery, except with just cause. The Labour Relations Law does not contain specific provisions regarding compensation of employees in cases of illegal
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4.4 Do fathers have the right to take paternity leave? 5.5 Are employers free to change terms and conditions of employment in connection with a business sale? Fathers have the right to enjoy two working days (unpaid) for reasons of paternity or adoption. Employers are not free to change the terms and conditions of the employment contracts in any circumstance (transfer of shares or transfer of business). However, the new employer may agree 4.5 Are there any other parental leave rights that with the employees new terms and conditions for the employment, employers have to observe? amending the employment contracts accordingly.
Macau Absences may be justified (but unpaid) due to the pressing need to provide assistance to a member of the household, subject to a 6 Termination of Employment maximum of 12 working days per calendar year. The law does not contain any provision regarding absences to feed 6.1 Do employees have to be given notice of termination and tend to the child. of their employment? How is the notice period determined? 4.6 Are employees entitled to work flexibly if they have responsibility for caring for dependants? Yes. A notice period must be observed in the case of termination of a contract without just cause (unilateral termination). The notice The law does not contain any provision regarding this issue. period may be established in the employment contract (the notice period for the employee cannot be longer than the notice period for the employer). 5 Business Sales In the absence of contractual provisions regarding the notice period, the Labour Relations Law sets forth that the notice period is 15 days 5.1 On a business sale (either a share sale or asset for the employer, but only of seven days for the employee. transfer) do employees automatically transfer to the If the employer does not comply with the notice period, the buyer? employee shall be entitled to compensation (the employer shall pay to the employee the basic remuneration regarding the days of the In the case of a share sale, since the employing entity will remain notice period). In addition, such notice period shall be taken into the same, there is no transfer of employees. On the other hand, in account for computing the seniority of the employee. case of a transfer of a commercial enterprise (transfer of business), under the Macau Commercial Code, employees shall automatically be transferred to the acquirer, except if, prior to the transfer, the 6.2 Can employers require employees to serve a period of “garden leave” during their notice period when the transferor and the acquirer have entered into an agreement pursuant employee remains employed but does not have to to which the employees will continue to work for the transferor in attend for work? another business. The Labour Relations Law is silent in this respect. However, our 5.2 What employee rights transfer on a business understanding is that employers can require employees to serve a sale? How does a business sale affect collective period of “garden leave”, as mentioned, if the employees are fully agreements? paid during such period.
In the case of transfer of a commercial enterprise (transfer 6.3 What protection do employees have against of business), the employment contracts should remain in dismissal? In what circumstances is an employee force, untouched, unless otherwise agreed with the employees. treated as being dismissed? Is consent from a third Nevertheless, according to the law, the employee may terminate the party required before an employer can dismiss? employment contract with just cause, in which case he/she may be entitled to receive compensation. Our understanding is that business According to the provisions of the Labour Relations Law, either the transfers should not affect collective agreements, if they exist. employer or the employee may terminate the labour contract with or without just cause. 5.3 Are there any information and consultation rights on In the case of termination of the contract with just cause, the employer a business sale? How long does the process typically must give the employee written notice of the decision to terminate take and what are the sanctions for failing to inform the employment within 30 days after becoming aware of the relevant and consult? facts, summarily describing the facts relating to the employee.
The law does not contain any provision regarding specific The lack of written notice or the lack of grounds in the just cause information and consultation rights on a business sale. invoked shall be considered termination of the employment without just cause, in which case the employee shall be entitled to compensation which is equivalent to double the amount that would 5.4 Can employees be dismissed in connection with a be due by the employer in the case of termination without just cause. business sale? The employer may freely terminate without just cause the labour contract, but the employee is entitled to compensation equivalent to: See the answer to question 5.1 above. As mentioned, employees 1) seven days of the basic remuneration if the period of may not be dismissed in case of a business sale. employment is over the probationary period and up to one year;
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2) 10 days of the basic remuneration per year of service if the for termination of the contract. Among others, the following are period of employment is over one year and up to three years; considered just cause for the employer to terminate an employment 3) 13 days of the basic remuneration per year of service if the contract: period of employment is over three years and up to five years; 1) wilful disobedience to orders given by superiors; 4) 15 days of the basic remuneration per year of service if the 2) repeated lack of commitment in fulfilling duties inherent to period of employment is over five years and up to seven the exercise of the employee’s functions; years; 3) chronic tardiness, leaving early or abandoning work during 5) 16 days of the basic remuneration per year of service if the the working hours without authorisation; period of employment is over seven years and up to eight 4) unjustified absences from work, which directly cause serious years; harm to the enterprise or, irrespective of any harm, when Macau 6) 17 days of the basic remuneration per year of service if the the number of unjustified absences is greater than three period of employment is over eight years and up to nine consecutive days or five separate days in each year; years; 5) false statements regarding the justification of absences; 7) 18 days of the basic remuneration per year of service if the 6) an abnormal reduction of productivity which has been period of employment is over nine years and up to 10 years; intentionally caused by the employee; and 7) repeated provocation of disputes with other employees of the 8) 20 days of the basic remuneration per year of service if the enterprise; period of employment is over 10 years. 8) acts of physical violence, insult or other abuse punishable Please note that there is a legal limit for the maximum amount of under law directed at the employer, superiors or other compensation to the employee. The limit is 12 times the basic employees of the enterprise; remuneration of the employee in the month of the termination of the 9) severe harm to the enterprise’s interests; and contract, irrespective of the duration of the employment. Additionally, 10) violation of regulations on occupational hygiene and safety. the monthly basic remuneration used to calculate compensation is limited to a maximum amount of Mop$20,000.00, save if a higher value has been agreed upon between the employer and the employee. 6.6 Are there any specific procedures that an employer There is no legal obligation to obtain the consent of a third party has to follow in relation to individual dismissals? if the employer wishes to terminate an employment contract unilaterally, with or without just cause. Yes. In the case of termination of contract with just cause, the employer must give the employee written notice of the decision The law does not provide for the reinstatement of the employee and to terminate the employment within 30 days after knowledge of back payment of salary or other benefits. the relevant facts, summarily describing the facts relevant to the employee. 6.4 Are there any categories of employees who enjoy In the case of termination of contract without just cause (unilateral special protection against dismissal? termination), employers are required to give notice to the employee within the notice period set forth in the contract, or within a 15- Yes. There are two categories of employees that enjoy special protection day notice period if the contract is silent on this matter. If the against dismissal. According to the Legal Regime of Compensation notice period is not complied with, the employee is entitled to for Damages arising from Accidents at Work and Occupational compensation and the notice period shall be taken into account for Diseases (Decree-Law No. 40/95/M), during the period of partial computing the seniority of the employee. temporary incapacity, the employer is required to occupy employees who are victims of an occupational accident or occupational disease in functions compatible with their health situation. An employer who 6.7 What claims can an employee bring if he or she is terminates the employment relationship with an employee who is a dismissed? What are the remedies for a successful claim? victim of an industrial accident or an occupational disease without due cause, while he/she is temporarily incapacitated, must pay him/her compensation equal to three months’ salary, without prejudice to any See the answer to question 6.3 above. In the case of lack of written other compensation provided by law for unilateral termination. notice or lack of grounds in the just cause invoked, an employee can bring a claim against his employer by filing a lawsuit in the According to the Labour Relations Law, the employer shall not labour court. If the court decides that the dismissal is not valid, unilaterally terminate the employment of a female employee during the employee shall be entitled to compensation equivalent to twice pregnancy or within three months after birth, except with just cause. of what he/she should be able to receive in the case of termination Otherwise, the employer shall be liable to pay compensation to the of the employment without just cause. In principle, the employee fired female employee equal to 56 days of remuneration, without can also claim for other damages. prejudice to any other compensation provided by law for unilateral termination. 6.8 Can employers settle claims before or after they are initiated? 6.5 When will an employer be entitled to dismiss for: 1) reasons related to the individual employee; or 2) business related reasons? Are employees entitled Yes; it is possible to reach a settlement agreement on the claims at to compensation on dismissal and if so how is any time during, before or after they are initiated. compensation calculated?
Employees are not entitled to compensation on dismissal with just cause. In general, any fact or serious circumstance that makes it impossible to continue the employment shall constitute just cause
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The right to privacy relates to access to and disclosure of information 6.9 Does an employer have any additional obligations if relating to the private and personal lives of either party, such as their it is dismissing a number of employees at the same respective family life, emotional and sexual lives, state of health and time? their political and religious convictions. Employee data can be transferred to other countries provided that No. The law does not contain any provision regarding additional the employer notifies the Data Protection Authority in Macau obligations of the employer if it is dismissing more than one and complies with the further requirements of the Personal Data employee at the same time. Protection Law (Law No. 8/2005).
Macau 6.10 How do employees enforce their rights in relation to mass dismissals and what are the consequences if an 8.2 Do employees have a right to obtain copies of any employer fails to comply with its obligations? personal information that is held by their employer?
The law does not contain any provision regarding this issue. Yes. During the course of the employment, the employee is entitled to obtain from the employer copies of his/her personal information that is held by the employer. 7 Protecting Business Interests Following Termination 8.3 Are employers entitled to carry out pre-employment checks on prospective employees (such as criminal record checks)? 7.1 What types of restrictive covenants are recognised? There are no statutory standards about this issue. In practice, for The Labour Relations Law does not contain any provision on some senior positions, it is usual to carry out pre-employment restrictive covenants. However, it is very common to negotiate checks, which are closely related to the employment relationship with certain categories of employees’ post-employment covenants, to be established. notably regarding non-competition and confidentiality obligations. Such restrictive covenants must be agreed in writing, addressing, e.g., the terms of the non-competition restrictions and its time limits, 8.4 Are employers entitled to monitor an employee’s including reasonable compensation during the restraint period. emails, telephone calls or use of an employer’s computer system?
7.2 When are restrictive covenants enforceable and for In accordance with the Personal Data Protection Law, employers what period? have the right to monitor employees’ telephone calls, emails, use of internet by the employees and video surveillance of the employee. The Labour Relations Law does not contain any provision regarding Such monitoring involves collecting personal data from the this issue. employee; thus, the employer must previously inform the employee that he will be monitored, and the employee must give his/her 7.3 Do employees have to be provided with financial consent. Prior to deciding to monitor the employee, the employer compensation in return for covenants? should assess the need for such monitoring and give careful and comprehensive attention, in particular, to the following items: There are no statutory standards or guidelines about this matter 1) the purpose of collecting the data and whether it is legitimate; in the Labour Relations Law. However, in practice, the provision 2) whether the practice of monitoring is necessary for achieving of financial compensation during the non-competition restriction the purpose, and whether alternatives to monitoring are period is one important element to be taken into consideration available, which will minimise involvement in the processing by the court when assessing the validity of such covenants. The of personal data; amount of the compensation should be reasonable in order for it be 3) whether the monitoring practice, scope and timing is enforceable. appropriate and justified; 4) the data that should be collected and whether they are essential for attaining the expected goals; 7.4 How are restrictive covenants enforced? 5) whether the monitoring will safeguard the interest of the employer or the interest of the employee; If the employee does not comply with the non-competition restriction, the employer may claim for damages in the labour court. The amount 6) the harmful results brought about by inappropriate handling of the data collected; and of the damages is often stipulated in the restrictive agreement. 7) how to formulate the rules for protecting personal data and the Personal Data Collection Statement. 8 Data Protection and Employee Privacy As monitoring is an act falling within the scope of personal data collection, the employer carrying out employee monitoring should abide by the Personal Data Protection Law, handle personal data 8.1 How do employee data protection rights affect the employment relationship? Can an employer transfer in transparent and legal ways with due respect to personal privacy, employee data freely to other countries? fundamental rights and freedom as bestowed by law and observe the principle of goodwill. The violation may constitute administrative The Labour Relations Law sets forth that the employer and the infringement, or even a criminal act; furthermore, the employer may employee should mutually respect each other’s personal rights; in also be liable to compensate the employee for damages suffered. particular, the right to privacy of their personal lives.
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Public Prosecutor Office. An employee has to pay a fee to submit 8.5 Can an employer control an employee’s use of social a labour claim. Nevertheless, employees are able to request for media in or outside the workplace? judicial support in order to be exempt for payment of judicial fees.
There are no guidelines about such issue. However, our opinion is that employers may not control an employee’s personal use of social 9.3 How long do employment-related complaints typically take to be decided? media outside the workplace.
In the first instance (Labour Court), complaints normally take six to 9 Court Practice and Procedure 12 months to be decided. Macau
9.1 Which courts or tribunals have jurisdiction to hear 9.4 Is it possible to appeal against a first instance employment-related complaints and what is their decision and if so how long do such appeals usually composition? take?
The Labour Court is the only court that has jurisdiction to hear Yes. Regardless of the value of the claim, employers and employees labour disputes between employers and employees. The Labour can always appeal to the Court of Appeal in lawsuits in which Court is composed of a single judge or by a panel of three judges. the discussion of the validity or subsistence of the employment contract is in question or in lawsuits arising from accidents at work or occupational diseases. Otherwise, the appeal may be limited 9.2 What procedure applies to employment-related regarding the value of the claim. The average decision time at the complaints? Is conciliation mandatory before a Court of Appeal is normally around eight to 12 months. complaint can proceed? Does an employee have to pay a fee to submit a claim?
Conciliation is not mandatory before a labour complaint is filed in the labour court. After the labour case is filed in court, there will be a mandatory conciliation between employer and employee at the
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Miguel Quental Paulo Cordeiro de Sousa FCLAW – LAWYERS & PRIVATE NOTARIES FCLAW – LAWYERS & PRIVATE NOTARIES Av. Almeida Ribeiro Av. Almeida Ribeiro Edif. Circle Square, 13.º, B-E Edif. Circle Square, 13.º, B-E Macau Macau
Tel: +853 2833 0885 Tel: +853 2833 0885 Email: [email protected] Email: [email protected] URL: www.fclaw.com.mo URL: www.fclaw.com.mo Macau Miguel Quental is a Partner at FCLAW. He is a guest lecturer at Paulo Cordeiro de Sousa is an Associate at FCLAW. He is engaged the Faculty of Law, University of Macau, teaching Labour Law and in practices related to the tax law, civil law, corporate and commercial Business/Commercial Law, and has been published in several law, financial law and public law. articles on Labour matters, as well as being an author of a textbook Paulo is a graduate in Law from the Faculty of Law of the Lisbon on Macau Labour Law, published in 2006 and 2012. Miguel is also University and a post-graduate in Business Management and Tax from an invited instructor at the Macau Lawyers Association and at the the Institute of Higher Financial and Tax Studies. He completed the Legal and Judicial Training Centre of the Macau SAR, and an invited coursework for the post-graduation programme in Intellectual Property consultant of the Department of Juridical Reform for the “Revision of at Faculty of Law of the Lisbon University and Portuguese Intellectual the Commercial Code”. Property Association. Graduate in Law, Faculty of Law of Coimbra (Portugal). Master’s in Admitted to the Portuguese Law Society and to the Macau Law Juridical Business Sciences, Faculty of Law of University of Coimbra. Association. Admitted in the Portuguese Law Society and in the Macau Law Association.
Established in 2003, FCLAW’s principal goal is to provide the highest quality legal services, seeking long-term partnering relationships with clients, in order to provide the best solution to its clients’ needs. The underlying aim of the firm is to identify clients’ needs and to meet those promptly and efficiently. For each practice area, FCLAW actively participates in procedures and negotiations providing legal services to private clients, domestic and international leading corporations and financial institutions, governments and governmental organisations. Together with our lawyers, FCLAW works across practices and diverse jurisdictions to provide the highest quality and rigorous legal services, bringing their collective experience to bear on the issues that clients face.
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Macedonia Emilija Kelesoska Sholjakovska
Debarliev, Dameski & Kelesoska, Attorneys at Law Ljupco Cvetkovski
1 Terms and Conditions of Employment 1.3 Do contracts of employment have to be in writing? If not, do employees have to be provided with specific information in writing? 1.1 What are the main sources of employment law? The employment contract shall be concluded in writing and must In Macedonia, employment issues are mainly governed by the be kept in the headquarters of the employer. A copy of the signed Constitution of the Republic of Macedonia and the Labour Law of contract of employment shall be handed to the employee on the date Republic of Macedonia. of signing the employment contract. Further, depending on the area of regulation of labour issues, there are also employment regulations governed by: the Law on 1.4 Are any terms implied into contracts of employment? employment and insurance against unemployment; the Law on labour inspection; the Law on records in the field of labour; the Law on employment of disabled persons; the Law on holidays of The Labour Law regulates the mandatory contents of the the Republic of Macedonia; the Law on temporary employment employment contract. The employment contract shall at least agencies; the Law on volunteering; the Law on peaceful settlement contain: (i) information on the parties, their residence or seat; (ii) of labour disputes; the Law on employment and work of foreigners; date of entry into employment; (iii) job title or data type of work the Law on safety and health at work; the Law on minimum wage; for which the employee concluded the employment contract, with and the Law on protection from harassment in the workplace. a brief description of the work to be performed under the contract of employment; (iv) provisions on the obligation of the employer to For employees working in the public sector, the Law of inform the employee about risk positions and special professional administrative officers and the Law for employees of the public qualifications or skills or special medical supervision, in accordance sector govern their employment. with the law, stating the specific risks under the legislation that may result from the work; (v) place of work performance; (vi) the 1.2 What types of worker are protected by employment duration of employment, when the contract was signed for a definite law? How are different types of worker distinguished? time; (vii) provision of whether the worker is employed part- or full- time; (viii) provision for daily or weekly regular working hours and The Labour Law protects and applies to any natural person that has allocation of working hours; (ix) provision for the amount of the concluded an employment contract with an employer. The workers basic salary, which is expressed in the amount of money that goes protected by the Labour Law are: (i) workers for an employer with to the worker to perform the work according to the law, collective a headquarters or a representative office in Macedonia, whose work agreement or employment contract; (x) provision for other benefits is performed in Macedonia; (ii) workers whose employer performs belonging to the worker to perform the work according to the law the work in Macedonia under an employment contract concluded in and the collective agreement; (xi) provision for annual leave or the accordance with a foreign law; and (iii) a worker whose employer manner of determining annual leave; and (xii) an indication of the from Macedonia has sent him or her outside to work abroad. general acts of the employer in which are stated certain conditions In accordance with the Macedonian regulations, workers are mainly of a worker. distinguished in accordance with their type of contract, which can be an: employment contract with an undefined or defined employment 1.5 Are any minimum employment terms and conditions contract time; employment contract with a young person; seasonal set down by law that employers have to observe? employment contract; part- or full-time employment contract; employment contract for performing work from home; employment The employers are bound by the regulations on the minimum contract for housekeepers; or an employment contract for business wage for workers, daily and weekly breaks, annual leave duration, people (management contract). maximum working hours, termination causes and notice periods, working age limitations, overtime payment and limitations, informing procedure and severance payments for redundancies and other issues specifically regulated with the abovementioned sources of the employment law.
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salary. The representative trade union is also entitled to negotiate 1.6 To what extent are terms and conditions of and conclude collective agreements and to initiate a strike in order employment agreed through collective bargaining? to protect the rights of the workers. Does bargaining usually take place at company or industry level? 2.3 Are there any rules governing a trade union’s right to In Macedonia, collective agreements are concluded on a general take industrial action? level of the Republic and, on the level of a special branch or department of the employer, in accordance with the National The trade union and its associations at higher levels have the right to Classification of Activities and individual-level employer. Ona call a strike in order to protect the economic and social rights of its general level of the Republic, there are the: (i) general collective members in their employment. The strike must be announced in writing
Macedonia agreement for the private sector of the economy; and (ii) general to the employer or employers’ association that it is directed against. collective agreement for the public sector, as well as other specified collective agreements such as the collective agreement for health 2.4 Are employers required to set up works councils? If workers, construction workers, agricultural and food production so, what are the main rights and responsibilities of workers, etc. Usually in Macedonia, the bargaining of collective such bodies? How are works council representatives agreements takes place at the industry level. chosen/appointed?
In accordance with the regulation in Macedonia, there is no 2 Employee Representation and Industrial obligation for employers to set up works councils. But, in the case Relations of informing and consulting with the workers, there is an obligation for a privately owned company, public company or other legal entity having more than 50 workers, as well as institutions that have 2.1 What are the rules relating to trade union recognition? over 20 workers, to appoint a representative from the employer to perform the information and the consultation. Workers have the right, at their free choice, to establish trade unions and become members, under the conditions laid down by statute or the rules of that union. Trade unions can constitute confederations 2.5 In what circumstances will a works council have co- or other forms of association in which their interests are connected determination rights, so that an employer is unable to to a higher level (trade unions at higher levels). The trade union of proceed until it has obtained works council agreement to proposals? a higher level becomes a legal entity on the day of registration in the Central Register of the Republic of Macedonia, following a previous entry into the register of trade unions or the register of associations The labour regulations do not contain any provisions regarding the of employers. The trade unions are registered in the Register of matter of co-determination rights of a works council. Unions, which is kept in the Ministry responsible for labour affairs. Submitting a request for entry into the register, for which a decision 2.6 How do the rights of trade unions and works councils from the Ministry must be obtained, completes registration. interact?
2.2 What rights do trade unions have? The works council’s rights are not determined by the labour regulations. The employer or the representative association of the employers are entitled to negotiate and conclude the collective The trade union is entitled to represent, promote and protect the agreement with the representative union of the workers. economic, social and other individual and collective interests of workers on a general level. The unions can constitute confederations or other forms of association in which their interests are connected 2.7 Are employees entitled to representation at board to a higher level (trade unions and employers’ associations on level? a higher level). In accordance with the law, the unions have the right to associate and cooperate with international organisations The employees are not entitled to representation or any attendance established due to the realisation of their rights and interests. The at the board level of their employer. union may collect a registration fee and membership fee with the purchase, gift or any other legal way to acquire property; forced execution can be implemented on movable and immovable property 3 Discrimination of the union necessary for holding meetings. A member of the union may seek court protection in case of violation of his or her rights 3.1 Are employees protected against discrimination? If under the statute or other rules of the union or association. A worker so, on what grounds is discrimination prohibited? must not be placed in a less favourable position than other workers because of trade union membership. The trade unions with members The employer is prohibited from putting the applicant for a job or employed by a particular employer may appoint or elect one or a worker in an unequal position because of racial or ethnic origin, more union representatives who will advocate the worker’s right colour, sex, age, health condition or disability, religious, political with that employer. The trade union representatives are entitled to or other beliefs, union membership, national or social origin, expect the employer to protect and promote the rights and interests family status, economic status, sexual orientation or other personal of the members. The employer is obliged to provide premises for circumstances. Also, in accordance with the law, women and men the activity to the trade union representative of the biggest union. must be provided with equal opportunities and equal treatment. The The trade union representative is protected from termination of principle of equal treatment implies a ban on direct and/or indirect employment without the union’s consent as well as the decrease of discrimination.
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3.2 What types of discrimination are unlawful and in what 4 Maternity and Family Leave Rights circumstances?
4.1 How long does maternity leave last? The law recognises two types of discrimination: direct and indirect discrimination on the grounds mentioned in question 3.1. These Workers during pregnancy, birth and parenting are entitled to paid types of discrimination refer to both the job applicant and the leave from work for a period of nine consecutive months. If the worker. Direct discrimination is any conduct motivated by any of worker gives birth to more than one child (i.e., twins, triplets or the abovementioned grounds by which a person has been placed, more), the maternity leave lasts for 15 months. or could be put, in a less favourable position than other persons in comparable cases. Indirect discrimination exists when a certain seemingly neutral provision, criterion or practice puts or would put 4.2 What rights, including rights to pay and benefits, does Macedonia a person at a particular disadvantage compared with other persons, a woman have during maternity leave? a job applicant or employee for a certain capacity, status, belief or conviction related to the abovementioned grounds. A worker who uses maternity leave for pregnancy, childbirth and parenting, or to take care of a child, is entitled to remuneration. The employee whose employment contract is terminated due to an 3.3 Are there any defences to a discrimination claim? expiry of the definite time and uses the right of remuneration, due to pregnancy, childbirth and parenting, continues to exercise this In Macedonia, the burden of proof in a discrimination claim lies with right until the expiry of the absence. The employer is banned from the employer. The employer shall not be held liable if the activities terminating the employment agreement of the worker who exercises of distinction, exclusion or giving priority in terms of a certain job the right of maternity leave. were done when the nature of work is such, or the work is performed in such conditions, that the characteristics associated with some of the abovementioned grounds are real and decisive conditions for 4.3 What rights does a woman have upon her return to performing the work. work from maternity leave?
At the end of the maternity leave, the worker is entitled to return to 3.4 How do employees enforce their discrimination the same job or, if that is not possible, an adequate position under the rights? Can employers settle claims before or after they are initiated? terms of the employment contracts. If the worker returns to work before the end of the maternity leave, the worker is entitled to the right of salary by the employer, as well as 50% of the determined In the case of discrimination, an employee has two options: (i) to file remuneration. a claim to the Commission for protection against discrimination; or (ii) to file a claim in front of the Civil Court against the employer. Following an absence due to pregnancy, childbirth and parenting, The employee is able to settle the claim both before and after the a worker who is breastfeeding, even after she starts working full- claim is initiated. time, will be entitled to a paid break during working hours that will last one-and-a-half hours a day. The worker is entitled to the right of additional paid break time for the first year after the birth of her 3.5 What remedies are available to employees in child. successful discrimination claims?
An employee who has succeeded in the discrimination claim is 4.4 Do fathers have the right to take paternity leave? entitled to (i) refuse to participate in actions that violate or may violate the employee’s right to equal treatment, i.e. to perform The father is entitled to the right to take paid paternity leave for actions that eliminate discrimination or its consequences, (ii) up to seven working days due to the birth of his child. Fathers are compensation for material and immaterial damage caused by the entitled to take paternity leave only if the mother does not use the violation of the rights protected by this law, and (iii) announce to right of the maternity leave. the media any violations of equal treatment at the expense of the defendant. 4.5 Are there any other parental leave rights that employers have to observe? 3.6 Do “atypical” workers (such as those working part- time, on a fixed-term contract or as a temporary The employer may not require any data on pregnancy of a worker, agency worker) have any additional protection? unless she herself does not submit the data related to her pregnancy. In accordance to the law, if the employee performs work during her The law does not entitle the atypical workers to any additional pregnancy that may adversely affect her health or the health of the protection regarding discrimination in relation to employment. child, the employer is obliged to provide her with another job and The law provides that in terms of conditions of employment, the salary, if it is more favourable for her. workers employed on a fixed-term contract cannot be treated in a less favourable manner than permanent workers solely because they have an employment contract for a definite time, unless different 4.6 Are employees entitled to work flexibly if they have treatment is justified by objective reasons. responsibility for caring for dependants?
During pregnancy and until the child is one year old, the worker cannot perform overtime or work at night. A worker that has a child from one to three years of age may be ordered to perform overtime
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or night work only after prior written consent. A worker who is relating to their workers, the transferor or transferee shall promptly parent to a child that is seven years of age or younger, or has a consult with the representatives of trade unions of its employees in seriously ill child or a child with a physical or mental disability, and connection with such measures to reach an agreement. who lives alone with the child and takes care of their upbringing and protection may be required to perform overtime or work at night 5.4 Can employees be dismissed in connection with a only with a prior written consent by the worker. One of the parents business sale? of a child with developmental disabilities and special educational needs has the right to work half of the full-time hours if both parents The transfer of the company or parts of the company itself does are employed or if the parent is single, based on the findings of the not give grounds for the dismissal of workers, except dismissals for competent medical board, if the child is not placed in an institution economic, technical or organisational reasons that require personnel for social healthcare. Macedonia changes.
5 Business Sales 5.5 Are employers free to change terms and conditions of employment in connection with a business sale?
5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the An employer, who has obtained the employment rights of the buyer? workers, is obliged to provide all the rights, obligations and responsibilities that the workers had at their previous employer. In the case of a transfer of activities of a company or parts of the The new employer is obliged to ensure these rights for at least one company, or in the case of a transfer of tasks or part of them from year, until the expiration of the employment contract or collective the employer-carrier to another employer-transferee, the rights and agreement that the obligation is on the previous employer. obligations arising from employment completely transfer to the employer-transferee to whom the business is sold. When a company 6 Termination of Employment ceases to exist due to the division of the company body, deciding on the division of the company determines which of the new companies established assume the rights and obligations of labour relations to 6.1 Do employees have to be given notice of termination the previous employer. The transfer of the company or parts of the of their employment? How is the notice period company itself does not give grounds for the dismissal of workers, determined? except dismissals for economic, technical or organisational reasons that require personnel changes. The worker and employer may terminate the employment contract within the specified statutory or contractual notice period. When the contract is terminated, the parties are obligated to respect the 5.2 What employee rights transfer on a business minimum duration of the notice period. sale? How does a business sale affect collective agreements? If the employer terminates the employment contract with an individual worker or fewer workers, the notice period is one month. If the workers are transferred to the employer-transferee, they are The notice period is two months in the case of termination of entitled to all the rights arising from the labour regulations, as well employment of more than 150 employees or 5% of the total number as their employment agreement. However, it should be noted that of workers working for the employer prior to the termination of before the transfer of the rights and obligations arising from the employment. If the employer terminates the employment contract employment of workers by the employer-carrier and employer- of seasonal workers, the notice period is seven working days. The transferee, the transferor and transferee are obligated to inform notice period starts on the day after the worker received the decision the unions of this fact and to consult them in order to reach an for termination of the employment contract. agreement. The law does not regulate how the business sale affects the collective agreements, but it is required that the unions are 6.2 Can employers require employees to serve a period informed and consulted in order for an agreement to be reached. of “garden leave” during their notice period when the This agreement may include the collective agreements’ issues and employee remains employed but does not have to the transfer of the rights and obligations from the agreements to the attend for work? new employer. The law does not regulate the right of an employer to require an employee to serve a period of “garden leave”. For the duration 5.3 Are there any information and consultation rights on a business sale? How long does the process typically of the notice period, the employer is only obliged to allow the take and what are the sanctions for failing to inform employee leave of four hours during the working week in order to and consult? seek another job.
Prior to the transfer of the rights and obligations arising from the 6.3 What protection do employees have against employment of workers by the employer-carrier and employer- dismissal? In what circumstances is an employee transferee, the transferor and transferee are obligated to inform the treated as being dismissed? Is consent from a third unions of this fact and to consult them in order to reach agreement party required before an employer can dismiss? on: (i) the established or proposed date of the transfer; (ii) the reasons for such transmission; (iii) legal, economic and social The employer may terminate the employment contract only if there implications for workers; and (iv) measures envisaged in relation to is a valid reason for refusal related to the conduct of the employee the workers. Where the transferor or the transferee predict measures (personal reason by the employee) for violating the working order and discipline or work obligations (cause of fault), or if the cause
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is based on the needs of the operation of the employer (business reason). The law also provides for cases when the employment 6.6 Are there any specific procedures that an employer contract is terminated due to unfounded reasons. According to the has to follow in relation to individual dismissals? law, unfounded reasons for cancellation of the employment contract are: (i) membership in a union or worker participation in union Prior to the termination of the contract of employment due to a activities in accordance with law and collective agreements; (ii) personal reason, the employer has to issue the worker a warning in the filing of a complaint or participation in proceedings against an a written form for failing to meet obligations and the possibility of employer for the purpose of confirming the breach of contractual termination in the event of further violations of the same. and other obligations arising from employment before arbitral, If the employment contract is terminated, the employer is obligated judicial and administrative authorities; (iii) approved absence due to state the reasons for the termination, defined by law and the to illness or injury, pregnancy, birth and parenting, care of a family collective agreement, and the employer is required to prove the Macedonia member and unpaid parental leave; (iv) the use of an approved leave merits of the cause that justifies the termination and to provide an of absence and annual leave; (v) serving in the military or military explanation. exercise; and (vi) other cases of suspension of the employment contract stipulated by this law. 6.7 What claims can an employee bring if he or she is In accordance with the Labour Law, the provisions relating to dismissed? What are the remedies for a successful termination of the employment contract shall apply in the case claim? when the employer terminates the employment contract and, at the same time, the employee is also proposed with a new amended The worker is entitled to appeal to the management or to the employment contract. employer against the decision to terminate the employment contract. As a general rule, according to the law, the employer is not The complaint shall be filed within eight days from receipt of the required to obtain any kind of consent from a third party before the decision for the termination of the employment contract. The employee’s contract is terminated. The only exception to this rule decision on the appeal is taken within eight days of the filing of the in accordance with the Labour Law is when the employer wants complaint. When no decision is taken on the complaint or when to terminate the employment contract of the union representative. the worker is not satisfied with the decision taken on the complaint, The employer may terminate the employment contract of the union the worker is entitled to take proceedings before a competent court. representative only with the prior consent of the union. At the request of the worker, the union can represent workers in opposition proceedings.
6.4 Are there any categories of employees who enjoy special protection against dismissal? 6.8 Can employers settle claims before or after they are initiated? Other than the categories of employees stated in question 6.3, in accordance with the Labour Law, the union representative is The employer is able to settle the claim with the employee either protected against dismissal during the whole period of their term before or after they are initiated. of office and at least two years after expiry of their term of office. 6.9 Does an employer have any additional obligations if 6.5 When will an employer be entitled to dismiss for: it is dismissing a number of employees at the same 1) reasons related to the individual employee; or 2) time? business related reasons? Are employees entitled to compensation on dismissal and if so how is If the employer intends to make a decision on the termination of compensation calculated? the employment of a number of workers due to business reasons, or at least 20 employees for a period of 90 days at each termination The employer is entitled to dismiss the employee due to reasons of employment, regardless of the total number of employees by related to the individual worker when the worker, because of the employer, it shall be considered a collective dismissal due to his behaviour, lack of knowledge or opportunities, or failure to business reasons. When the employer intends to carry out collective meet specific conditions set by law, is not capable of performing redundancies, the process shall be initiated with consultation with contractual or other obligations of employment (personal reasons). the workers’ representatives, at least one month before the collective The employer may terminate the employment contract of a worker dismissal. The employer is obligated to provide the representatives for personal reasons only if the worker is provided with the necessary with all relevant information before starting consultations to achieve working conditions and is given appropriate instructions, guidelines an agreement. After the consultation with the representatives, the or a written warning from the employer related to the work claiming employer shall issue a written notice to the office in charge of that the employer is not satisfied with the manner of the execution employment issues regarding the help and services of mediation in of duties, and if the worker does not improve the performance by the employment. This notice shall be issued no later than 30 days prior deadline set by the employer. to the termination of the employment. The employer can also dismiss the worker if the worker is no longer needed to perform certain work under the conditions stated in the 6.10 How do employees enforce their rights in relation to employment contract due to economic, organisational, technological, mass dismissals and what are the consequences if an structural or similar reasons by the employer (business reasons). employer fails to comply with its obligations? In the case of termination of the employment contract for business reasons, the employer is obliged to pay the worker severance If the employer fails to fulfil the obligation stated in question 6.9, a payment, which is determined in a number of net wages that the fine of 3,000 Euros will be imposed. employer will pay according to the time the worker has spent at work.
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rights and obligations of the employment relationship or related to 7 Protecting Business Interests Following employment. The personal data of workers, whose collection no Termination longer has a legal basis, must be immediately removed and ceased of use. 7.1 What types of restrictive covenants are recognised? The law does not regulate the right of a transfer of an employee’s data freely to other countries by an employer. For the duration of employment, the workers must not, without the consent of their employer, for themselves or on a third party’s 8.2 Do employees have a right to obtain copies of any account, perform or conclude any deals related to the business of personal information that is held by their employer? the employer or a competitive or potentially competitive employer.
Macedonia The employer may require compensation of the damage caused by The personal data of workers may be collected, processed, used the actions of the worker. and delivered to third parties by the employer, or by the person During their employment, if the worker gains technical, production employed by the employer and who is specifically authorised. or business knowledge and business relations, the employer and the employee can agree on a provision for prohibition of competitive 8.3 Are employers entitled to carry out pre-employment action after the termination of employment (competitive clause) in checks on prospective employees (such as criminal the employment contract. record checks)? In accordance with the law, the worker is banned from using for their own use or giving to a third party, data considered confidential In accordance with the law, the employer at the time of conclusion to the employer. This obligation applies to the worker whose of the employment contract shall not require from the candidate for employer determines that the data is confidential, was entrusted with employment data on family or marital status or information related the data, or was aware of it. The worker is responsible for issuing to family planning. The employer is also banned from asking the confidential data, if he or she knew or should have known of such candidate for employment to submit documents and other evidence capacity of the data. that are not directly related to employment. Furthermore, the candidate is not obliged to answer questions that are not directly related to employment. 7.2 When are restrictive covenants enforceable and for what period? 8.4 Are employers entitled to monitor an employee’s The ban from competition activities for the worker lasts for the whole emails, telephone calls or use of an employer’s time during the employment. After the employment, if the employer computer system? and the worker have agreed on a competitive clause, the competitive clause can last up to two years after the termination of the employment. In the Labour Act of Macedonia, there is a general provision stating that the employer is obliged to protect and respect the personality and dignity of the employee, as well as to take care and protect the 7.3 Do employees have to be provided with financial privacy of the employee. The law does not specifically state the compensation in return for covenants? ban of the employer to monitor the employee’s communications, but these acts can be considered as acting against the obligation for In accordance with the law, in the case when respecting the protection of the personality and dignity of the employee. competition clause prevents the worker from earning a proper income, the employer shall, for the time that the worker is respecting the prohibition, pay cash compensation to the worker. 8.5 Can an employer control an employee’s use of social The compensation for respecting the competitive prohibition must media in or outside the workplace? be determined in the employment contract, and shall be at least half of the average salary of the worker for the last three months prior to The law does not directly regulate if the employer can control an the termination of the employment contract. employee’s use of social media in or outside the workplace, but the employer is entitled to ban the use of the social media during working hours or even ban the employee from accessing social 7.4 How are restrictive covenants enforced? media on the employer’s computers. However, the employer is not entitled to ban the use of the social media outside of the workplace If the worker fails to comply with the ban of competition activities, and after working hours. fails to keep the data confidential, or does not respect the competition clause for the agreed period after the termination of the employment, the employer is entitled to claim damages for the worker’s actions 9 Court Practice and Procedure in court.
9.1 Which courts or tribunals have jurisdiction to hear 8 Data Protection and Employee Privacy employment-related complaints and what is their composition?
8.1 How do employee data protection rights affect the In accordance with the Law on Courts of Macedonia, the competent employment relationship? Can an employer transfer court for labour disputes in Macedonia is the Court of First Instance. employee data freely to other countries? The Appellate Court shall be competent after appeal on the decision of the Court of First Instance. If the criteria are met, the dispute can The personal data of workers may be collected, processed, used finally be taken to the Supreme Court. and delivered to third parties if this is necessary for exercising the
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the Appellate Court shall decide on the appeal filed against the 9.2 What procedure applies to employment-related decision of the Court of First Instance within 30 days of receipt of complaints? Is conciliation mandatory before a the application or within two months if before the Appellate Court complaint can proceed? Does an employee have to holds a hearing. pay a fee to submit a claim?
For employment-related complaints in Macedonia, civil procedure 9.4 Is it possible to appeal against a first instance is applied. The conciliation is not mandatory before a complaint can decision and if so how long do such appeals usually proceed. The employee is obligated to pay a fee to submit a claim take? in front of the Court that is related to the amount of compensation that is claimed. If the criteria related to the civil procedure are met, the decision of
the First Instance Court can be appealed in front of the Appellate Macedonia Court. 9.3 How long do employment-related complaints typically take to be decided? In proceedings of labour disputes, the Appellate Court shall decide on the appeal filed against the decision of the Court of First Instance within 30 days of receipt of the application or within two months if In proceedings of labour disputes, the procedure before the Court a hearing is held before the Appellate Court. of First Instance must be completed within six months from the date of filing the claim. In proceedings regarding labour disputes,
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Emilija Kelesoska Sholjakovska Ljupco Cvetkovski Debarliev, Dameski & Kelesoska, Debarliev, Dameski & Kelesoska, Attorneys at Law Attorneys at Law Mirche Acev no. 2/3rd Mirche Acev no. 2/3rd Skopje Skopje Republic of Macedonia Republic of Macedonia
Tel: +389 2 3136 530 / 3215 471 Tel: +389 2 3136 530 / 3215 471 Email: [email protected] Email: [email protected] URL: www.ddklaw.com.mk URL: www.ddklaw.com.mk
Macedonia Emilija Kelesoska Sholjakovska is one of the founders of Debarliev, Ljupco Cvetkovski is a partner and a licensed attorney at law and has Dameski & Kelesoska, Attorneys at Law. Employment legislation, been based at Debarliev, Dameski & Kelesoska Attorneys, at Law intellectual property, electronic communications, competition, corporate since 2006. While focusing his expertise on employment relations, law, taxation and M&A are her most valued areas of expertise. corporate law and litigation, Ljupco also works on energy, M&A and private public partnerships. He is a member of the Macedonian Bar Emilija Kelesoska Sholjakovska graduated from the Iustinianus Association. Ljupco Cvetkovski has participated in a large number Primus Faculty of Law in Skopje, Republic of Macedonia, in 1997. She of seminars, training programmes, conferences and various surveys, first started working at Kolevski Law Office Skopje, and subsequently such as “Investing Across Borders 2010”, “Training Seminar for continued at MENS LEGIS Law Company. Following this, she worked Lawyers on the European Convention on Human Rights in 2006 and at Spirkovski Law Offices and later established Debarliev, Dameski 2007” and “Training of Trainers for Developing Defence Lawyer’s & Kelesoska, Attorneys at Law, along with partners Dragan Dameski Skills”. and Ivan Debarliev. In 1999, Emilija Kelesoska Sholjakovska was admitted to the Macedonian Bar Association, and since 2001 has been a member of the Bureau for Protection on Industrial Property Rights. She is also a member of the International Advocates Union (UIA) and the International Bar Association (IBA).
Accepting the premise that no one can be equally versed in all fields of law, Debarliev, Dameski & Kelesoska Attorneys at Law (DDK) was created as a company committed to being the leading business law firm in Macedonia. Debarliev, Dameski & Kelesoska, Attorneys at Law is also the first law company established in the territory of the Republic of Macedonia, distinguishing itself in the market with a clear business and corporate law orientation, complemented by an excellent network of legal experts covering the complete territory of Republic of Macedonia. The quality of Debarliev, Dameski & Kelesoska, Attorneys at Law rests mainly upon the quality of its attorneys, their accessibility and efficiency. DDK’s attorneys at law share outstanding academic backgrounds, as well as a strong commitment to legal perfection. The partners of DDK have more than 15 years’ law practice experience and have exceeded clients’ expectations by providing sophisticated and efficiently-managed legal services. DDK offers excellent legal services to clients involved in all of the biggest M&A and energy projects in Macedonia, and has been engaged as counsel in numerous successful PPP projects, privatisations, capital markets transactions, banking, joint ventures, etc.
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Malaysia Selvamalar Alagaratnam
Skrine Siva Kumar Kanagasabai
writing and must include a provision for termination. However, the 1 Terms and Conditions of Employment lack of a written contract does not, for that reason alone, invalidate the employment relationship or the contractual terms. 1.1 What are the main sources of employment law? There is no obligation to provide specific information in writing to employees save and except as required under the Personal Data The main sources of employment law are legislation, subsidiary Protection Act 2010 (“PDPA”). legislation and case law. In instances where local case law does not address an issue, case law from commonwealth countries, especially 1.4 Are any terms implied into contracts of employment? the United Kingdom, is persuasive. Certain terms can be implied by law or by custom. 1.2 What types of worker are protected by employment The EA imposes certain minimum terms and conditions of law? How are different types of worker distinguished? employment. Any condition of service under the EA that is more favourable to an EA employee prevails over that in the employment Most laws protect all levels of employees. However, there are contract or will apply in the event it is not provided for in the certain exceptions; the Employment Act, 1955 (“EA”), in general, employment contract. only protects employees who fall within the following categories Regardless of contractual terms, by law, all employees have an (“EA employees”): implied right: to protection from unjust dismissal; to paid maternity ■ any person whose monthly wages are MYR 2,000 or below; leave; to unionise or join a trade union (unless specifically excluded by and the TUA); to contribute and receive contributions to the Employees’ ■ any person who (irrespective of salary) is employed: Provident Fund, the Employees’ Social Security and the Employment ■ as a manual labourer; Insurance System (unless specifically excluded by the EPF Act, the ■ as a supervisor of manual labourers; SOCSO Act or the EIS Act, as the case may be); and to have their ■ to operate or maintain any mechanically propelled vehicle personal data handled in a manner that is consistent with the PDPA. for the purpose of transporting passengers or goods or for EA employees have the right to minimum wage. reward or commercial purposes; Employees also have an implied right to be treated with mutual trust ■ as a domestic servant; or and respect. ■ in certain positions in sea-going vessels. The Income Tax Act imposes an obligation on employers to make There are, however, certain provisions of the EA that extend to all deductions from salaries payable at source and remit the payment employees or employees who fall outside the above categories. towards the employees’ personal income tax payment in accordance Foreign nationals working in Malaysia (and certain other categories with a schedule issued by the Inland Revenue Board. of employees) are excluded from the application of the Employees’ Provident Fund Act 1991 (“EPF Act”) and the Employees’ Social 1.5 Are any minimum employment terms and conditions Security Act 1969 (“SOCSO Act”). set down by law that employers have to observe? Certain categories of employees are excluded from the application of the Employment Insurance System Act (“EIS Act”). EA employees are entitled to the following minimum terms and The Trade Unions Act 1959 (“TUA”) does not allow for certain conditions of employment: categories of employees to become union members. ■ maximum hours of work per day and per week; ■ overtime payment for work in excess of normal hours of work; 1.3 Do contracts of employment have to be in writing? If ■ protection from deduction of wages; not, do employees have to be provided with specific ■ paid annual leave/vacation leave; information in writing? ■ paid sick leave; ■ 11 paid gazetted public holidays, five of which are determined The EA (which applies only to EA employees) provides that by law; employment contracts lasting for more than one month must be in ■ termination notice period;
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■ payment of termination benefits, except in cases where the After ascertaining the above matter(s), the DGIR is required to termination of employment is due to misconduct or poor notify the Minister of Human Resources who shall then give his performance; and decision on the recognition claim. Where the Minister decides that ■ a minimum wage of MYR 1,000 per month or MYR 4.81 recognition is to be accorded, such recognition is deemed to be per hour in Peninsular Malaysia and MYR 920 per month accorded from such date as the minister may specify; this is usually or MYR 4.442 per hour in Sarawak, Sabah & the Federal the date when the claim was made. Territory of Labuan. All employees, except for those excluded from the application of the 2.2 What rights do trade unions have? EPF Act, are entitled to EPF contributions that are no less than at the rate prescribed by the EPF Act. A trade union may sue in its name. Malaysia All employees, except for those excluded from the application of the A trade union has immunity from legal proceedings in respect of any SOCSO Act, are entitled to SOCSO contributions that are no less act carried out in contemplation or in furtherance of a trade dispute than at the rate prescribed by the SOCSO Act. on the ground only that such act induces some other person to break All female employees, except for certain exempted categories, are a contract of employment, or that it interferes with the trade, business entitled to paid maternity leave of no less than 60 consecutive days. or employment of some other person or with the right of some other The Persons with Disabilities Act 2008 provides that persons with person to dispose of his/her capital or of his/her labour as he/she wills. disabilities shall have the right to access employment facilities on an A trade union also has general immunity from liability in tort, equal basis to those persons without disabilities. subject to certain exceptions.
1.6 To what extent are terms and conditions of 2.3 Are there any rules governing a trade union’s right to employment agreed through collective bargaining? take industrial action? Does bargaining usually take place at company or industry level? Industrial action such as strikes, pickets and lockouts are governed by statute. Only a trade union which is registered with the Director-General of Trade Unions (“DGTU”) and has been granted recognition by The TUA provides that a trade union of workmen and a trade union the employer, in accordance with applicable laws, may enter into of employers may only call for a strike or lockout, respectively, if: collective bargaining with the employer. The collective bargaining ■ they obtain the consent by secret ballot of at least two-thirds process is also regulated by law. Collective bargaining takes place of their total number of members; at company level. ■ they have allowed for at least seven days to lapse after submitting the results of the secret ballot to the Director General of Trade Unions; and 2 Employee Representation and Industrial ■ the proposed strike or lockout is in compliance with the rules Relations of the trade union and all applicable laws. Picketing peacefully for the purpose of obtaining or communicating 2.1 What are the rules relating to trade union recognition? information, or persuading or inducing an employee to work or abstain from working, is permissible, provided the employees do The Industrial Relations Act 1967 (“IRA”) provides the mechanism not attend in such numbers or otherwise in such manner as to be and requirements for trade union recognition. A trade union may calculated to intimidate any person, obstruct the approach thereto or obtain recognition by serving the employer, in a prescribed form, egress therefrom of the employer’s premises or workplace, or lead with a claim for recognition in respect of the workmen or any class to a breach of the peace. of workmen employed by the employer. Within 21 days after the There are, however, certain circumstances in which the IRA service of the claim, the employer must either: prohibits strikes, pickets and lockouts. ■ accord recognition; or ■ notify the trade union of workmen concerned in writing the 2.4 Are employers required to set up works councils? If grounds for not according recognition. so, what are the main rights and responsibilities of such bodies? How are works council representatives If recognition is not accorded by the employer or the employer does chosen/appointed? not respond at all within the stipulated 21-day period, the trade union may report the matter to the Director General of Industrial Relations Works councils do not exist in Malaysia. (“DGIR”) within 14 days of the receipt of the notification of non- recognition or after the expiry of the time frame of 21 days, failing which the claim for recognition by the trade union will be deemed 2.5 In what circumstances will a works council have co- to be withdrawn. determination rights, so that an employer is unable to proceed until it has obtained works council agreement The DGIR, upon receipt of the report from the trade union, may take to proposals? such steps or make such enquiries to ascertain: ■ the competence of the trade union of workmen to represent This is not applicable. Please see question 2.4 above. the workmen in respect of whom recognition is sought to be accorded; and ■ by way of secret ballot, the percentage of the workmen 2.6 How do the rights of trade unions and works councils concerned who are members of the trade union making the interact? claim. This is not applicable. Please see question 2.4 above.
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public holidays, annual leave and sick leave are to be applied to 2.7 Are employees entitled to representation at board part-time employees. level?
No, there is no law providing for employee representation at board 4 Maternity and Family Leave Rights level.
4.1 How long does maternity leave last? 3 Discrimination By law, the minimum entitlement to paid maternity leave is 60 consecutive days. 3.1 Are employees protected against discrimination? If Malaysia so, on what grounds is discrimination prohibited? 4.2 What rights, including rights to pay and benefits, does All employees have a right to be treated fairly and with mutual a woman have during maternity leave? trust and respect. Accordingly, all forms of discrimination are not permissible. However, there are no specific statutes or laws that A woman is entitled to her pay and all contractual benefits as if she prohibit discrimination. had been in active service, except for benefits that are tied to actual active work, e.g., attendance allowance.
3.2 What types of discrimination are unlawful and in what circumstances? 4.3 What rights does a woman have upon her return to work from maternity leave? As mentioned in question 3.1 above, all forms of discrimination are not permissible. However, discrimination is only not permissible A woman has the right to resume work as if there has been no break when it is individual in nature. Collective decisions that may in in her service. other jurisdictions be viewed as discriminatory are not prohibited. For example, collective separation actions that classify employees 4.4 Do fathers have the right to take paternity leave? according to age group or differing terms of employment for men and women are permissible. No, fathers do not have the right to take paternity leave by law.
3.3 Are there any defences to a discrimination claim? 4.5 Are there any other parental leave rights that employers have to observe? There may be a variety of defences available to discrimination claims, such as business needs, convention, lack of prejudice, etc. No, there are no other parental leave rights that employers must observe. 3.4 How do employees enforce their discrimination rights? Can employers settle claims before or after 4.6 Are employees entitled to work flexibly if they have they are initiated? responsibility for caring for dependants?
Employees may bring a civil claim or may terminate their contract No, employees are not entitled to work flexibly where they have of employment on the alleged ground of breach of contract by the responsibility for caring for dependants. employer and then commence an unjust dismissal action. In both instances, settlement out of court is possible. 5 Business Sales 3.5 What remedies are available to employees in successful discrimination claims? 5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the In the case of a civil claim, the employee would be entitled to buyer? damages and a restitution of rights or benefits denied. In an unjust dismissal action, the employee would be entitled to back wages No, there is no automatic transfer of employees upon a sale of from the date of termination of employment to the date of the final business, and in fact, by law, employees’ contracts of employment hearing in court (capped at 24 months) together with reinstatement will be deemed terminated. In the case of a share sale, the to the previous job; or back wages from date of termination of employment contract is unaffected. employment to the date of the final hearing in court (capped at 24 months) and compensation in lieu of reinstatement, calculated at the rate of one month’s salary for each year of service. 5.2 What employee rights transfer on a business sale? How does a business sale affect collective agreements? 3.6 Do “atypical” workers (such as those working part- time, on a fixed-term contract or as a temporary In the case of employees who accept employment with the acquirer, agency worker) have any additional protection? there is no automatic transfer of individual contractual rights. Collective agreements entered into between the selling entity and No, they do not. However, the Employment (Part-Time Employees) a trade union will continue to apply vis-à-vis the acquiring entity. Regulations 2010 set out how legal entitlements such as overtime,
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who considers him/herself to have been dismissed without just 5.3 Are there any information and consultation rights on cause or excuse may make a representation for reinstatement under a business sale? How long does the process typically the IRA. If the employer is not able to prove that there was a just take and what are the sanctions for failing to inform cause or excuse to dismiss the employee, the employee will become and consult? entitled to back wages from the date of termination of employment to the date of the final hearing in court (capped at 24 months), together There are no information or consultation rights associated with a sale with reinstatement to the previous job; or back wages from the date of business unless provided for in a collective agreement. As a matter of termination of employment to the date of the final hearing in court of good labour practice, employers are encouraged to inform the (capped at 24 months) and compensation in lieu of reinstatement, employees and trade unions prior to the transaction being made public. calculated at the rate of one month’s salary for each year of service. Malaysia Third-party consent is not required prior to dismissal. 5.4 Can employees be dismissed in connection with a business sale? 6.4 Are there any categories of employees who enjoy special protection against dismissal? By law, all employees are deemed terminated upon a business sale. They will be entitled to termination benefits (as provided by statute for EA employees, and if provided by contract for non-EA All employees are protected from unjust dismissal. employees) unless they are offered continued employment with the acquirer (with full recognition for years of service with the selling 6.5 When will an employer be entitled to dismiss for: entity) within seven days of the sale on terms and conditions of 1) reasons related to the individual employee; or 2) employment that are no less favourable. business related reasons? Are employees entitled to compensation on dismissal and if so how is compensation calculated? 5.5 Are employers free to change terms and conditions of employment in connection with a business sale? An employer may be entitled to dismiss an employee for reasons related to the individual employee when the employee is guilty of Yes, employers are free to change terms and conditions of misconduct that is inconsistent with continued employment or poor employment in connection with a business sale but a change that performance. Dismissals for business-related reasons are possible is less favourable to the employees will entitle the employees to in the case of retrenchments or on closure or sale of business. termination benefits payable by the selling entity. Employees who are dismissed for business-related reasons are entitled to compensation. The EA prescribes the minimum 6 Termination of Employment termination benefits payable to EA employee as follows: ■ 10 days’ wages for every year of employment if he/she has been employed for a period of less than two years; 6.1 Do employees have to be given notice of termination ■ 15 days’ wages for every year of employment if he/she has of their employment? How is the notice period been employed for a period of two years or more, but less determined? than five years; ■ 20 days’ wages for every year of employment, if he/she has Employees have to be given notice of termination unless they are been employed for a period of five years or more; and dismissed for misconduct or poor performance. The minimum ■ pro rata in respect of an incomplete year of service, calculated notice period is as prescribed in the employment contract. For EA to the nearest month. employees, the minimum notice period should be as prescribed in For non-EA employees, there is no statutory obligation to pay the employment contract or the EA, whichever is longer. termination benefits. However, case law dictates that if the financial The minimum notice period prescribed under the EA is as follows: position of the employer permits, and especially if the retrenchment ■ four weeks’ notice, if he/she has been in employment for a exercise is carried out with the aim of increasing efficiency and period of less than two years; profits, fair and reasonable benefits should be made available to all ■ six weeks’ notice, if he/she has been in employment for a employees. Presently, one month’s salary for each year of service period of two years or more, but less than five years; and for all levels of employees (which is higher than the minimum ■ eight weeks’ notice if he/she has been in employment for a prescribed by the EA) is considered fair and reasonable. period of five years or more.
6.6 Are there any specific procedures that an employer 6.2 Can employers require employees to serve a period has to follow in relation to individual dismissals? of “garden leave” during their notice period when the employee remains employed but does not have to Specific procedures are applicable for all types of dismissal and attend for work? differ in accordance with the grounds for dismissal.
Yes, garden leave is permissible. 6.7 What claims can an employee bring if he or she is dismissed? What are the remedies for a successful 6.3 What protection do employees have against claim? dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third An employee who considers themselves to have been dismissed party required before an employer can dismiss? without just cause may make a representation for reinstatement under the IRA. If the employer is not able to prove that there was Employees have protection against unjust dismissal. An employee a just cause or excuse to dismiss the employee, the employee will
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become entitled to back wages from the date of termination of employment to the date of the final hearing in court (capped at 24 7.3 Do employees have to be provided with financial months), together with reinstatement to the previous job; or back compensation in return for covenants? wages from date of termination of employment to the date of the final hearing in court (capped at 24 months) and compensation in No, employees do not have to be provided with financial lieu of reinstatement, calculated at a rate of one month’s salary for compensation in return for covenants. each year of service. Alternatively, an employee may bring a civil claim for breach of 7.4 How are restrictive covenants enforced? contract. Ordinarily, the remedy available is limited to damages that are equivalent to the salary that would have been paid during Restrictive covenants are enforced by commencing a civil action the termination notice period. to obtain remedies, such as interlocutory or interim injunctions, Malaysia An EA employee may also make a claim for termination benefits permanent injunction, and/or damages. under the EA. 8 Data Protection and Employee Privacy 6.8 Can employers settle claims before or after they are initiated? 8.1 How do employee data protection rights affect the Yes, but in the case of a representation for reinstatement under employment relationship? Can an employer transfer employee data freely to other countries? the IRA, any settlement that is achieved prior to a representation for reinstatement being conciliated upon in accordance with the provisions of the IRA may not always be binding on parties. The employer has an obligation to deal with the employee data in accordance with the PDPA. The PDPA requires that consent is sought from the employee before such data may be processed. 6.9 Does an employer have any additional obligations if Certain exceptions apply to the General Principle, such as where the it is dismissing a number of employees at the same data is being processed for the performance of a contract. However, time? whether or not the exceptions under the General Principle apply, the employer would have to issue a written notice, in both English and Collective termination by way of retrenchment or upon closure of Malay, to inform a data subject of the following: operations is subject to certain requirements in terms of compliance (a) that personal data of the data subject is being processed by or with both the legality of the termination and process. on behalf of the data user, and to provide a description of the personal data to that data subject; 6.10 How do employees enforce their rights in relation to (b) the purposes for which the personal data is being or is to be mass dismissals and what are the consequences if an collected and further processed; employer fails to comply with its obligations? (c) any information available to the data user as to the source of that personal data; Employers enforce their rights in relation to mass dismissals in (d) the data subject’s right to request access to and to request the same way as they would enforce their rights in the event of an correction of the personal data and how to contact the data individual dismissal. The remedies are also the same. user with any enquiries or complaints in respect of the personal data; (e) the class of third parties to whom the data user discloses or 7 Protecting Business Interests Following may disclose the personal data; Termination (f) the choices and means the data user offers the data subject for limiting the processing of personal data, including personal data relating to other persons who may be identified from that 7.1 What types of restrictive covenants are recognised? personal data; (g) whether it is obligatory or voluntary for the data subject to Generally, restrictive covenants are not enforceable. The Contracts supply the personal data; and Act 1950 provides that every agreement by which anyone is (h) where it is obligatory for the data subject to supply the restrained from exercising a lawful profession, trade, or business personal data, the consequences for the data subject if he/she of any kind, is to that extent void. Therefore, a restrictive covenant fails to supply the personal data. that prohibits any employment or involvement with a competing business is not enforceable. The PDPA also prohibits the transfer of personal data out of the country save where exceptions apply or where consent has been obtained from the data subject. 7.2 When are restrictive covenants enforceable and for There are additional obligations relating to the disclosure, protection what period? and security, retention, maintenance of integrity and access to personal data. Restrictive covenants are only enforceable where the employee uses confidential information or an unfair advantage he/she has derived during his/her employment. 8.2 Do employees have a right to obtain copies of any personal information that is held by their employer?
Yes. Subject to certain exceptions, pursuant to the access principle provided for in the PDPA, an employee has the right to make
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a written request for access to his/her personal data and to make employees whose salaries do not exceed MYR 5,000 a month, corrections if any of the data is found to be inaccurate, incomplete, where the complaint is of non-payment of wages or other payments misleading or not up to date. due to them under their contracts of employment. The civil courts also have jurisdiction to hear employment-related 8.3 Are employers entitled to carry out pre-employment claims. checks on prospective employees (such as criminal record checks)? 9.2 What procedure applies to employment-related complaints? Is conciliation mandatory before a Yes, employers are entitled to carry out pre-employment checks but complaint can proceed? Does an employee have to subject to the consent of the prospective employee. pay a fee to submit a claim? Malaysia
8.4 Are employers entitled to monitor an employee’s An employee who wishes to make a representation of unjust emails, telephone calls or use of an employer’s dismissal under the IRA has to do so within 60 days of the alleged computer system? dismissal. The Industrial Relations Office will make an attempt at conciliation and, if the matter is not settled, may refer the matter to Yes, employers are entitled to monitor an employee’s emails, the Industrial Court for adjudication. The courts have ruled that it telephone calls or use of the computer system if the facilities and is only matters that are frivolous and vexatious that should not be equipment are part of the employer’s property and provided for referred to the Industrial Court. purposes of work. Complaints to the Director General of Labour should be made in accordance with the provisions of the EA. 8.5 Can an employer control an employee’s use of social Claims may be filed in the civil courts in the same manner as any media in or outside the workplace? other civil suit.
The employer may impose controls or restrictions on the use of 9.3 How long do employment-related complaints typically social media by employees during work hours and with the use of take to be decided? the employer’s property. However, usage outside the workplace or work hours may not be controlled. Depending on the nature of the claim, the mode the complaint is brought and the stage at when it is settled, it can take between three 9 Court Practice and Procedure months and three years. It is not unheard of for claims to extend well beyond three years.
9.1 Which courts or tribunals have jurisdiction to hear 9.4 Is it possible to appeal against a first instance employment-related complaints and what is their decision and if so how long do such appeals usually composition? take?
The Industrial Court has jurisdiction to hear the following matters: It is possible to appeal a decision of the civil court and a decision of ■ representations for reinstatement brought by an employee the Director General of Labour. An award of the Industrial Court who considers themselves to have been dismissed without may only be challenged by way of a judicial review application just cause or excuse; to the High Court on the grounds that, in making its award, the ■ trade disputes between an employer and his/her workers; Industrial Court has committed an error of law. The time taken will ■ claims of non-compliance by one party to an award handed differ and may be between six months and two years. In certain down by the Industrial Court or a collective agreement; and instances, it may extend beyond two years. ■ applications to interpret collective agreements. Employees who come within the purview of the EA may make a Acknowledgment complaint to the Director General of Labour in respect of wages or payments due to them under their contracts of employment, The authors would like to thank Foo Siew Li, Partner at Skrine, for the Employment Act or the Minimum Wage Order. The Director her valuable research and assistance in drafting this chapter. General’s powers to enquire into complaints extend to non-EA
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Selvamalar Alagaratnam Siva Kumar Kanagasabai Skrine Skrine Unit No. 50-8-1, 8th Floor Unit No. 50-8-1, 8th Floor Wisma UOA Damansara Wisma UOA Damansara 50, Jalan Dungun, Damansara Heights 50, Jalan Dungun, Damansara Heights 50490 Kuala Lumpur, Malaysia 50490 Kuala Lumpur, Malaysia
Tel: +603 2081 3999 Tel: +603 2081 3999 Fax: +603 2094 3211 Fax: +603 2094 3211 Email: [email protected] Email: [email protected] URL: www.skrine.com URL: www.skrine.com
Selvamalar Alagaratnam is a co-head of the Employment Practice Siva Kumar Kanagasabai currently heads the Employment Practice Malaysia Group of Skrine. She has more than 20 years’ experience in all Group and the Shipping Practice Group. Apart from Employment and aspects of employment law, both contentious and non-contentious. Shipping, Kumar has a broad commercial litigation practice and is a regular trainer in the Bar Council’s advocacy training programme for She is the Senior Vice Chair of the International Bar Association’s lawyers. Employment and Industrial Relations Committee, a member of Lawasia’s Industrial Law Committee, a committee member of the He handles both contentious and non-contentious employment law Malaysian chapter of the International Society for Labour and Social issues. He has also acted as Counsel in judicial review hearings, Security Laws and a member of the Malaysian Bar’s Industrial Law appeals from the Labour Court and conducted trials in the High Court Committee. as well as on appeals to the Court of Appeal and the Federal Court. Kumar has been named in Chambers Asia-Pacific 2009–2018 as a She has co-authored several publications including The Law of leading practitioner in Employment law. In 2011, he was appointed by Dismissal, The Malaysian Court Forms: Employment Law Section and the Malaysian Government to be a member of PEMANDU’s Human The Legal Guide to Employee Dispute Resolution – Malaysia, and is Capital Lab on reforms to labour law. Kumar recently received the ILO a regular presenter at domestic and international legal conferences. Client Choice Award for Employment/Labour Practitioner of the Year Selvamalar is listed as one of the world’s leading practitioners by (Malaysia) for 2012, 2013 and 2014. Who’s Who Legal 2014–2017 in Management Labour & Employment His broad commercial experience includes general monetary claims, and recognised as Who’s Who Legal Thought Leader for Employment insolvency, company law, insurance and defamation. and Industrial Relations in 2017. His experience in shipping and maritime matters includes handling cargo claims, the arrest of vessels, vessel damage claims arising from negligent loading, charter party disputes, claims against freight forwarders, dealing with legal issues arising from seafarers’ contracts, enforcement of debenture holders’ rights against vessels, ship mortgage defaults, contracts for the sale of goods/commodities and representing parties in bunker supply contract disputes. Kumar has been named as a leading shipping lawyer in Chambers Asia-Pacific for 2014–2018.
Skrine is one of the largest full-service law firms in Malaysia with a depth of experience in a range of legal matters acquired through more than 50 years of practice. The firm is currently led by 48 partners with over 100 lawyers across the Corporate, Dispute Resolution and Intellectual Property Divisions. Skrine’s employment practice area is well established with its partners having extensive and in-depth experience.
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Malta Dr. Matthew Brincat
GANADO Advocates Dr. Lara Pace
As with English legislation, some recent legislation refers to the 1 Terms and Conditions of Employment term ‘workers’ which, broadly speaking, is a term encompassing employees, agency workers, contract staff and self-employed 1.1 What are the main sources of employment law? persons who are “dependant” on one particular employer. A Maltese employee is usually categorised as a full-timer, a whole- The primary source of Maltese employment law is the Employment timer or a part-timer. A full-timer is a person who works an average and Industrial Relations Act (“EIRA”) (Chapter 452 of the Laws of of 40 hours per week. A Wage Regulation Order (also known as Malta). It regulates the main terms and conditions of employment. a Sectoral Order) specifies a number of employment parameters In addition to the EIRA, various subsidiary legislation has been and rights which are applicable only to a particular sector of promulgated to regulate specific fields of employment law, which the employment market (e.g., the Food Manufacturing Wage seek to transpose the different directives of the European Union. Regulation Order of 1991). One of the specified parameters is the Moreover, Wage Regulation Orders are an important element whole-timer weekly hours rate (usually ranging between 20 and 35 of Maltese employment law as they determine the minimum hours per week). An employee working in that sector who reaches entitlement of specific sectors including the specific leave that number of hours is entitled to be given the maximum leave and entitlements applicable to a particular sector. The Constitution benefits entitlement as a full-timer. of Malta is also a primary source of Maltese employment law A part-timer under Maltese employment law is an employee who as it devotes considerable attention to work and work relations. works less than the full-time or the whole-time weekly hours Collective Agreements usually regulate the employees’ conditions of work. Broadly speaking, part-timers are not to be treated less of employment and such agreements include both substantive and favourably than full- or whole-timers in so far as remuneration procedural clauses, making them important sources of employment and benefits are concerned. Pro rata calculations and payments law. Lastly, whilst the doctrine of precedent does not apply in Malta, as compared to whole-timers or full-timers are usually applicable decisions and judgments of the Industrial Tribunal and the Court of to part-timers. Also, under the Part Time Employees Regulations Appeal are salient sources of employment law. Decisions of the (Subsidiary Legislation 452.79) part-timers are entitled to pro rata European Court of Justice of the European Union, are an important benefits and leave notwithstanding the number of hours worked. On source of Maltese employment law. the other hand, Maltese law regulates self-employment through the Employment Status National Standard Order (Subsidiary Legislation 1.2 What types of worker are protected by employment 452.108) (the “Self Employment Regulations”) which tends to law? How are different types of worker distinguished? restrict the use of self-employment in Malta. A similar right not to be treated less favourably also applies to Generally speaking, employment legislation in Malta is equally fixed-term contract employees as compared to those comparable applicable to employees at every level of the workplace. The Maltese employees employed on indefinite-term contracts. workforce can generally be split into two categories, namely those who are employed and those who are self-employed. An employee 1.3 Do contracts of employment have to be in writing? If is defined in Section 2 of the EIRA as “any person who has entered not, do employees have to be provided with specific into or works under a contract of service, or any person who has information in writing? undertaken personally to execute any work or service for, and under the immediate direction and control of another person, including an Under Maltese law, every employee must have a written contract of outworker but excluding work or service performed in a professional employment or a minimum statement of conditions. Such a contract capacity or as a contractor for another person when such work or of employment may be written or verbal. However, if the contract service is not regulated by a specific contract of service”. entered into is verbal then the employer has eight working days The definition of employee makes it clear that any person who to give the employee either a contract of employment or a written has entered into a contract of employment is considered to be an statement of minimum conditions according to the Information to employee. The definition then attempts to include other persons Employees Regulations (Subsidiary Legislation 452.83). Such such as outworkers and other personnel who fall under the direction information includes normal rates of pay, overtime rates, hours of and control of another person, however, the last part of this definition work, place of work, and a reference to all the leave to which an seems to exclude professionals and contractors who do not have a employee is entitled. contract of employment with an employer.
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1.4 Are any terms implied into contracts of employment? 2.2 What rights do trade unions have?
There are terms implied in contracts of employment as the Maltese Trade Unions have a right to act in contemplation or furtherance Courts have taken the view that terms which are very obvious do not of trade disputes. They have the power to enter into contracts and, need to be stated expressly in the contract of employment. subject to certain restrictions, may sue and be sued. Additionally, trade unions are permitted by the Constitution to take action for the protection of the occupational interests of its members. Collective 1.5 Are any minimum employment terms and conditions set down by law that employers have to observe? bargaining and industrial action are two very characteristic types of
such action. Malta It is a basic principle of Maltese Civil law that parties are free to contract on whatever terms they choose. Freedom to contract is, 2.3 Are there any rules governing a trade union’s right to however, limited by statutory intervention in that no parties may take industrial action? agree to terms that are below the minimum rights granted by statute. The EIRA in fact specifies that if a contract of employment specifies Maltese law does not have a comprehensive “strike law” or any conditions that are less favourable to the employee than those enshrined right to strike. Rather, unions are granted statutory specified in the EIRA or the regulations issued under it, the statutory protection from liability, which they would otherwise incur under conditions shall prevail. Minimum employment conditions the tort law, when taking industrial action pursuant to a trade include (but are not limited to) minimum wage rate, vacation leave dispute. It is unfair to dismiss an employee who is taking part in entitlements, family leave entitlements and conditions relating to the “official” industrial action. termination of the employment contract.
2.4 Are employers required to set up works councils? If 1.6 To what extent are terms and conditions of so, what are the main rights and responsibilities of employment agreed through collective bargaining? such bodies? How are works council representatives Does bargaining usually take place at company or chosen/appointed? industry level? The European Works Council (Further Provisions) Regulations Where unions are present they usually negotiate collective (Subsidiary Legislation 452.107) holds that employees of a agreements with employers. In such instances the content of the Community-scale group of undertakings which has at least 1,000 collective agreement is deemed to be part of the terms and conditions employees within the Member States, at least two group undertakings of employment and can be enforced by employees and the employer in different Member States, at least one group undertaking with at alike. Such agreements are typically negotiated at company level. least 150 employees in one Member State and at least one other group undertaking with at least 150 employees in another Member State, may set up a works council. Employees of a Community- 2 Employee Representation and Industrial scale undertaking which has at least 1,000 employees within the Relations Member States and at least 150 employees in each of at least two Member States, may also set up a works council.
2.1 What are the rules relating to trade union recognition? The works councils represent collectively the interests of the employees of the Community-scale undertaking or Community- The necessity of having a right to associate is particularly important scale group of undertaking. in the industrial relations scenario wherein trade unions and A special Negotiating Body is to be set up which has the task of employers’ associations are organised with a view to protecting their determining together with the central management the scope, representative interests. The main source of industrial relations is composition, functions and term of office of the European Works the EIRA which outlines the manner in which trade unions and Council. other associations may be formed and registered, their status and their conduct. The EIRA also provides for restrictions on liability, 2.5 In what circumstances will a works council have co- the right to act in contemplation or furtherance of trade disputes, the determination rights, so that an employer is unable to ensuring of the provision of essential services in this respect and proceed until it has obtained works council agreement restriction on the union membership. Recognition of a trade union to proposals? for bargaining purposes at a particular enterprise is normally based on the membership exceeding 50 per cent of the entire workforce. In no circumstance does the law require co-determination; however, Recently, however, there is a tendency for particular categories of in practice, should the employer not be observing the law, the works employees to claim a separate recognition from that of the other council representatives can always apply to the Malta courts for an workers within the same organisation. injunction, which, if upheld, even provisionally, will prohibit the The verification of union recognition is regulated via the Recognition employer from proceeding. of Trade Unions Regulations (Subsidiary Legislation 452.112). According to these regulations the verification exercise which 2.6 How do the rights of trade unions and works councils determines who must be granted recognition by the employer is interact? carried out by the Director of Industrial and Employment Relations in accordance with the main rules established by these regulations. Trade Unions have stronger laws in their favour which works councils do not have (such as the right to be immune in tort during strike action). That being said, in workplaces where unions are present, the union representatives usually sit on the company’s works council.
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that are different for those workers who are employed at different 2.7 Are employees entitled to representation at board times, where such scales have a maximum that is achieved within a level? specified time frame. With respect to disabled persons, the Persons with Disability No, this is an entirely voluntary right that can be self-imposed by the Act (Chapter 210) and the Equal Opportunities (Persons with company concerned. a Disability) Act (Chapter 413) and the Equal Treatment in Employment Regulations (Subsidiary Legislation 452.95), prohibit 3 Discrimination discrimination against persons with a disability as far as their employment is concerned. Malta 3.1 Are employees protected against discrimination? If so, on what grounds is discrimination prohibited? 3.3 Are there any defences to a discrimination claim?
The protection against discrimination is one of the fundamental The statutory justifications from liability for unlawful discrimination rights and freedoms of the individual provided under Chapter IV in employment are found in the EIRA. The EIRA provides three of the Maltese Constitution. Article 45 of the Maltese Constitution instances when exclusion or preference in relation to one of the specifically caters for the protection from discrimination on the grounds that may constitute discrimination would not amount to basis of race, place of origin, political opinion, colour, creed, or discriminatory treatment: sex. This article protects persons from being discriminated in ■ when it is reasonably justified taking into account the nature every aspect of life including work. The advent of EU membership of the vacancy be filled or the employment offered; brought about an overhaul in Maltese equality law in relation to ■ where a required characteristic constitutes a genuine and employment. A number of anti-discrimination provisions with determining occupational requirement; or direct relevance to the workplace were included in the EIRA, and a ■ where the requirements are established by an applicable laws number of statutory instruments were introduced in order to expand or regulations. upon the general principles found in the EIRA. The EIRA seeks to cover various grounds of discrimination. A non-exhaustive list of 3.4 How do employees enforce their discrimination these grounds is provided for under Article 2 of the EIRA which rights? Can employers settle claims before or after defines “discriminatory treatment” as any distinction, exclusion they are initiated? or restriction which is not justifiable in a democratic society including discrimination on the basis of marital status, pregnancy An employee who alleges that the employer has discriminated or potential pregnancy, sex, colour, disability, religious conviction, against him/her may, within four months of the alleged breach, lodge political opinion or membership in a trade union or employers’ a complaint to the Industrial Tribunal. Employees can settle claims association. The term “including” clearly indicates that other before and after proceedings are initiated through private settlements. grounds which, though not specifically mentioned therein, such as age or sexual orientation for example, can also be deemed to constitute discriminatory treatment, if the distinction, exclusion or 3.5 What remedies are available to employees in successful discrimination claims? restriction in question is not otherwise justifiable in a democratic society. Moreover, discrimination against part-timers and persons employed on fixed-term contracts is also regulated. Employees are entitled to be awarded monetary compensation in cases where the Industrial Tribunal establishes that discrimination has taken place. 3.2 What types of discrimination are unlawful and in what circumstances? 3.6 Do “atypical” workers (such as those working part- time, on a fixed-term contract or as a temporary The EIRA expressly prohibits forms of discriminatory treatment at agency worker) have any additional protection? the various stages of employment. Discrimination in the workplace is unlawful as far as recruitment, treatment during the course of “Atypical” workers such as those working part-time, on a fixed- employment and termination is concerned. term contract or as a temporary agency worker cannot be treated A number of regulations have been enacted to strengthen the legal less favourably than full-time employees in the same class of framework on equality. Such instruments include the Equality for Men employment, and they are entitled to equal rights and benefits. and Women Act (Chapter 456 of the Laws of Malta) which focuses on sexual and gender discrimination, the Employment and Industrial Relations Interpretation Order (Subsidiary Legislation 452.89) which 4 Maternity and Family Leave Rights instructs the Industrial Tribunal to refer to the European Directives on discrimination, and the Equal Treatment in Employment Regulations (Subsidiary Legislation 452.95) which focuses on the principle of 4.1 How long does maternity leave last? equal treatment in relation to religion and religious belief, racial or ethnic origin, disability, age and sexual orientation. Subject to satisfying the necessary statutory criteria, a woman is Moreover, the only provision on equal pay found in Maltese law is entitled to 18 weeks’ ordinary maternity leave. in Article 27 of the EIRA. This provisions states that employees in the same class of employment are entitled to the same rate of 4.2 What rights, including rights to pay and benefits, does remuneration for work of equal value. However, this article a woman have during maternity leave? also specifies that when the matter is regulated by a collective agreement, then such an agreement may provide for different salary A woman on maternity leave is entitled to 14 weeks on full pay scales, annual increments and other conditions of employment and four weeks at the minimum wage rate payable by the social
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security department. Subject to certain conditions the employer to the transferee in line with the Transfer of Business Protection of may claim the first 14 weeks of maternity from the maternity fund. Employment) Regulations (Subsidiary Legislation 452.85). These In the case of an employee who is pregnant, breastfeeding or has regulations apply in the following cases: recently given birth, and who could be exposed to a risk at work ■ in any transfer of an undertaking, business, or part of an that could jeopardise her health and safety and/or the pregnancy/the undertaking or business to another employer as a result of child, the employee is entitled to special maternity leave as long as a legal transfer or merger; provided that there is a transfer the risk exists. within the meaning of this regulation whenever there is a transfer of an economic entity which retains its identity, with When an employee is on maternity leave or special maternity leave, the objective of pursuing an economic activity; she shall be deemed to have been in the employment of the employer and during any such absence she shall be entitled to all rights and ■ to a service provision change; Malta benefits which may accrue to other employees of the same class or ■ to any undertaking engaged in economic activities whether or category of employment at the same place of work, including the not that activity is central or ancillary and whether or not it is operating for gain; and right to apply for promotion opportunities at her place of work. ■ where and insofar as the undertaking, business or part of the Additionally, a pregnant employee is entitled to time off without loss undertaking or business to be transferred is situated in Malta. of pay or any other benefit, in order to attend antenatal examinations, if such examinations have to take place during her hours of work. The Regulations have also made it clear that a transfer of business Adoption leave and leave for medically-assisted procreation are also may even take place with more than one transaction and that no governed by Maltese law. property, movable or immovable, needs to be transferred. Finally, the regulations do not apply in a share transfer scenario if the business is not transferred. 4.3 What rights does a woman have upon her return to work from maternity leave? 5.2 What employee rights transfer on a business On return to work from maternity leave, a woman is entitled to sale? How does a business sale affect collective return to the same job or when this is no longer possible for a valid agreements? reason, to equivalent or similar work which is consistent with her original contract of employment. On a business sale, all employee rights are transferred. Additionally, existing collective agreements are transferred together with the transfer of the business. 4.4 Do fathers have the right to take paternity leave?
Fathers are entitled to take birth leave which is regulated by specific 5.3 Are there any information and consultation rights on a business sale? How long does the process typically Wage Regulation Orders depending on the sector of employment take and what are the sanctions for failing to inform in question. In absence of a Wage Regulation Order, the Minimum and consult? Special Leave Entitlement Regulations (Subsidiary Legislation 452.101) stipulate that the father is entitled to one working day of When the undertaking carrying out the transfer (transferor) employs birth leave. 20 or more employees, Section 38 (2) of EIRA requires both the transferor and the transferee to give the employees’ representatives 4.5 Are there any other parental leave rights that the following information: employers have to observe? ■ the date or proposed date of the transfer; ■ the reasons for the transfer; Men and women with one year’s continuous service are entitled to ■ the legal, economic and social implications of the transfer for four months’ unpaid parental leave in respect of children under eight the employees; and years of age. Employees are also allowed 15 hours of paid time ■ the measures envisaged in relation to the employees. off to deal with emergencies arising in relation to persons related to them up to the first degree; the 15 hours of vacation leave are The employees’ representatives are the officials of a recognised deducted from the employee’s annual leave entitlement. trade union or a number of employees elected specifically for the purpose of negotiation in relation to the business transfer. The requisite information must be provided by means of a written 4.6 Are employees entitled to work flexibly if they have responsibility for caring for dependants? statement given to the employee representatives at least 15 working days before the transfer is carried out or before the changes in No, there is no entitlement to flexible work for employees who are conditions of employment of the employees come into effect, responsible for caring for dependants. Rather, such right is granted whichever is earlier. at the discretion of the employer. If the employment conditions of the affected employees will change as a consequence of the transfer, consultation on the impact of the changes has to begin with the employees’ representatives seven 5 Business Sales working days after the information statement is received by the representatives. Although statute does not stipulate whether a sale and purchase agreement can be signed before the information/ 5.1 On a business sale (either a share sale or asset consultation obligations are fulfilled, employers are discouraged transfer) do employees automatically transfer to the buyer? from doing so. Any person contravening these requirements to inform and consult Upon the transfer of an undertaking, the contracts of employment of are liable on conviction to a fine of not less EUR 1,164.69 for every the transferor’s employees automatically transfer from the transferor employee that is affected by the transfer.
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5.4 Can employees be dismissed in connection with a 6.3 What protection do employees have against business sale? dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third Any dismissal in connection with the transfer will, in principle, be party required before an employer can dismiss? unfair and give rise to an entitlement to claim compensation. With respect to indefinite contracts of employment, the employer is always free to terminate the employment, but he/she may only do 5.5 Are employers free to change terms and conditions of so for a good and sufficient cause or in cases of redundancy. Even employment in connection with a business sale? so, the employee may always contest the redundancy or the actual Malta termination in the Industrial Tribunal. In cases where the employee Changes to terms and conditions of employment by reason of the is engaged on a fixed-term contract, the law stipulates that if either transfer are voidable, even if agreed to by the employees. party wishes to terminate the employment before the time stipulated at law without a good and sufficient cause, the defaulting party has 6 Termination of Employment to pay to the other an amount which is equal to half the wages that the employee would have earned in the period remaining. Also, according to statute, fixed-term contracts may not be terminated on 6.1 Do employees have to be given notice of termination the basis of redundancy. of their employment? How is the notice period Generally, it is accepted that theft, misconduct and a genuine determined? redundancy are good and sufficient causes for termination. As with most common law jurisdictions, the employer must show that he/ Employees on an indefinite contract of employment are obliged to she has a good reason for the dismissal and that a fair and reasonable be given a notice period of termination of their employment. Statute procedure has been followed when implementing the dismissal. lays down a minimum period of notice that will apply where the Consent from a third party is not required before an employer can contract of employment does not make any provision for notice. dismiss an employee. Notice periods only apply in cases of redundancy or resignation. There are no notice periods for termination for good and sufficient cause (e.g., gross misconduct). 6.4 Are there any categories of employees who enjoy The statutory minimum period of notice depends on the length special protection against dismissal? of time the employee has been in employment with a particular employer. The notice cannot, however, exceed a maximum of 12 The same rules apply to dismissals in connection with pregnancy or weeks. These notice periods apply to all categories of employees maternity, parental leave, health and safety, trade union membership irrespective of seniority. Longer notice periods may be agreed in or activities, transfers of undertakings, breach of the Organisation the contract of employment when the employee holds a technical, of Working Time Regulations and making a disclosure to the proper executive, administrative or managerial role. public authority (“whistle-blowing”) although if the termination is found to be made for reasons in connection with the employee wanting If an employer prefers that an employee does not work his/her notice to exercise his/her statutory rights in relation to the abovementioned period, the general practice is for employers to pay salary in lieu of topics, the dismissal is statutorily one which is unfair. the notice period. There are no special formalities for making such payments (except as to the deduction of tax where required). The only instance in which the law expressly prohibits termination of employment is when the employee is on injury leave.
6.2 Can employers require employees to serve a period of “garden leave” during their notice period when the 6.5 When will an employer be entitled to dismiss for: employee remains employed but does not have to 1) reasons related to the individual employee; or 2) attend for work? business related reasons? Are employees entitled to compensation on dismissal and if so how is compensation calculated? The extent to which garden leave clauses would be enforceable in Malta is debatable. Once the employer has received the notice of resignation of the employee, the employer may opt to keep the An employer is entitled to dismiss an employee for reasons related employee in employment for the duration of the notice period or to the individual employee in situations where the employer has he/she may opt to release the employee with immediate effect by good and sufficient reasons to dismiss the employee. Additionally, paying the employee an amount equal to all the wages which the an employer will be entitled to dismiss an employee for business- employee would have earned during the notice period. If, on the related reasons if the termination is due to a genuine redundancy. other hand the employee fails to work all or part of the notice period which has to be given to the employer, the employer has the right 6.6 Are there any specific procedures that an employer to demand the employee to pay him/her an amount equal to half the has to follow in relation to individual dismissals? wages that the employee would have earned during the notice period or that part which is unexpired, but the employer cannot force the The law does not establish any specific procedures which an employee to remain in employment, even during a period of garden employer must follow in relation to individual dismissals. However, leave. through case law it has been established that an employee must be given the opportunity to defend himself/herself and be fairly heard. Additionally, the collective agreement and employee handbooks may stipulate a particular procedure which must be followed.
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have emphasised that the limitations of time and market have to be 6.7 What claims can an employee bring if he or she is reasonable within a small area such as Malta, as an ex-employee dismissed? What are the remedies for a successful cannot be forced to leave his/her country in order to pursue his/her claim? vocation.
An employee may bring forward the claim that the dismissal was not for a good and sufficient cause. If the employer does not manage to 7.2 When are restrictive covenants enforceable and for prove that he/she had a good and sufficient cause for termination the what period? Industrial Tribunal may either order reengagement, reinstatement and/or monetary compensation. Having stated this, where the It is quite common for employers in Malta and elsewhere to include Malta complainant is employed in a managerial or executive post, the clauses in contracts of employment that seek to impose a restriction Tribunal shall not order the reinstatement or the reengagement of on employees which attempt to restrict employees from working the complainant. with the competition of the employer following termination of the employee’s contract of employment. It must be said that the Courts of Malta have consistently interpreted such clauses restrictively, on 6.8 Can employers settle claims before or after they are the basis of public policy in that the courts felt time and time again initiated? that the liberty of employees to find suitable employment should supersede such restrictive covenants in employment contracts. Employers can settle claims before and after claims are initiated Such clauses have in fact been seen as contracts in restraint of trade through private settlements. and therefore susceptible of close examination, as well as being considered to unreasonably restrict employees from seeking to 6.9 Does an employer have any additional obligations if better themselves. The Maltese Courts have emphasised that the it is dismissing a number of employees at the same limitations of time and market have to be reasonable within a small time? area such as Malta, as an ex-employee cannot be forced to leave his/ her country in order to pursue his/her vocation. Where a collective redundancy (as defined in the Collective Redundancies (Protection of Employment) Regulations (Subsidiary 7.3 Do employees have to be provided with financial Regulations 452.80)) is proposed to take place within a period of 30 compensation in return for covenants? days, consultation with appropriate representatives must take place at the earliest possible opportunity. Additionally, the employer is Pure restrictions from working with a competitor are usually not bound to supply the employees’ representatives with a statement in enforceable but should the Company wish to enforce such covenants writing giving all relevant information and shall in any event give and the employee agrees, then the employee would need to be paid such employees’ representatives the reasons for the redundancies, during the restrictive period if the employer requires the employee the number of employees he/she intends to make redundant, the not to work at all. Should the employer allow the employee to work number of employees normally employed by him/her, the criteria elsewhere, then payment is not necessary. proposed for the selection of the employees to be made redundant, details regarding any redundancy payments which are due and the period over which redundancies are to be effected. 7.4 How are restrictive covenants enforced? The employer must also forward to the Director responsible for Employment and Industrial Relations, a copy of the written Restrictive covenants may be enforced through judicial proceedings. notification and a copy of the written statement on the same day that these are notified to the employees’ representatives. 8 Data Protection and Employee Privacy
6.10 How do employees enforce their rights in relation to mass dismissals and what are the consequences if an 8.1 How do employee data protection rights affect the employer fails to comply with its obligations? employment relationship? Can an employer transfer employee data freely to other countries? Employees can enforce their rights by applying to the Malta courts for a remedy or by roping in the government department for the Essentially employers, as data controllers, are under an obligation protection of employment rights in order to defend their interests. to ensure that they process personal data about their employees If the employer fails to observe its obligations, it is also open to in accordance with specified principles including the principles of civil damages and a criminal action brought by the Department for proportionality and transparency. It is also recommended that the Industrial and Employment Relations. workforce is informed of any procedure being implemented due to the provisions of the Data Protection Act 2001 (“DPA”). As from the 25th May 2018, the General Data Protection Regulation 7 Protecting Business Interests Following will come into force and the principles established therein shall be Termination directly applicable. An employer who wishes to provide employee data to third parties must do so in accordance with the DPA principles and processing 7.1 What types of restrictive covenants are recognised? conditions. It should be noted that the DPA prohibits the transfer of data to a country outside the EEA unless (i) that country ensures an In Malta, the recognised restrictive covenants are limited. Recent adequate level of protection for personal data, (ii) measures are in jurisprudence on non-compete clauses has held enforceable a place to ensure proper protection of personal data, or (iii) one of a clause which prohibits the employee from soliciting clients of the series of limited exceptions applies. employer with whom he/she had contact. The Maltese Courts
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8.2 Do employees have a right to obtain copies of any 9 Court Practice and Procedure personal information that is held by their employer?
9.1 Which courts or tribunals have jurisdiction to hear Employees, as data subjects, have the right to make a subject access employment-related complaints and what is their request. This entitles them, subject to certain limited exceptions, to composition? be told what data is held about them, to whom it is disclosed and to be provided with a copy of such personal data. Subject access Many disputes between employers and employees are settled in requests cover personal data held in manual and electronic records the Industrial Tribunal which has exclusive jurisdiction to hear such as email. Malta cases instituted by employees relating to dismissal, trade disputes and other employment law disputes such as those related to 8.3 Are employers entitled to carry out pre-employment harassment, discrimination and the observation of the working time checks on prospective employees (such as criminal requirements, most of which originated from Malta’s membership record checks)? of the European Union. In situations where the dispute relates to the conditions of employment, the Industrial Tribunal is composed Employers are entitled to carry out pre-employment checks on of a Chairperson. In situations relating to Industrial Relations, the prospective employees but only in situations where this is required Tribunal is composed of a Chairperson and two other members who and permitted by law. are selected by the Chairperson of the Tribunal. A right of Appeal from the decision of the Industrial Tribunal exists 8.4 Are employers entitled to monitor an employee’s on point of law to the Court of Appeal composed of a judge. emails, telephone calls or use of an employer’s computer system? 9.2 What procedure applies to employment-related complaints? Is conciliation mandatory before a Whilst there have been no decisions from the Maltese Courts on the complaint can proceed? Does an employee have to subject as of yet, monitoring an employee’s emails, telephone calls or pay a fee to submit a claim? use of an employer’s computer system is so far permissible provided that it is carried out in accordance with the Data Protection Act A complaint is to be submitted to the Industrial Tribunal within principles in that it should be adequate, relevant and not excessive and four months from the alleged breach. Conciliation is optional and should be carried out in the least intrusive way possible. Any adverse not mandatory and a fee is payable to submit a claim. There is no impact of monitoring on employees must be justified by its benefit to mandatory conciliation prior to judicial proceedings. the employer and/or others. Express employee consent to monitoring is not usually required; however, employees should be made aware 9.3 How long do employment-related complaints typically that monitoring is being carried out, the purpose for which it is being take to be decided? conducted and to whom the data will be supplied. Where disciplinary action is a possible consequence of anything discovered, this too There is no pre-established time frame within which an employment- should be made clear to employees. The principles outlined by the related complaint is decided. However, based on experience, a Grand Chamber of the European Court of Human Rights in the case claim instituted in front of the Industrial Tribunal typically takes of Bărbulescu v. Romania, will be applied in practice. one-and-a-half years to two years to be decided.
8.5 Can an employer control an employee’s use of social media in or outside the workplace? 9.4 Is it possible to appeal against a first instance decision and if so how long do such appeals usually take? An employer controlling an employee’s use of social media is only permissible in accordance with the principles laid down by the EU A right of Appeal from the decision of the Industrial Tribunal exists General Data Protection Regulation. on point of law to the Court of Appeal. The appellant has 12 days to file an appeal. Like the Industrial Tribunal, the Court of Appeal does not have a time limit within which it should give a judgment, however from practice this usually takes around one year from that of when the appeal was filed.
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Dr. Matthew Brincat Dr. Lara Pace GANADO Advocates GANADO Advocates 171 Old Bakery Street 171 Old Bakery Street Valletta Valletta VLT1455 VLT1455 Malta Malta
Tel: +356 2123 5406 Tel: +356 2123 5406 Email: [email protected] Email: [email protected] URL: www.ganadoadvocates.com URL: www.ganadoadvocates.com Malta
Dr. Matthew Brincat is a Partner at GANADO Advocates, whose Dr. Lara Pace is an Associate within GANADO Advocates’ Employment practice mainly evolves around Employment and Pensions, areas of team, regularly assisting clients on legal and regulatory matters relating law he believes connect both the human and the corporate aspects to drafting of employment contracts and other legal documentation, as of legislation. Matthew is a co-founder and the General Secretary of well as on issues relating to termination of employment, dismissals, the Malta Association of Retirement Scheme Practitioners (MARSP), redundancies, discrimination, industrial disputes and litigation connected which brings together all the licensed pension administrators in Malta. to such matters. He has also been heavily involved in the formation of GANADO Advocates’ Employment and Pensions law department and has gained valuable experience of Industrial Tribunal and OAFS proceedings. Matthew is a member of the Lex Mundi European Employment Practices Group and delivers lectures at the Malta Employers’ Association on Employment Legislation. Matthew is also the co-author of the Malta volume of the Kluwer Encyclopaedia on Labour Law and the author of a number of articles in local and foreign magazines and journals in relation to both Employment and Pensions legislation.
GANADO Advocates is a leading commercial law firm with a particular focus on the corporate, financial services and maritime sectors, predominantly servicing international clients doing business in or out of Malta. The firm traces its roots back to the early 1900s, and is today one of Malta’s foremost law practices, consistently ranking as a leading firm in all its core sectors. GANADO Advocates has, over the past decades, contributed directly towards creating and enhancing Malta’s hard-won reputation as a reliable and effective international centre for financial and maritime services. Today, the firm continues to provide high standards of legal advisory services to support and enhance Malta’s offering. The firm’s Labour and Employment law practice encompasses a full range of employment services including advice on litigious and non-litigious employment law matters, industrial relations, employment benefits and pensions. While having a practice in its own right, the employment team also provides invaluable support to the other teams within the firm on transactions which span a broad range of areas including M&A transactions.
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Mexico Hugo Hernández-Ojeda Alvírez
Hogan Lovells Luis Ruiz Gutiérrez
cent of the salaries related to vacation days; (iii) 15 days of salary 1 Terms and Conditions of Employment as a Christmas bonus; (iv) a maximum of 48 hours as weekly work shift for day shifts; (v) a rest day or day off per week; (vi) profit 1.1 What are the main sources of employment law? sharing; and (vii) minimum wage (currently, the daily minimum wage is MXN$80.04), among others. The main sources of employment law are: (i) constitutional rights; (ii) international treaties approved by the Mexican Senate; (iii) 1.6 To what extent are terms and conditions of precedents of the Supreme Court of Justice (jurisprudence); (iv) employment agreed through collective bargaining? general rules of law; (v) tradition; and (vi) general rules of fairness. Does bargaining usually take place at company or industry level?
1.2 What types of worker are protected by employment The employer and the trade union are able to agree on any terms and law? How are different types of worker distinguished? conditions of employment through collective bargaining agreements (i.e. benefits, compensation, work shifts, training, positions, etc.) as The Mexican Federal Labour Law (MFLL) protects all the long as the agreement: complies with the minimum mandatory rights individuals involved in an employment relationship. The MFLL and benefits granted by the MFLL; does not contain provisions that considers three different types of workers/employees: (i) unionised contradict such law; and is filed before the Labour Authority. workers; (ii) non-unionised workers; and (iii) entrusted employees.
1.3 Do contracts of employment have to be in writing? If 2 Employee Representation and Industrial not, do employees have to be provided with specific Relations information in writing?
According to the MFLL, employment contracts must be documented 2.1 What are the rules relating to trade union recognition? in writing. Otherwise, in case of litigation, the employer is obligated to evidence the working conditions. According to the MFLL, unions have the right to call a strike against an employer in order to force the execution of a collective bargaining agreement (CBA), regardless of whether the union 1.4 Are any terms implied into contracts of employment? actually represents the majority of the employees. Due to the aforementioned, employers that do not have a CBA executed and Employment agreements could be executed for a fixed time, for duly registered before the Labour Court may face several calls to a specific task, for initial training, for a specific season, or for an strike. It is mandatory for the Labour Court to reject any calls to indefinite time. strike of a trade union other than that with which the employer has Employment agreements must contain: (i) information of the previously executed a CBA duly registered before such authority. parties; (ii) term of the employment; (iii) services to be rendered by However, a different trade union does have the right to file a “Union the employee; (iv) place in which the services will be rendered; (v) Certification” procedure with the Labour Court. This procedure salary information (i.e. amount, terms to be paid, payment day, etc.); consists in this second union arguing that, rather than the union (vi) training references; (vii) holidays; and (viii) any other working with which the company has executed the registered CBA, it is the condition agreed to by the parties. employees’ organisation that represents the actual interests of the majority of the workers in the company. In cases where the second trade union is able to prove that it is the organisation that represents 1.5 Are any minimum employment terms and conditions the workers, it will have all the rights and duties conferred upon the set down by law that employers have to observe? trade union, including the right to call to strike.
The minimum employment rights are: (i) vacation – six days for the first year of service, eight days for the second year of service, 2.2 What rights do trade unions have? 10 days for the third year of service; after that, vacation days are increased by two days every five years; (ii) a vacation bonus – 25 per According to the MFLL, trade unions have several rights, such as
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the right to: prepare their own by-laws and regulations; elect their It is illegal for employees to strike in a number of cases, such as when representatives; and organise their management and administration, a majority of the striking employees engage in violent acts against the as well as their activities and action programmes. In addition, trade employer or his property, or where the employees work in government unions may also: file a call to strike with an employer in order to establishments or shops during wartime. If the Court declares a enforce the execution of a CBA; object to information being filed strike illegal, the strikers’ employment relationships are automatically by the employer with the Treasury Department in connection with terminated. profit sharing; request the employer to withhold the employees’ contributions for the trade union agreed on the CBA; participate 2.4 Are employers required to set up works councils? If in the preparation of the companies’ training programmes; file a so, what are the main rights and responsibilities of union certification procedure when they represent the majority of such bodies? How are works council representatives Mexico the employees of an employer; and execute the CBA, among others. chosen/appointed?
2.3 Are there any rules governing a trade union’s right to The MFLL does not provide for works councils. take industrial action? 2.5 In what circumstances will a works council have co- The MFLL recognises strikes as a temporary suspension of the work determination rights, so that an employer is unable to performed by a trade union of workers. The MFLL contains the proceed until it has obtained works council agreement applicable rules for strikes and their procedure. The notice for strike to proposals? should be filed by the trade union before the competent Labour Court in order to accomplish one of the specific objectives mentioned in This is not applicable. the MFLL (review the CBA or law collective bargaining agreement, obtain a balance between the employees’ and the employer’s 2.6 How do the rights of trade unions and works councils rights, enforce the execution of a collective bargaining agreement interact? or law collective bargaining agreement, secure compliance with the remedies imposed for a breach of the collective bargaining This is not applicable. agreement, request the compliance to obligations related to profit sharing, and support another strike that shares any of the goals listed herein). The majority of the employees should perform the strike; 2.7 Are employees entitled to representation at board otherwise, after the strike starts, the employer may file a procedure level? requesting the cessation of the strike. This is not applicable. Except for forcing the execution of a CBA, only the trade union in charge of the CBA may call for a strike or give notice of the strike. It should give notice of the strike to the employer, including a list of 3 Discrimination its demands, the objective of the strike, and the exact date and time when work activities will be suspended. Once a strike notice has been given to the employer, any, and all, 3.1 Are employees protected against discrimination? If so, on what grounds is discrimination prohibited? action against the employer’s assets should be suspended. The labour union should also file a copy of the strike notice before The MFLL prohibits any kind of discrimination. All individuals the Labour Court at least six days prior to the strike in the case of involved in an employment relationship are protected against private companies, and at least 10 days prior to the strike in the case discrimination on the grounds of: race; nationality; sexual preference; of public services. Within the 48 hours following receipt of notice, immigration condition; religion; civil status; social condition; age; the employer should file a written answer with the Court. The Court gender; and/or disability. will then conduct a conciliation hearing. The employees should appear at the conciliation hearing to proceed with the strike. The employer should also appear; otherwise, the 3.2 What types of discrimination are unlawful and in what circumstances? strike notice remains in full force and effect. This pre-strike period may be extended at the request of the labour union, but the strike will take place if no settlement is reached at this stage. Any kind of discrimination is unlawful. According to the MFLL, discrimination practices are also prohibited during the hiring process. During a strike, the employees should bring any ships, aircraft, trains, buses, or other means of transportation en route to their last scheduled destinations. For strikes affecting hospitals, clinics, and 3.3 Are there any defences to a discrimination claim? similar establishments, patients should continue to receive care until transferred to another location. In case of a claim for discrimination, the employer must prove that A minimum number of employees, as determined by the Court, no discriminatory practice or policy are applicable or have occurred; should also continue working in activities that would cause severe otherwise, a fine and other sanctions could be imposed on the employer. problems or compromise the safety or wellbeing of the workplace, machinery, equipment, or raw materials, should they be completely 3.4 How do employees enforce their discrimination suspended, or to enable suspended business activities to resume. rights? Can employers settle claims before or after The Court may refuse to approve a strike if it fails to meet the they are initiated? requirements in the MFLL. The employees should then return to work within 24 hours. Employees affected by discriminatory practices or policies could file or claim before the Labour Court or the National Board to Prevent Discrimination.
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Employers can settle claims before litigation is initiated or even when litigation takes place. 4.4 Do fathers have the right to take paternity leave?
Yes, employers are obligated to provide five working days as 3.5 What remedies are available to employees in paternity leave. successful discrimination claims?
Remedies could be anything from a fine of approximately 4.5 Are there any other parental leave rights that US$20,000.00 to a severance payment. employers have to observe?
Mexico Employers must observe their obligation to provide pregnant 3.6 Do “atypical” workers (such as those working part- women with a safe place to work. In cases of adoption, maternity/ time, on a fixed-term contract or as a temporary agency worker) have any additional protection? paternity leave applies and the time corresponding to the maternity and paternity leave shall be considered for purposes of seniority. No, there is no additional protection for “atypical” workers. 4.6 Are employees entitled to work flexibly if they have responsibility for caring for dependants? 4 Maternity and Family Leave Rights Yes, if the employer and employee agree to modify the working 4.1 How long does maternity leave last? conditions, the employee shall be able to render services on a flexible basis. According to the MFLL, maternity leave will last 12 weeks (six weeks before the child’s birth and six weeks after the birth). 5 Business Sales The period before birth can be negotiated by the employee in agreement with the employer in order to be partially enjoyed after birth. In the case of adoption, maternity leave lasts six weeks. 5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the buyer? 4.2 What rights, including rights to pay and benefits, does a woman have during maternity leave? Employees automatically transfer to the buyer in a share sale if the employees continue working for the buyer. In the event of During maternity leave, women are entitled to the benefits that they an asset transfer, the following scenarios could be applicable: (i) would normally receive. In addition, the following rules apply: employees could be transferred to the buyer; (ii) the employment ■ Pregnant women may not work under hazardous conditions, of the personnel could be terminated; (iii) a mix of scenarios (i) and or perform industrial tasks during the night, extraordinary (ii); and (iv) the employees could continue working for the seller. hours or sanitary contingencies. Their salary, benefits, and The transfer of personnel is normally negotiated during the process rights should not be affected. of acquisition. ■ Statutory maternity leave may be extended as necessary if work is not possible because of the pregnancy or the delivery of the child. 5.2 What employee rights transfer on a business ■ During the nursing period, the new mother is entitled to two sale? How does a business sale affect collective additional 30-minute rest periods per day to feed the child in agreements? an adequate and hygienic place set aside by the employer. If this is not possible, the parties may agree to reduce her work The working conditions of the personnel could not be affected or shift by one hour. reduced in case of employer substitution (transfer of employees); ■ When returning from maternity leave, the employee is therefore, if a CBA is applicable to the personnel, such an agreement entitled to return to her employment, provided that no more must be transferred to the buyer. than one year has passed since the date of delivery.
■ Maternity leave does not affect longevity of service. 5.3 Are there any information and consultation rights on ■ The employer should have enough seats available for a business sale? How long does the process typically pregnant women. take and what are the sanctions for failing to inform ■ During maternity leave, the Mexican Social Security Institute and consult? will pay the working mother 100 per cent of her daily salary as a social security contribution. If the maternity leave period There is no obligation on the employer to inform or consult with is extended, she is entitled to 50 per cent of the daily salary of the personnel regarding a business sale. However, it is always social security contribution for a period of up to 60 days. advisable to comment and discuss the terms of the sale with the union representatives to avoid misunderstandings. 4.3 What rights does a woman have upon her return to work from maternity leave? 5.4 Can employees be dismissed in connection with a business sale? The rights of women after maternity leave are: (i) to be considered as a regular employee; and (ii) two daily breaks of 30 minutes If the decision is to terminate the employment of an employee during the following six months as a lactation period or a one- due to the business sale, the employer must pay the corresponding hour reduced shift. severance (three months of integrated salary, plus 20 days of integrated salary for each year of service, plus a seniority premium).
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months’ integrated salary, plus 20 days of integrated salary per 5.5 Are employers free to change terms and conditions of year of service (integrated salary is calculated adding to the salary employment in connection with a business sale? all benefits and payments earned by the employee), as well asa seniority premium. No. If the working conditions/rights suffer a modification that reduces the employee’s rights, the employee will be able to sue the new employer, asking for the maintenance of the labour rights 6.6 Are there any specific procedures that an employer has to follow in relation to individual dismissals? or for the termination of the employment and payment of the full severance, plus back salaries. No, there are no specific procedures that an employer must follow
in relation to individual dismissals (except for termination with Mexico 6 Termination of Employment cause in which a notice should be delivered during the termination). However, it is recommended to execute termination agreements, which must be ratified before the Labour Court for its enforceability. 6.1 Do employees have to be given notice of termination of their employment? How is the notice period determined? 6.7 What claims can an employee bring if he or she is dismissed? What are the remedies for a successful There is no obligation for the employer to inform employees in claim? advance about the termination of employment. Claims or legal actions that an employee can bring are: (i) reinstatement in his/her job; and (ii) payment of legal severances. 6.2 Can employers require employees to serve a period In both cases, the payment of back salaries and other benefits are of “garden leave” during their notice period when the part of the claims remedies. employee remains employed but does not have to attend for work? 6.8 Can employers settle claims before or after they are There is no prohibition for the employers to impose such a condition. initiated? However, the prevailing practice in Mexico is not to ask for a period of “garden leave” and terminate the employment the day on which Yes, the employer is able to settle, before or during, a labour claim the employee is informed. at any stage of the procedure before the Labour Court resolves the case.
6.3 What protection do employees have against dismissal? In what circumstances is an employee 6.9 Does an employer have any additional obligations if treated as being dismissed? Is consent from a third it is dismissing a number of employees at the same party required before an employer can dismiss? time?
In the case of a wrongful dismissal, the employee could sue the No, employers do not have any additional obligations. However, if employer asking for his/her reinstatement or the payment of full the personnel will be substituted by new equipment or technology, severance. An employee could be dismissed with cause by the the employer must pay, in addition to the severance, a month’s employer only if one or more reasons for termination determined by integrated salary. the MFLL are applicable. In this case, the employer has the burden to prove the reason for termination. If the employer is not able to 6.10 How do employees enforce their rights in relation to prove the above, the payment of full severance plus back salaries mass dismissals and what are the consequences if an will apply. The employer does not require consent from a third party employer fails to comply with its obligations? to dismiss an employee. Employees are able to sue an employer, either individually or 6.4 Are there any categories of employees who enjoy jointly, for their reinstatement or for a full severance payment. If special protection against dismissal? the employer obtains a resolution against its interests, and if it fails to comply with its obligations, the Labour Court could order the No, there are no categories of employees who enjoy special attachment of goods in order to preserve the rights of the plaintiffs protection against dismissal. Employees with an authorised leave in the case. of the Mexican Social Security Institute cannot be dismissed during such a period. 7 Protecting Business Interests Following Termination 6.5 When will an employer be entitled to dismiss for: 1) reasons related to the individual employee; or 2) business related reasons? Are employees entitled 7.1 What types of restrictive covenants are recognised? to compensation on dismissal and if so how is compensation calculated? From a labour perspective, restrictive covenants in general are not recognised by the MFLL due to the provisions contained in Article Only when the employer rescinds the employment due to the cause 5 of the Mexican Constitution. This Article expressly prohibits of termination stated by the MFLL, is it not obligated to pay the covenants in agreements or contracts by means of which a person severance. Otherwise, if the employer terminates the labour “restrains temporarily or permanently to a determined lawful relationship without reasons for termination, the severance payment profession, industry or business activity” and grants individuals the will have to be paid. Severance consists in the payment of three
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right and freedom to engage in any lawful activity, except when there protection. The Federal Law for the Protection of Personal Data in the is a valid resolution that determines that the third party’s rights are Possession of Private Parties (Federal Law), effective on July 6, 2010, affected. sets forth that all personal data processing or treatment (gathering, In addition, the Mexican Constitution, as well as the MFLL, establishes disclosure, storage, and use) is subject to the consent of the individual that employees’ rights cannot be waived. This means that restrictive to which such data belongs, unless such processing is contemplated covenants or agreements run the risk of being considered null and void. within one of the exceptions provided by the Federal Law. Notwithstanding, it is customary to include restrictive covenants In general terms, there are two main obligations under the and confidentiality clauses either in the employment contract orin aforementioned Federal Law that must be observed by the employer separate agreements, as grounds for justified causes of termination of as data controller: (i) the need to deliver a privacy notice to the data subject (employees), which must comply with specific requirements; Mexico employment in case said obligations are breached. and (ii) the creation of a personal data department, which will It is also common to agree to post-employment restrictive covenants on promote the protection of personal data within the private entity and civil agreements in return for additional compensation for employees in represent the private entity if an application for access, rectification, return for performance of said obligations. Restrictive covenants shall cancellation or objection of personal data is filed by the data subject remain in full effect between the parties until one of the parties brings with the employer or before the data protection authority (Federal an action against the other before the Courts, in order for the latter to Institute for Access to Public Information and Data Protection). issue a decision declaring the agreement void before the Civil Courts. The employer should also take the necessary measures to secure Once the Civil Court declares the agreement to be null and void, it will the protection of its employees’ personal data. The corresponding order for events to be “restituted” to their initial status by means of authority may sanction employers for not complying with these which an employee will be requested to deliver the compensation paid privacy protection obligations. for performance of the obligations of restrictive covenants. Employers can only transfer employee data freely in the country or Notwithstanding the above, the Industrial Property Law expressly abroad in case of one of the specific exceptions allowed by the Federal includes that “the individual or company that contracts an employee Law (i.e. permitted by Law or a Treaty, for prevention or medical that is working or has worked as a professional, advisor or consultant diagnose, within entities of the same Group that operate with the same that renders or has rendered services for another individual or entity processes and internal policies, etc.) or in terms of the privacy notice. in order to obtain its trade secrets will be liable for the payment of Otherwise, the employees’ consent is required for the transfer. damages and lost profits caused to such individual or entity”. A person or entity that, by means of any illegal way, obtains information that contains a trade secret, will also be liable for damages and lost profits. 8.2 Do employees have a right to obtain copies of any personal information that is held by their employer?
7.2 When are restrictive covenants enforceable and for Yes, employees do have a right to obtain copies of any personal what period? information held by their employer, as long as they comply with the process and provisions to exercise the right to access their personal There are no judicial precedents in respect of restrictive covenants data as described by the Federal Law. being enforceable. Based on our experience, in order for these clauses to be enforceable, it is important that they are limited to a specific territory, period of time, and industry. They must also 8.3 Are employers entitled to carry out pre-employment identify the confidential information protected thereby. checks on prospective employees (such as criminal record checks)?
7.3 Do employees have to be provided with financial Yes, employers are entitled to carry out pre-employment checks compensation in return for covenants? on prospective employees. Nevertheless, it is advisable to obtain express employee’s consent. It is advisable that employees are provided with financial compensation in return for covenants, in order to strengthen their enforceability. For further information, please refer to question 7.1. 8.4 Are employers entitled to monitor an employee’s emails, telephone calls or use of an employer’s computer system? 7.4 How are restrictive covenants enforced? Yes, employers are entitled to monitor an employee’s emails, It will depend on the restrictive covenants, as to how they are enforced, telephone calls, and computer use, as long as these communications as well as on how the parties agree these covenants. One option are maintained in their work tools property. Notwithstanding the may be by means of a civil agreement, filing a civil claim alleging aforementioned, it is advisable to obtain express employee’s consent damage and lost profits due to the breach of these covenants, and even and recognition that these communications could be monitored by criminal liability. Please refer to question 7.1 for further information. the employer.
8 Data Protection and Employee Privacy 8.5 Can an employer control an employee’s use of social media in or outside the workplace?
8.1 How do employee data protection rights affect the Yes, an employer is entitled to control an employee’s use of employment relationship? Can an employer transfer social media in or outside the workplace, as long as they establish employee data freely to other countries? appropriate policies and dispositions in the internal labour regulations to enforce the applicable terms according to labour Even though the MFLL does not establish a specific provision on the dispositions. matter, the Federal Constitution establishes the right of personal data
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After the parties are notified of the resolution, they have 15 9 Court Practice and Procedure days to challenge it by means of a constitutional proceeding (amparo) before the Collegiate Court of Labour Matters. 9.1 Which courts or tribunals have jurisdiction to hear Nevertheless, please note that the aforementioned employment-related complaints and what is their Constitutional Amendment does establish a mandatory composition? one-hearing conciliation process before a complaint can proceed; this Amendment also implies the establishment of a new conciliatory authority that will not depend on Currently, labour claims are resolved by Federal and Local the judicial department. It is expected that there might be Conciliation and Arbitration Boards. These are formed by additional amendments to labour procedures as a result of the representatives from the government, the employees’ sector, and
Constitutional Amendment described. Mexico employers. There is a constitutional amendment that has been b) The collective conflicts procedure depends on the type of approved, so during 2018 the Labour Boards will be converted conflict filed by the parties (i.e. collective conflicts ofan into Labour Courts. This means that they will not be formed by economic nature, and strikes). Please refer to question 2.3 representatives from the government, the employees’ sector, or for further information. employers, but will depend on the judicial authorities (as the courts c) According to the MFLL, labour procedures before courts are with jurisdiction to hear non-employment-related complaints). free of governmental fees for the parties.
9.2 What procedure applies to employment-related 9.3 How long do employment-related complaints typically complaints? Is conciliation mandatory before a take to be decided? complaint can proceed? Does an employee have to pay a fee to submit a claim? The labour procedure takes around two to three years to be decided. All individual or collective disputes arising from labour relationships between the employer and the employee or between the employer 9.4 Is it possible to appeal against a first instance and the trade union should be resolved before the Labour Courts that decision and if so how long do such appeals usually exist at the federal and local levels. take? a) Individual disputes generally arise when an employee files a claim against an employer with the competent Board. Filing The first instance resolutions are able to be appealed before the a claim initiates the “ordinary” procedure; after receiving the Federal Collegiate Tribunal by the amparo process. Such a process employee’s claim, the Board sets a date and time for a hearing takes from five to nine months to be resolved. that has two stages (conciliation, and claim and answer to such a claim). During the conciliation stage, the Board seeks to facilitate Acknowledgment a settlement between the employer and the employee. If The authors would like to acknowledge the assistance of their the parties fail to settle, the lawsuit proceeds into its second colleague Mary Carmen Fuertes Abascal in the preparation of this phase: claim; and answer to such a claim. The employee may chapter. ratify, clarify, or make further claims and the employer may answer and challenge these. Once this stage is finished, the Court sets an additional hearing for the parties to offer and render evidence to support their claims and objections. After introducing evidence, the parties are given time to file their final arguments. The file is then submitted in order for the Labour Court to issue the resolution and notify each of the parties.
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Hugo Hernández-Ojeda Alvírez Luis Ruiz Gutiérrez Hogan Lovells Hogan Lovells. Paseo de Tamarindos 150-PB Paseo de Tamarindos 150-PB Bosques de las Lomas Bosques de las Lomas Mexico, D.F. 05120 Mexico, D.F. 05120 Mexico Mexico
Tel: +52 55 5091 0137 Tel: +52 55 5091 0155 Email: hugo.hernandezojeda Email: [email protected] @hoganlovells.com URL: www.hoganlovells.com URL: www.hoganlovells.com Mexico Partner, Mexico City. Partner, Mexico City. Hugo Hernández-Ojeda is a leader in the Labour and Employment, With four decades of experience, Luis has assisted numerous Pension and Social Security practice in the Mexico City office. He corporations with employment work facility shutdowns providing focuses on labour and employment, pensions, investigations and valuable insights to issues involving calling to strike procedures and social security law. collective labour litigation. He began his professional career in 1991 at Barrera, Siqueiros y He has vast experience regarding collective labour law issues, Torres Landa in civil and immigration law. In 2001, he founded his implementing negotiations with unions to obtain legal modifications of own firm. Seven years later, he rejoined Barrera Siqueiros y Torres the working conditions for employees. He has also managed similar Landa (now Hogan Lovells) as partner. He is the author of several activities for non-union employees. articles published in Latin Lawyer, Abogado Corporativo, and The In addition, he handles labour and employment consultancies. He has International Comparative Legal Guide series, among others. led cases for multinational corporations that purchase companies in Member of the International Bar Association, the United States – Mexico and want to transfer employees, analysing and advising the Mexico Bar Association (former Chairman), Asociación Nacional de different options available for employee transfer; he also advises Abogados de Empresa and the Mexican Bar Association. multinational corporations that need guidance and support on how to handle labour issues in Mexico, including negotiations with unions. Representative Experience These negotiations have included the transfer of union employees Participated in the shutdown of the General Motors facilities in Mexico. from one employer to another, the annual review of the collective Prepared and implemented the collective and union strategy for bargaining agreements, collective terminations of employment, and AutoZone Group in Mexico. negotiations to temporarily suspend employment relationships. Prepared and implemented the strategy for the shutdown and sale of Practice Area mining facilities of Goldcorp Group in Mexico. Employment. Practice Areas Education Labour, Employment, Social Security, Pensions, Business Structures, Law Degree, Escuela Libre de Derecho, 1980. Investigations, Mining. Awards and Rankings Education Band 2, “Labour and Employment”, Chambers Latin America 2011, Law Degree, Universidad Anáhuac del Sur, 1995. 2012, 2013, 2014, 2015, 2016, 2017 and 2018. Awards and Rankings Recommended by The Client’s Guide 2011 and 2012. Recommended by Latin America Corporate Counsel Association Recommended by Who’s Who Legal in 2011, 2012, 2016 and 2017 in (LACCA), 2013–2018. “Management, Labour and Employment”. Band U, Chambers Latin America, 2013 and 2014. Recommended by The Legal 500 in 2015 and 2016. Band 4, Chambers Latin America, 2013 and 2014. Recommended by Latin Lawyer 250 in 2015 and 2016. Band 2, “Labour and Employment”, Chambers Latin America, 2015, 2016, 2017 and 2018. Recommended by The Client’s Guide, 2011 and 2012.
Hogan Lovells is one of the few truly unified transatlantic legal practices that services corporations, financial institutions, and governmental entities across the spectrum of their critical business and legal issues globally and locally. The firm offers an exceptional, high-quality global capability, with extensive reach into the world’s commercial and financial centres, and particular strengths in the areas of labour and employment, arbitration, litigation, corporate, finance, government regulatory, and intellectual property. Our globally recognised Labour and Employment team is a very deep bench with broad experience in international labour and employment matters, representing foreign and domestic clients throughout Latin America, United States, Europe, Africa, Asia and Middle East. Our lawyers have handled numerous complex matters in any language that is required, before all the major tribunals in the world. Clients we regularly represent include domestic and foreign multinational corporations that conduct business in all regions. For further information please visit: www.hoganlovells.com.
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Mozambique Pedro Madeira de Brito
BAS – Sociedade de Advogados, SP, RL Lara Tarciana Sousa dos Mucudos Macamo
However, as a rule, an employment contract should be written and 1 Terms and Conditions of Employment contain, at least, information regarding the identification of the parties, professional classification and professional occupational 1.1 What are the main sources of employment law? category of the employee, place of work, contract duration and terms of renewal, salary, means and period of salary payment and details The Constitution of the Republic establishes the right to work, right on additional payments, the hiring date, established contract term of equal treatment in the workplace, right to strike, right to health and its justification (where applicable), date of the contract and, in and safety in the workplace, right to fair salary, right to access to the the case of a fixed-term contract, termination date and signatures. court and freedom of association. Mozambique’s Labour Law (Law No. 23.2007 of 1 August 2007) 1.4 Are any terms implied into contracts of employment? is applicable to all employment relationships. For foreign non- resident employees, Decree No. 37/2016, of 31 August 2016 and The first term implied is the parties’ good faith, which can be translated Decree No. 63/2011, of 7 December 2011, are applicable to all as the mutual obligation of trust and confidence between them. One employment relationships. of the most important terms is the one subjecting the contract to a There is further, complementary legislation, applicable to employment collective bargaining agreement or to the Employment Law itself. relationships such as social insurance (Law No. 4/2007, of 7 February 2007 and Decree No. 51 /2017, of 9 October 2017), accidents at 1.5 Are any minimum employment terms and conditions work and health regime (Decree No. 62/2013, of 4 December 2013). set down by law that employers have to observe? International conventions and treaties, to which Mozambique is a signatory, as well as collective bargaining agreements, are also There are minimum employment terms and conditions, namely, sources of labour law. minimum wages, minimum employment conditions, holidays, work hours, termination of employment agreements, which shall prevail 1.2 What types of worker are protected by employment over employment agreements and collective bargaining agreements, law? How are different types of worker distinguished? set by the Employment Law.
Anyone engaged in a productive activity, under an economically 1.6 To what extent are terms and conditions of subordinated relationship, with or without formal/written contract, employment agreed through collective bargaining? excluding the employment relationships between public institutions Does bargaining usually take place at company or and their employees (which are regulated by specific legislation), is industry level? protected by Labour Law. There are some types of professionals such as domestic employees, Collective bargaining typically governs matters such as: the work-at-home employees, miners, seafarers, dockworkers, artists relationship between employers and trade union bodies; mutual and showmen, professional athletes and foreign employees, which, rights and duties; extra-judicial resolution mechanisms of labour in addition to the Employment Law, have their work relations disputes; applicable procedures, terms and notice periods for regulated by special rules laid down in complementary legislation. termination of contract; and territorial area of application. Unless an employment agreement establishes favourable conditions to the employee, these legal provisions are applicable and they are 1.3 Do contracts of employment have to be in writing? If more common at industry level. not, do employees have to be provided with specific information in writing? 2 Employee Representation and Industrial The validity of an employment relationship does not depend on the Relations existence of a written contract nor are the employee’s rights affected by the lack of written form of an employment contract. On the contrary, the lack of a written form of contract is attributable to the 2.1 What are the rules relating to trade union recognition? employer who is subject to all related legal consequences. The Constitution of the Republic establishes the freedom of the
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employees to organise professional associations or trade unions, but in case of litigation, the employer may allow employees to be in order to defend individual or collective interests. represented at the board level in order to facilitate the negotiation Employment Law also dedicates a whole chapter (Chapter V) to process between the parties. set rules regarding professional associations and trade unions. Trade unions must have their by-laws registered and recognised in 3 Discrimination the Employment Administration’s central body, according to the procedures established in the Employment Law. 3.1 Are employees protected against discrimination? If so, on what grounds is discrimination prohibited? 2.2 What rights do trade unions have?
Yes, employees are protected against discrimination. The protection
Mozambique The Mozambican Employment Law provides different forms of union against discrimination on the basis of their skin colour, race, gender, structures, each one with specific objectives, rights and obligations. and ethnic origin, place of birth, religion, education, social status, Regarding its rights, in general terms, trade unions have the right to parents’ marital status, occupation or political conviction is a draw up their by-laws, to elect their representatives, to organise their constitutional right for all citizens, thus, the Employment Law in management and activity and to formulate their action programmes. particular, also establishes it as a fundamental principle, as the Constitution of Mozambique is considered its first source. 2.3 Are there any rules governing a trade union’s right to The Employment Law explicitly prohibits discrimination regardless take industrial action? of sexual orientation, race or if HIV-infected, as well as sets forth a principle of equality between foreign and national employees, as Yes. Aside from being a fundamental right and therefore duly well as a general prohibition of discrimination amongst employees. protected by the Constitution of the Republic, the right to strike is duly regulated in Section VII of the Employment Law. 3.2 What types of discrimination are unlawful and in what circumstances? 2.4 Are employers required to set up works councils? If so, what are the main rights and responsibilities of In general, negative forms of discrimination are unlawful, such as such bodies? How are works council representatives chosen/appointed? unequal treatment based on gender, marital status, age or sexual orientation. The freedom of association is a worker’s right to the extent that the The Employment Law clearly states that in all cases the access overall objective of creating trade unions is to protect and defend the of equal treatment and opportunities on employment, vocational interests of workers. Likewise, the Employment Law establishes training, career promotion and working conditions regardless of any that employers are free to associate themselves either at the regional personal condition or situation must be assured. level or by branch of activity. In any case, works councils can be implemented at a company level 3.3 Are there any defences to a discrimination claim? whenever a trade union subsidiary body does not exist. Although the Employment Law is not explicit on this matter, it can be assumed Yes, depending on the situation, the employer has many options to that its rights and responsibilities are identical to the trade unions argue a discrimination claim. The employer can argue the need of and they are elected in a General Employee’s Assembly expressly different treatment in face of a different situation under the principle convened for that purpose. of equity or, for instance, the violation of the company’s policy or workplace rules, or even the poor performance of the employee. 2.5 In what circumstances will a works council have co- Above all, it is important to prove that there were no discriminatory determination rights, so that an employer is unable to reasons behind its actions. proceed until it has obtained works council agreement to proposals? 3.4 How do employees enforce their discrimination rights? Can employers settle claims before or after Works councils have no co-determination rights, although they must they are initiated? be consulted by the employers when certain matters are related to the company’s employees, just as the trade unions have to. Employees can report the situation to the authority that oversees the area of employment and work conditions or they can file a lawsuit 2.6 How do the rights of trade unions and works councils against the employer, which can be settle before or after a claim is interact? filed.
If there is a trade union, it is most likely that there will not be a 3.5 What remedies are available to employees in works council. Nevertheless, in case they co-exist, the works successful discrimination claims? councils are considered subsidiary to trade union stewards and union committees, without putting aside the fact that some rights Successful discrimination claims entitle employees to a compensation are exclusive to trade unions. for material and non-material damages, and the correction of the discriminatory condition (for example, in the case of a rectification 2.7 Are employees entitled to representation at board of the salary when gender discrimination in differentiated payment level? for the same function is proven).
No, employees are not entitled to representation at board level,
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employment agreements, the employer’s position is transferred 3.6 Do “atypical” workers (such as those working part- automatically to the buyer. time, on a fixed-term contract or as a temporary agency worker) have any additional protection? 5.2 What employee rights transfer on a business No, atypical employees do not have any additional protection. The sale? How does a business sale affect collective agreements? law protects every employee in equal terms.
The buyer, when assuming the position of the previous employer, 4 Maternity and Family Leave Rights must guarantee that all the employment rights and duties are maintained and enforced. The same applies to all existing collective agreements. 4.1 How long does maternity leave last? Mozambique
The Employment Law establishes a period of 60 consecutive days 5.3 Are there any information and consultation rights on a business sale? How long does the process typically of maternity leave for the female employee, which may be taken 20 take and what are the sanctions for failing to inform days before the estimated date of birth. and consult?
4.2 What rights, including rights to pay and benefits, does Both the buyer and the seller have the obligation to previously a woman have during maternity leave? inform and consult the trade union or the company’s works council about the details that determined the sale. During maternity leave, female employees on maternity leave have The Employment Law does not specifically set a timescale for this the right to receive their base salary through Social Security. procedure but states that it must be before the sale, and establishes a If the mother or child goes to the hospital, the woman has the right of fixed monetary fine according to the sanctioning regime of the Law having her maternity leave period suspended for as long as the hospital in case of non-compliance. admission lasts, by communicating in writing to her employer. Women are also entitled to protection against termination of 5.4 Can employees be dismissed in connection with a employment for up until one year after giving birth. business sale?
4.3 What rights does a woman have upon her return to Yes. The terms of the business sale can dictate the termination of work from maternity leave? employment agreements, which must be carried out following the procedure established by the Employment Law. Besides the above mentioned right, the Employment Law entitles the woman not to do night work, and to a daily interruption of work for 5.5 Are employers free to change terms and conditions of breastfeeding (special work schedule) until one year after giving birth. employment in connection with a business sale?
4.4 Do fathers have the right to take paternity leave? Employers are not necessarily free to change terms and conditions of employment in connection with a business sale. The change of terms and conditions may occur in the general conditions established Yes. Employees can benefit from one day of paternity leave every in the Employment Law, considering that the buyer assumes the two years by communicating in writing to the employer. previous employer’s position in the same terms. The faculty is not related to a business sale event. 4.5 Are there any other parental leave rights that employers have to observe? 6 Termination of Employment During pregnancy and after childbirth, women have the right not to perform any tasks that may endanger their medical condition or 6.1 Do employees have to be given notice of termination reproductive function. of their employment? How is the notice period determined? 4.6 Are employees entitled to work flexibly if they have responsibility for caring for dependants? According to the Employment Law, a simple notice cannot terminate an employment contract. Women are entitled to 30 days per year of justified absence if their The type of agreement determines the forms of termination of child, that is under the age of 18, becomes ill or has an accident. employment agreements, although in general, and despite the procedures and rules involved; the notice period is 30 days. 5 Business Sales 6.2 Can employers require employees to serve a period of “garden leave” during their notice period when the 5.1 On a business sale (either a share sale or asset employee remains employed but does not have to transfer) do employees automatically transfer to the attend for work? buyer? No, employers do not require employees to serve a period of garden Unless a business sale determines the termination of prior leave. However, it is possible, especially when the employee has
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additional credits such as paid vacations or other rights, to agree that In the ‘best-case scenario’, the employee would receive he/she will not have to attend work but will continue to be paid and compensation and/or be reinstated. to convert the period notice into paid days.
6.8 Can employers settle claims before or after they are 6.3 What protection do employees have against initiated? dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third Employers can settle claims both before and after they are initiated. party required before an employer can dismiss?
The employer may only dismiss an employee if there are grounds to 6.9 Does an employer have any additional obligations if it is dismissing a number of employees at the same support the dismissal according to Employment Law. time? Mozambique An employee is treated as being dismissed if the employer terminates the employment relationship without the consent of the employee. No. Although the Employment Law provides two main types The Employment Law does not indicate the consent from a third of redundancy procedure: collective dismissal; and individual party as a requirement for a dismissal, but establishes a mandatory redundancy (thus the existence of different procedures for each consult, in some cases. one), the compensation in cases of collective dismissal (which is considered when more than 10 employees are dismissed) is calculated in the same terms as individual redundancy, described in 6.4 Are there any categories of employees who enjoy special protection against dismissal? question 6.5 in addition of the 30 days’ prior notice.
As mentioned before (at question 4.3), women who are pregnant or 6.10 How do employees enforce their rights in relation to recently became mothers, cannot be dismissed for up until one year mass dismissals and what are the consequences if an after giving birth. Works council or trade union body members can employer fails to comply with its obligations? only be dismissed with just cause when the grounds concern their performance as members of those organisations. Where an employer fails to comply with their obligations in relation to mass dismissals, they can be sued by the employees. In addition, the employer, in cases of non-compliance, can be sanctioned or even 6.5 When will an employer be entitled to dismiss for: condemned by the court to reinstate or compensate the employees. 1) reasons related to the individual employee; or 2) business related reasons? Are employees entitled to compensation on dismissal and if so how is compensation calculated? 7 Protecting Business Interests Following Termination The employer is entitled to dismiss an individual employee when his/her conduct makes it impossible to maintain the contractual 7.1 What types of restrictive covenants are recognised? relationship, providing grounds for dismissal, when foreseen in the Employment Law. As long as the Mozambican Constitution’s principles are respected, The employer is entitled to dismiss for business-related reasons in particular, the fundamental right to work, restrictive covenants when there are objective reasons (which must be technological, are valid. structural or market-related) that may affect the administrative or It is important to note that the line separating restrictive covenants productive organisation. from their potential unconstitutionality is rather tenuous and its The employee is entitled to compensation, which is calculated clauses should be analysed on a case-by-case basis. according to the type of employment agreement, salary, reason for dismissal and seniority circumstances. 7.2 When are restrictive covenants enforceable and for what period? 6.6 Are there any specific procedures that an employer has to follow in relation to individual dismissals? Situations concerning the enforcement of restrictive covenants must be considered on a case-by-case basis. Yes. Dismissals with just cause must always be preceded by a disciplinary procedure, which terms are established by the Employment Law, with the risk of being considered null. The statute 7.3 Do employees have to be provided with financial compensation in return for covenants? of limitation to bring a disciplinary action against the employee is six months after the misdemeanour. It is our understanding that employees should not get financial compensation in exchange of covenants. However, because the 6.7 What claims can an employee bring if he or she is Employment Law is silent on the matter, under the civil rules the dismissed? What are the remedies for a successful parties can use this solution to avoid breaking the law. claim?
The most common claims brought by the employees are related 7.4 How are restrictive covenants enforced? to the grounds of their dismissal (trying to prove the inexistence of just cause) or to the disciplinary procedure itself (breach of the Situations concerning the enforcement of restrictive covenants must rules established by the Employment Law regarding the disciplinary be considered on a case-by-case basis. procedure).
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8 Data Protection and Employee Privacy 9 Court Practice and Procedure
8.1 How do employee data protection rights affect the 9.1 Which courts or tribunals have jurisdiction to hear employment relationship? Can an employer transfer employment-related complaints and what is their employee data freely to other countries? composition?
There is no specific data protection law in Mozambique. Judicial Courts, which exist in all of Mozambique, hear employment- Nevertheless, there are fundamental rights protected by the related complaints. Labour disputes fall under the jurisdiction of Constitution of Mozambique related to the protection of data, such the competent provincial and district judicial courts. Additionally, as the reference to personal privacy and the right to inviolability arbitration agreements will also be valid and enforceable, if there is of correspondence or other private data or information. The an arbitration clause. Mozambique Employment Law also reinforces employees’ rights to privacy. Hence, regarding employment relationships, employers’ powers to 9.2 What procedure applies to employment-related collect and process personal data are restricted by the employee’s complaints? Is conciliation mandatory before a fundamental right to privacy. complaint can proceed? Does an employee have to pay a fee to submit a claim? The law does not provide a straight answer to the free transfer of data to other countries. Nevertheless, under the Employment Law, The procedure is a simplified, summary process. The conciliation employees’ personal data obtained by the employer is subject to is done during the trial, after the parties submit the articles. Several confidentiality and hence cannot be provided to unauthorised third different statutes govern disputes resolution in employment matters: parties, without the employee’s consent, unless legal provisions so the Employment Law (Articles 180 to 193); the Mediation and determine. Arbitration Act (Law No. 11/99, 8 July); the Code of Labour Procedure; the Code of Civil Procedure; and the Civil Code. 8.2 Do employees have a right to obtain copies of any The conciliation and mediation can be done before submitting the personal information that is held by their employer? claim. Employment Law governs the arbitration procedure. Arbitration Yes, the employee can request the copies and rectify any personal is always optional, unless the employer is a state company, or a information held by their employer if he/she deems necessary. company providing basic needs services and if the Commission for Mediation and Arbitration so determines. When the claim is filed 8.3 Are employers entitled to carry out pre-employment with the court, the employee and the employer are given notice to checks on prospective employees (such as criminal attend a mandatory conciliation hearing with the purpose of reaching record checks)? an agreement. The judicial phase begins if no agreement is reached. The only fees to be paid by the employee in order for a claim to be Yes, employers are entitled to carry out pre-employment checks on submitted are court fees. prospective employees but cannot disseminate such information. Nevertheless, in certain situations, the employee may be exempted Employers may only carry out the pre-employment checks deemed from this payment, upon submission of a duly substantiated request. fundamental to the specific job to be performed. There are also special procedures regarding occupational accidents and illnesses. 8.4 Are employers entitled to monitor an employee’s emails, telephone calls or use of an employer’s computer system? 9.3 How long do employment-related complaints typically take to be decided? No. The employer can establish rules and limits for the use of emails, telephone calls and computer systems as well as to prohibit At first instance, employment-related complaints take an average the use of company’s equipment for personal matters, however, of six months to be decided, depending on the complexity and the monitoring of employees’ communications is not expressly workload of the Court, although this varies on a case-by-case basis. established in the Constitution or in the Employment Law. Therefore, such possibility must be seen and carefully analysed on a 9.4 Is it possible to appeal against a first instance case-by-case basis under the risk of the employee’s right to privacy decision and if so how long do such appeals usually being infringed. take?
Yes, it is possible to appeal against a first instance decision. The 8.5 Can an employer control an employee’s use of social appeal must be filed with the competent Mozambique Appeal media in or outside the workplace? Court. The timeline varies according to the case complexity. This procedure takes at least two years. The employer can only control the use of social media inside the workplace. The Employment Law does not establish any special rules regarding the protection or monitoring of the employee’s social media accounts.
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Pedro Madeira de Brito Lara Tarciana Sousa BAS – Sociedade de Advogados, SP, RL dos Mucudos Macamo Rua Artilharia Um, 51 Páteo Bagatela Legalline - BAS Internacional Network Alliance Edifício 1, 4. andar 1250 Avenida Zedequias Manganhela 137 Lisboa n. 520, 2. andar, flat 3, Prédio 1. º de Janeiro Portugal Maputo, Mozambique
Tel: +351 211 554 330 Tel: +258 21 420 205 Email: [email protected] Email: [email protected] URL: www.bas.pt URL: www.legalline.co.mz
■■ Recognised as an expert lawyer in Labour Law by the Portuguese ■■ Lawyer at Chiziane, Jeque & Advogados Associados – Sociedade
Mozambique Bar Association in 2004. de Advogados, Limitada/Legalline. ■■ Admitted to the Portuguese Bar Association in March 1990. ■■ Administrator of Legalline. ■■ Ph.D. from the Faculty of Law of the University of Lisbon in 2011. ■■ Member of the Mozambique Bar Association. ■■ Professor at the Faculty of Law of the University of Lisbon since ■■ Law Degree at St. Tomás Mozambique University (USTM). 1990. ■■ Arbitrator. ■■ Lecturer at the Institute of Labour Law of the Faculty of Law of the ■■ Industrial Property Agent. University of Lisbon in the Post-graduation in Labour Law since 1995. ■■ Assistant Professor at USTM and Escola Superior de Economia e Gestão (Mozambique), 2012. ■■ Master’s in Law in the field of Legal Sciences, by the Faculty of Law of the University of Lisbon in 1997. ■■ Experience representing clients before the labour courts and the Mozambican labour authorities and in negotiations and ■■ Graduated in Law from the Faculty of Law of the University of representation with the employers. Lisbon in 1987. ■■ Member of the Ethical Commission of the Hospital Centre of Central Lisbon since 2009. ■■ Chief of Staff of the Assistant Secretary of State of the Minister of Health between 1992 and 1993. ■■ Assistant to the Assistant Secretary of State of the Minister for Health and of the Secretary of State for Health Care Administration between 1990 and 1992. ■■ Assistant to the Assistant Secretary of State and of Health from April 2008 until October 2009. ■■ Drafted the Portuguese Labour Law Code and many publications in specialised journals about labour law matters and procedural labour law. ■■ Larger experience representing clients before the labour courts and the Portuguese labour authorities. ■■ Deep knowledge of Portugal and Mozambique’s Employment and Social Security law. Has lectured in training actions in Mozambique regarding Mozambique’s Employment law. ■■ Recommended by Individual’s Ranking in Chambers Europe 2018 (band 4) for Employment, Portugal.
BAS law firm founded in 2010 has a team of 24 lawyers, and about 30 professionals. In addition to the Lisbon and Oporto offices, BAS has an international presence through its partnerships and partners in Angola (Luanda), Brazil and Mozambique (Maputo – Legalline). BAS’ hallmark is its competence and high level of experience of its professionals in the matters in which they intervene. They have a special focus on legal support in the areas of Health Law, Labour Law, Public Service, Administrative Law, Public Procurement, Administrative Litigation, Intellectual Property, Corporate Law, Banking and Financial Law, Civil Litigation, Data Protection and, more recently, Real Estate Law and Sports Law. ■■ BAS clients are mainly from the public sector and SMC. ■■ The professionals, who constitute the society, guarantee qualified advice, providing valuable legal knowledge to the challenges presented by the clients. ■■ BAS has also an active role in social responsibility by accepting pro bono requests to support projects in the areas of Health and Culture.
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Nigeria Jumoke Lambo
Udo Udoma & Belo-Osagie Mary Ekemezie
Labour Act which prescribes the minimum terms and conditions of 1 Terms and Conditions of Employment employment is limited in its scope as it applies only to Workers. The terms and conditions of employment of Non-Workers are primarily 1.1 What are the main sources of employment law? subject to the terms of their respective contracts of employment.
The sources of employment law in Nigeria are: 1.3 Do contracts of employment have to be in writing? If a) the Constitution of the Federal Republic of Nigeria 1999 (as not, do employees have to be provided with specific amended) (the “Constitution”); information in writing? b) the Labour Act, chapter L1, Laws of the Federation of Nigeria 2004 (“Labour Act”); Although the Labour Act recognises that an employment contract c) federal laws enacted by the National Assembly (Nigeria’s could be oral or written, express or implied, section 7 of the national legislative houses) and the State laws enacted by Labour Act requires every employer to issue a written contract to the House of Assembly (the state legislative authority) of the employee, within three months of the commencement of the each state that relate to labour and employment, pension and employment relationship. With respect to Non-Workers, there is workplace compensation including the following: no statutory requirement for their employment contracts to be in ■ Department of Petroleum Resources Guidelines No. 1 of writing. It is however advisable that contracts be made in writing 2015 on the Release of Staff in the Nigerian Oil and Gas for ease of reference and clarity of the employment terms. Industry.
■ Employees’ Compensation Act 2010. 1.4 Are any terms implied into contracts of employment? ■ Factories Act, Chapter F1, LFN 2004. ■ Industrial Training Fund, Chapter I9, LFN 2004 as amended. Yes. Some of the implied terms in contracts of employment include ■ National Health Insurance Scheme Act, Chapter N42, the employer’s duty to provide work to employees and to provide a LFN 2004. safe place of work. ■ National Housing Fund Act, Chapter N45, LFN 2004. ■ Nigerian Oil and Gas Industry Content Development Act 1.5 Are any minimum employment terms and conditions 2010. set down by law that employers have to observe? ■ Pension Reform Act 2014. ■ Personal Income Tax Act, Chapter P8, LFN 2004 (as Yes. The Labour Act prescribes the minimum terms and conditions amended by the Personal Income Tax (Amendment) Act, of employment that employers must comply with in relation to 2011). Workers. These minimum terms include the requirement to provide ■ Trade Disputes Act, Chapter T8, LFN 2004. transportation or transportation allowance, provide paid sick leave ■ Trade Unions Act, Chapter T14, LFN 2004 as amended by of up to 12 days, annual leave of not less than six days and maternity the Trade Union (Amendment) Act 2005. leave to female Workers. d) decisions of the Nigerian courts – case law; and e) international conventions, treaties and protocols relating to 1.6 To what extent are terms and conditions of labour, employment, workplace, industrial relations or matters employment agreed through collective bargaining? connected therewith that have been ratified by Nigeria. Does bargaining usually take place at company or industry level?
1.2 What types of worker are protected by employment The use of collective bargaining agreements (“CBAs”) is very law? How are different types of worker distinguished? common in sectors where the employees are members of a trade union. Collective bargaining usually takes place at the industry There are from a legal perspective, two broad categories of level between the recognised trade union of the relevant sector and employees in Nigeria: Workers who are defined under the Labour the employers’ association. It is, however, not uncommon for the Act as “employees who perform manual labour or clerical work” CBA to indicate that certain matters (usually matters not covered and, employees who perform administrative, executive, technical in the CBA) may be negotiated at the company level. or professional functions (referred to as “Non-Workers”). The
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2 Employee Representation and Industrial 2.6 How do the rights of trade unions and works councils Relations interact?
This is not applicable. Please refer to our response to question 2.4. 2.1 What are the rules relating to trade union recognition?
We have assumed that the word ‘recognition’ here means the act 2.7 Are employees entitled to representation at board of an employer acknowledging a trade union for the purposes of level? collective bargaining. The Trade Unions Act, Chapter T14, Laws of There is currently no general statutory right that entitles employees Nigeria the Federation of Nigeria 2004 (as amended) (the “TUA”) primarily governs the activities of trade unions in Nigeria. The TUA makes to be represented at board level. recognition of registered trade unions obligatory on an employer. In relation to collective bargaining, the TUA provides that all 3 Discrimination registered unions in the employment of an employer shall constitute an electoral college so as to elect members who will represent their unions in negotiations with the employer. 3.1 Are employees protected against discrimination? If so, on what grounds is discrimination prohibited?
2.2 What rights do trade unions have? Yes. The Constitution prohibits discrimination against Nigerian citizens on the basis of their community, ethnic group, place of origin, The rights of trade unions in Nigeria include the rights to: sex, religion, political opinion or the circumstances of their birth. In (a) negotiate the terms and conditions of employment with addition, the HIV and AIDS (Anti-discrimination) Act 2014 prohibits employers on behalf of employees who are members of the employers from discriminating directly or indirectly against employees trade union; on the basis of their HIV status or HIV-related illness. The Lagos State (b) embark on an industrial strike action; and Special Peoples Law 2010 which only applies in Lagos State, also (c) engage in peaceful picketing. prohibits discrimination on the basis of an employee’s disability.
2.3 Are there any rules governing a trade union’s right to 3.2 What types of discrimination are unlawful and in what take industrial action? circumstances?
Yes. The TUA prohibits trade unions from carrying out a strike or All forms of discrimination – direct or indirect – are prohibited lock-out, or engaging in any conduct in contemplation or furtherance including discrimination on the basis of an employee’s sex or of a strike or lock-out, unless: pregnancy status. (a) the trade union is not engaged in the provision of essential services; 3.3 Are there any defences to a discrimination claim? (b) the strike or lock-out is in relation to a labour dispute that constitutes a dispute of right; As most discrimination claims are instituted within the context of (c) the strike or lock-out concerns a dispute arising from a wrongful termination of employment claims, an employer may collective and fundamental breach of contract of employment or collective agreement on the part of an employee, the trade be able to defend itself, by proving that the termination of the union or an employer; employee’s contract was carried out in accordance with the terms of his/her employment contract and any applicable law. (d) the provisions for arbitration in the TUA have first been complied with; and (e) a simple majority of all registered members voted to go on 3.4 How do employees enforce their discrimination strike. rights? Can employers settle claims before or after they are initiated?
2.4 Are employers required to set up works councils? If In Nigeria, the most common avenue available to employees so, what are the main rights and responsibilities of such bodies? How are works council representatives to enforce their rights (including discrimination rights) in an chosen/appointed? employment relationship is by instituting an action in the National Industrial Court of Nigeria (NICN) – the court vested with original We do not have the concept of a works council under Nigerian law. exclusive jurisdiction in respect of all labour and employment matters in Nigeria. Employers are able to settle claims at any time before or after they are initiated, until the final judgment of the court is 2.5 In what circumstances will a works council have co- delivered. determination rights, so that an employer is unable to proceed until it has obtained works council agreement to proposals? 3.5 What remedies are available to employees in successful discrimination claims? This is not applicable. Please refer to our response to question 2.4. Where a claim of discrimination is successfully proven, the remedy available to employees in most cases is compensation for wrongful or unfair termination. The court may also award damages to the employee.
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3.6 Do “atypical” workers (such as those working part- 5 Business Sales time, on a fixed-term contract or as a temporary agency worker) have any additional protection? 5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the No, atypical workers do not have any additional protection. buyer?
4 Maternity and Family Leave Rights Employees do not automatically transfer in the context of an asset sale as the consent of each employee is required in order to transfer an employee from one employer to another. Where the employee is a Nigeria 4.1 How long does maternity leave last? Worker, in addition to obtaining such Worker’s consent, the contract pursuant to which the Worker is transferred to the new employer The Labour Act provides that a pregnant female Worker is entitled must be endorsed by an authorised labour officer. A labour officer is to six weeks’ leave before her expected delivery date and another a public officer serving in the Ministry of Labour who is authorised six weeks after the delivery. In relation to Non-Workers, employers by the Minister of Labour to act as an authorised labour officer, for tend to use the provisions of the Labour Act as benchmark for the purposes of the Labour Act. determining maternity entitlements. In relation to a share sale, other than the changes to the beneficial ownership of the shares of the employer, the employer remains the 4.2 What rights, including rights to pay and benefits, does same. There is, therefore, no requirement to transfer the employees a woman have during maternity leave? or to obtain their consent to the share acquisition.
The Labour Act provides that a female Worker who has been in 5.2 What employee rights transfer on a business employment for a period of six months or more immediately before sale? How does a business sale affect collective the maternity leave, shall be entitled to at least 50% of her salary agreements? during the duration of the maternity leave. In an asset sale, where the employment contracts are novated to the buyer, all the rights of the employees under the existing contracts of 4.3 What rights does a woman have upon her return to work from maternity leave? employment transfer to the buyer. In much the same manner as the novation of employment contracts, collective agreements may also be novated to the transferee entity on the same terms and conditions. The Labour Act provides that any employee nursing her child is to Alternatively, the existing collective agreement may be terminated be allowed half an hour, twice a day, during working hours for the and a new collective agreement negotiated with the new employer. purpose of nursing her child. In a share sale, employees continue to be employed by the same employer and their rights under the terms and conditions of their 4.4 Do fathers have the right to take paternity leave? employment contracts do not change. Collective bargaining agreements also continue to run in this circumstance as the identity The Labour Act does not make any provisions for paternity leave. of the employer does not change. Some state governments (Enugu and Lagos States), however, offer paternity leave to male employees in the service of the state governments. The paternity leave in Enugu State is for three weeks 5.3 Are there any information and consultation rights on while that of Lagos State is for only two weeks and only applies in a business sale? How long does the process typically take and what are the sanctions for failing to inform respect of the first two children of such male employee. and consult?
4.5 Are there any other parental leave rights that There is generally no statutory requirement for employers to employers have to observe? mandatorily inform or consult employees or their representatives before making any business decisions, unless such consultation is No, there are no other parental leave rights that employers are specifically required by the terms of the employees’ employment required to observe. contracts. In practice, however, employers would usually notify employees of a proposed business transfer. 4.6 Are employees entitled to work flexibly if they have In relation to the Nigerian petroleum sector, a transferor employer responsibility for caring for dependants? within this sector must obtain the consent of the Department of Petroleum Resources (the “DPR”) if it intends to terminate the The Labour Act does not contain any provisions to this effect and any contracts of any of its employees. employee entitlement in this respect will have to be subject to the In the context of a share sale, as the employer of record does not terms and conditions of such employee’s contract of employment. change, there is no requirement to inform the employees of the share sale.
5.4 Can employees be dismissed in connection with a business sale?
In responding to this question, it is important to distinguish between the use of the term “dismissal” and the term “termination of employment”. Under Nigerian law, the term “dismissal” typically
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refers to the termination of a contract of employment due to the An employer and an employee may, however, agree to such an employee’s misconduct, and this may be done summarily without arrangement under the terms of a contract of employment. notice and without payment in lieu of notice. Where the employer merely brings the employment relationship to an end, not owing 6.3 What protection do employees have against to any fault of the employee, this is referred to as a “termination dismissal? In what circumstances is an employee of employment”. A termination must be done in accordance with treated as being dismissed? Is consent from a third the provisions of the employee’s contract of employment and any party required before an employer can dismiss? applicable severance payments and accrued benefits must be paid to the employee. Employees may challenge their dismissal by instituting an action at the National Industrial Court of Nigeria (“NICN”). An employee
Nigeria In the context of an asset sale, therefore, employees are unlikely to be dismissed but their contracts of employment may be terminated is treated as having been dismissed where his/her contract of where the transferee entity chooses not to employ them or where employment is terminated for cause. Grounds that constitute the employees refuse to give their consent to the transfer of their cause for dismissal include criminal acts, gross misconduct, sexual employment contracts to the buyer. In this case, such employees will harrassment, etc. be entitled to receive any applicable severance payments in addition Termination of employment in the Nigerian oil and gas sector is to the accrued but unpaid terminal benefits from the transferor entity. regulated. An employer that wishes to terminate the contract of In a share sale, the buyer (i.e., the new employer) may decide to an employee is required to obtain the consent of the Department terminate the employment of certain employees. This must be of Petroleum Resources (“DPR”) pursuant to the provisions of the done in accordance with the terms of their respective employment Department of Petroleum Resources (DPR) Guidelines No. 1 of contracts and any applicable severance payments, contractual 2015 on the Release of Staff in the Nigerian Oil and Gas Industry. payments and terminal benefits must be paid to such employees. In addition to obtaining the consent of the DPR, employers in the Nigerian oil and gas sector are also required to notify the Nigerian Content Development and Monitoring Board of any proposed 5.5 Are employers free to change terms and conditions of terminations. employment in connection with a business sale?
Generally, an employer can only vary the terms and conditions of an 6.4 Are there any categories of employees who enjoy employee’s contract of employment with the consent of the affected special protection against dismissal? employee. In an asset sale, where the transfer of the employees is effected by Yes, under section 54 (4) of the Labour Act, employers are prohibited means of a termination of the existing contract and the re-employment from terminating the contract of any female Worker who is absent by the new employer, the new employer may propose changes to the due to maternity leave, or who remains absent from her work for a terms of employment on which it engages the employees. longer period as a result of illness which arose out of her pregnancy or confinement and which renders her unfit for work.
6 Termination of Employment 6.5 When will an employer be entitled to dismiss for: 1) reasons related to the individual employee; or 2) business related reasons? Are employees entitled 6.1 Do employees have to be given notice of termination to compensation on dismissal and if so how is of their employment? How is the notice period compensation calculated? determined?
The general position is that Nigerian employers are entitled to Yes, employees must be given notice of termination of their terminate a contract of employment at any time and without stating employment or salary in lieu of such notice. the reason or cause for doing so, provided that the appropriate notice In relation to Workers, the minimum notice periods to be given to of termination is given to the employee or the employee is paid a the employees pursuant to section 11 of the Labour Act are: salary in lieu of such notice. The NICN has, however, indicated ■ one day, if the length of service is up to three months; that best practice, in accordance with international standards, is that ■ one week, if the length of service is up to two years; an employer must state the reason(s) for terminating an employee’s ■ two weeks, if the length of service is up to five years; and contract. ■ one month, if the length of service is five years or more. Where an employee is dismissed for reasons relating solely to the individual employee, the employee’s entitlement to compensation Parties, may, however, agree to longer notice periods in their is subject to the provisions of his/her contract of employment. contracts of employment. Sections 11 (6) and (9) of the Labour Act Typically, an employee is entitled to receive any accrued contractual also permit either party to an employment contract, to terminate the payments such as salary in lieu of contractual notice (if the employer contract by paying the other party salary in lieu of notice. elects not to give the contractual notice), accrued salaries until the With respect to Non-Workers, the applicable notice period is effective termination date and such other payments that may be due determined by the terms of their respective contracts of employment. to the employee, under the terms of his/her employment contract. Where the termination is for business-related reasons, such 6.2 Can employers require employees to serve a period termination may be treated as being a redundancy. The Labour Act of “garden leave” during their notice period when the defines the term “redundancy” as “an involuntary and permanent employee remains employed but does not have to loss of employment caused by an excess of manpower”. Typically, attend for work? in the event of a redundancy, a Worker is entitled to the following payments at the termination of his/her employment: We do not have the concept of “garden leave” under Nigerian law.
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a. agreed redundancy or severance payment; (a) inform the trade union or workers’ representative concerned b. salary in lieu of contractual notice (if the company elects not of the reasons for and the extent of the anticipated dismissal; to give the contractual notice); (b) adopt the principle of “last in, first out”, subject to a c. accrued salary up until the effective termination date; consideration of the factors of relative merit, skill, ability and reliability; and d. monetary value of any accrued but unutilised annual leave entitlement as at the effective termination date; (c) use its best endeavours to negotiate payments and entitlements. e. any accrued but unpaid incentives awards or bonuses (if applicable); There is no corresponding statutory requirement for Non-Workers. f. any other payments due to any of the employees under any of
the company’s employment and operational policies such as 6.10 How do employees enforce their rights in relation to Nigeria redundancy or gratuity payments; and mass dismissals and what are the consequences if an g. reimbursement of any out-of-pocket expense incurred by employer fails to comply with its obligations? any employee in connection with the performance of his/her duties prior to the effective termination date. In relation to Workers, if the employer does not comply with its There is no corresponding statutory obligation for Non-Workers in statutory obligation, this could be a ground on which the Workers relation to the computation of redundancy payments and whether may challenge the validity of the mass dismissals. If the Workers they would be entitled to receive any redundancy payments is institute an action, this would delay the disengagement process subject to the terms of their respective contracts of employment. until the completion of the action. There is a real likelihood, if the Non-workers are, however, entitled to the payments listed as ‘b.’ to Workers are members of a trade union, of the officials of the trade ‘g.’ above. union instituting an action on behalf of the Workers. With respect to Non-Workers, if any of the Non-Workers are 6.6 Are there any specific procedures that an employer members of a trade union, the officials of such trade union, are also has to follow in relation to individual dismissals? likely to institute an action challenging the process.
If the dismissal is not for cause, it would be termed a termination 7 Protecting Business Interests Following and an employer is required to comply with the terms of the contract including the notice requirements under the contract. Termination Where the dismissal is for cause such as for misconduct, then prior to dismissing the employee, the employer must have offered the 7.1 What types of restrictive covenants are recognised? employee an opportunity to defend himself/herself. If a disciplinary tribunal is constituted, the tribunal must be independent and Under Nigerian law, restrictive covenants are prima facie void, but impartial and must comply with the rules of natural justice and the courts may enforce such covenants if they are reasonable with principles of fair hearing. Where the allegations are of a criminal reference to the interest of the parties concerned and the general nature, the same burden of proof applies as in criminal cases (i.e., public, and if there is a proprietary interest that is sought to be the allegation must be proved beyond a reasonable doubt). protected. In deciding the question of reasonableness, the courts will take into account the nature of the business, trade or occupation, 6.7 What claims can an employee bring if he or she is the area over which the restraint is to be imposed and the length of dismissed? What are the remedies for a successful time for which it is to continue. Restraint-of-trade covenants of 12 claim? months or less are usually enforceable in practice.
If an employer terminates an employee’s contract of employment 7.2 When are restrictive covenants enforceable and for without following the procedure laid out in the contract, the employee what period? could institute an action for wrongful termination. If the employee is successful, the NICN has been known to award significant damages Please see our response to question 7.1 above. to such an employee and in some cases the court has ordered the employer to reinstate the appointment of the employee. 7.3 Do employees have to be provided with financial compensation in return for covenants? 6.8 Can employers settle claims before or after they are initiated? Employees do not have to be provided with financial compensation in return for covenants. The employer may, however, agree to Employers can settle claims before or after they are initiated and provide financial compensation in return for the employee’s before judgment is entered in the claim. agreement to be bound by the covenants. Nigerian courts are also more likely to uphold the covenants against the employee if the 6.9 Does an employer have any additional obligations if employee receives compensation in exchange for his/her consent to it is dismissing a number of employees at the same be bound by the covenants. time?
7.4 How are restrictive covenants enforced? If the employees to be dismissed are Workers under the Labour Act, and the dismissals are not connected to the conduct of the A party that wishes to enforce the terms of a restrictive covenant employees, such dismissals would be regarded as a redundancy, and would institute an action in court for this purpose. the employer must:
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go to the Court of Appeal and the decision of the Court of Appeal, on 8 Data Protection and Employee Privacy any appeal arising from any civil jurisdiction of the NICN, is final. However, appeals from decisions of the NICN in respect of criminal 8.1 How do employee data protection rights affect the cases can be made to the apex court of Nigeria, the Supreme Court. employment relationship? Can an employer transfer The NICN is composed of a President and such number of judges of employee data freely to other countries? the NICN as may be prescribed by an Act of the National Assembly. For the purpose of exercising its jurisdiction, the NICN is duly Section 37 of the Constitution guarantees and protects the privacy constituted if it consists of a single Judge or no more than three of citizens, their homes, correspondence, telephone conversations Judges as the President of the NICN may direct. and telegraphic communications. The provisions of this section Nigeria are very wide and employers are deemed to be caught by it and 9.2 What procedure applies to employment-related are, therefore, required to respect the employee’s right to privacy. complaints? Is conciliation mandatory before a With respect to the transfer of employee data outside Nigeria, the complaint can proceed? Does an employee have to National Information Technology Development Agency Guidelines pay a fee to submit a claim? on Data Protection provides that personal data cannot be transferred outside Nigeria, unless adequate provisions are in place The National Industrial Court (Civil Procedure) Rules 2017 (the for its protection. “Rules”) provides for the practice and procedure to be adopted at the proceedings before the NICN, which is in line with the common 8.2 Do employees have a right to obtain copies of any law adversarial judicial system that is practised in Nigeria. personal information that is held by their employer? Under the Rules, a Judge of the NICN may refer any matter instituted at the NICN to the Alternative Dispute Resolution Centre Yes, an employee has a right to obtain copies of any personal (the “Centre”) established within the NICN premises, for amicable information held by his/her employer. settlement through conciliation or mediation. The Centre shall endeavour to conclude the mediation or conciliation process within 21 working days from the date the process commences, with the 8.3 Are employers entitled to carry out pre-employment possibility of an extension of no more than 10 working days. Where checks on prospective employees (such as criminal record checks)? parties are unable to settle their disputes through the mediation or conciliation process, the NICN would hear the matter in accordance with its Rules. There are no prohibitions against pre-employment checks; however, an employer that intends to carry out such checks must ensure that it Parties to a matter before the NICN are required to pay the applicable does not do so in a manner that breaches the employee’s constitutional filing fees as stated in the Rules when commencing or defending a right to privacy. The HIV and AIDS (Anti-Discrimination) Act matter at the NICN. 2014 prohibits employers from carrying out HIV and AIDS tests on employees or prospective employees without the prior consent 9.3 How long do employment-related complaints typically of such persons. take to be decided?
8.4 Are employers entitled to monitor an employee’s The NICN Rules seek to create a system for the speedy dispensation emails, telephone calls or use of an employer’s of justice and fast-tracking proceedings at the NICN. This, computer system? notwithstanding, cases could typically be concluded between eight months and two years from the date on which the matter was filed Employers may monitor work emails in order to ensure compliance at the NICN. with the policies of the workplace and any applicable laws and regulations. It is, however, advisable that employees are expressly 9.4 Is it possible to appeal against a first instance informed that the monitoring is taking place. decision and if so how long do such appeals usually take? 8.5 Can an employer control an employee’s use of social media in or outside the workplace? It is possible to appeal the decision of the NICN. Prior to 2017, there was uncertainty on whether there was a general right of appeal An employer may prescribe rules around the use of social media in against decisions of the NICN. The Nigerian Supreme Court, the workplace and may implement systems that prevent employees however, resolved this uncertainty on 30th June 2017 in the case of from accessing and/or using social media with the employer’s Skye Bank Plc vs. Victor Anaemem Iwu, where it held that parties resources while in the workplace. could appeal any decision of the NICN to the Court of Appeal. It is possible to conclude an appeal within two to four years from the date on which the appeal is lodged at the Court of Appeal but it 9 Court Practice and Procedure is not unusual for an appeal to the appellate court on any matter, including employment law related matters, to take a longer period to be concluded. 9.1 Which courts or tribunals have jurisdiction to hear employment-related complaints and what is their composition?
The NICN has exclusive original jurisdiction over employment- related complaints and cases. Appeals from decisions of the NICN
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Jumoke Lambo Mary Ekemezie Udo Udoma & Belo-Osagie Udo Udoma & Belo-Osagie 12th Floor, St Nicholas House 12th Floor, St Nicholas House Catholic Mission Street Catholic Mission Street Lagos Island, Lagos State Lagos Island, Lagos State Nigeria Nigeria
Tel: +234 1 4622307-10 / Tel: +234 1 4622307-10 / 4622312 / +234 1 2774920-2 4622312 / +234 1 2774920-2 Email: [email protected] Email: [email protected] URL: www.uubo.org URL: www.uubo.org Nigeria Jumoke Lambo co-heads the firm’s Telecommunications, Media and Mary Ekemezie is a Senior Associate in the firm’s private equity, Technology (“TMT”), Aviation, Labour and Employment teams and mergers and acquisitions, labour and employment and corporate heads the Business Development and Advisory teams. She also advisory teams, and has been involved in various transactions across oversees Alsec Nominees Limited, the firm’s company secretarial her practice areas. Her experience includes advising private equity practice. Her specialisations include foreign investment, regulatory funds and other multinational investors on investments across a compliance, TMT, aviation, capital markets, employment law and range of sectors. Her labour and employment practice has seen her particularly, mergers and acquisitions. She routinely assists clients advise clients on Nigerian law requirements for employment contracts, with generating employment and end of employment documentation, restraint of trade, immigration requirements for foreign employees, negotiating and settling employment-related contractual and requirements for termination of employment contracts, redundancies trade disputes, and advising on employee issues in the context of and restructuring employee remuneration structures and the applicable bankruptcies, liquidations, mergers, acquisitions, divestments and compensation regime in the context of employment arrangements. restructuring. She also provides assistance with drafting executive Mary is a regular contributor to the World Bank’s Women Business and non-executive contracts. She also advises a variety of investors and Law Report and the Taylor Vinters Employment Law Newsletter. on the acquisitions of interests in Nigerian companies and regulatory She co-authored the IFLR 2016 Mergers and Acquisition Review compliance. Jumoke is recognised by the Nigerian edition of Who’s and the Practical Law – International Acquisitions Transaction Guide Who Legal for her M&A practice. Her work has also been noted in 2016 and contributed to the Bowmans Africa Guide – Employment the International Financial Law Review’s Expert Guides. She sits on Consequences of Business Transfer. several boards.
Udo Udoma & Belo-Osagie is a corporate and commercial full-service law firm with offices in Nigeria’s major business centres. UUBO has been described in international rankings as one of Nigeria’s “Magic Triangle” law firms. We aim to structure timely, practical and creative legal solutions founded on a philosophy of providing bespoke legal advice that is accessible, commercially-oriented and consistently sound on principle. The firm maintains a policy of actively seeking to develop fresh skills and acquire new expertise in our niche areas, thus enabling us to respond quickly to the rapid changes that occur in the world of business and finance. Our “hands-on” and collaborative approach across the diverse sectors in which our clients operate, enables us to achieve our objective of finding solutions and providing tailored advice that is accessible, commercially-oriented and consistently sound on principle. The firm embraces diversity, which is seen in the backgrounds, range of experience and “hands on” collaborative approach of our team. This has contributed to recurring high rankings underscored by what is currently one of the highest ratios of internationally recognised Partners per firm in the Nigerian market.
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Poland Weronika Papucewicz
CDZ Legal Advisors Piotr Kryczek
day and week, the frequency and method of remuneration payments, 1 Terms and Conditions of Employment the length of annual leave, any collective agreements governing the employee’s conditions of night-time work, methods of confirming 1.1 What are the main sources of employment law? arrival at work and justification of absences from work. Irrespective of the above requirements imposed by law, it is recommended to In Poland, the main sources of employment law are international law formalise the principles of employment for evidencing purposes. (e.g., ILO conventions), EU law and national law. Domestically, the main source is the Polish Labour Code and a number of 1.4 Are any terms implied into contracts of employment? other statutory acts and secondary regulations to the Code which regulate in more detail, various aspects of employment such as Provisions of employment contracts may not be less advantageous collective labour agreements and other collective arrangements and to the employee than provisions of binding laws (such as the Polish regulations setting out the rights and obligations of the parties of an Labour Code) and the employer’s internal labour regulations, in employment relationship. particular work regulations, wage regulations and collective labour agreements. 1.2 What types of worker are protected by employment law? How are different types of worker distinguished? 1.5 Are any minimum employment terms and conditions set down by law that employers have to observe? The Labour Code protects workers employed under employment contracts. The Code distinguishes a few types of workers who are Working time may not exceed eight hours per day and an average of specially protected, e.g., an employee who is pregnant cannot be 40 hours per average working week, with certain exceptions such as laid off and cannot work overtime, at night, outside of the permanent balanced working time or work in continuous activities. Employees workplace or in the shift-time system, without her prior consent. are entitled to a minimum uninterrupted rest period of 11 hours in Another group protected against termination are employees who every 24-hour period, and 35 hours per week. Work performed will reach retirement age within four years or trade union activists over the working time limits constitutes overtime work and must be while performing their functions (the consent for termination of paid additionally or extra time-off must be granted. The maximum the board of the trade union organisation is required). Moreover, number of overtime hours per year amounts to 150 hours (unless the employer cannot terminate an agreement with an employee collective labour agreements, internal regulations or individual who is absent for justified reasons because of leave or illness. The contracts provide otherwise). Labour Code also protects employees on maternity leave and young Employees are entitled to 26 working days’ paid leave per year (or employees (aged 16 to 18). 20 working days if the total employment period is shorter than 10 It should be noted that some professions (e.g., teachers, mine- years). The employment period covers education. workers and others) are subject to specific rules and privileges based The remuneration specified in the employment contract may not be on branch-related legislation. lower than the statutory minimum salary (PLN 2,100 in 2017, i.e., approx. EUR 490). 1.3 Do contracts of employment have to be in writing? If not, do employees have to be provided with specific 1.6 To what extent are terms and conditions of information in writing? employment agreed through collective bargaining? Does bargaining usually take place at company or Yes, Polish law requires an employment contract to be concluded in industry level? writing. If a contract is not concluded in such form, an employer must confirm basic employment terms (such as remuneration, work Terms and conditions set forth in collective bargaining agreements position, place of work, working time and work commencement (CBAs) apply to individual employment contracts. CBAs can be date) in writing prior to starting employment, otherwise the employer concluded by the trade unions on a company and inter-company might be held liable and be forced to pay a fine. The employer must level, as well as on an industry level. also provide the employee with additional written information about certain general conditions of work such as the length of the working
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The level of unionisation in Poland amounts to about 12%. Most trade unions (62%) comprise public sector workers (teachers, 2.5 In what circumstances will a works council have co- nurses, doctors, etc.) including industry workers (miners, railways, determination rights, so that an employer is unable to proceed until it has obtained works council agreement energy sector, etc.). to proposals?
2 Employee Representation and Industrial The employer is obliged to provide the works council with Relations information about the activities and economic situation of the company and expected changes in this respect, as well as any actions that could lead to significant changes in work organisation
2.1 What are the rules relating to trade union recognition? or employment (planned layoffs, changes in work organisation, Poland employment policy, etc.). Under the Trade Unions Act, the trade union may be established by Other matters that must be subject to consultation or consent of at least 10 eligible employees in the company. The employees have the council may be agreed with trade unions or other employee to enact a statute and then apply for a registration to the National representatives. Court Register. Once the trade union is registered, it becomes a legal person. Trade unions have the right to establish national federations and confederations. 2.6 How do the rights of trade unions and works councils interact?
2.2 What rights do trade unions have? The rights of works councils overlap with the rights of trade unions, but even then an employer who employs at least 50 workers is Generally, an employer cannot terminate or alter a trade unionist’s obliged to establish a works council. In companies in which there is employment contract with notice without the consent of the trade both a works council and a trade union, the role of the works council union. The other rights include: is often marginal. ■ the right to negotiate and execute collective bargaining agreements and other agreements; 2.7 Are employees entitled to representation at board ■ the power to agree on internal rules, especially work and pay level? rules; ■ the right to express opinions on legislative proposals, statutes There is no such obligation. The owners of the employing company or other normative acts; may discretionarily decide that a person appointed by employees ■ the right to give an opinion on individual employment will be a member of company’s management board or supervisory matters, especially termination of an employment contract; board. Such situations are not common in the private sector. and ■ the right to be informed and consulted during group layoffs. 3 Discrimination
2.3 Are there any rules governing a trade union’s right to take industrial action? 3.1 Are employees protected against discrimination? If so, on what grounds is discrimination prohibited? Industrial action is regulated by the Act on Collective Labour Dispute Resolution. The right to strike is guaranteed by the Polish Polish law clearly prohibits any discrimination in employment. Constitution, but the right to organise strikes is reserved for trade Poland has implemented two anti-discrimination directives: 2000/43/ unions. A strike is the ultimate stage of collective dispute resolution, EC Racial Equality Directive; and 2000/78/EC Employment Equality. and must be preceded by mandatory negotiations and mediation, General anti-discriminatory provisions are set forth in several and optionally by arbitration. provisions of the Labour Code and in the Anti-discrimination Act, which protects against discrimination other than that resulting from employment relations, e.g., discrimination at work performed under 2.4 Are employers required to set up works councils? If so, what are the main rights and responsibilities of civil law contracts. such bodies? How are works council representatives chosen/appointed? 3.2 What types of discrimination are unlawful and in what circumstances? The Act on Informing and Consulting Employees (implementing 2002/14/EC Directive) stipulates that employers with 50 or more It is prohibited to discriminate on the grounds of sex, age, workers must inform them of their right to set up a works council. disability, race, religion, nationality, political beliefs, trade union The council is elected by all employees and its composition depends membership, ethnic origin, denomination or sexual orientation, as on the size of the company (three, five or seven members unless the well as employment for definite or indefinite terms, or on a full-time number is set in an arrangement with the employees). or part-time basis. The employer is obliged to inform the works council about the Employees must be treated equally in the establishment and activities and economic situation of the company, as well as any termination of employment relationships, terms and conditions significant changes in work organisation or employment (for of employment, promotion and access to training to develop their instance planned layoffs). The council is also entitled to present its professional qualifications. non-binding opinions on a number of matters. In February 2017, The Labour Code stipulates that the principle of equal treatment there were approximately 3,520 work councils in Polish companies. is violated when the employer differentiates the employee’s
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situation on the basis of one or more reasons resulting, among other things, in the refusal to enter into or dissolve a work contract, or 4 Maternity and Family Leave Rights disadvantageous remuneration for work or other employment conditions, or deprivation of promotion or other benefits. 4.1 How long does maternity leave last?
3.3 Are there any defences to a discrimination claim? The length of maternity leave depends on the number of children born: Defence in discrimination cases may not be easy as, in such cases, ■ 20 weeks – one child at birth; the employer must prove that he uses objective criteria for all ■ 31 weeks – two children at birth; Poland employees. This means that an employer must demonstrate that ■ 33 weeks – three children at birth; any action connected with employment had justified and legitimate ■ 35 weeks – four children at birth; and grounds, e.g., an increase of salary was in line with the company’s ■ 37 weeks – five or more children at birth. general promotion policy. Leave of up to six weeks can be used prior to the expected date of Introduction of and compliance with internal rules against childbirth. discrimination (e.g., a code of conduct) may significantly strengthen an employer’s position in such defence. 4.2 What rights, including rights to pay and benefits, does a woman have during maternity leave? 3.4 How do employees enforce their discrimination rights? Can employers settle claims before or after they are initiated? A female employee receives an allowance paid by the Social Insurance Institution (ZUS). The amount of the maternity benefit Victims of discrimination may enforce their rights during and after differs depending on the case; in principle, it is equal to 100% of the employment termination, and may lodge a claim for compensation. ground of benefit assessment basis for the first six or eight weeks (depending on the number of children born) and 60% for the period Employees who exercise the right to compensation for a breach of parental leave after the above-mentioned periods. However, of equal treatment rules must not be treated unfavourably and, in certain cases, it may be equal to 80% of the ground of benefit in particular, it may not cause termination of their employment. assessment basis. The employee is protected from dismissal during Employees are also entitled to notify the National Labour the maternity leave (with some exceptions). Inspectorate. The Inspectorate may conduct an inspection and impose a fine on the employer who is responsible for discrimination. When an employee files a claim, settlement ending the dispute is 4.3 What rights does a woman have upon her return to work from maternity leave? possible both before and after the claim is brought before the labour court until the final judgment is passed. After the leave, the employee must resume work in the previous The employee who accuses the employer of discrimination does not position or, if this is impossible, in a position equivalent to the have an obligation to prove this accusation in front of the court. previous position or a position corresponding to her professional However, he/she still has to substantiate the complaint of unequal qualifications and with remuneration not lower than before the treatment and determine which of the criteria for discrimination the maternity leave. employer has applied. A female employee is entitled to take unpaid childcare leave or ask for reduced working hours during which she is protected from 3.5 What remedies are available to employees in dismissal. Moreover, a female employee who is breastfeeding is successful discrimination claims? entitled to two additional breaks from work included in her working time, the length of which depends on her working time and the A person whose rights regarding anti-discrimination were violated number of children born. has a right to compensation equal to at least the amount of the statutory minimum wage (i.e., PLN 2,100, approx. EUR 490). 4.4 Do fathers have the right to take paternity leave?
3.6 Do “atypical” workers (such as those working part- An employee who is the father taking care of a child is entitled to time, on a fixed-term contract or as a temporary paternity leave of two weeks until the child is 24 months old. The agency worker) have any additional protection? leave can be split into two parts, neither of which can be shorter than one week. Paternity leave is granted upon a written request “Atypical” workers do not have any additional protection, but they submitted no later than seven days before the commencement of that cannot be treated worse than other “typical” employees. Disabled leave and the employer is obliged to accept that request. employees have additional rights such as: Additionally, the father may use a part of the mother’s maternity ■ an appropriate workplace with special facilities; leave – the mother employee must use at least 14 weeks of her ■ working hours limited to eight hours per day and 40 hours per maternity leave and can waive the right to the remaining portion and week; grant it to the father employee, at his written request. ■ night-work and overtime work is forbidden; ■ an additional 15-minute break at work; 4.5 Are there any other parental leave rights that ■ additional annual leave (10 days per year); and employers have to observe? ■ additional rehabilitative leave (up to 21 days per year). Immediately after using maternity leave, both parents are entitled to parental leave of up to 32 or 34 weeks (depending on the number
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of children born) in aggregate. This leave can be split into no more than four parts, cannot be shorter than eight weeks and can also be 5.2 What employee rights transfer on a business taken by both parents at the same time. Parents are able to take 16 of sale? How does a business sale affect collective agreements? the 32 weeks of parental leave later (by the end of the calendar year in which the child becomes six years old). It is granted upon written request submitted 21 days before the leave starts and the employer Within two months from the transfer date, the employee is entitled is obliged to grant the leave. to terminate his/her employment contract upon a seven-day notice (such termination has the same legal effect as termination with Also, an employee employed for at least six months (including prior notice by the employer). periods of employment) has the right to unpaid extended upbringing A collective agreement of the previous employer continues to apply leave to provide personal care to the child. The length of that leave Poland lasts up to 36 months and it can be granted by the end of the calendar to the transferred employees for one year from the transfer, unless year in which the child becomes six years old. Both, parental and otherwise stated in the separate regulations. The new employer may upbringing leave can be combine with work for one year. introduce more favourable conditions for this group of employees.
4.6 Are employees entitled to work flexibly if they have 5.3 Are there any information and consultation rights on responsibility for caring for dependants? a business sale? How long does the process typically take and what are the sanctions for failing to inform and consult? Every employee is entitled to take unpaid childcare leave or ask for reduced working hours. If the parental leave is combined with The information about a planned transfer must be provided to the work, the leave is extended in proportion to the time worked – the employees at least 30 days before the planned transfer date and parent is able to combine work with parental leave for a maximum must contain: the date and reasons of the transfer; legal, economic of 64 or 68 weeks (depending on the number of children born). and social implications for the employees; and any measures to be Additionally, a woman who is breastfeeding is entitled to additional taken regarding the conditions of employment, remuneration and breaks from work included in her working time, the length of which retraining. There is no sanction for a breach of this obligation. depends on her working time and the number of children born. An However, failure to inform the employees in proper time can result employee raising at least one child aged up to 14 is entitled to be in an employer’s liability for any damages caused to an employee granted two paid days or 16 hours off per calendar year. and can result in extension of the term for an employee’s decision as The employee is entitled to an allowance while taking care of a child to termination of the employment contract (please see question 5.2). aged up to eight years (paid for up to 60 days) and while taking care The length of the procedure depends on the company size and the of other family members (paid for up to 14 days). conditions of a particular transaction.
5 Business Sales 5.4 Can employees be dismissed in connection with a business sale?
5.1 On a business sale (either a share sale or asset No, employees cannot be dismissed in connection with a business transfer) do employees automatically transfer to the sale. The transfer itself cannot constitute grounds for termination of buyer? an employment relationship by an employer.
The sale of shares in the company does not affect the employees and they remain employed by the same company. 5.5 Are employers free to change terms and conditions of employment in connection with a business sale? In the case of transfer of assets (transfer of an organised part or entire enterprise) in the form of a sale or contribution to another company, Generally, employers are not entitled to change, independently, the the new employer (company) becomes party to the existing terms of employment in connection with a business sale, but the employment relationships by law. This means that employees are employer and trade union can conclude a relevant agreement in this transferred to a new employer automatically. respect. The criteria for estimating, whether the transfer of enterprise (organised part thereof) has been effected, have been developed in the jurisdiction of the Tribunal of Justice of the European Union 6 Termination of Employment and are adopted by Polish courts. In the Spijkers case, the Tribunal set-out several tests that have to be taken into consideration in this respect. The crucial question is whether the buyer continues the 6.1 Do employees have to be given notice of termination of their employment? How is the notice period activity of the target company or starts a new activity of a similar determined? type. If so, the transfer of the employee took place. Other important factors to be taken into account in such tests include: the type of Employees must be given a notice of termination unless the parties enterprise; determination whether material tangible components conclude a mutual agreement in this respect. An employment of the enterprise have been transferred (such as buildings and real contract for an indefinite or definite term may be terminated with property); the value of intangible components at the time of the notice or may be terminated without notice due to a gross violation transfer; whether the majority of employees have been taken over by the employee of his/her duties. In cases of an indefinite-term by the new employer; if the handling of clients has been transferred contract or termination without notice, reason must be offered in upon the transfer; and others. Each case and its circumstances writing by the employer that would justify the termination. should be reviewed individually.
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The period of notice under indefinite and definite contracts depends ■ members of the works council; on an employee’s length of service in a company: ■ so-called social labour inspectors; and ■ two weeks – if the length of service is shorter than six ■ employees protected for a valid reason, in particular those on months; sick leave with a doctor’s certificate. ■ one month – if the length of service is at least six months; and 6.5 When will an employer be entitled to dismiss for: ■ three months – if the length of service is at least three years. 1) reasons related to the individual employee; or 2) In the case of employment for a trial period, the terms of notice are business related reasons? Are employees entitled as follows: to compensation on dismissal and if so how is
Poland compensation calculated? ■ three working days – if the trial period does not exceed two weeks; Reasons related to the individual employee may include personal ■ one week – if the trial period exceeds two weeks; and reasons (e.g., long-term sickness) or reasons related to the employee’s ■ two weeks – if the trial period is three months. behaviour (e.g., loss of trust). The employer may also terminate the employment contract without notice if the employee is at fault 6.2 Can employers require employees to serve a period (disciplinary dismissal). In practice, the most common reason for of “garden leave” during their notice period when the disciplinary dismissal is a serious breach of basic duties (such as employee remains employed but does not have to unauthorised absence at work, refusing to carry out a task). attend for work? An employment contract may also be terminated without notice if there is no fault on the employee’s part but he/she is unable to work The Polish law does not recognise a “garden leave” period. Under due to incapacity to work caused by an illness lasting for a specific the Labour Code, the employee is obliged to use their remaining period of time. leave during the notice period, provided that the employer has granted such leave. In practice, business-related reasons may require that the job position of the employee be liquidated due to economic or organisational The employer is able to unilaterally release the employee from the changes in the company. Justified reasons for dismissal not related obligation to work during the notice period (the employee retains to employees include the following: the entitlement to remuneration). ■ where there is causality between the position’s liquidation and the termination (further employment is no longer needed); 6.3 What protection do employees have against ■ where the liquidated position is identified in a manner that dismissal? In what circumstances is an employee does not give rise to any doubt; and treated as being dismissed? Is consent from a third ■ where there has been approval of organisational changes by a party required before an employer can dismiss? relevant authority or other entity, if required by law.
Employees may appeal against termination with notice to a labour court within 21 days of the date of the notice, and may claim that the 6.6 Are there any specific procedures that an employer notice be void, reinstatement to work or compensation. In the case has to follow in relation to individual dismissals? of termination without notice, an employee has 21 days to lodge a claim for reinstatement to work or compensation. The employee The employer must meet the following requirements: may challenge the reasons for termination or other breaches of law ■ termination must be preceded by informing trade unions (if (for instance, lack of consultation with trade unions). they exist and represent the particular employee); The employee is treated as dismissed at the end of the notice period. ■ it must be done in writing; In the case of termination without notice, in particular in case of ■ it must contain the reasons for termination (in contracts for an disciplinary dismissal, the termination is effective as of the day indefinite term and in case of termination without notice) and when the employee received the termination notice. information on how to appeal against termination; and If there is a trade union representing the employee, it must be ■ after the termination, the employer is obliged to issue and notified by the employer in writing about the intention to terminate provide the employee with a certificate of employment. the employee’s indefinite-term employment contract with notice. The trade union may present its objections with reasons to the 6.7 What claims can an employee bring if he or she is employer in writing. The consent of the trade union is required only dismissed? What are the remedies for a successful in the case of employees with special protection against dismissal claim? (trade union board members). The employee may bring a claim for a court to invalidate the termination, or if the contract of employment has already been 6.4 Are there any categories of employees who enjoy special protection against dismissal? terminated, for reinstatement to work or for compensation. The compensation must be awarded at the amount of remuneration due for two weeks up to three months, but in any case it may not The following groups of employees are specially protected: be lower than the amount of remuneration for the notice period. ■ pregnant women; The remedies for a successful claim mostly depend on the ■ employees who will reach retirement age in less than four ability to prove the reasons of termination and observance of the years; termination procedure. Mistakes made during such procedure ■ trade union activists; significantly increase an employee’s chances of success before ■ employees on childcare leave, on vacation, maternity leave the labour court. or unpaid carer’s leave;
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6.8 Can employers settle claims before or after they are 7.2 When are restrictive covenants enforceable and for initiated? what period?
An agreement with the employee can be settled both before and during The parties may set, in a separate agreement, a non-compete obligation the course of court proceedings until the final judgment is passed. which will be binding after termination of the employment contract. Such an agreement must be in writing, must stipulate the period of the non-compete clause and the compensation for compliance. 6.9 Does an employer have any additional obligations if it is dismissing a number of employees at the same There are no restrictions as to the duration of such covenants. The time? confidentiality clause and non-solicitation clause may be a part of such agreement. Poland Group layoffs are regulated by the Act of the Specific Principles of Terminating Labour Relationships for Reasons not Attributable to 7.3 Do employees have to be provided with financial the Employees (implementing 98/59/EC Directive). The Act applies compensation in return for covenants? to entities that employ at least 20 employees and plan to terminate within 30 days, (including a minimum of five terminations by mutual In the case of a post-contractual non-compete obligation, the former agreements) and for business reasons, employment contracts, of at employee is entitled to receive, for the entire period of the covenant, least: compensation which must not be lower than 25% of his/her recent ■ 10 employees when the total number of employees is lower remuneration during the non-compete period. The compensation than 100; may be paid in monthly instalments. ■ 10% of employees when the entity employs at least 100 but less than 300 workers; and 7.4 How are restrictive covenants enforced? ■ 30 employees when the entity employs at least 300 workers. Before the group layoffs, the employer is obliged to: The former employee is liable for a breach of the non-competition ■ consult its decision with trade unions or other employees’ clause under the Labour Code. An employer who does not perform representatives; its obligations, i.e., stops paying compensation, may be sued by the ■ provide trade unions with information on reasons for layoffs, employee before a labour court. number and professions to be laid off, the planned date of In the case of a breach of the non-competition clause, the layoffs, the criteria of selection for dismissal and the order of Suppression of Unfair Competition Act will also apply. The Act layoffs; defines actions which may be considered acts of unfair competition ■ provide the same information to the local Employment and regulates the rules for liability for such acts. In accordance with Office; and the Act any act such as: “transfer, disclosure or use of third party ■ award dismissed employees a severance pay which amounts to: information which is confidential or receipt of such information ■ one month’s remuneration, if the employee was employed from an unauthorised person, if it threatens or violates the interests for less than two years; of the entrepreneur” is considered an act of unfair competition. ■ two months’ remuneration, if the employee was employed This provision applies to the former employee three years after from two to eight years; and termination of the employment contract. ■ three months’ remuneration, if the employee was employed for more than eight years. 8 Data Protection and Employee Privacy The employer must settle with the trade unions an agreement regarding the terms of layoffs or – if there is no trade union or when the agreement is not possible – the employer must itself regulate the layoffs. 8.1 How do employee data protection rights affect the employment relationship? Can an employer transfer employee data freely to other countries? 6.10 How do employees enforce their rights in relation to mass dismissals and what are the consequences if an employer fails to comply with its obligations? The employer is a personal data controller of the personal data of its employees and is obliged to protect such data. The employer cannot share such data with any third party without the express consent of If the employer fails to fulfil its obligations in cases of mass the employee (with some exceptions such as a court order). The dismissals, it can lead a court to invalidate the termination, or personal data protection rules also apply to candidates and former alternatively award compensation or reinstate the employee to work. employees. The employee can also claim for rightful severance pay. Under the Polish Labour Code, an employer may require an applicant to provide certain information only. Additionally, an employer may 7 Protecting Business Interests Following require an employee to provide additional information if necessary Termination to exercise special rights to which an employee is entitled under labour law. The Labour Code vests the employer with the right to require additional personal information only if the applicant/ 7.1 What types of restrictive covenants are recognised? employee is obligated to provide such information directly under other regulations. There are a few restrictive covenants after termination: Generally, employee data transfers to a “third country” (outside ■ post-contractual non-compete clause; the European Economic Area) are only allowed if the country of ■ confidentiality clause; and destination ensures an adequate level of protection (at least the ■ non-solicitation clause.
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same as that applied in Poland). No express legal definition of an dignity or privacy of employees. In practice, the best way to “adequate level of protection” exists; it is to be assessed by a data legally monitor employees at work is to inform them about the controller on an individual basis. possible monitoring. According to the Labour Code, employees Personal data may be transferred to a third country that does not are obliged to perform specific work for the employer and under ensure at least the same level of data protection as Poland if: (i) the employer’s direction at a place and time specified by the the employee has given his or her written consent; (ii) the transfer employer. Consequently, the employer is entitled to check if is necessary to perform a contract between the employee and the employees use the company’s email, telephones and computers to employer or takes place in response to the employee’s request; perform work and not for private use. (iii) the transfer is necessary to perform a contract concluded in
Poland the interest of the employee between the employer and a third 8.5 Can an employer control an employee’s use of social party; (iv) the transfer is necessary or required by reasons of public media in or outside the workplace? interest or for the establishment of legal claims; (v) the transfer is necessary in order to protect the vital interests of the employee; No regulations concerning Internet use in the workplace exist in or (vi) the transfer relates to data which is publicly available. Poland. Under Polish general legal conditions, it is necessary Alternatively, the transfer of personal data to such a third country to refer back to general principles when regulating social media, may be permitted with prior approval of the Inspector General such as: (i) privacy protection; (ii) the right of the employer to for Personal Data Protection, provided that the employer ensures direct employees’ labour; and (iii) the protection of trade secrets. adequate safeguards (e.g., standard contractual clauses) with In practice, Polish employers often introduce internal legal respect to the protection of privacy, rights, and freedoms of the procedures which are binding on their employees; the Social employee. Media Policies (SMP). A Polish SMP must contain: In accordance with the EU regulation which will become effective ■ a statement of purpose motivating the introduction of the from 25 May 2018, legislation regarding data protection will be policy; modified; for example, the candidate will have a right to demand ■ a list of actions and behaviours on social media that the the employer to remove his/her personal data from the system employer prohibits; and or the employer will have more information obligations towards ■ a list of possible disciplinary measures that may be applied employees. when the SMP is violated. Employees must remember their duty to take care of the best 8.2 Do employees have a right to obtain copies of any interests of the company and keep confidential any information personal information that is held by their employer? where disclosure of such could cause damage to the employer. Publishing some information about the company via social media Employees are entitled to manage and update their data. To do may therefore be recognised as a breach of duties and may result so, they must provide a written request to the employer. The in disciplinary termination. employer must answer in writing within 30 days and inform the employees about their rights and collected data, but does not have to make it available. 9 Court Practice and Procedure
8.3 Are employers entitled to carry out pre-employment 9.1 Which courts or tribunals have jurisdiction to hear checks on prospective employees (such as criminal employment-related complaints and what is their record checks)? composition?
The employer may only require a candidate to provide the data In Poland, labour courts are competent for all legal proceedings set out in the Labour Code and other statutes. The employer between employers and employees. cannot process any other personal information which it deems Claims arising out of employment relationships are decided by necessary for its purposes even with the consent of the employee/ labour courts: that constitute separate organisational units of district applicant. According to the rulings of the Polish courts as well as courts; and labour and social insurance courts that constitute separate the doctrinal views, such consent may not be given freely as there organisational units of regional courts. is an imbalance of power between the employer and the applicant/ employee. In Poland, the possibility of examining the criminal record of a 9.2 What procedure applies to employment-related complaints? Is conciliation mandatory before a candidate for employment only exists for professions and positions complaint can proceed? Does an employee have to specifically set out in multiple separate statutes (e.g., judges, pay a fee to submit a claim? doctors, university teachers). The data in question are not included in the relevant catalogue in the Labour Code; therefore, employers Civil procedure applies to employment-related complaints. are forbidden from processing this information. Conciliation before both the labour court and the civil court is not mandatory. A settlement ending a dispute between the employer 8.4 Are employers entitled to monitor an employee’s and employee is possible at each stage of proceedings before the emails, telephone calls or use of an employer’s labour court. If a conciliatory commission exists in the workplace computer system? of the employee, before submitting a claim to a court, the employee may request such conciliatory commission to initiate mediation. There is no specific regulation in Poland that concerns the Employees do not have to pay a fee for submitting claims to a labour monitoring of employees at work; however, the general rules on court unless the value of the case exceeds PLN 50,000 – then a fee data protection apply. Monitoring is generally allowed but it must of 5% of the value of the dispute will apply. be reasonable, proportional to its aims and must not violate the
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9.3 How long do employment-related complaints typically 9.4 Is it possible to appeal against a first instance take to be decided? decision and if so how long do such appeals usually take? On average, first instance decisions concerning employment-related complaints take between six months to two years to be decided, It is always possible to appeal against a first instance decision. Appeal depending on the court. courts rule on such appeals (depending of the region of Poland) in about six months to one year. Poland Weronika Papucewicz Piotr Kryczek CDZ Legal Advisors CDZ Legal Advisors Zajęcza 15 St. Zajęcza 15 St. 00-351 Warsaw 00-351 Warsaw Poland Poland
Tel: +48 22 492 40 00 Tel: +48 22 492 40 00 Email: [email protected] Email: [email protected] URL: www.cdz.com.pl URL: www.cdz.com.pl
Weronika Papucewicz | Advocate, Partner, Head of the Employment Piotr Kryczek | Legal Advisor, Partner, Co-Head of the Employment Law Practice at CDZ Legal Advisors. Law Practice at CDZ Legal Advisors. Weronika advises on all stages of hiring and terminating contracts with Piotr specialises in employment, competition law, intellectual and employees. She drafts management and non-competition contracts, industrial property law, with a particular focus on trademark issues. employment bylaws and internal policies for employers and conducts He advises Polish and international clients, including companies from trainings. She adapts global employment policies and procedures to the BPO/SSC sectors. He represents clients in proceedings before the requirements of Polish law. civil and commercial courts of all instances. Weronika participates in employment restructuring, downsizing and Piotr advises on the hiring procedure of employees and termination layoffs, including negotiations with trade unions. She deals with of contracts. He develops internal regulations, remuneration systems employee aspects during M&A transactions and represents employers and incentive programmes. He advises on the process of transforming in court proceedings. the employees’ organisational structure and employment restructuring. Weronika was named a Rising Star by the ranking of the nationwide Before joining CDZ, he worked for the Polish Antimonopoly Office law newspaper Dziennik Gazeta Prawna and Wolters Kluwer. She has (now UOKiK), and acted as a head of the legal department, and board authored numerous publications relating to individual and collective member of CANAL+ Polska (now nc+), the first commercial television labour law and has been a speaker during conferences. station in Poland. She graduated from the Warsaw University’s Faculty of Law and Piotr cooperates with the Helsinki Foundation for Human Rights and Administration and the American Law School of the Center for the Polish Society of Anti-Discrimination Law, and is actively involved in American Law Studies. She is also a Ph.D. graduate from the Institute pro bono activities for a number of foundations and private individuals. of Legal Sciences of the Polish Academy of Sciences. Piotr is recommended by The Legal 500 EMEA 2017 in the field of employment law.
CDZ Legal Advisors offers more than just legal advice. CDZ’s approach is practical, solution-based and innovative. It has offices in Warsaw, Krakow and Lodz. CDZ’s expertise covers transactional, corporate, litigation and regulatory issues. It handles complex situations by deploying multi-skilled teams. As a member of Interlaw, the International Association of Independent Law Firms, CDZ advises on cross-border matters by working in integrated teams from almost 100 jurisdictions. It guides clients through the local legal and business environment. CDZ supports leading organisations representing the business services sector in Poland. For many years, CDZ has been ranked by The Legal 500 EMEA, Chambers Europe and IFLR 1000. In 2017, CDZ was recognised in six fields of law: employment; corporate, commercial and M&A; TMT; dispute resolution; restructuring and insolvency; and capital markets. CDZ lawyers are also recommended as leaders in their practice areas.
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Portugal Dália Cardadeiro
BAS – Sociedade de Advogados, SP, RL Alexandra Almeida Mota
(iv) date of conclusion of the contract and date of commencement 1 Terms and Conditions of Employment of its effects; (v) the employee’s annual leave; 1.1 What are the main sources of employment law? (vi) notice periods to be observed by the employer and the employee for termination of the employment contract or the The main sources of employment law are the Portuguese criterion for their determination; Constitution, European legislation, the Portuguese Employment (vii) remuneration (amount and periodicity); Code (approved by Law No. 7/2009 of 12 February 2009), the (viii) daily and weekly normal working hours; Regulation of the Employment Code (Law No. 105/2009 of 14 (ix) applicable collective bargaining agreement, if any; September Code), collective bargaining agreements and individual (x) the number of the occupational accident insurance policy and agreements. the identification of the insurance company; and Within the Portuguese Employment Code, the vast majority of (xi) identification of the labour compensation fund, as well as of the rules are mandatory and, therefore, can only be modified by the labour compensation guarantee fund. agreement of the parties and only if such amendment is intended to For a term employment agreement, the Portuguese Employment Code improve the position or rights of the employees. requires written information in the contract itself regarding the term, Furthermore, Chapter III of the Portuguese Constitution sets forth the reasons for concluding such contract and for the term’s duration. a number of fundamental rights and principles regarding both employees and employers. 1.4 Are any terms implied into contracts of employment?
1.2 What types of worker are protected by employment Yes, all mandatory legal provisions and all non-mandatory rules not law? How are different types of worker distinguished? modified or waived by agreement of both parties. The parties’ main duties are particularly relevant, namely, for the Every employee is protected under Portuguese employment law and employer, the obligation to provide work and to pay for it and, for the Portuguese Employment Code but some of its provisions only the employee, the duty to provide work and the duty of loyalty. apply to certain types of employees (those holding management or managerial positions, for example). Furthermore, some special employment situations also benefit from 1.5 Are any minimum employment terms and conditions set down by law that employers have to observe? specific legal regimes (domestic work, entertainment professionals and sports practitioners, for example). Yes, there are. The Portuguese Employment Code provides for minimum employment conditions and standards, in terms of holidays, 1.3 Do contracts of employment have to be in writing? If maximum working hours, remuneration, etc. Collective agreements, not, do employees have to be provided with specific when applicable, may also set down minimum conditions (minimum information in writing? wages, for example).
The general rule states that it is not mandatory that the employment In Portugal, the law sets a minimum guaranteed monthly agreement is entered into in writing, although this rule has some remuneration. exceptions, namely with regards to fixed-term or foreign workers’ employment agreements, for example. 1.6 To what extent are terms and conditions of Nevertheless, the Portuguese Employment Code obliges the employer employment agreed through collective bargaining? Does bargaining usually take place at company or to provide some essential information, in writing, to the employees. industry level? Specifically: (i) identification of the employer; In the absence of a prohibitive legal rule, collective bargaining (ii) the employee’s workplace; instruments can regulate virtually all aspects of an employment (iii) the employee’s category or a concise description of the relationship, but to some extent, only if they offer more favourable employee’s duties; terms for the employees.
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Although industry or sector level collective bargaining agreements are more common, company agreements also exist. 2.6 How do the rights of trade unions and works councils interact?
2 Employee Representation and Industrial The scopes of action of trade unions and works councils is different. Relations For example, the right to declare a strike is the exclusive right of a trade union, as well as the right to conclude collective bargaining agreements. 2.1 What are the rules relating to trade union recognition? In some specific labour procedures (collective dismissals, for example), the existence of a works council in a company waives the
Employees have a constitutional right to freedom of association Portugal need for union representatives to participate. which includes the right to set up trade unions, at all levels, to defend and promote their socio-professional interests. A trade union is constituted and approved by the respective statutes 2.7 Are employees entitled to representation at board level? by means of deliberation of the constituent assembly, which can be an assembly of representatives of associates, and acquires Employees of private sector companies are not entitled to legal personality by the registration of those acts with the ministry representation at board level. In public business entities (which responsible for the labour area. are corporate entities created by the State to carry out its purposes); Trade unions are governed by statutes and regulations approved however, the works council may promote the election of workers’ by them, they freely and democratically elect the heads of their representatives to the company’s governing bodies. governing bodies and democratically organise their management and activity. 3 Discrimination 2.2 What rights do trade unions have? 3.1 Are employees protected against discrimination? If With the purpose of defending and promoting the defence of the so, on what grounds is discrimination prohibited? rights and interests of their represented employees, trade unions have a series of constitutional and legal rights, such as the rights The Portuguese Employment Code has implemented the principle to conclude collective bargaining agreements, to participate in of equal treatment with regards to access to employment, vocation the drafting of labour legislation, and to take part in a company training, promotion and working conditions. restructuring processes. In view of this, any direct or indirect discrimination based on lineage, age, gender, sexual orientation, gender identity, marital status, family 2.3 Are there any rules governing a trade union’s right to situation, education, social origin or condition, genetic heritage, take industrial action? reduced working capacity, disability, chronic illness, nationality, ethnic origin or race, language, religion or belief, political or The Portuguese Constitution and the Portuguese Employment Code ideological beliefs or trade union membership is strictly prohibited. guarantee employees the right to strike, providing that the correct Moreover, the Portuguese Employment Code also foresees that procedures are followed. Trade unions must decide to strike. harassment in the workplace is forbidden. Please note that according to the applicable legal regime, harassment includes a wide spectrum 2.4 Are employers required to set up works councils? If of offensive behaviours, including sexual harassment, emotional so, what are the main rights and responsibilities of abuse (mobbing) and other discriminatory harassment. If a company such bodies? How are works council representatives has seven or more employees, the implementation of a code of chosen/appointed? conduct for preventing and combating workplace harassment is mandatory. In Portugal, the establishment of a works council is not mandatory. However, employees have the right to create such councils in order 3.2 What types of discrimination are unlawful and in what to defend their interests and their rights. Such right is foreseen not circumstances? only in the Portuguese Employment Code, but also in the Portuguese Constitution. Works council representatives must go through an The Portuguese Employment Code prohibits direct and indirect election process. discrimination. Direct discrimination includes dismissing someone because of a protected characteristic (discrimination factor), 2.5 In what circumstances will a works council have co- deciding not to employ them, refusing to provide them with determination rights, so that an employer is unable to training, denying them a promotion, or giving them adverse terms proceed until it has obtained works council agreement and conditions all because of a protected characteristic. Indirect to proposals? discrimination occurs when the employer’s practices, policies or procedures have the effect of disadvantaging employees who share As a rule, in specific matters, works councils must only be consulted certain protected characteristics. before management decisions are made or may participate the procedures for company restructuring, but their opinions or recommendations are not mandatory. 3.3 Are there any defences to a discrimination claim? The Constitution grants them the right to exercise management The employer may claim that the different treatment was objective control in companies, but such control does not imply co- and proportionately justified and that it was not based on any determination powers or co-management of the company.
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discrimination factor, demonstrating, for example, that there were to daily time off work for such purposes, as well as special justifiable and determinant requirements for the pursuit of a specific protection in case of dismissal. occupation, by virtue of the nature of the activity in question or the context in which it is carried out. 4.4 Do fathers have the right to take paternity leave?
3.4 How do employees enforce their discrimination Yes, fathers have the right to take paternity leave. They are entitled rights? Can employers settle claims before or after to parental leave of 15 working days, within 30 days of the birth of they are initiated? the child, of which five consecutive days must be taken immediately following the birth of the child. After such leave, fathers then have Employees may resort to the courts or the Commission for Equality
Portugal the right to an additional 10 working days of leave, provided that in Work and Employment (CITE). Both parties can settle claims at they are taken simultaneously with the mother’s initial leave. any time.
4.5 Are there any other parental leave rights that 3.5 What remedies are available to employees in employers have to observe? successful discrimination claims? Yes. A daily dispensation for breastfeeding or bottle-feeding may In general, compensation for both material and moral damages is be taken, in two separate periods of up to one hour each, unless available, as well as, in certain cases, reinstatement and compensation otherwise agreed with the employer, without loss of remuneration for the termination of the employment agreement. or privileges. An employer’s retaliatory act that is detrimental to the employee Pregnant employees have the right to work leave for prenatal because of rejection or submission to a discriminatory act is legally consultations. Fathers have the right to accompany the mother to deemed invalid. such consultations on three occasions.
3.6 Do “atypical” workers (such as those working part- 4.6 Are employees entitled to work flexibly if they have time, on a fixed-term contract or as a temporary responsibility for caring for dependants? agency worker) have any additional protection? In the case of a minor (under the age of one) with a disability or a All employees are granted the same protection regarding chronic illness, parents may be entitled to a reduction of five hours of discrimination. However, pregnant, puerperal or lactating employees, the normal working week, with the remaining hours being adjusted. employees on parental leave and trade union representatives or members of employees’ representative structures have special Employees with a child under 12 years of age or, irrespective of age, protection. with a disability or a chronic illness, may be entitled to work part- time or on a flexible working schedule.
4 Maternity and Family Leave Rights 5 Business Sales
4.1 How long does maternity leave last? 5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the Working mothers and fathers are entitled to initial parental leave buyer? of 120 or 150 consecutive days per new born child, which may be shared between parents after the childbirth, without prejudice to the Yes. In case of transfer of business, the Portuguese Employment mother’s exclusive parental leave of six weeks after childbirth. Code foresees an automatic transfer of employees, whereby This leave may be increased by an additional 30 days in the event employees are transferred with all rights and obligations arising that each of the parents takes, exclusively, a period of 30 consecutive from their pre-existing employment relationship, without any need days, or two periods of 15 consecutive days, after the mother’s for employee consent (i.e., it is not a voluntary transfer). initial six weeks leave. Recent amendments to the labour law have been approved to grant In the case of multiple births, the leave period is increased by 30 employees, in certain circumstances, a right of opposition to the days for each twin besides the first child. transfer of their employment contract to the transferee. This can be legally viable if the employee can prove that such transfer causes 4.2 What rights, including rights to pay and benefits, does him/her serious damage with regards to negative cash-flow of the a woman have during maternity leave? transferee, difficult financial impact or no confidence in thenew employer work organisation. In such cases, the employee is entitled Female employees are protected against the loss of any rights during to terminate his/her contract with just cause and receive severance maternity leave. The Portuguese Social Security provides for a pay. compensation for the loss of salary. 5.2 What employee rights transfer on a business sale? How does a business sale affect collective 4.3 What rights does a woman have upon her return to agreements? work from maternity leave?
On a business sale, employees will keep all the rights and obligations A woman has the same rights as before the maternity leave but, arising from their previous employment relationship. during the breastfeeding or lactation period, the employee is entitled
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Collective Bargaining Agreements (“CBA”) applicable to the seller be, by reason of such transfer, transferred to the new employer. must be kept by the buyer until the expiration date of the CBA or, Nevertheless, the employee and the employer may agree on new at least, for 12 months after the transfer date, unless a new CBA terms and conditions, in the fullest extent permitted by law. applies to the new employer. If, after this time frame, a new CBA is not applicable to the transferee, the employee will keep his/her previous rights regarding remuneration, job position, functions and 6 Termination of Employment social benefits.
6.1 Do employees have to be given notice of termination 5.3 Are there any information and consultation rights on of their employment? How is the notice period a business sale? How long does the process typically determined? take and what are the sanctions for failing to inform Portugal and consult? As a rule, the Portuguese Employment Code does not permit termination by giving notice. As a general rule, both the transferor and transferee need to inform Nevertheless, it is mandatory to give prior notice to the employee: the employees’ representatives (or if there are none, the employees i) in case of non-renewal of a fixed-term employment agreement; directly), in writing, of the date of the transfer, any effects that this or transfer may have on the terms and conditions of employment, ii) if the employer decided to terminate the employment agreement and the terms and conditions of the transfer contract entered into during a trial period which lasted more than 60 days. by the transferor and transferee, regardless of the confidentiality obligations if this information is communicated to the employees. In the case of large- and medium-size companies, this information 6.2 Can employers require employees to serve a period must also be shared with the labour authorities. of “garden leave” during their notice period when the employee remains employed but does not have to According to Portuguese law, employees’ representatives are the attend for work? works councils, trade unions and trade union representatives. Under the new legal frame, when facing a situation in which The Portuguese Employment Code does not foresee a “garden there are no employee representatives, the employees can directly leave” period. “Garden leave” is only possible upon agreement of name, among themselves and within a five-working-day-period, a both parties. representative delegation. However, in case of termination of the employment agreement, the The transferor and transferee may also need to consult the employees’ employer may oblige the employee to take any remaining holiday representatives (or if there are none, the employees directly) in days during the notice period. order to try to reach an agreement regarding the measures that they intend to implement because of the transfer. In the event that no agreement is reached, the transfer may still occur and no prejudicial 6.3 What protection do employees have against dismissal? In what circumstances is an employee consequences should arise. treated as being dismissed? Is consent from a third The timing for providing this information and consultation is as party required before an employer can dismiss? follows: (i) the information needs to be supplied with reasonable notice The Portuguese Employment Code foresees the general regime prior to the transfer (no actual specific deadline is established); applicable to the termination of employment agreements, stating (ii) if there is a need for consultation, the information mentioned that any dismissal must be grounded on objective reasons, whether above needs to be supplied at least 10 days prior to the they are related to the employee or to the company. consultation; and Concerning the motives related to employees, the dismissal might (iii) as far as consultation is concerned, there is no minimum occur whenever there is a material reason that can be deemed as or maximum period established in law and it is up to the just cause, namely a breach of the employment agreement or of any employer to establish a reasonable duration (and if no other legal obligation by the employee that, due to its gravity and agreement can be reached, as mentioned, the transfer may consequences, makes immediately and practically impossible the still proceed). maintenance of the employment. According to Portuguese law, employees’ representatives are the Besides dismissal with just cause, employers may also dismiss works councils, trade unions and trade union representatives. employees by means of an individual or collective redundancy procedure, providing that there are objective reasons (related to the 5.4 Can employees be dismissed in connection with a company) to justify it. business sale? The means of employment termination must be motivated by objective factors, such as the closing-down of one or more No, the employee cannot be dismissed as a direct consequence of departments/sections of the company or the need to reduce the the business sale. Notwithstanding the above, the business sale may number of employees as a result of a change in the market, or provide the employer with structural, economical or technological structural or technological reasons related to the company (e.g. the grounds to start a redundancy procedure. reduction of the company’s activity due to a decrease in the demand of goods or services, economic and financial imbalance). 5.5 Are employers free to change terms and conditions of However, these procedures are usually quite complex and employment in connection with a business sale? burdensome, and there are several mandatory steps that must be followed. Nevertheless, the employer does not need the consent of a No, the former employer’s rights and obligations arising from an third party (e.g. Portuguese Labour Authorities) before the dismissal employment agreement existing on the date of the transfer, shall of an employee.
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6.4 Are there any categories of employees who enjoy 6.6 Are there any specific procedures that an employer special protection against dismissal? has to follow in relation to individual dismissals?
Employees’ representatives and employees during pregnancy, The dismissal of an employee requires not only the existence of maternity leave, and during the breastfeeding period, as well as “just cause” but also compliance with procedural requirements as those on parental leave, have special protection against dismissal. set out in the relevant legislation. The main compulsory steps to be followed are:
6.5 When will an employer be entitled to dismiss for: (i) The disciplinary procedure must be initiated within 60 days of 1) reasons related to the individual employee; or 2) the fault being identified. The disciplinary procedure begins Portugal business related reasons? Are employees entitled with a written communication to the employee, which must to compensation on dismissal and if so how is state that the procedure has been initiated in order to dismiss compensation calculated? the employee (“Communication”). A full description of all of the facts allegedly executed by the employee (“Report”) should be attached to the Communication. If the employee is 1) The existence of just cause for dismissal also depends on the a union representative, a copy of the Communication and of relevant consequences that an employee’s behaviour has on the the Report should be sent to them. employee/employer relationship. “Just cause” can only result (ii) The employee, within 10 working days of receiving the from behaviour that, because of its gravity and because of the Communication and Report, must present their written consequences to the employer, makes unacceptable the continuation defence. He may also attach documents and request of the employment agreement. The relevant Portuguese legislation the production of evidence, inter alia, oral testimony of foresees various situations that, in principle, are considered just witnesses. cause. These are as follows: (iii) The employer, directly or through an instructor, should hear ■ Unreasonable disobedience of orders given by a superior. all the witnesses presented by the employee, up to a maximum ■ Disrespect of other employees’ rights. of three per each fact argued and 10 in total. ■ Continuous creation of conflicts with other employees. (iv) Once the production of evidence is over, the employer has 30 days to issue the final decision (“Decision”). Such decision ■ Continuous indifference to carrying out, with due diligence, must be presented in writing. duties inherent to the job. ■ Damage to relevant financial or fiduciary interests of the employer. 6.7 What claims can an employee bring if he or she is ■ False declaration in relation to the justification of an absence. dismissed? What are the remedies for a successful claim? ■ Unjustifiable absence from work that results in serious damage or risk to the employer or, independently from risk or damage, five continued days of absence or 10 interspersed The causes of unfair dismissal are: a) nonexistence or invalidity days of absence in a year. of the disciplinary proceeding; b) dismissal based on political, ideological or religious reasons; and c) the absence of valid reasons ■ Conscious breach of safety and hygiene rules. in relation to the dismissal of the employee. ■ Injuries, verbal insults or other offences against other employees, members of the corporate bodies of the employer If the court considers the dismissal to have been unfair, the employer or its representatives. will have to pay the employee any moral damages awarded by the ■ Kidnapping and in general other crimes against personal court, as well as the wages the employee did not receive (the company freedom of the persons referred to in the previous paragraph. is only liable to pay up to 12 months of salary). Moreover, because ■ Breach or opposition to compliance with court decisions or of an unfair dismissal, the employee has the right to be reinstated. other decisions from public authorities. However, the employee may opt for compensation instead of ■ Abnormal reduction of the employee’s productiveness. reinstatement. Such compensation will correspond to an amount of between 15 and 45 days’ (which may be increased to 30 and 60 In case of dismissal for just cause, the employee is not entitled to days in case the employer formally objects to reinstatement, which receive any financial compensation. it may do in the case of direction and management employees) pay 2) Redundancy must be due and justified by the closing-down of for each year of service or fraction thereof, with a minimum of three one or more departments/sections of the company or a reduction of months’ pay. For these purposes, the length of service continues to employees caused by market, structural or technological grounds. be calculated until the date of the court’s decision. In this case, the employer would be obliged to grant the employee compensation. Such compensation should be calculated as follows: 6.8 Can employers settle claims before or after they are ■ One month’s salary per year of service for services rendered initiated? until 31 October 2012; ■ 20 days’ salary per year of service for services rendered Yes, employers can settle claims before or after they are initiated. between 1 November 2012 and 30 September 2013; and ■ 12 days of salary per year of service for services rendered after 1 October 2013. 6.9 Does an employer have any additional obligations if it is dismissing a number of employees at the same If compensation calculated until 31 October 2012 is equal to or time? greater than 12× Reference Base Salary (RBS) or 240× Guaranteed Minimum Remuneration (GMR) (currently set at €580), the Yes. Collective redundancy occurs when, within a three-month employee will be entitled to the full amount (including excess), period, an employer dismisses at least two employees if the employer but no additional compensation will be accrued for service after 31 has 50 or fewer employees, or five employees if the employer has October 2012. more than 50 employees.
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Collective redundancy must be justified by the closing down of one or mandatory. The law does not establish any minimum or maximum more departments/sections of the company or a reduction of employees amount and the parties may freely agree to it. The amount of caused by market, structural or technological grounds: compensation for non-competition should be a reasonable amount ■ Market reasons – For this purpose, market reasons are either to ensure the employee’s livelihood together with a non-related the reduction of the company’s activity due to the reduction activity or unemployment benefit. in the demand for goods or services, or the legal or practical Regarding the permanence covenant, the employee is obliged not to impossibility of selling these goods or services in the market. terminate her/his employment agreement, for a period not exceeding ■ Structural reasons – For this purpose, structural reasons are three years, as compensation for extraordinary expenses made by the economic and financial imbalance, the change of activity, the employer during the employee’s training. the restructuring of the production organisation or change of
dominant products. Portugal ■ Technological reasons – For this purpose, technological reasons 7.4 How are restrictive covenants enforced? are alterations which have occurred in the production techniques, processes, or the automation of the production equipment, Restrictive covenants are enforced by means of a legal action. control or transport of weights, as well as the computerisation of services and the automation of communication systems. 8 Data Protection and Employee Privacy 6.10 How do employees enforce their rights in relation to mass dismissals and what are the consequences if an 8.1 How do employee data protection rights affect the employer fails to comply with its obligations? employment relationship? Can an employer transfer employee data freely to other countries? Dismissed employees can appeal to the court by way of an interlocutory injunction in order to suspend the dismissal within five The employment agreement itself is a legal ground for the working days and/or through a definitive action that must be brought processing of employees’ personal data, meaning that the data within a period of six months after the date of termination. subjects do not have to consent it. However, employers can only As previous mentioned in the answer to question 6.7, if the dismissal process data that is strictly necessary for the execution of the is unfair, the employer will have to pay the employee any moral employment agreement and fulfilment of legal obligations, such as damages awarded by the court, as well as the wages the employee for purposes of salary payment, contributions to tax authority and did not receive in the interim period (the company is only liable to social security, or insurances against accidents at work. Personal pay up to 12 months’ worth of salary). Moreover, because of an data processed for other purposes, such as company marketing, unfair dismissal, the employee has the right to be reinstated. health insurance or other benefits require the employees’ explicit consent. In any case, employers are obliged to provide employees with 7 Protecting Business Interests Following information on how personal data is processed by the company, for Termination instance the identification and contacts of the controller and the data protection officer, rights of the data subjects and ways of exercising 7.1 What types of restrictive covenants are recognised? it or the period for which it will be stored. Regarding the transfer of employees’ data in particular, if it is Permanence and non-competition agreements are recognised as between EU countries, there are no boundaries. It is just required that restrictive covenants. employers inform the data subjects about the recipients or categories of recipients of their personal data. If the transfer is to a non-EU country, employers must inform the data subjects of the intention to 7.2 When are restrictive covenants enforceable and for transfer personal data to a third country or international organisation. what period? In addition, data subjects must be informed of the existence or absence of an adequacy decision by the Commission, or, if not, reference to A clause limiting the activity of the employee for no more than two the appropriate or suitable safeguards and the means by which to years (or three years for those employees whose activity involves a obtain a copy of them or where they have been made available. relationship of trust or access to particularly sensitive information concerning competition) after termination of the employment agreement is lawful, if all of the following conditions are met: 8.2 Do employees have a right to obtain copies of any personal information that is held by their employer? (a) such clause is stated in writing in the employment agreement or in the termination agreement; Employees, as data subjects, have the right to obtain from their (b) it is an activity the performance of which can effectively cause damage to the employer; or employer confirmation as to which personal data concerning them is being processed, where it is being used and for what purpose. (c) the employee is given compensation during the period in Further, if required, employers provide a copy of the employees’ which the activity is restricted, which may be fairly reduced when the employer has spent a substantial amount of money personal data, free of charge, in electronic format. in the professional training of the employee. 8.3 Are employers entitled to carry out pre-employment checks on prospective employees (such as criminal 7.3 Do employees have to be provided with financial record checks)? compensation in return for covenants?
The general provision establishes that the employer cannot run, In Portugal, non-competition during the agreement does not require directly or through a third party, a background check on applicants any payment but if it is to apply after termination such payment is
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regarding private personal information. Nonetheless, it is possible Justice (‘Supremo Tribunal de Justiça’), or even, if a matter of to do so if such information is strictly necessary to assess the unconstitutionally is raised during the process, the Constitutional employees’ capacity to perform their duties and there is a written Court may also overrule a lower court decision with a collective of request justifying the need for such information. The applicant can 13 judges. The Supreme Court will hear cases either in a formation also allow background checks to be conducted. of three judges, or, in some cases, in a formation of eight judges.
8.4 Are employers entitled to monitor an employee’s 9.2 What procedure applies to employment-related emails, telephone calls or use of an employer’s complaints? Is conciliation mandatory before a computer system? complaint can proceed? Does an employee have to pay a fee to submit a claim? Portugal Yes, if a very strict set of requirements is met. It depends on a careful preparation in advance of the framework in which such The procedure for employment-related complaints differs depending monitoring may exceptionally occur, on informing the employees on the type of complaint. It is not mandatory to complete the on the conditions of use of the company’s equipment, the forms of conciliation procedure before a complaint can proceed. Nevertheless, control and its purposes, etc., and on prior communication with the during the judicial procedure conciliation sessions take place. Portuguese Data Protection Authority (“CNPD”). In order to submit a claim, an employee must pay a court fee, except if the employee is exempted from this payment due to their financial 8.5 Can an employer control an employee’s use of social situation or if he/she is represented by the public prosecutor’s office. media in or outside the workplace? 9.3 How long do employment-related complaints typically On this particular matter, the issues arising from the employees’ take to be decided? right to privacy are even more pressing but, in very exceptional situations, such control may be permissible (for example, in cases For urgent matters, like work accident complaints or unfair concerning the company’s reputation and image), although this dismissal, court decisions are made within a maximum period of possibility always requires a careful analysis in relation to each 12 months. For non-urgent matters, employment related complaints individual case. typically take between a year-and-a-half and two years to be decided at first instance court. 9 Court Practice and Procedure 9.4 Is it possible to appeal against a first instance decision and if so how long do such appeals usually 9.1 Which courts or tribunals have jurisdiction to hear take? employment-related complaints and what is their composition? Yes, it is. On average, the appeal takes one year to be decided by second instance court. The possibility to appeal against a decision In Portugal, the employment-related complaints are decided by of the first instance level depends on the value of the complaint the Labor Court (first instance level), formed of only one judge. (generally above €5,000). However, in certain circumstances it is Following this, three judges would decide whether or not the party possible to appeal against a first instance decision regardless of the that has been defeated at first instance may appeal for a second amount involved. Namely in matters involving work accidents, instance, the ‘Tribunal da Relação’ and subsequent appeal. If employees’ dismissals, validity of employment agreements, applicable, depending on the nature of the complaint or the amounts definition of the employees’ categories,inter alia. involved, there can be a new appeal for the Supreme Court of
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Dália Cardadeiro Alexandra Almeida Mota BAS – Sociedade de Advogados, SP, RL BAS – Sociedade de Advogados, SP, RL Rua Artilharia Um, 51 Páteo Bagatela Rua Artilharia Um, 51 Páteo Bagatela Edifício 1, 4.º andar Edifício 1, 4.º andar 1250 - 137 Lisbon 1250 - 137 Lisbon Portugal Portugal
Tel: +351 211 554 330 Tel: +351 211 554 330 Email: [email protected] Email: [email protected] URL: www.bas.pt URL: www.bas.pt Portugal ■■ Graduated in Law from the Faculty of Law of the University of ■■ Degree in Law from the Universidade Católica Portuguesa (1996). Lisbon (1999). ■■ Master in Law from the Faculdade de Direito da Universidade de ■■ Intensive post-graduate degree in Banking Law from the Institute Lisboa (2002). of Banking Law of the Faculty of Law of the University of Lisbon ■■ In 2008, attended the Master in “Relaciones Laborales/Labor (2000). Relations” in IE Business School – Instituto de Empresa, in Madrid. ■■ Intensive post-graduate degree on the new Labour Code by the ■■ Lawyer since November 1998. Joined BAS – Sociedade de Labour Institute of the Faculty of Law of the University of Lisbon Advogados, SP, RL (2015). (2004). ■■ Legal consultant at the Portuguese Government Commission for ■■ Post-graduate degree in Arbitration at the Faculty of Law of Citizenship and Gender Equality from April 1997 until September Lisbon’s Universidade Nova (2010). 2003. ■■ Post-graduate degree in Public Employment Law at the Law and ■■ EELA Member – European Employment Lawyers Association Regulation Study Centre of the Coimbra University Law School since 2003. (2013). ■■ Deep knowledge on employment and social security matters. ■■ Partner (founder in 2010) and lawyer at BAS – Sociedade de Advogados, SP, RL. ■■ Active in companies’ restructuring processes, including collective dismissals, downsizing processes and severance agreements. ■■ EELA Member – European Employment Lawyers Association. ■■ Assistance to international clients on implementation of their ■■ Participation in opinion articles in the areas of Labour Law and international policies and practices in Portugal. Public Services Law. ■■ Strong knowledge on the Iberian market. ■■ Trainer in training courses in the areas of Labour Law and Public Services Law. Dália has lectured in training in Angola regarding ■■ Larger experience in negotiations representing unions and works Angola’s Employment law. Experience in international litigation councils. associated with the judicial actions regarding CPLP. ■■ Long-time opinion article collaborator with the main business ■■ Assistance to clients in the definition and implementation of newspapers, legal magazines, and regular speaker at conferences their human resources policies and practices, and prevent the and seminars. occurrence of labour disputes or ensure their swift and effective ■■ Alexandra is recommended by Chambers & Partners (Tier 3). resolution. ■■ Deep Knowledge on consultancy and training services concerning Employment and Social Security law in the public and private institutions in different subject areas of the Countries that belong to the CPLP (Community of Portuguese Speaking), such as corporate restructures, definition of remuneration policies and contractual models and disciplinary action and due diligence. ■■ Extensive experience on corporate restructures, collective dismissals, definition of remuneration policies, contractual models, disciplinary action and due diligence.
BAS law firm was founded in 2010 and has a team of 24 lawyers, with about 30 professionals. In addition to the Lisbon and Oporto offices, BAS has an international presence through its partnerships and partners in Angola, Brazil and Mozambique. The BAS hallmark is its competence and high level of experience of its professionals. The firm has a special focus on legal support in the areas of Health Law, Labour Law, Public Service, Administrative Law, Public Procurement, Administrative Litigation, Intellectual Property, Corporate Law, Banking and Financial Law, Civil Litigation, Data Protection and, more recently, Real Estate Law and Sports Law. ICLG■■ BAS TO: clients EMPLOYMENT are mainly from the & public LABOUR sector and LAW SMC. 2018 WWW.ICLG.COM ■■ Professional legal advice, providing valuable knowledge to help the challenges presented by our clients. ■■ BAS also plays an active role in social responsibility by accepting pro bono requests to support projects in the areas of Health and Culture.
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Romania
Pachiu & Associates Mihaela Cracea
40 working hours per week); they are not allowed to work overtime; 1 Terms and Conditions of Employment and, with regards to fixed-term workers, their ILAs are limited to the period mentioned in the agreement. 1.1 What are the main sources of employment law? In addition, and for determined periods of time, the Labour Code and other relative legal provisions regulate the temporary workers, The main sources of employment law are the Labour Code (Law No. who are employed by temporary workforce agencies and made 53/2003), as republished in the Official Gazette No. 345/18.05.2011 available to companies called beneficiaries. The temporary workers and further modified (the “Labour Code”), and the Social Dialogue enjoy the same rights as the beneficiaries’ own employees. Law (Law No. 62/2011), published in the Official Gazette No. 322/10.05.2011 (the “Social Dialogue Law”) as further modified. 1.3 Do contracts of employment have to be in writing? If For other labour-related matters, such as labour, health and safety, not, do employees have to be provided with specific protection of maternity in the workplace, non-discrimination, social information in writing? security, and the protection of employees in the case of transfer of undertakings, etc., there are particular legal sources. ILAs have to be concluded in writing, in the Romanian language, based on the parties’ mutual consent and prior to the commencement of the employment relations. The obligation to conclude the ILA in 1.2 What types of worker are protected by employment law? How are different types of worker distinguished? writing is incumbent on the employer. Prior to the conclusion of an ILA, the employer shall inform its There are two types of workers: (i) workers employed by private potential employee about the main provisions of the ILA, such as legal entities; and (ii) workers employed by public institutions and job position, job description, workplace, salary and working hours. authorities (i.e., public servants). Moreover, prior to the commencement of the activity, the employer The employment laws protect both categories of workers, but there should provide the employee with an original copy of the ILA. are certain differences regarding the applicability of such legal provisions, as follows: 1.4 Are any terms implied into contracts of employment? ■ Workers from the private system may negotiate details concerning their Individual Labour Agreements (“ILAs”) ILAs take a form that briefly includes the main and most important within the limits set by the applicable legal provisions, such as details regarding employment. salary, holiday, work time, etc. In this case, the employment laws represent only the legal frame, whereas such workers The ILA shall provide for the most essential conditions of may have a more flexible approach with regards to the employment, such as: (i) identification of the parties; (ii) job conditions of their specific labour positions. position; (iii) work schedule; (iv) workplace; (v) salary and other ■ Labour relations applicable to workers in the public system indemnifications; (vi) details concerning holidays; (vii) trial period; are ruled by special and derogatory legal provisions. Such (viii) notice period; (ix) criteria of employees’ appraisals; and (x) workers may not negotiate and change all the conditions of parties’ rights and obligations, as well as any other significant/ their employment. special details that the parties are willing to establish explicitly As regards the workers from the private system, the legal regulations (e.g., confidentiality, non-compete obligations, intellectual property provide for full-time workers and part-time workers, as well as for rights, etc.). fixed-term workers and workers employed for an unlimited period of time. 1.5 Are any minimum employment terms and conditions All the rights and obligations applicable to full-time workers and to set down by law that employers have to observe? workers employed for an unlimited period of time are recognised as applicable to part-time workers and fixed-term workers as well. Employers may negotiate the main details of the ILA with the The main difference between such categories is that: in relation to employees, but cannot decide upon conditions less favourable to part-time workers, the working time is less than the normal working employees than the ones set up by the law. hours provided by the legal regulations for a full-time worker (i.e., There are certain minimum terms and conditions that must be considered by the employers, such as trial period, salary, annual
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leave, minimum working conditions, maximum number of working Representative trade unions have the right to take part in collective hours per day/month, procedure in the case of dismissal, notice bargaining and to be consulted with respect to any measures period, etc. envisaged by the employer which might have an impact on the Moreover, an employee may never waive his/her minimum legal workers, such as collective lay-offs. rights as provided by labour legislation, not even in a direct and written form. If the ILA contains certain terms that are inconsistent 2.3 Are there any rules governing a trade union’s right to with the minimum legal rights, such terms are deemed null and void, take industrial action? becoming applicable the minimum legal rights. A trade union is entitled to take industrial action if it considers such a measure to be in the best interests of the represented employees.
1.6 To what extent are terms and conditions of Romania employment agreed through collective bargaining? The main industrial action available to a trade union is the strike. A Does bargaining usually take place at company or strike can be declared only if it was notified to the employer at least industry level? 48 hours in advance and if all the other reconciliation procedures provided by the Social Dialogue Law have been exhausted. As of the enactment of the Social Dialogue Law, the Collective There are three types of strike: (i) a warning strike; (ii) a proper Bargaining Agreement (“CBA”) at national level does not strike; and (iii) a solidarity strike. exist anymore. Such agreements might be concluded only at industry level and will be applicable only to contractual parties. A proper strike represents the collective and voluntary cessation of Furthermore, collective bargaining also takes place at company work by the employees of a company, or within a certain industry. level. Negotiation at this level is mandatory for companies having Attending to a strike is the sole option of the employees. The at least 21 employees. However, the conclusion itself of a CBA is employees who are not attending the strike are obliged to continue not mandatory; only the negotiation. their employment activity. During collective bargaining, parties usually aim to agree upon more The warning strike cannot exceed two hours. The solidarity strike favourable employment terms and conditions than the minimum cannot exceed 24 hours. standards recognised by the law. Certain rules are set for energy and public sector employees that must ensure one third of activity in case of a strike. Also, certain categories of public personnel, such as prosecutors, judges and 2 Employee Representation and Industrial military personnel, may not initiate strikes. Relations
2.4 Are employers required to set up works councils? If 2.1 What are the rules relating to trade union recognition? so, what are the main rights and responsibilities of such bodies? How are works council representatives chosen/appointed? Trade unions are independent legal entities, without a lucrative purpose, established for the protection and promotion of both the Works councils may only be set up following EU regulations collective and individual rights of employees who are trade union regarding employers/groups of employers. members. Such employers must offer the proper conditions for negotiation Firstly, in order for a trade union to be recognised, it must be regarding the setting up of the works councils or the setting up of registered with the territorial competent court of law. To this aim, the information and consulting procedure. at least 15 employees of the same employer are required to sign the minutes of the organisation. Such negotiations may be initiated by the employer, or the employees may request the establishment of a works council. The request of Secondly, to be considered representative and to take part in the employees is to be addressed to the central management. collective bargaining, trade unions must meet the following requirements: With regards to works councils, Romanian legislation provides ■ at company level: to be legally established and include at such entities with the sole purpose of informing and consulting least 50 per cent + 1 of the total number of employees; employees. ■ at industry level, or group companies level: to be a The members of the works councils are employees appointed either representative organisation for that particular industry, by the representatives of the employees or elected directly by the including at least seven per cent of the number of employees employees, if there are no such representatives. The number of in that industry; and members must be between three and 30, with representatives of ■ at national level: to be a nationally representative trade both genders, and should provide at least one representative of each union confederation that covers over five per cent of the total European Member State where the employer has affiliates. number of the employees in the country. According to the number of employees in a particular Member State, one or more additional representatives may also be appointed. 2.2 What rights do trade unions have? 2.5 In what circumstances will a works council have co- Trade unions are independent legal entities, without a lucrative determination rights, so that an employer is unable to purpose, established for the protection and promotion of both the proceed until it has obtained works council agreement collective and individual rights of employees that are trade union to proposals? members. For this purpose, trade unions have the right to submit, on behalf of The works councils must be informed regarding any measures their members, petitions and motions of claims based on a power of that the company or group of companies intend to take, which will attorney issued by such members. directly or indirectly affect the interests of the employees.
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The works councils do not have, according to Romanian legislation, any co-determination rights regarding the measures to be taken by 3.4 How do employees enforce their discrimination the employer. rights? Can employers settle claims before or after they are initiated?
2.6 How do the rights of trade unions and works councils Provided that an employee considers any discrimination is interact? being exerted in his/her regard and he/she informs the employer accordingly, the employer may settle such a claim by taking the The trade unions or the representatives of the employees are entitled necessary measures to protect the employee from discrimination. to appoint the members of the works councils, in compliance with Furthermore, if the employees consider that they have been the legal conditions regarding the number and capacity of such Romania discriminated against, they are entitled to file a formal complaint members. with the National Council for Combating Discrimination, within After the setting up of the works councils, such councils shall one year as of the date when the discriminatory action took place, or collaborate with the trade unions or the representatives of the from the time he/she learned of such an action. employees in order to simplify the procedures of informing and If the employee is still not satisfied with the result of the complaint, consulting with the employees on any measures and/or issues he/she is entitled to file a discrimination claim to the competent pertaining to the employees’ interests. court of law. The claim may be settled amicably by the parties, if they reach an agreement, even after the litigation is initiated. 2.7 Are employees entitled to representation at board level? 3.5 What remedies are available to employees in successful discrimination claims? Employers are not obliged to invite the representatives of the employees to the Board of Directors’ meetings, having on the An employee who has proven that he/she has been discriminated agenda issues that may affect the employees from a professional, against may request and obtain (i) special (moral) and/or compensatory economic, social, cultural or sportive point of view. However, damages, (ii) reinstatement of the status quo ante position, or (iii) if invited, such representatives do not have any right of decision cancellation of the discriminatory situation (measure, deed). as there is no obligation to appoint employees of the company as members of the Board of Directors. Further, in the case of dismissal on discrimination grounds, the employee may request to be reinstated in his/her former position.
3 Discrimination 3.6 Do “atypical” workers (such as those working part- time, on a fixed-term contract or as a temporary agency worker) have any additional protection? 3.1 Are employees protected against discrimination? If so, on what grounds is discrimination prohibited? The legal provisions with regards to the rights and obligations of the The employer must comply with the principles of equal treatment, workers are the same for all categories of workers. The differences non-discrimination and equal opportunities for all of its employees. are triggered only by the nature of their employment contract. Direct or indirect discrimination towards an employee, based on criteria such as gender, sexual orientation, genetic characteristics, 4 Maternity and Family Leave Rights age, national origin, race, colour of skin, ethnic origin, religion, political orientation, social origin, disability, family conditions or responsibilities, or trade union membership or activity is prohibited. 4.1 How long does maternity leave last?
Maternity leave consists of 126 calendar days, usually 63 days 3.2 What types of discrimination are unlawful and in what before birth (pregnancy leave) and 63 days after birth (nursing circumstances? leave). Both nursing and pregnancy leaves may be compensated between each other, according to the doctor’s recommendation and The employer must observe and respect non-discrimination the mother’s option. Nonetheless, the nursing leave must not be principles during the recruitment process, when concluding the fewer than 42 calendar days. ILA and for the entire term of the ILA, as well as when terminating the ILA. Any type of discrimination on the grounds mentioned Starting on 1 January 2011, people who have earned income for hereinabove is considered unlawful, and may be sanctioned by the 12 months in the two years prior to the child’s birth may have a Romanian courts of law and by the National Council for Combating discretionary benefit of the following rights: (i) parental leave Discrimination. for children under the age of two years (three years in the case of disabled children); and (ii) a monthly allowance.
3.3 Are there any defences to a discrimination claim? 4.2 What rights, including rights to pay and benefits, does a woman have during maternity leave? If a discrimination claim has been registered with the competent court of law, the sole defence for the employer is to prove, with Employees who have fulfilled the minimum time of subscription testimonies, written documents and other legal evidences, that no to the Sole National Fund for Health Social Insurances may benefit measures or actions were taken towards the employee based on from a maternity indemnity. They are also insured in the medical discriminating views, but based on objective grounds related to his/ system and benefit for medical treatment supported by the National her actions and/or activities within the company.
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Health Insurance House. The maternity leave is also considered as a subscription period for pension insurance. 5 Business Sales
4.3 What rights does a woman have upon her return to 5.1 On a business sale (either a share sale or asset work from maternity leave? transfer) do employees automatically transfer to the buyer? Employers cannot dismiss employees who have been on maternity leave for a period of six months, after the employee’s return to Yes, Romanian legislation has transposed Council Directive No. work. Such an interdiction is not applicable in cases of judicial 2001/23/EC on the approximation of the laws of the Member reorganisation or insolvency of the company. States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings Romania Pregnant employees or employees who have returned from nursing or businesses. The transposition was made by Law No. 67/2006 leave or who are breastfeeding and are working in hazardous on the protection of employees’ rights in cases of the transfer of a conditions, are entitled to relocation to a safer position, or to the business, units or parts thereof, published in the Official Gazette No. improvement of their working conditions. If neither is possible, the 276/28.03.2006 (“Law No. 67/2006”). employee is entitled to maternity risk leave for up to 120 days. According to Law No. 67/2006, a transfer of an undertaking occurs Women who have recently given birth or are breastfeeding may not if the ownership over a business or part of a business is transferred be compelled to perform night work. from a transferor company to a transferee company with the objective of keeping such an undertaking in operation after the transfer. As 4.4 Do fathers have the right to take paternity leave? a consequence of such transfer, the employees are automatically transferred to the buyer. In cases of a share sale, considering that Fathers are entitled to five calendar days of paternity leave. The this is a corporate change at shareholding level, such a change does paternity leave shall be awarded upon request, within the first eight not have a direct and automatic consequence on the employees. weeks after the birth of the baby. If the father has graduated in a course concerning the rearing of 5.2 What employee rights transfer on a business children, he is entitled to an additional 10 calendar days of paternity sale? How does a business sale affect collective leave. agreements? Also, according to a legal provision which entered into force on 1 The transferee company has to take over all individual and collective March 2012, the other parent has to be granted one month from the labour agreements concluded between the transferor company and period of leave for raising the child. Otherwise, the right to benefit its employees. The employees must enjoy the same rights they from such a month of parental leave will be lost. Basically, in cases had prior to the transfer, and the provisions of the ILAs concluded where the mother chooses the two years’ parental leave, she can stay between the transferor company and the employees remain valid. with the child for one year and 11 months and the remaining one month shall either be granted to the father or lost. The transferee company has to observe that the transferred employees are not granted rights that are inferior to those which they had under In situations in which the mother dies at birth or during the nursing the ILAs and under the CBA concluded with the transferor company. leave, the father is entitled to the rest of the mother’s leave, receiving the correlative indemnity. Last but not least, during the paternity With regards to the CBA, the transferee company may only leave, the father is entitled to benefit from the monthly child-raising renegotiate the transferor company’s CBA after one year as of the allowance. Also, the father is entitled to benefit from the insertion takeover date. incentive in case he decides to return to the job before the child reaches the age of one. 5.3 Are there any information and consultation rights on a business sale? How long does the process typically take and what are the sanctions for failing to inform 4.5 Are there any other parental leave rights that and consult? employers have to observe?
The transferor has to inform the transferee of all the rights and Either the mother or the father may, upon request, benefit from parental obligations that are to be transferred. leave, for a period of time until the child has reached the age of two. Moreover, 30 days prior to the takeover date, the transferee and Employees having a disabled child may benefit from parental leave transferor must, in writing, inform their employees about: (i) the until the child reaches the age of three. envisaged takeover date, including takeover reasons; (ii) the legal, economic and social consequences of the transfer; (iii) the decisions 4.6 Are employees entitled to work flexibly if they have affecting the employees; and (iv) the working conditions to be responsibility for caring for dependants? provided upon takeover. In cases where such a transfer affects the employees, the employer Pregnant employees may benefit from a maximum number of 16 has to consult the trade union/employees’ representatives at least 30 hours per month for pre-natal consultations, without a decrease in days prior to the transfer date. their salary rights. Non-compliance with the provisions regarding the transfer of Employees that are breastfeeding benefit from two work breaks for an undertaking results in a fine of RON 1,500 to RON 3,000 breastfeeding, of one hour each, until the child reaches the age of (approximately EUR 350 to EUR 700). one. These two hours may be granted as a shortening of the work programme upon the employee’s request without decreasing the salary income, and shall be entirely borne by the employer.
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party consent. However, in cases of dismissal for disciplinary 5.4 Can employees be dismissed in connection with a misconduct, the employer has to establish a commission that should business sale? propose the dismissal. Moreover, in cases of dismissal of an employee based on their A business sale may not represent a reason for dismissal. All the physical/mental incapacity, a decision of competent medical experts employees have to be transferred and the transferee may not claim has to be taken. any individual or collective dismissal of the transferred employees based on the occurrence of the transfer. 6.4 Are there any categories of employees who enjoy special protection against dismissal? 5.5 Are employers free to change terms and conditions of Romania employment in connection with a business sale? The Labour Code provides for situations in which the dismissal of an employee is not possible. According to the Labour Code, it is not The employers may not change the labour conditions of the permitted to dismiss an employee based on criteria such as gender, transferred employees without the prior approval of the employees. sexual orientation, genetic characteristics, age, national origin, Any amendments to the terms and conditions of employment have race, colour of skin, ethnic group, religion, political opinions, to be included in the ILA or in an additional act to the ILA. social origin, disability, family status or responsibility, trade union membership or activity, or for exercising, under the law, the right to strike and trade union rights. 6 Termination of Employment Moreover, it is forbidden to dismiss an employee in the following cases: during illness leave attested by a medical certificate; during 6.1 Do employees have to be given notice of termination quarantine; during the entire period when the employed woman is of their employment? How is the notice period pregnant, provided that the employer found out about her pregnancy determined? before the issuance of the dismissal decision; during maternity leave; during the leave for raising a child up to the age of two years, An ILA may be terminated: (i) by law; (ii) by mutual consent; (iii) or in the case of a disabled child, up to the age of three years; during upon the employee’s initiative; or (iv) upon the employer’s initiative. nursing leave for a sick child of up to seven years, or in the case With regards to the employer’s initiative, employees may not of a disabled child, for underlying illnesses, until the child turns be dismissed without cause, even if the employee is granted 18; during the exercise of an elected position within a trade union compensation and an extended notice period. Considering such, an body, except when the dismissal is ordered for a serious disciplinary employee may be dismissed only in the following limited situations: misconduct or repeated disciplinary misconducts; or during annual i. employee’s disciplinary misconduct; leave. ii. employee’s professional incapacity; However, such interdictions are not applicable in cases of dismissals iii. the closing of the employee’s position; due to the insolvency of the employer, legal reorganisation or winding-up. iv. employee’s physical/mental incapacity; or v. if the employee is in police custody or under house arrest for more than 30 days. 6.5 When will an employer be entitled to dismiss for: 1) reasons related to the individual employee; or 2) In the case of points ii–iv hereinabove, the employer has to give business related reasons? Are employees entitled a notice of termination and grant the employee a prior notice of to compensation on dismissal and if so how is at least 20 working days. The applicable CBA at industry and/or compensation calculated? company level, as well as the ILA, may provide for an extended notice period. Under the Labour Law, dismissal on the grounds of: (i) an employee’s disciplinary misconduct; (ii) an employee’s professional 6.2 Can employers require employees to serve a period incapacity; (iii) an employee’s physical/mental incapacity; or (iv) of “garden leave” during their notice period when the an employee being in police custody or under house arrest for more employee remains employed but does not have to than 30 days, is considered to be related to the employee, whilst the attend for work? dismissal due to the closing of the employee’s position is classed as business-related. It is possible to serve a period of “garden leave” only if the employee The latter can be either individual or collective, if a certain number agrees to such a period. Otherwise, the employer may not limit the of dismissed employees is reached. right of an employee to work, even during the notice period. In cases of dismissal due to (i) the employee’s professional incapacity, (ii) the employee’s physical/mental incapacity, or (iii) the closing of 6.3 What protection do employees have against the employee’s position, the employer has to grant the dismissed dismissal? In what circumstances is an employee employee compensation as provided by the applicable CBA. If treated as being dismissed? Is consent from a third there is no such CBA applicable to the company, no compensation is party required before an employer can dismiss? granted as the legal provisions do not provide for such.
The Labour Code expressly provides the situations in which an employee may be dismissed. In each case, dismissal must be 6.6 Are there any specific procedures that an employer grounded on a dismissal decision and a formalistic procedure must has to follow in relation to individual dismissals? be strictly observed. In each dismissal case, the employer has to issue a dismissal decision, Further, the employer has to sustain the necessity and grounds of dismissal in case of litigation. There is no need to obtain third-
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which has to be communicated to the employee and to provide for if the employer fails to comply with its obligations, the dismissed certain mandatory elements, such as the dismissal reasons, the prior employees have the right to challenge the dismissal decision in a notice period, etc. court within 30 calendar days of the date the dismissal decision was Furthermore, in cases of dismissal due to the employee’s disciplinary communicated (as provided by the Labour Code) or within 45 days misconduct and the employee’s professional incapacity, the employer of the acknowledgment of such a decision (as provided by the Social has to observe formalistic procedures provided by the Labour Code Dialogue Law). and the applicable CBA. Furthermore, in cases where the employer has failed to pay the In the first case mentioned in the above paragraph, the employer has mandatory compensation, the employees have the right in court to to carry out a preliminary disciplinary inquiry, and in the latter, an request the payment within three years as of the date when such evaluation of the employee has to be performed. Both the preliminary payment was due. Romania disciplinary inquiry and the evaluation are performed by commissions/ specific employees established by the employer for such purposes. 7 Protecting Business Interests Following Termination 6.7 What claims can an employee bring if he or she is dismissed? What are the remedies for a successful claim? 7.1 What types of restrictive covenants are recognised?
Each employee has the right to challenge, before the courts of Under Romanian Law, during the term of the ILA, an employee may law, during the 45 days following the acknowledgment of such a undertake a non-competing obligation following termination of the decision, the dismissal decision issued by the employer. In case ILA. Based on such an obligation, the employee will not be allowed of litigation, the burden of proof is incumbent on the employer, to undertake any activity in his/her own interest or in the interest of which has to prove the existence of the reasons for dismissal and a third party, which may compete with the activity performed for the that they justified the dismissal of the employee. In cases of unfair benefit of the former employer, nor to perform activities on behalf of dismissal, the court may impose the reinstatement of the employee the former employer’s competitors. to the position held prior to the dismissal and the payment of the The employee may also undertake a confidentiality agreement salaries accrued between the dismissal and the date of reinstatement. regarding the obligation not to disclose information with respect to Moreover, if requested, the court may impose on the employer the the activity of the company/employer. payment of special (moral)/compensatory damages and/or court expenses. However, moral damages are very rarely granted. 7.2 When are restrictive covenants enforceable and for what period? 6.8 Can employers settle claims before or after they are initiated? The non-competing obligation undertaken by an employee is only valid for a maximum period of two years after the termination of Pecuniary claims may be settled before, or after, they are initiated. the ILA. The fidelity obligation, if agreed, is valid for the entire However, under the Labour Code, an employee may not waive the duration of the ILA and, after its termination, for a period agreed rights granted by law, one of the rights being the challenge of a by the parties. dismissal decision issued by the employer. Any transaction by which the employee waives such rights is null and void. 7.3 Do employees have to be provided with financial Considering such, it is difficult to settle reinstatement claims before or compensation in return for covenants? after they are initiated, as such settlement would equal re-employment. However, courts of law allow the amicable settlement of claims. The non-competing clause is valid only if the former employer pays the former employee a non-competing indemnification. The non- competing indemnification must amount to at least 50 per cent of the 6.9 Does an employer have any additional obligations if average gross salaries of such an employee for the last six months it is dismissing a number of employees at the same prior to the termination date of the ILA. Such an indemnification time? shall be paid on a monthly basis during the whole period of such a covenant. Collective lay-offs require a formalistic procedure over a period of 30 days and apply in the event of termination of the ILA by the There is no mandatory indemnification in the case of the employer of at least: 10 employees if the employer has between 20 confidentiality obligation. and 100 employees; 10 per cent of the employees if the employer has between 100 and 300 employees; or 30 employees if the employer 7.4 How are restrictive covenants enforced? has at least 300 employees. In the case of collective lay-offs, the employer must consult the For the enforcement of a non-competing obligation, the parties must trade union/employees’ representatives regarding the intended lay- expressly provide in the ILA, or in an addendum to the ILA, certain off and notify the labour authorities of such a dismissal. elements stipulated by law: (i) the prohibited activities; (ii) any third party in favour of which the employee is restricted to perform such activities; (iii) the period of time for which the non-competing 6.10 How do employees enforce their rights in relation to mass dismissals and what are the consequences if an clause will produce effects; (iv) the amount of the non-competing employer fails to comply with its obligations? monthly indemnification; and (v) the geographic area in which the employee can be in real competition with the former employer. In cases of mass dismissal, as in the case of individual dismissals,
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The employers might also request other information and documents 8 Data Protection and Employee Privacy from the prospective employees, provided that they are relevant or strictly necessary for the targeted job (considering the job description 8.1 How do employee data protection rights affect the or a requirement of the legal provisions). This information might employment relationship? Can an employer transfer concern criminal records, medical files, etc. employee data freely to other countries?
8.4 Are employers entitled to monitor an employee’s The legal framework in the field is Law No. 677/2001 on the emails, telephone calls or use of an employer’s protection of individuals with regard to the processing of personal computer system? data and on free movement of such data (“Law No. 677/2001”), Romania implementing the provisions of the Directive No. 95/46 on the Employers are entitled to monitor communications means provided protection of individuals with regard to the processing of personal by the employer, including the use of company emails and telephone data and on free movement of such data. calls, as well as the use of the internet. Employers have the obligation to process the employees’ personal Such monitoring will only be deemed legitimate, however, if data according to the provisions of Law No. 677/2001. The main employees were previously informed about such monitoring and purpose of processing employee’s personal data is for human instructed that the company’s infrastructure should not be used for resources, meaning that the personal data is processed in order for the personal purposes. Nevertheless, even if an employer has access employer to be able to fulfil its obligations towards their employees. to such means of communication, it will not have the right to Although the employers do not have the obligation of notifying the disseminate any private information which they identify in relation data protection authority with respect to the processing of employees’ to the private lives of the employees. personal data for human resources purposes (please refer to Decision No. 200/2015 and the former Decision No. 90/2006 issued by the 8.5 Can an employer control an employee’s use of social Romanian Data Protection Authority – “DPA”), employers have an media in or outside the workplace? obligation to inform employees about such processing, about the categories of personal data that are processed, the addressees, and The employer might control the use of social media of an employee their rights with respect to their personal data (especially the right only if social media activities are among the employee’s job duties. to access the data, the right to object to processing and the right to Otherwise, even if an employee accesses his/her social media intervention). accounts using the company’s computers, the company cannot The personal data of the employees can be transferred to other control the private communications through these social media countries, provided that such countries’ legislations provide for the accounts. same level of protection of personal data as Romania does. The As for the employee’s use of social media outside the workplace, transfer to third countries (i.e., which are not EU Member States) as long as the employee does not use the employer’s terminals, the requires the preliminary notification of DPA and, in some cases, the employer cannot control or monitor this activity. DPA’s clearance. Moreover, in most cases, the prior consent of the employees on such a transfer is also required. 9 Court Practice and Procedure 8.2 Do employees have a right to obtain copies of any personal information that is held by their employer? 9.1 Which courts or tribunals have jurisdiction to hear employment-related complaints and what is their As is the case with any data subject, employees have the right to composition? access their personal data processed by the employer and to exercise any other rights recognised by Law No. 677/2011 including their Employment-related complaints are settled at first instance right to request and obtain information from their employer about by the tribunal, competent within the range of the claimant’s the processing of their personal data. The employer must disclose to domicile/residence or headquarters, where special labour sections the employees information including the purpose of the processing, are established. At first instance, the cases are settled by a panel categories of processed personal data, data recipients, etc. Likewise, consisting of a judge and two judicial assistants. On second appeal, the employees are entitled to obtain copies of the documents in their the case is heard by a panel of three judges at the Courts of Appeal. personal files which may comprise their personal data. The decision of the first court is definite and enforceable.
8.3 Are employers entitled to carry out pre-employment 9.2 What procedure applies to employment-related checks on prospective employees (such as criminal complaints? Is conciliation mandatory before a record checks)? complaint can proceed? Does an employee have to pay a fee to submit a claim? Employers are entitled to carry out pre-employment checks on prospective employees, using public information only and the Employment-related complaints have to be settled in an emergency information provided by the employees through their CVs regime. The claims are exempted from the judicial stamp fee and (information such as name, sex, gender, civil status, professional from a judicial stamp. Furthermore, as a general rule, hearing terms experience, training and education, and preferences). Such processing cannot exceed 15 days. The employer has the burden of proof and of personal information included in the CV is, according to Decision the legal summoning procedure can be performed 24 hours prior to No. 200/2015 and to the former Decision No. 100/2007 issued by the the hearing date. Evidence must be submitted to the court before the DPA, exempted from notification to the authority, provided that this first court hearing of the parties. The conciliation is not mandatory information is processed only for recruitment purposes and that the prior to the initiation of the court proceedings. CVs are voluntarily transmitted by the person concerned.
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9.3 How long do employment-related complaints typically 9.4 Is it possible to appeal against a first instance take to be decided? decision and if so how long do such appeals usually take? As a general rule, even if the complaints have to be judged with urgency, a case may take up to two years if an appeal against the The decisions of the tribunal can be appealed at the Courts of Appeal, first instance decision is filed. However, it is possible to havea where special labour sections are established. The decision of the complaint settled within a year if no such appeal is filed. Court of Appeal is final and it usually takes one year for a decision to be settled. However, an appeal does not prevent the enforcement of the first instance court’s decision. Essentially, the first court’s
decision is enforceable as of right (de jure) and the appeal may Romania suspend the effects of such a decision exceptionally, only for strong reasons and only after the submission of bail by the interested party.
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Mihaela Cracea Pachiu & Associates 13 Barbu Delavrancea Street Bucharest 1, 011351 Romania
Tel: +40 21 312 10 08 Email: [email protected] URL: www.pachiu.com
Romania Mihaela is a lawyer with over 14 years of professional experience, leading the IT & data privacy Practice group, as well as the Labour sub-practice area. Mihaela has built a solid expertise and legal competence in IT, cybersecurity, data protection and intellectual property related matters, and manages projects on information security and cross border data flow matters. Other highlights of Mihaela’s practice involve holding training on the measures to be implemented so as to ensure data privacy and cybersecurity compliance and reviewing IT and data privacy policies and other related documentation in terms of local and European statutory provisions in the field. As a labour and employment lawyer, she has been involved in projects on staff restructuring and transfer of undertaking, by providing guidelines, drafting the required documentation, assisting the clients during the negotiations and following up on post-acquisition issues. As graduate of the Faculty of Law of the Ovidius University in Constanta, Mihaela holds a LL.M. degree in Business Law and is an intellectual property counsel on trademarks. She is fluent in English and conversant in French and co-authored several international comparative legal guides focusing on data protection matters in the digital environment and attended, as speaker, several local conferences on cyber security and data privacy issues.
Pachiu & Associates is a Romanian business law firm founded 15 years ago by Laurentiu Pachiu, one of the first business lawyers in Romania. It rapidly evolved to become one of the leading local law firms for one main reason: it offers prompt, effective and personalised solutions to all legal matters and challenges that domestic and foreign businesses are confronted with in Romania. Pachiu & Associates counts on a solid team of experienced and motivated lawyers, graduates of leading universities in Romania or abroad. The team brings together 10 lawyers and five partners each heading a department and a practice area in the firm. Our lawyers are proficient in English and some of them in German, Italian and Spanish. We have built a strong, well-reputed German desk owing to the vast expertise advising Austrian and German investors in Romania. We pride ourselves in providing longstanding legal assistance throughout the years and opinions on transactions having an aggregate value of several billion euros. Due to our well-established network of clients and partners, we have constantly been involved in a variety of cross-border transactions. The firm’s offices are located right in the heart of Bucharest. The Bucharest office covers the firm’s activity throughout the country, either directly or through partner law firms in the major cities in Romania, as cost- and time-effectiveness standards impose.
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Slovenia
Law firm Šafar & Partners, Ltd Martin Šafar
with a draft written employment contract at least three days prior to 1 Terms and Conditions of Employment the envisaged signing of the contract and with a written employment contract upon its conclusion. 1.1 What are the main sources of employment law? Pursuant to the ERA-1, the employment contract must be executed in writing; however, according to the law and case law, a relationship The main source of employment law in the Republic of Slovenia between the employee and the employer that has all elements of an is the Employment Relationships Act (hereinafter: ERA-1), the employment relationship is also deemed an employment relationship amended version of which was enforced in 2013. The ERA-1 and is implemented as such even if the employment contract is not is harmonised with European legislation and incorporates all in writing. In such a case, the employee has the right to request applicable and binding international conventions, EU directives and from their employer, any time during the employment relationship, regulations. Trade union activity, collective agreements and many to submit to them the employment contract. In the event of a other aspects of employment law, as well as special categories of dispute concerning the existence of an employment relationship, workers, are governed by special regulations. it is presumed that one exists if all elements of an employment It should be noted, in particular, that the rights and obligations of the relationship exist. parties to the employment relationship in collective agreements and internal regulations can be stipulated differently or more favourably 1.4 Are any terms implied into contracts of employment? than those presented herein. The ERA-1 stipulates some terms regarding the performance of 1.2 What types of worker are protected by employment work within the employment relationship, whereas additional terms law? How are different types of worker distinguished? can be agreed upon also in a collective agreement or an employment contract. In compliance with the ERA-1, the worker is obliged: to A worker is any natural person who has entered into an employment perform work with due diligence at the workplace and with regard relationship by signing an employment contract. An employment to the type of work for which the employment contract has been contract can be concluded by any natural person who has fulfilled concluded, at the location and during the working time laid down the conditions for performing work and is older than 15 years. The for performance of work, taking into consideration the employer’s ERA-1 governs and applies to all workers, whereby the employment organisation of work and business operations; to observe the relationships of some workers, i.e., managers, can also be stipulated requirements and instructions of the employer in relation to the otherwise. fulfilment of contractual and other obligations arising from the employment relationship; to respect and implement the regulations The ERA-1 also stipulates the category of “economically dependent and measures regarding safety and health at work and perform person”, namely a self-employed person who does not employ their work with due care; to inform the employer of all relevant workers and, under a civil law contract, performs work in person, circumstances that affect or might affect the fulfilment of their independently and for remuneration (earning 80% of their annual contractual obligations and also of any changes of data that affect the income from the same client) over a longer period of time under fulfilment of the rights deriving from the employment relationship; the circumstances of economic dependency. In compliance with to refrain from all actions which, given the nature of the work they the ERA-1, economically dependent persons are entitled to limited perform for the employer, may cause material or moral damage or labour law protection. might harm the business interests of the employer; and not to exploit for their personal use or disclose to a third person the employer’s 1.3 Do contracts of employment have to be in writing? If business secrets and during the employment relationship to not not, do employees have to be provided with specific perform work without the employer’s written consent for their own information in writing? account or for the account of a third person nor conclude business falling under the activity that is actually carried out by the employer An employment relationship is stipulated in an employment and represents or might represent competition to the employer. contract, which must be concluded in writing. The employment The ERA-1 also stipulates the obligations of the employer, contract is deemed legal and valid when it is signed by both the namely that the employer must: provide the worker with the work employee and the employer. The employer must provide the worker agreed upon in the employment contract; provide to the worker
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appropriate remuneration for their work; provide the worker with safe and healthy working conditions in accordance with the special 2.2 What rights do trade unions have? regulations on safety and health at work; protect and respect the worker’s integrity and take into account and protect the worker’s To answer this question appropriately, a distinction must be made privacy; provide a working environment such that the worker is not between trade unions holding the status of a representative trade subjected to sexual or other harassment or mobbing on the part of union and the rest. The former can: conclude collective agreements the employer, a superior or co-workers; and protect the worker’s with general validity and participate in the decision-making bodies personal data. dealing with issues of economic and social security as well as propose candidates from among workers who participate in management; issue opinions on draft general acts of the employer in 1.5 Are any minimum employment terms and conditions Slovenia compliance with the ERA-1; consult the employer about the change set down by law that employers have to observe? of employer and transfer of workers to a new employer and, in the case of termination of employment of a large number of workers, The list of minimum employment terms and conditions that consult about the introduction and performance of night work, etc. the employer has to observe would extend beyond the limits of Trade unions without this status do not enjoy the abovementioned this contribution. They mainly concern minimum payment for rights. performed work, duration of a working day, week and year, duration of annual leave, notice period, amount of severance pay, etc. 2.3 Are there any rules governing a trade union’s right to take industrial action? 1.6 To what extent are terms and conditions of employment agreed through collective bargaining? Does bargaining usually take place at company or These rules are laid down in the Strike Act stipulating that trade industry level? unions can also organise a strike action. The strike committee must announce the strike at least five days before the date of its beginning In the Republic of Slovenia, employment relationships and the rights by sending a decision on the commencement of the strike to the and obligations of workers and employers are largely regulated by management and executive bodies in the organisation and/or to the collective agreements, namely at the level of branch of industry, employer; whereas in the case of a strike of workers in a specific professional collective agreements and also at the corporate level. branch or activity and a general strike, the decision must also be sent The ERA-1 lays down some specific rights and obligations that have to the competent body in the Chamber of Trade and Commerce and/ to be included in the collective agreement. Collective agreements or professional association. If the trade union does not take part in stipulate a number of rights and obligations in terms of amount and/ the organisation of the strike, its representatives can participate in or duration that are laid down in a basic form in the ERA-1. It the negotiations for a reasonable settlement of a dispute if they have should be noted that the provision that is more favourable for the been invited by the parties to the dispute. worker as the weaker party in the employment relationship always The strike committee and the workers who take part in the strike must applies. organise and manage it in a manner that does not constitute a threat Collective agreements are concluded for an individual branch and/ to the safety and health of people and property and that enables the or profession and are not automatically binding upon employers, continuation of the work after the strike. The strike committee and except in case their applicability is extended; otherwise they are the workers participating in the strike must not prevent the workers only binding upon the signatories. As a rule, collective agreements refusing to participate in the strike from working. at the corporate level are concluded only by large companies. For organisations and employers who perform an activity or work of special social significance, as well as for organisations with special significance for national defence, the right to a strike can only be 2 Employee Representation and Industrial exercised under the condition that the minimum work process is Relations ensured that guarantees the safety of people and property or is an indispensible condition for the life and work of citizens or work of other organisations, as well as fulfilment of international obligations. 2.1 What are the rules relating to trade union recognition? In such cases, the deadline for announcing the strike is 10 days. In the cases referred to in this paragraph, the participants must submit In the Republic of Slovenia, trade union activity, as one of the a proposal for the settling of the dispute during the period from the fundamental human rights that is also protected by the Constitution announcement of the strike to the day of its commencement. of the Republic of Slovenia, is governed by the ERA-1 and the In a body and/or an organisation of a socio-political entity as well Representativeness of Trade Unions Act. as in other state bodies, workers can exercise their right to strike A legal entity acquires the status of a trade union on the date of the under the condition that the strike does not essentially threaten issue of a court decision on the deposit of the articles of association the exercising of the function of these bodies and organisations, or some other basic act. Special terms and conditions that a trade whereas the strike must be announced to the official who leads the union should fulfil are not prescribed. The Representativeness of body or the organisation by way of submitting the decision at least Trade Unions Act expressly specifies the terms and conditions that a seven days before the commencement of the strike. trade union must fulfil in order to acquire the status of a representative The workers of the bodies for national defence and internal affairs trade union, namely it must: be democratic and exercise freedom can exercise their right to strike under the terms that are stipulated of membership in trade unions, freedom of functioning and by laws governing the rights and obligations of workers in such implementation of membership rights and obligations; operate bodies. uninterruptedly for at least six months; be independent from the state and the employers, financed mainly from the membership fee and other own sources; and have the number of members as defined by law.
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works council, as well as cover the works council’s costs of work; at 2.4 Are employers required to set up works councils? If least the costs of premises where meetings are held, clients received so, what are the main rights and responsibilities of and the work performed by the professional members of the works such bodies? How are works council representatives council, the costs of materials used by the works council and the chosen/appointed? costs of administrative staff for the works council.
In compliance with Slovenian labour legislation, setting up a works council is the right of workers, not the obligation of employers. 2.5 In what circumstances will a works council have co- Workers can set up a works council or select an employee determination rights, so that an employer is unable to representative and thus participate in the management of the proceed until it has obtained works council agreement to proposals?
company. Slovenia A special law (the Worker Participation in Management Act) lays Prior to adopting status and personnel issues of the company and down the formation, composition, term of office and election of the issues concerning safety and health at work, the employer must a works council, the method and election of the works council consult the works council and strive to align the viewpoints during members, termination of membership in the works council, the consultation. The employer’s decisions concerning the adoption protection of voting rights, participation of workers in the company’s of the bases for the use of annual leave or other types of absence bodies, workers’ participation in the management of the company from work, the criteria for assessing job performance of workers, and resolving of disputes. The election of the works council and/ the criteria for remuneration of innovation activity in the company or the employee representative is a precondition for the workers to and the criteria for promotion at work, must first be approved by the exercise their right to participate in the management in compliance works council, which also applies to decisions in cases of a change with the law. If a company does not have a works council or a in the company’s status, sale of the company or its considerable part, works council representative, the workers can only exercise this a change in the company’s activity, organisational changes, changes right individually, not collectively. in technology or diminished economic activity of the company Through the works council or employee representative, the workers causing an increase or reduction in staffing levels. receive information, make proposals and give opinions, request a If the works council refuses the approval, such a refusal does not joint consultation with the employer, co-decide on individual issues affect the correctness and legality of the employer’s decision. If the and request from the employer to postpone their decision until the employer, prior to adopting the decisions, fails to inform the works final decision is adopted by the competent body. The works council’s council about issues related to changes in the company’s activity, obligation to inform encompasses issues concerning the company’s organisational changes, changes in technology or a decline in the economic position, the company’s development goals, the state economic activity or if they adopt a decision related thereto without of affairs in production and sales, the general economic position having conducted the required procedure with the works council, of the industry, change of activity, changes in the organisation of the works council can suspend the employer’s decision based on a production and in technology, as well as the annual account and resolution and at the same time initiate the procedure for resolving annual report. of the dispute. The works council may also act in the same manner The workers have the right to set up a works council if the company when the employer fails to meet the legally defined deadlines for employs more than 20 employees with a right to vote (it is granted individual phases of the procedure in joint consultation or fails to to those workers who have been employed by the company for six request a joint consultation about the status and personnel issues. In consecutive months, whereas the managers, the procurators and the both cases, the employer must not implement their decision until a family members of the managerial staff do not enjoy the right to final decision is reached by the competent body, i.e., the arbitration vote). In a company employing less than 20 workers with a right to board that is composed of the same number of members appointed vote, these workers can participate in the management through an by the works council and the employer as well as one neutral employee representative. The number of the members of the works chairperson who is appointed based on mutual agreement. council depends on the number of employees. The term of office of the works council members is four years and the members can be reappointed. If the employer has already established a works 2.6 How do the rights of trade unions and works councils interact? council, the latter adopts the resolution on the calling of elections to the council, whereas in other cases such a resolution is adopted by The representative trade unions of the employer may convene the assembly of all workers that can be convened on the initiative an assembly of all workers that passes a resolution on the call to of three workers or the representative trade unions in the company. election to the works council; otherwise, the rights of the trade union Depending on the size of the company, the function of the works representatives and works council members do not interact. council member can be professional and the costs of the salary of such a member are borne by the employer. Setting up a works council or electing an employee representative is a legally defined 2.7 Are employees entitled to representation at board right of the workers that the employer cannot deny. level? A more detailed regulation of the rights of the works council and their enforcement is defined in a written agreement between In a two-tier management system, workers’ participation at the the works council and the employers, and such an agreement board level is implemented through the employee representatives may stipulate a broader scope of the co-management rights than in the company’s supervisory board or board of supervisors provided by law. The works council meets during working hours and also through the employee representative in the company’s if the work process enables this. If the works council meets outside management board (human resources executive). In a one-tier the working hours because of the nature of the work process, the management system, the workers participate in the management time the members spend at the meeting is included in their working through employee representatives in the board of directors and the time. The employer must grant the members of the works council committee of the board of directors as well as through the human the right to five paid hours a month for attending the meetings of the resources executive. The number of employee representatives in
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the supervisory board is determined in the company’s articles of The employer can reach an agreement with the employee about association; however, it must not be lower than one-third and higher the employee’s claims from the time they learn about such claims than one-half of all members of the supervisory board, whereas the until the time their decision becomes final, and later also until the number of representatives in the board of directors is also stipulated execution of the court decision. in the company’s articles of association, of whom at least one member must be the employee representative. A company with a 3.5 What remedies are available to employees in two-tier management system with more than 500 employees has successful discrimination claims? an employee representative that is appointed to the management board by the works council, whereas in a company with a one- In the case of an established violation of the prohibition of tier management system and more than 500 employees one of the discrimination or mobbing in the workplace, the employer is held Slovenia employee representatives is appointed to the management board liable for damages to the candidate and/or worker under the general as human resources executive, based on a proposal by the works rules of civil law, which means that they are liable for the reduction council. in assets, prevention of an increase in assets and infliction of physical pain, mental distress or fear. 3 Discrimination The worker may claim compensation in the case that they sustain physical pain or mental distress or fear, and may request from the employer to pay for the publication of the judgment or its correction 3.1 Are employees protected against discrimination? If or the order to revoke the employer’s statement that constitutes a so, on what grounds is discrimination prohibited? violation, or in the case of any other conduct that can be used to attain the purpose that is attained through compensation. The prohibition of discrimination is regulated in the ERA-1 in Non-pecuniary damage incurred by a candidate or worker shall also detail. The law prohibits discrimination based on any personal include mental distress sustained owing to unequal treatment of a circumstance such as nationality, race, ethnic origin, national worker and/or discriminatory conduct of the employer and/or failure and social origin, sex, colour of skin, health condition, disability, to provide protection from sexual or other forms of harassment or religion or belief, age, sexual orientation, family status, membership workplace mobbing. In the calculation of compensation for non- in a trade union or pecuniary status. pecuniary damage, it must be ensured that the compensation is The ERA-1 expressly prohibits sexual and other harassment as well effective and proportional to the damage sustained by the candidate as workplace mobbing. and/or worker and that it discourages the employer from repeating the violation, which constitutes the first and only punitive damage in 3.2 What types of discrimination are unlawful and in what the Slovenian legal system. circumstances?
3.6 Do “atypical” workers (such as those working part- Both direct and indirect discrimination are unlawful, namely during time, on a fixed-term contract or as a temporary the employment relationship as well as at the time of employment, agency worker) have any additional protection? upon promotion, during training, education and re-qualification and in regard to salaries and other benefits from the employment In terms of discrimination, these types of workers enjoy the relationship, absence from work, working conditions, working same rights as full-time workers and those working under contract hours and the cancellation of employment contracts. for an indefinite time. The same applies to the new category of Differing treatment based on any personal circumstance referred economically dependent persons. to in the preceding paragraph does not constitute discrimination if, owing to the nature of the work or circumstances in which the work is performed, a certain personal circumstance represents a significant 4 Maternity and Family Leave Rights and decisive condition in respect of the work and such a requirement is in proportion to and justified by a legitimate objective. 4.1 How long does maternity leave last?
3.3 Are there any defences to a discrimination claim? A new Parental Protection and Family Benefits Act was passed in 2014 in order to implement the new European legislation and to In contrast to what is customary, when the worker files a promote the equalisation of the burdens among parents or caretakers. discrimination claim, the burden of proof lies with the employer. Previous types of parental leave were not only renamed (now called The employer can successfully defend themselves against the maternity leave, paternity leave, parental/childcare leave), but accusations of discrimination if they prove that they, in the also slightly restructured. There has been no further discussion of abovementioned circumstances, treated the worker equally to other adoption leave since all the rights biological parents and adoptive workers and/or that the different treatment was lawful. parents have are now equal. Maternity leave lasts for 105 days and is intended for the mother-to- 3.4 How do employees enforce their discrimination be to prepare for the childbirth and for the mother to look after her rights? Can employers settle claims before or after baby after its birth as well as for protection of the mother’s health they are initiated? upon childbirth and afterwards. The mother of the child is entitled to the maternity leave, yet under specific terms this right is also The worker can enforce their rights directly with the employer, granted to the father of the child or some other person or one of the based on a request or in a mediation or arbitration procedure, if the child’s grandparents. The mother must take the maternity leave 28 two are defined. Eventually, they can also enforce their rights by days before her due date, which is determined by her gynaecologist. filing an action with the court of appropriate jurisdiction.
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The mother is also entitled to 130 days of parental leave. The women; they are entitled to paternal leave instead of maternity leave, father has the right to his own 130 days of this type of leave and can and are under some circumstances protected against the termination pass all of them to the mother for a combined period of 365 days, of their employment contract. whereas the mother can only transfer 100 days of this type of leave It is also important to note that for the period of 18 months the to the father with 30 days being non-transferable. mother has the right to breastfeed her child for an hour a day with It has to be noted that there are exceptions to practically every rule the right to be paid for this time. regarding the use of all types of leave, since there are many specific situations that can occur (death of the parent, loss of parental rights, 4.6 Are employees entitled to work flexibly if they have abandonment of the child, etc.). responsibility for caring for dependants? Slovenia 4.2 What rights, including rights to pay and benefits, does A woman who: looks after a child until that child is three years old; a woman have during maternity leave? looks after a child with severely impaired mobility or a child who is moderately or severely mentally impaired until this child is 18 years One of the most important rights is the right to the parental old; or looks after two children until the younger child finishes the allowance. However, a woman who looks after a child is entitled first grade of primary school, has the right to part-time work. In the to part-time work that must cover at least one-half of the weekly latter case, at least one year of part-time work has to be carried out hours of attendance. This right has to be granted to a parent by by the father. The part-time work must cover at least one-half of the the employer. The parent can then apply to the Centre for Social weekly hours of attendance. Work to enforce the right to be paid a proportionate part of social security contributions up to the full amount of work obligations that is calculated based on the minimum salary. 5 Business Sales
4.3 What rights does a woman have upon her return to 5.1 On a business sale (either a share sale or asset work from maternity leave? transfer) do employees automatically transfer to the buyer? A woman has the right to return to the job she had before she took maternity leave and to perform work under the terms stipulated in Yes, in the case of a legal transfer of a company or a part thereof, her employment contract. Generally speaking, the worker may the employees are automatically transferred to the new employer. enforce the rights they obtained or the rights that have improved According to case law, the employer need not conclude new during the worker’s absence from work due to parental leave employment contracts with the workers. immediately after they start working if they could not enforce them during their absence; these must be provided for by the employer. 5.2 What employee rights transfer on a business The employment contract of a female worker can be terminated sale? How does a business sale affect collective during their pregnancy and breastfeeding period up to the age of agreements? one year of the child only in the case of extraordinary termination of employment contract or the initiation of a procedure for dissolution In compliance with the ERA-1, the employees have the right of the employer, which applies also to parents who use the full to refuse to work for the new employer. In such cases, their parental leave period, provided that the employer has first obtained employment relationship is terminated based on an extraordinary an approval from the inspector of labour. termination of employment by the previous employer. The workers who switch employers in such a way and have their rights from the employment contract deteriorate for objective reasons, can cancel 4.4 Do fathers have the right to take paternity leave? the employment contract, whereby they enjoy the same rights as if their employment contract was cancelled by the employer for Yes, from 2018 onwards, fathers have the right to a 30-calendar-day business-related reasons. paternal leave that is intended solely for fathers so that they, together The new employer must assure the workers that the rights and with the child’s mother, can look after their child at such a tender obligations under the collective agreement that was binding on the age, and to a paternity compensation. The father must use the first previous employer, continue to stay in force for at least one year, 15 days of paternal leave in the period before the child is six months unless the collective agreement ceases to be valid prior to the expiry old (otherwise this portion of paternal leave expires), whereas the of one year or a new collective agreement is concluded prior to the remaining 15 paid days can be used up until the child finishes the expiry of one year. first grade of primary school. If the father takes maternal leave instead of the mother, he is not entitled to the first 15 days of the paternal leave. 5.3 Are there any information and consultation rights on A father can use 30 days of the paternal leave with full or partial a business sale? How long does the process typically take and what are the sanctions for failing to inform absence from work and by taking consecutive days (without and consult? interruptions) or intermittent days. As already mentioned in our answer to question 4.1, the father is also entitled to 130 days of The previous employer and the new employer must inform the parental leave which can be transferred in full to the mother. employer’s trade unions about the date or proposed date of the transfer and the reasons for the transfer, as well as about the legal, 4.5 Are there any other parental leave rights that economic and social implications of the transfer and the envisaged employers have to observe? measures for workers at least 30 days prior to the transfer. For the purpose of reaching an agreement, the previous employer and the Men have practically the same rights arising from parenthood as new employer must consult the trade unions at least 15 days prior to
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the transfer about the legal, economic and social implications of the they are stipulated in the ERA-1, collective agreements, internal transfer and about the envisaged measures for workers. regulations and optionally also in the employment contract. If there is no trade union at the employer, the workers affected by the transfer must be informed in a manner customary to the employer 6.2 Can employers require employees to serve a period about the deadline and the circumstances of the transfer. of “garden leave” during their notice period when the If the failure to fulfil the obligations referred to in the previous two employee remains employed but does not have to attend for work? paragraphs results only in a sanction for a violation, the trade union may initiate a collective labour dispute. When the employer is unable to provide work for their workers temporarily but no longer than six months in a calendar year, Slovenia 5.4 Can employees be dismissed in connection with a they can dismiss the worker based on written notice on garden business sale? leave so as to preserve the job. The worker is entitled to a pay equal to 80% of their average monthly salary for a full-time job In compliance with the ERA-1, a change of employer is not, in itself, in the last three months and/or the period of the last three months a lawful reason for the termination of the employment contract for prior to the absence; moreover, the worker is obliged to respond business-related reasons; however, this does not mean that, after to the employer’s requests in the manner and under the conditions the transfer of the company or a part thereof, the new employer is specified in the notice of garden leave. not entitled to restructure their work process and to terminate the In any case, the employer can place the worker on garden leave after employment contracts of redundant workers for business-related giving them the notice period and paying them a salary equal to reasons. 100% of the base referred to in the previous paragraph.
5.5 Are employers free to change terms and conditions of 6.3 What protection do employees have against employment in connection with a business sale? dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third Pursuant to the ERA-1, in the case of a legal transfer of a company party required before an employer can dismiss? or a part thereof, a merger or a division of a company or a change of employer does not constitute a change of employment relationship Workers are protected against dismissal with the provisions of the for the worker; on the contrary, the worker preserves all the rights ERA-1, the provisions of the branch collective agreements and the and obligations arising from their employment relationship with the employer’s internal regulations. The employer may thus lawfully previous employer with the new employer. cancel the employment contract only based on a justified reason and provided the employer respects all procedural safeguards. Attention 6 Termination of Employment should be drawn to the categories of workers under special protection to whom the employer, under specific terms and for specific reasons, cannot cancel the employment contract or may only do this if the 6.1 Do employees have to be given notice of termination worker expressly agrees with it. of their employment? How is the notice period It is deemed that the worker’s employment contract is cancelled determined? at the time the worker receives the notice of cancellation of employment contract and/or when the fiction of service of the notice Prior to an ordinary cancellation of an employment contract based becomes effective. The employer cannot revoke the served notice of on fault, the employer is obliged, within 60 days following the cancellation of employment contract by unilateral action. As a rule, identification of the violation and no later than six months from the the employment relationship of a worker terminates on the date of occurrence of the violation, to remind the worker in writing about expiry of the notice period, except for the worker whose employment the fulfilment of obligations and the possibility of cancellation of contract has been cancelled for business-related reasons or for a their employment contract should the worker repeat the violation reason of incompetence and who is, upon the expiry of the period of the contractual and other obligations under the employment of notice, absent from work due to temporary incapacity because of relationship within one year of receipt of the written warning, unless illness or injury (their employment relationship is terminated on the otherwise stipulated by a branch collective agreement; in any event day they return to work or should return to work, but no later than at the time period cannot be longer than two years. the end of six months after the expiry of the period of notice). Prior to ordinary cancellation based on fault or incompetence and In some cases, the employer must obtain approval prior to cancelling prior to extraordinary cancellation of the employment contract, the employment contract. The employment contract of an appointed the employer must acquaint the worker in writing with the alleged or elected shop steward cannot be cancelled without approval of violations or the alleged incompetence, as well as give them the body of which they are a member or the trade union, if they the opportunity to defend themselves within a reasonable time act in compliance with the law, the collective agreement and the period that may not be shorter than three working days, unless employment contract, unless they, for a business-related reason, circumstances exist due to which it would be unjustified to expect refuse to take the offered substitute job or if the cancellation occurs the employer to provide the worker with such an opportunity. in the framework of the dissolution of the employer, whereby the Prior to an ordinary cancellation of the employment contract for employer is not obliged to obtain any approval. In the case of business-related reasons, the employer is not obliged to serve to the certain reasons for cancellation of employment contract to specific worker the notice of cancellation as was the case under the previous categories of workers, the worker’s express approval is required. ERA. The employer must also obtain an “approval” from a governmental The minimum notice periods depend on the person cancelling the committee in the case of a cancellation of an employment contract employment contract and on the reasons for the cancellation, and for the reason of incompetence and incapacity to perform work under the terms stipulated in the employment contract due to disability,
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whereby the employer is not bound by such approval; the existence of the terms and, consequently, the legality of such a cancellation of 6.9 Does an employer have any additional obligations if employment contract are established in a dispute before the court. it is dismissing a number of employees at the same time?
6.4 Are there any categories of employees who enjoy Yes, he does – in the case of an institute of cancellation of the special protection against dismissal? employment contracts of a large number of workers for business- related reasons, namely when an employer with 20 to 100 employees The following workers are to some extent protected against dismisses at least 10 of them, when an employer with 100 to 300 dismissal: members of the works council, shop stewards, members employees dismisses at least 10% of them and when an employer of the supervisory board who represent workers, employees’ with 300 or more employees dismisses at least 30 of them. In Slovenia representatives in the council of an institution as well as appointed such cases, the employer must cancel the employment contracts or elected shop stewards; workers aged 58 or over or workers following a special procedure, draw up a redundancy programme who lack, at most, five years of pensionable service to fulfil the and notify the trade union and the Employment Service of the conditions for old-age retirement; female workers during pregnancy Republic of Slovenia about the reasons for the cessation of the need and breastfeeding mothers up to the child’s age of one year; parents for performance of work by workers, the number of workers and the who are on full parental leave without interruptions, including one anticipated categories of redundant workers. month after the leave was used; and disabled workers and those absent from work due to illness. 6.10 How do employees enforce their rights in relation to mass dismissals and what are the consequences if an 6.5 When will an employer be entitled to dismiss for: employer fails to comply with its obligations? 1) reasons related to the individual employee; or 2) business related reasons? Are employees entitled Before the dismissal, the workers can enforce their rights collectively to compensation on dismissal and if so how is through the trade union with whom the employer must consult about compensation calculated? all essential circumstances of the dismissal and reach an agreement with it about the proposed criteria for determining redundancies, the The reasons for cancellation of an employment contract that are alternatives to prevent and limit the number of dismissals as well related to an individual worker include: violations committed by as the possible measures aimed at preventing and mitigating the the worker serving as grounds for an ordinary cancellation of the harmful consequences. employment contract (based on fault) or, in the case of an extremely severe violation of obligations under employment relationship, for After receiving a notice of cancellation of an employment contract, extraordinary cancellation; incompetence and incapacity to perform every worker can enforce their rights individually, namely by filing work under the conditions set out in the employment contract an action with the court to establish the illegality of the cancellation owing to disability pursuant to the regulations governing pension of the employment contract. and disability insurance or the regulations governing employment rehabilitation and employment of disabled persons. 7 Protecting Business Interests Following The business-related reasons include cessation of the need for the Termination performance of certain work under the terms of the employment contract, whereby such reasons can be of an economic, organisational, technological, structural or similar nature. 7.1 What types of restrictive covenants are recognised?
6.6 Are there any specific procedures that an employer In compliance with the law, workers must refrain, during the has to follow in relation to individual dismissals? employment relationship, from all conduct which, given the nature of the work performed for the employer, materially or morally Please see the answer to question 6.1. harms or could harm the employer’s business interests. They are also obliged to protect the employer’s business secrets and, during the employment relationship, must not compete with them without 6.7 What claims can an employee bring if he or she is their written approval (non-compete covenants). dismissed? What are the remedies for a successful claim? The employer who thinks that the worker, while performing or in relation to their work, gains technical or business knowledge and establishes business connections, can include in the employment The worker can file an action with the court to establish the illegality contract a special non-compete clause prohibiting the worker of the cancellation of the employment contract and its annulment; from performing a competitive activity after the termination of the to establish that the employment relationship still lasts and to re- employment contract. establish the employment relationship and return to work, which also encompasses other rights arising from the employment relationship, including the pecuniary ones. 7.2 When are restrictive covenants enforceable and for what period?
6.8 Can employers settle claims before or after they are initiated? The non-compete clause is only valid if in writing, if the employer pays the worker a monthly fee for complying with the clause (see question 7.3 below) and if the termination of the employment The employer can reach an agreement with the worker about the contract is a consequence of an extraordinary termination of the claim of the latter either before an action is filed with the court or employment contract by the employer (although not due to all of the subsequently, until the court decision becomes final or is executed.
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reasons), an agreement, an ordinary termination of the employment Protection Act sets out that such requests can only be submitted after contract by the employee or an ordinary termination of employment a reasonable time period has elapsed since the previous request; contract based on fault. such time frame is prescribed by law. The non-compete clause must be laid down with reasonable time limits of prohibition of competition; it may not exclude the 8.3 Are employers entitled to carry out pre-employment possibility of suitable employment of the worker and must not be checks on prospective employees (such as criminal in contravention of the principle of equivalent mutual performance. record checks)? The non-compete clause must not be longer than two years. Without special stipulations, such background checks are not permitted. The principle of proportionality should always be
Slovenia 7.3 Do employees have to be provided with financial compensation in return for covenants? considered on a case-by-case basis when a decision as to whether the personal data on job applicants and employees can be gathered The employer must determine and pay to the worker compensation must be made. In no case may an employer require an employee for respecting the non-compete clause; such compensation must to provide information on their family or marital status, pregnancy, amount to a monthly payment of at least one-third of the worker’s family planning or other information unless it is directly related to average monthly salary in the last three months prior to the the employment relationship. termination of the employment contract. 8.4 Are employers entitled to monitor an employee’s emails, telephone calls or use of an employer’s 7.4 How are restrictive covenants enforced? computer system?
If the worker violates the non-compete clause, the employer may Slovene legislation, court practice and the decisions of the request, by filing an action, that he ceases violating the clause, Information Commissioner regarding the issues in question are very compensates for the loss incurred as a result of the violation and strict and sometimes even impossible for the employers to deal with. surrenders the business transactions concluded for their account, If a specific account or telephone number is in use by the employee transfers the benefits of the business transactions concluded for their the employer has no right to look at any data that is linked with it or account or waives the right to compensation. The sanctions for the is being trafficked through it. The same prohibition applies even to violation, including the contractual penalty, are usually stipulated in the traffic data itself (phone numbers called, emailed persons, etc.). detail in the non-compete clause. The argument for this is that persons who contacted the employee did not give consent for the data to be seen or used by any other person. 8 Data Protection and Employee Privacy 8.5 Can an employer control an employee’s use of social media in or outside the workplace? 8.1 How do employee data protection rights affect the employment relationship? Can an employer transfer employee data freely to other countries? The only way for the employers to have such control is to limit access to media sites. If an employee is performing his work outside of the actual workplace or at home the employer can also limit Data protection in general is regulated by the Personal Data access to social sites but this applies only to the computer or other Protection Act, with the protection of employees’ data also electronic devices that are the property of the employer. regulated by the ERA-1. Employers must manage the personal data of employees and safeguard it in accordance with the law. Once the legal basis no longer exists, the employer must immediately 9 Court Practice and Procedure delete and stop using the employee’s personal data. Personal data of employees may be collected, processed, used and communicated to third parties only in cases stipulated by the law and if this is 9.1 Which courts or tribunals have jurisdiction to hear necessary for the realisation of the rights and obligations arising employment-related complaints and what is their from the employment relationship or in connection with the composition? employment relationship. Personal data can be transferred to third countries in accordance with the Personal Data Protection Act and The rights and obligations arising from employment relationships with the provision that an order is issued by the national supervisory as well as individual and collective labour disputes are adjudicated authority, which determines that a certain third country, to which by specialised labour courts. The court of first instance decides by a the personal data is being transferred, provides a sufficient level panel of judges except if the law prescribes that a case be adjudicated of protection of such data. The order is not necessary if a third by a single judge (in case of pecuniary claims up to a defined value, country is listed among countries which provide a sufficient level of suspension of employment contract, probation, etc.). protection of personal data. The panel of judges in a court of first instance is composed of one professional judge and two lay judges, namely one from the list of candidate workers or insured persons and one from the list of 8.2 Do employees have a right to obtain copies of any personal information that is held by their employer? employers or institutes. The appeals against the decisions of the first-instance labour courts Employees have the right to obtain all the personal data and are adjudicated by the Higher Labour and Social Court, namely by documentation that is kept in the personal files of their employers. panels of judges that are composed of three professional judges. In order for the employees not to abuse this right, the Personal Data Extraordinary appeals are decided by the Supreme Court of the Republic of Slovenia.
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agreement, and within no later than 90 days, the worker, within the 9.2 What procedure applies to employment-related following 30 days, may request judicial protection before the court complaints? Is conciliation mandatory before a of appropriate jurisdiction. complaint can proceed? Does an employee have to pay a fee to submit a claim? The worker and the employer may, within 30 days from the deadline for the fulfilment of obligation or elimination of violation by the The worker may request the establishment of illegality of the employer, also agree on the settling of the dispute by mediation. In cancellation of the employment contract, of other modes of the event mediation is not completed successfully within 90 days termination of the employment contract or of decisions on after the agreement on mediation, the worker may enforce judicial disciplinary responsibility of the worker within 30 days from the day protection before the labour court within a further 30-day period following the unsuccessfully completed mediation.
of the serving of notice and/or the day when they learnt about the Slovenia violation of the right. The same deadline applies for the filing of an In the labour dispute proceedings, court fees must be paid, unless action by a non-selected candidate who believes that the prohibition stipulated otherwise for individual types of proceedings, by the of discrimination was violated during the selection procedure. Court Fees Act that distinguishes between pecuniary and non- With regards to other violations of the rights and obligations arising pecuniary disputes. from an employment relationship, the worker may or must, in the event the employer fails to fulfil their obligation arising from the 9.3 How long do employment-related complaints typically employment relationship or to eliminate the violation within eight take to be decided? working days after being served the worker’s written request, request judicial protection before the labour court of appropriate jurisdiction To answer this question appropriately, disputes concerning the within 30 days from the expiry of the deadline for the fulfilment of existence or termination of employment relationship, which are obligations or elimination of the violation by the employer. prioritised by the court, must be discussed separately from other Irrespective of the deadline referred to in the previous paragraph, the disputes. In the case of the first type of dispute, the average time worker may file for pecuniary claims arising from the employment period from the filing of an action to the decision of the Higher relationship, which become statute-barred after five years, with Labour and Social Court, which becomes final upon serving, is a the exception of statutory default interest (which becomes statute- year-and-a-half on average; in the case of other disputes, the time barred after three years), directly with the labour court of appropriate period is slightly over three years. jurisdiction. The collective agreement that is binding on the employer may 9.4 Is it possible to appeal against a first instance stipulate arbitration as a means for settlement of individual labour decision and if so how long do such appeals usually disputes. In such a case, the worker and the employer may, no later take? than within 30 days from the deadline for the fulfilment of obligation or elimination of violation by the employer, reach an agreement on It is always possible to appeal against a first instance decision; settlement of the dispute by arbitration. If the arbitration board does the Higher Labour and Social Court decides on such an appeal in not reach a decision within the time limit stipulated in the collective around six months to one year.
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Martin Šafar Law firm Šafar & Partners, Ltd Resljeva cesta 25 1000 Ljubljana Slovenia
Tel: +386 1 432 20 84 Fax: +386 1 234 27 70 Email: [email protected] URL: www.op-safar.si Slovenia Martin Šafar is a Founding and Managing Partner at the Law firm Šafar & Partners, Ltd. He counsels clients on a wide range of employment and labour law issues as well as other matters. He also practises in the areas of company disputes, commercial litigation and contracts. Martin also specialises in insolvency cases. Together with his partners, he counsels some of the most influential companies in Slovenia. His clients hold him in high regard for his litigation skills. He regularly represents companies in court in all kinds of civil law matters. He is a member of the Bar Association of Slovenia and can represent his clients at every level of the court system, all the way up to the Supreme Court. Martin Šafar studied law at the University of Ljubljana, where he graduated cum laude. He is fluent in English, Croatian and Serbian. He also understands and speaks German and French.
Law firm Šafar & Partners, Ltd is a Slovenian boutique law firm providing all types of legal services while specialising in labour and employment law. It was founded by Vesna Šafar, who has over 40 years of experience in labour and employment law both as a judge and as a lawyer. The highly dedicated team managed by Martin Šafar is widely recognised for their work among Slovenian and foreign clients as well as its peers. Law firm Šafar & Partners, Ltd counsels not only the biggest and most important companies in Slovenia regarding every possible employment law issue including mergers and acquisitions but also takes on difficult cases from private clients who need the best representation possible. Members of the firm who, together with Vesna Šafar, are also recognised in the legal guideChambers & Partners, are highly active as legal authors and as lecturers at many conferences.
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Spain Ana Gómez
Mariscal & Abogados, Asociados Sara Moukayed
1 Terms and Conditions of Employment 1.5 Are any minimum employment terms and conditions set down by law that employers have to observe?
1.1 What are the main sources of employment law? Yes, the law identifies minimum employment terms and conditions. Applicable Collective Bargaining Agreements also provide minimum Employment law is provided by several sources, in order: 1) the terms, such as working hours, overtime, length of probationary Constitution and international treaties incorporated by the Spanish period, notice period, annual wage, and disciplinary policy. legal system and European law; 2) the law and implementing regulations; 3) case law by the Spanish Supreme Court; 4) Collective Bargaining Agreements; 5) employment contracts; and 6) customs. 1.6 To what extent are terms and conditions of employment agreed through collective bargaining? Does bargaining usually take place at company or 1.2 What types of worker are protected by employment industry level? law? How are different types of worker distinguished? Collective Bargaining Agreements can regulate the terms and Broadly speaking, there are three types of workers in Spain: ordinary conditions of employment as long as the parties agree on and with workers, senior managers and self-employed workers. Only self- the only limitations of the terms and conditions that are mandatory employed workers are excluded from employment law protection; under the law. they have a separate regulation and jurisdiction. Collective Bargaining Agreements are binding. Bargaining usually takes place at industry level and exceptionally 1.3 Do contracts of employment have to be in writing? If at company level. not, do employees have to be provided with specific information in writing? 2 Employee Representation and Industrial The employment agreement may be entered into either orally or in Relations writing. In any case, when the contract is oral, every party has the right to ask the other to put it in writing. Nevertheless, it is compulsory for a group of employment contracts 2.1 What are the rules relating to trade union recognition? to be in writing, for example when written form is required by the law, for training contracts, part-time contracts, fixed-term contracts A trade union performs its activity on behalf of the interests of the and teleworking contracts. employees who are affiliates exclusively. Their rights are derived directly from the Spanish Constitution, as a fundamental right. Moreover, under the law, the employer must provide specific and Trade unions have a special regulation, which is very protective. statutory information in writing about the terms and employment conditions. Likewise, trade unions are legally recognised based on the greater representativeness they have; that is to say, according to the number of representatives that each union has obtained in a company. They 1.4 Are any terms implied into contracts of employment? can be at national level or local level. Once they are recognised, trade unions have a right to consultation There are many terms implied since the statutory regulations and with the employer, bargaining and to promote elections in the the collective bargaining agreements foresee quite extensive terms workplace. that contracts of employment must abide. That is the reason why Spanish employment contracts are not very extensive, and make reference to the law and Collective Bargaining Agreements. 2.2 What rights do trade unions have?
Trade unions have specific rights and guarantees such as: (i) the company is bound to initiate a contradictory proceeding when a member of the trade union commits a gross or very gross misconduct; (ii) members are not to be dismissed or disciplinarily
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sanctioned during the performance of their duties and during the which they must be kept informed or consulted by the employer. following year; and (iii) members are entitled to choose between Non-fulfilment of said duties of information or consultation may readmission or being paid the severance rights in case of unfair sometimes lead to the nullity of the employer’s decision. dismissal. They also enjoy priority in relation to their permanence within the company in case of redundancies and relocations to 2.6 How do the rights of trade unions and works councils different workplace. interact? In addition, trade unions have a right to be informed and consulted by the employer on a group of matters concerning the company and Trade unions have a specific regulation for themselves (Ley Organica its employees. de Libertad Sindical) which grants them specific rights that Spain employers must abide. In general terms their rights are essentially 2.3 Are there any rules governing a trade union’s right to the same as those which apply to works councils. In collective take industrial action? dismissals, trade unions always have priority of consultation (before works councils) and when a member of a trade union is also, at the A trade union’s right to take industrial action which also includes same time, a member of a works council, there is no duplicity of right to strike, is governed by specific regulation, namely Royal rights. Decree 17/1977 and Act 11/1985 (LOLS). However, case law often interprets trade unions’ rights. 2.7 Are employees entitled to representation at board level? 2.4 Are employers required to set up works councils? If so, what are the main rights and responsibilities of No, employees are not entitled to representation at board level. such bodies? How are works council representatives chosen/appointed? 3 Discrimination Employers are not required to set up work councils. However, employees are entitled to participate through the promotion of 3.1 Are employees protected against discrimination? If elections for works councils or workers’ delegates. so, on what grounds is discrimination prohibited? In workplaces employing fewer than 50 and more than six employees, employees can designate workers’ delegates for their Indeed, the Spanish Constitution provides protection against representation. discrimination based on the following: birth; race; sex; religion; or In workplaces with 50 or more employees, employees can elect a any other personal or social conditions. This protection has been works council. incorporated into employment statutory regulations whereby the employer must always protect the employee against discrimination Workers’ Statute and Royal Decree 1844/1994 concerning Unions within the employment relationship. Moreover, employment contracts Elections regulate election processes for representatives. There is may be void if there are grounds for discrimination. Orders or decisions an intervention of the Labour Authority during the process. by the employer are also void when they involve unfavourable These bodies have specific rights and guarantees such as: (i) the treatment to workers; it is compulsory for the employer to have an company is bound to initiate a contradictory proceeding when a active role and undertake measures to avoid discriminatory situations. member commits a gross or very gross misconduct; (ii) members are not to be dismissed or disciplinarily sanctioned during the performance of their duties and during the following year; and (iii) 3.2 What types of discrimination are unlawful and in what members are entitled to choose between readmission or being paid circumstances? the severance rights in case of unfair dismissal. They also enjoy priority in relation to their permanence within the company in case Discrimination, in both a direct or indirect manner, is considered of redundancies and relocations to different workplace. unlawful. Conduct on the part of the employer is considered to be reprehensible whereby there is direct discrimination against a In addition, these bodies have a right to be informed and consulted particular employee or when the employer indirectly treats certain by the employer on a group of matters concerning the company and employees or groups differently. the employees. For example, they are entitled to receive relevant and up-to-date information about company performance and any Types of discrimination, which can occur, are grounded, i.e., on issue related to workers, business progress, levels of absenteeism age, disability, sex, ethnicity, marital status, social status, religion, and foresight of new employment contracts including the number beliefs, political convictions, sexuality, membership of a trade and types. In addition, they must get information in relation to union, harassment, etc. serious or very serious sanctions. Moreover, works councils are entitled to receive copies of the employment contracts. 3.3 Are there any defences to a discrimination claim?
2.5 In what circumstances will a works council have co- In the event that an employee suffers from discrimination, he or she determination rights, so that an employer is unable to is entitled to sue the company or another employee individually. proceed until it has obtained works council agreement Such legal proceedings are specific and quick. Public attorneys to proposals? must be also part of the proceedings and the employee is entitled to claim for damages too. Both parties should give evidence grounds Neither works council nor workers’ representatives are entitled to for themselves. On one hand, the employee must gather sufficient co-determination rights, unless the law or the Collective Bargaining information to prove the unlawful situation; on the other hand, the Agreement state so. Besides that, there are a number of matters of employer has the burden of proof to provide evidence that there is no discrimination.
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3.4 How do employees enforce their discrimination 4.4 Do fathers have the right to take paternity leave? rights? Can employers settle claims before or after they are initiated? Indeed, fathers are also entitled to take paternity leave for one month whenever they choose, within the 16 weeks of maternity leave. Employees may enforce their discrimination rights whenever they This term may be extended in case of multiple births, or babies with consider grounds for discrimination and bring legal action before disabilities. the Labour Courts wherein they may also claim compensation for damages considering the breach of fundamental rights. If they are not successful before the Labour Courts, they are also entitled 4.5 Are there any other parental leave rights that Spain to sue before the Constitutional Court when there is violation of employers have to observe? fundamental rights, or even at the European Court of Human Rights. Employers may settle an agreement before the Court enacts a After reinstatement, female workers are entitled to an absence of one judgment. In spite of this, before taking place in Court, Spanish law hour (or split into two fractions) per day to breastfeed up until the compels parties to attempt an arrangement before the Mediation, newborn is nine months old. This time will be proportionally increased Arbitration and Conciliation Service (so-called, “SMAC”), even in cases of adoption, multiple births or foster care. Those who pursue though some types of claims are excluded. This first step ensures an this right, at their will, may replace this right for a reduction of half an easier and quicker solution as the procedure can terminate there if hour of their working day for the same purpose, or may accumulate the parties reach an agreement. these into complete days under the terms provided by the Collective Bargaining Agreement, or by agreement with the employer. Furthermore, either parent may apply for a parental leave of absence 3.5 What remedies are available to employees in until the baby is three years old with the right to keep their job post successful discrimination claims? or a reduction of their working day for as long as the child is under 12 years old, with an equal reduction in their wages or other benefits. The employees may be successful when the Court enacts a judgment wherein the decision is made confirming that the discriminatory situation took place and must therefore be reversed. Employees 4.6 Are employees entitled to work flexibly if they have replaced in the initial situation prior to the discrimination, will responsibility for caring for dependants? receive compensation for damages and the employer will be punished with a penalty by the Labour Authority. Employees who are directly in charge of a child under 12 years old, a disabled person or relatives (up to second degree of consanguinity or affinity) are entitled to apply for a working time reduction with an 3.6 Do “atypical” workers (such as those working part- equal reduction in their wages. time, on a fixed-term contract or as a temporary agency worker) have any additional protection? Notwithstanding the foregoing, nowadays policies have been implemented to help achieve a work-life balance. “Atypical” workers are entitled to exactly the same rights as pointed out above, as indeed are any other employees. 5 Business Sales
4 Maternity and Family Leave Rights 5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the 4.1 How long does maternity leave last? buyer?
According to Spanish law when females workers mention maternity, In accordance with provision 44 of the Workers’ Statute, on a adoption and foster care, they are entitled to maternity leave of up to business sale, being understood as an economic entity, employees four consecutive months in duration (maybe further in the event of will automatically transfer to the buyer. In such a case, employees risk during pregnancy, multiple births or premature birth). While on will have the assurance of the continuance of job positions, the maternity leave, the employment contract is suspended. salaries, the seniority and Social Security rights. In this regard, the new employer would subrogate in the new position, guaranteeing the rights and conditions of the employees and therefore each term 4.2 What rights, including rights to pay and benefits, does of their employment contract. a woman have during maternity leave?
Women are entitled to receive Social Security benefits, as is the 5.2 What employee rights transfer on a business sale? How does a business sale affect collective newborn. Mothers are also entitled to receive a monthly instalment agreements? amounting to 100% of their Social Security base, for the entire duration of the period of maternity leave. The new employer (transferee) should subrogate the rights and conditions of the employees therefore ensuring all Labour and 4.3 What rights does a woman have upon her return to Social Security rights provided in employees’ employment contracts work from maternity leave? and provisions of Collective Bargaining Agreements. After the transfer, the same Collective Bargaining Agreement as Firstly, when a woman returns from her maternity leave she before the transfer should govern the employees until the end of the is entitled to be reinstated in the same position under identical validity period or whilst the parties do not agree on a new Collective terms and conditions. She will also be protected against unlawful Bargaining Agreement. dismissal during the first nine months since the birth of the baby.
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5.3 Are there any information and consultation rights on 6.2 Can employers require employees to serve a period a business sale? How long does the process typically of “garden leave” during their notice period when the take and what are the sanctions for failing to inform employee remains employed but does not have to and consult? attend for work?
Under provision 44 of the Workers’ Statute the transferor must No, employers cannot require employees to serve a period of inform the employees and the union representatives in writing and garden leave. “Garden leave” could only operate in the event that with sufficient prior notice (customarily 15 days) of the following it is mutually agreed under the scope of the employment contract. information: (i) expected date of business sale; (ii) grounds for the Whenever the employee remains employed, they have to still show Spain business sale; (iii) communication about the legal, economic and up for work, otherwise the employer risks a claim on the part of social consequences for the employees; and (iv) envisaged measures the employee, under grounds for lack of effective occupation. for the employees. The transferor is bound to provide the transferee Nevertheless the garden leave during their notice period is usually the information pointed out above with sufficient prior advance; agreed in practice. otherwise, the transferee should also inform the employees with sufficient prior notice. 6.3 What protection do employees have against The transferor and the transferee intending to initiate measures for dismissal? In what circumstances is an employee the affected employees are bound to initiate a period of consultation treated as being dismissed? Is consent from a third with the employees’ representatives. This process entails a prior party required before an employer can dismiss? consultation period between the employer and the employees’ representatives wherein parties are likely to discuss the envisaged Whenever an employee is dismissed, they are entitled to claim before measures for the employees and the consequences. This prior a Court. Prior to Court, parties are required to reach an agreement consultation period should be 15 calendar days. The process will be before the Mediation, Arbitration and Conciliation Service. void if the employer does not fulfil this requirement. An employee is treated as being dismissed when formally handed The sanctions for failing to inform and consult are a fine from EUR a written communication by the employer, wherein the grounds 626 up to a maximum of EUR 6,250. and effective date of termination must be stated, and other statutory requirements, according to the type of dismissal. In the event that there is no formal communication in writing, this may constitute a 5.4 Can employees be dismissed in connection with a “tacit dismissal”. Usually, tacit dismissals are considered as unfair business sale? since they fail to adhere to the requirements provided by law. No, employees cannot be dismissed in connection with a business sale. Consent from a third party is not required under any circumstances. However, in circumstances where the transferee does not want to transfer all the employees on board through the process, those 6.4 Are there any categories of employees who enjoy employees are entitled to claim against both the transferee and special protection against dismissal? transferor for unlawful dismissal. Yes, there are categories of employees who enjoy special protection. Any employee, whether female or male, who has parental rights, 5.5 Are employers free to change terms and conditions of is pregnant, or on maternity or paternity leave, is protected against employment in connection with a business sale? dismissal. In addition, victims of gender-based violence, legal representatives of the workers and employees who have claimed No, employers do not have such rights as to the change the terms against the employer for their rights (or use the whistleblowing and conditions of employment in connection with a business sale. canal), are also protected as they are particularly vulnerable. Employers can proceed with a change of conditions of employment post-business sale on the grounds of economic, technical, productive Dismissing an employee who is under any of the situations mentioned or organisational reasons. above triggers a void or null dismissal.
6.5 When will an employer be entitled to dismiss for: 6 Termination of Employment 1) reasons related to the individual employee; or 2) business related reasons? Are employees entitled to compensation on dismissal and if so how is 6.1 Do employees have to be given notice of termination compensation calculated? of their employment? How is the notice period determined? Employers are entitled to dismiss based on disciplinary grounds when these are the result of gross or very gross misconduct. Under The notice of termination must always be given in writing, those grounds, there is no severance payment. Employers are otherwise, the termination is considered as unfair. The prior notice entitled to dismiss when the employee’s trial period ends, in the advice may have been agreed in the employment contract or by a event that the employee is not sufficiently capable or in cases of Collective Bargaining Agreement. In practical terms, there is no frequent absenteeism. In any of these cases, employees are entitled difference between notice of termination and letter of termination to receive compensation of 20 days’ salary per year of service, up under Spanish law. to one year’s salary. Should there be no determination of the prior notice, a customary In relation to business reasons, the employers are entitled to dismiss period of 15 calendar days would apply. In the event that the based on financial, technical, organisational or productive grounds, employer does not comply with this requirement, they will be bound which should be carefully explained in the written communication. to pay an economic compensation in lieu of prior notice.
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Redundancies taken under these grounds must be compensated exceeding 15 days or 30 days (depending on the size of the with a severance pay of 20 days’ salary per year of service, up to a company). Said consultation period, in order to be valid, must be maximum of 12 months. done in writing and properly, with prior notification to the Labour For severance purposes, the calculation includes the last 12 payrolls Authority. The negotiation parties should meet at least three times the employee received, taking into account any salary items, plus during the consultation period and keep minutes for each discussion. other so-called benefits (medical insurance, life insurance, company To this end, when there is no workers’ council, and prior to the car, etc.), excluding those so-called “non-salary items” (km, travel official start of the consultation period, the company should offer expenses, etc.). the staff the opportunity to appoint a commission among them for representation purposes during the consultation period. Spain 6.6 Are there any specific procedures that an employer During the consultation period, in the attempt to reach an agreement has to follow in relation to individual dismissals? with the workers, terms and conditions will be discussed such as exit conditions, days to be paid as compensation, if any possibility exists The Workers’ Statute requires a very specific procedure that an of implementing a relocation plan for the affected employees, etc. employer has to follow, as they must: (i) provide a written notice; After this consultation period, the employer has to communicate (ii) include an extensive explanation of the grounds to dismiss; to the Labour Authority the result thereof. If an agreement has (iii) refer to the effective date of termination; and (iv) provide the been reached, a full copy of said agreement is to be transferred. severance pay by wire transfer when dismissal grounds are for Otherwise, the final decision concerning the collective dismissal objective reasons, and attach a receipt thereof. that has been adopted, and the conditions thereof, is to be sent to the In case of a dismissal based on gross misconduct, the employer workers’ representatives and the Labour Authority. must inform the workers’ representatives; if the dismissed is a If, within 15 days of the date of the last meeting held within the workers’ representative or member of a union, he/she must open a consultation period, the employer has not informed the workers’ contradictory file. representatives and the Labour Authority of its decision concerning the collective dismissal, the procedure will lapse. Upon reaching the agreement, or communicating the decision to the workers’ 6.7 What claims can an employee bring if he or she is dismissed? What are the remedies for a successful representatives, the employer may individually notify the affected claim? workers of the dismissals and issue notices of redundancy.
An employee can bring a claim based on: (i) the causes of the 6.10 How do employees enforce their rights in relation to termination (either objective or disciplinary); (ii) the lack of mass dismissals and what are the consequences if an compliance with the statutory requirements; (iii) the amount employer fails to comply with its obligations? pending to receive; and (iv) the breach of any fundamental right. A successful claim entails the declaration of the dismissal to be As pointed out above, mass dismissals have a very formal unfair. At his/her choice, the employer may choose between paying process to follow which encapsulates an active participation of the a severance of 45/33 days’ salary per year of service up to an amount employees and the workers’ representatives and, in the event that the of 42/24 months or reincorporating the employee in his/her same employer fails to comply with the requirements, the redundancies job position and paying the corresponding procedural wages from will be declared null and void. Notwithstanding the foregoing, the effective date of termination, up until to the Court enacts a the workers’ council has a right to challenge the mass dismissal judgment. When the employee is a workers’ representative, this (a collective claim) and the employees, individually, are free to would be at his/her choice. challenge their individual dismissals once the collective claim has ended. Enforcement of collective claims is rather complex but valid. On the other hand, a claim may entail the declaration of nullity when there has been a breach of fundamental rights. For this situation, the remedy is the invalidation of the dismissal and the immediate 7 Protecting Business Interests Following reinstatement of the employee in his/her same job. A compensation Termination for damages suffered will also be received.
7.1 What types of restrictive covenants are recognised? 6.8 Can employers settle claims before or after they are initiated? The Workers’ Statute provides the right to settle non-compete Employers may settle claims any time before or after their initiation. clauses within the employment contracts that are enforced following In others words, parties are entitled to reach an agreement before termination. In addition, exclusivity clauses during the employment the Judge enacts a judgment that determines the end of the process. contract may prevent the employee from working elsewhere. Finally, the employee may be bound to continue working for a predetermined period of time, following a training programme paid by the employer. 6.9 Does an employer have any additional obligations if it is dismissing a number of employees at the same time? 7.2 When are restrictive covenants enforceable and for what period? Yes, employers do have additional obligations when dismissing a number of employees at the same time. Mass dismissal has a very Regarding non-compete clauses, these are enforceable following the formal process to follow, which is set out by the applicable legislation. effective termination of the agreement, for a maximum period of Otherwise the redundancies will be declared null and void. two years for qualified workers and six months for all other workers. Firstly, a mass dismissal process must be preceded by a consultation Exclusivity will last for as long as the employment relationship is period with the workers’ representatives, for a period either not in force.
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Permanence covenants following specific training supported by entitled to rights to access, rectification and the cancelling of their the employer cannot last more than two years. data. They are also entitled to claim before the Data Protection Agency in Spain in case of a breach of their rights.
7.3 Do employees have to be provided with financial compensation in return for covenants? 8.3 Are employers entitled to carry out pre-employment checks on prospective employees (such as criminal Non-compete clauses have to be provided with a financial record checks)? compensation in return. Said amount has to be agreed in writing and must be adequate to the scope of the restriction. There is no Employers are not strictly entitled to carry out pre-employment Spain statutory figure or percentage established. checks on prospective employees. However, there are some careers For exclusivity, employees have to be provided with financial wherein it is usual to ask for evidence of/the lack of a criminal compensation too, which has to be agreed between the parties. record, in particular, when the employee has to join a professional There is no statutory figure or percentage established. Usually, this association (i.e., lawyers, doctors). is 10% of the fixed salary. The employee is entitled to waive his/ In general, pre-employment checks are considered private data so her exclusivity duty, with a prior notice of 30 days and then he/she any inappropriate use may infer liability on the part of the employer. will lose such compensation. In any case the law will allow the employee to compete with the employer. 8.4 Are employers entitled to monitor an employee’s Finally, permanence clauses would not have to be compensated with emails, telephone calls or use of an employer’s a financial amount as long as the employer covers the expense of a computer system? specialisation in training or an academic programme. In the event that the employee quits, the employer will be entitled to receive Yes, employers are entitled to monitor an employee’s emails, compensation for damages. telephone calls, or use of their computer system provided they implement internal policies related to the use of IT devices and right to monitor. Otherwise, if the employer does not state a very detailed 7.4 How are restrictive covenants enforced? description about the use of work tools, they may risk breaching employees’ rights to privacy. An employer is entitled to enforce restrictive covenants before Labour Courts and claim remedies and compensation for resulting Transparency and clear prior warning to employees about the use of damages. employer’s IT devices is therefore required prior to being monitored. Nevertheless, in the event of default, it is not always quick or easy In any case of being monitored, the measure must be proportionate, for employers to enforce such restrictive covenants. adequate and less intrusive of employees’ privacy rights. Labour Courts are restrictive in this regard and a default by the employer may lead to the nullity of the monitoring, invalidity 8 Data Protection and Employee Privacy of the proof in the proceedings, penalties for the employer and compensation for damages to the employee.
8.1 How do employee data protection rights affect the employment relationship? Can an employer transfer 8.5 Can an employer control an employee’s use of social employee data freely to other countries? media in or outside the workplace?
According to Act 15/1995 concerning Data Protection, employers Please see the same requirements as referred to at question 8.4 are bound to create a specific database including all the personal above. In-house policies may encompass the access to social media data related to their employees, which must be communicated to the but this should be informed prior and with some limits. Additionally Data Protection Agency. any unlawful use of this may risk breaching employees’ rights to In accordance with the provision of this Act, some data is so-called privacy. “specially protected” as it is considered sensitive for which the employer must observe a special security protection. Any breach in 9 Court Practice and Procedure this sense shall be subject to sanctions by the Data Protection Agency. Otherwise, the employee must acknowledge the data treatment in writing (usually employment contracts include provisions related to 9.1 Which courts or tribunals have jurisdiction to hear data protection so consent is given) and so have the right to access, employment-related complaints and what is their rectification and the deletion of their data. composition? The employer is not free to transfer employee data to other countries Firstly, the Labour Court of first instance is the court with unless the employee’s consent is given expressly and there is a valid jurisdiction to acknowledge employment-related complaints. purpose for such transfer. The next instance is the Labour Chamber of the Superior Court of Justice; one per each region in Spain. When controversies are 8.2 Do employees have a right to obtain copies of any related to a number of workplaces of different regions the Labour personal information that is held by their employer? Chamber of the National Audience is relevant. Finally, for final appeals we find the Labour Chamber of the Supreme Court. Employees do indeed have the right to obtain copies of any personal In addition, the Constitutional Court also has jurisdiction in matters information held by their employer. Employees are entitled to related to fundamental rights or other ones enforced by the Spanish require a full description of the personal data held by the employer Constitution. with a statement of their protection level. Furthermore, they are
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9.2 What procedure applies to employment-related 9.3 How long do employment-related complaints typically complaints? Is conciliation mandatory before a take to be decided? complaint can proceed? Does an employee have to pay a fee to submit a claim? It depends normally on the subject to be judged, so the timeframe for enacting a judgment ranges from months to years. Lack of means Depending on the subject of the complaint, there are statutory by the Labour Courts brings long delays sometimes. Nonetheless, deadlines. Prior to a claim before Court, it is mandatory to attempt some matters are more urgent as they are considered “sensitive”, an agreement before the Mediation, Conciliation and Arbitration such as dismissals and fundamental rights. Service, (SMAC), although some subjects are excluded (such as, for example, claims related to flexibility for childcare, annual leave, Spain geographical mobility, change of employment conditions, contract 9.4 Is it possible to appeal against a first instance decision and if so how long do such appeals usually suspension, or fundamental rights). This is an administrative act take? whereby a quick solution can be ensured. In the event that the parties arrange an agreement, the procedure will terminate at this Not all decisions judged by a first instance Labour Court can be level and claim before Court is not necessary. appealed. These are rather exceptional and would include processes If parties do not arrange an agreement at the conciliation level they that have no relevant amount (less than EUR 3,000), or matters are entitled to challenge an agreement while the process is in rule. which require an urgent judgment (for example, annual leave). At first instance, when the employee claims before the Labour Normally, an appeal will take a minimum of nine months at the Court, no fees need to be paid. Before the Superior Court of Justice second instance and two years at the Supreme Court. and Supreme Court, only the employer has to pay a fee.
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Ana Gómez Sara Moukayed Mariscal & Abogados, Asociados Mariscal & Abogados, Asociados Conde de Aranda 1, 2º izq. Conde de Aranda 1, 2º izq. 28001 Madrid 28001 Madrid Spain Spain
Tel: +34 91 564 64 32 Tel: +34 91 564 64 32 Fax: +34 91 564 46 17 Fax: +34 91 564 46 17 Email: [email protected] Email: saramoukayed@ URL: www.mariscal-abogados.com mariscal-abogados.com
Spain URL: www.mariscal-abogados.com
Ana Gómez graduated with a degree in Law from the Autonomous Sara Moukayed has a double-degree in Law and Political Sciences University of Madrid and holds a Master’s in Business Law, from the Universidad San Pablo CEU. Furthermore, she has specialising in Labour Law, from Centro de Estudios Garrigues. She completed a Master’s degree in Business Law at the Universidad San has been a member of the Madrid Bar Association (ICAM) since 1999. Pablo CEU. Sara started her professional career at top-tier national She is the President of the Board of the Labour Lawyers Association firms and has specialised in labour law and procedural labour law. (ASNALA) and she is a member of the Association Forelab (Labour Lawyers’ Forum) as well as the international organisation European Employment Lawyers Association.
Mariscal & Abogados is a multidisciplinary law firm offering comprehensive legal advice in Spain. Our high level of expertise and clear international focus are our distinctive features. Since our creation in 2001, the law firm has forged a team of highly qualified professionals who offer high-end personal service, with minimal response time. We establish a bond of trust with our clients, domestic and international companies of different countries and sectors, and make their objectives our own. Our international vocation has resulted in the creation of international departments directed by professionals with extensive legal experience and a deep understanding of the cultural and commercial characteristics of each individual market. Our presence in different networks, chambers of commerce and international organisations, alongside our office in Miami, allows us to address cross-border problems. Our working languages are Spanish, German, English and French. “At Mariscal Abogados we provide our clients with a personal and friendly service, dedicating them the utmost attention to accomplish our priority: their satisfaction. We take care of their interests, adapt to their circumstances and always try to anticipate their needs.” – Miguel Mariscal, Founding Partner.
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Sweden
EmpLaw Advokater AB Annika Elmér
1 Terms and Conditions of Employment 1.5 Are any minimum employment terms and conditions set down by law that employers have to observe?
1.1 What are the main sources of employment law? There are minimum employment terms and conditions set forth in the following acts: Sweden is generally governed by the civil law tradition, and within employment law, Swedish legislation aims, in some ways, The Employment Protection Act (1982:80): this act is, in principle, to resemble that of other Nordic countries. EU law has, with mandatory to the benefit of the employee, e.g., providing for notice few exceptions, been rapidly implemented in the Swedish legal periods, type of employment, protection from unfair dismissals, system. The main sources of national employment law are found time bars and remedies. Employer organisations and trade unions in the Swedish Constitution, statutes, authority provisions, case law, may, to a certain extent, agree on deferring provisions in central collective bargaining agreements, individual employment contracts collective bargaining agreements. and employer decision-making. The Annual Leave Act (1977:480): this act entitles employees to a minimum of 25 vacation days per year. The act also includes principles on calculation of vacation pay and vacation pay in lieu of 1.2 What types of worker are protected by employment law? How are different types of worker distinguished? vacation. Employer organisations and trade unions may, to a certain extent, agree on deferring provisions in central collective bargaining agreements. The law protects employees equally. Hence, there is no legal difference between blue-collar and white-collar employees. The Working Hours Act (1982:673): this act limits the working hours, defines the minimum rest period and the maximum number Employees in managerial positions, such as a managing director of of overtime hours. a limited liability company, do not enjoy employment protection by way of law. There is no legislation on minimum pay in Sweden.
1.3 Do contracts of employment have to be in writing? If 1.6 To what extent are terms and conditions of not, do employees have to be provided with specific employment agreed through collective bargaining? information in writing? Does bargaining usually take place at company or industry level? Employment contracts need not to be in writing. However, an employer shall unilaterally inform the employee of the most The Swedish labour market is, to a wide extent, regulated by important terms and conditions of employment. Such information collective bargaining agreements, in which terms and conditions are shall be given in writing no later than one month after commencement set out in detail. of employment. Normally, this information is provided in a written Collective bargaining agreements exist both at industry and company employment contract. level as such, but bargaining takes place foremost at industry level.
1.4 Are any terms implied into contracts of employment? 2 Employee Representation and Industrial Relations The duty of loyalty is implied in all contracts of employment. The duty is mutual, whereby the employer shall safeguard the employer- employee relationship in various ways and the employee shall 2.1 What are the rules relating to trade union recognition? avoid any conflict of interest which could reasonably be demanded considering the employee’s position, etc. The recognition and formation of trade unions is guaranteed and protected by constitutional law. Freedom of association is guaranteed for both employees and employers.
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2.2 What rights do trade unions have? 3 Discrimination
The main function of trade unions is to safeguard the interests 3.1 Are employees protected against discrimination? If of their members, i.e., the employees, when it comes to work so, on what grounds is discrimination prohibited? environment, employment protection, wage development, etc. The means to achieve the greatest influence for their members is to agree Employees are protected against discrimination, which is prohibited on collective bargaining agreements and to achieve high coverage on grounds of gender, age, transgender identity, sexual orientation on the labour market for these agreements. and ethnic origin, as well as religion and disability. Employers bound by a collective bargaining agreement shall consult Sweden with the local trade union prior to taking any decision of importance 3.2 What types of discrimination are unlawful and in what relating to either the organisation as such (collective changes) or circumstances? to the terms and conditions of individual employees (individual changes). Also, employers not bound by a collective bargaining Discrimination is defined as: agreement have a duty to consult with the trade unions in certain situations. 1. Direct discrimination: when someone is disadvantaged by being treated less favourably than someone else is treated, In the line of business, the employer further has a duty to has been treated or would have been treated in a comparable continuously inform the local trade union on business development, situation and the disadvantage is associated with any of the finances, etc. protected grounds. The local trade union representatives are chosen by members of that 2. Indirect discrimination: when someone is disadvantaged specific trade union. by the application of a provision, a criterion or a procedure that appears neutral but that may put people of any of the protected grounds at a particular disadvantage, unless the 2.3 Are there any rules governing a trade union’s right to provision, criterion or procedure has a legitimate purpose take industrial action? and the means that are used are appropriate and necessary to achieve that purpose. Constitutional law and the Co-Determination in the Workplace Act 3. Inadequate accessibility: when a person with a disability (1976:580) provide trade unions with a far-reaching right to take is disadvantaged through a failure to take measures for industrial action. accessibility. 4. Harassment: conduct that violates a person’s dignity and that is associated with one of the following grounds of 2.4 Are employers required to set up works councils? If discrimination: sex; gender identity or expression; ethnicity; so, what are the main rights and responsibilities of religion or other belief; disability; sexual orientation; or age. such bodies? How are works council representatives chosen/appointed? 5. Sexual harassment: conduct of a sexual nature that violates someone’s dignity. There is no such requirement. However, in accordance with 6. Instructions to discriminate: orders or instructions to EU Directive 2009/38/EC, an employer shall, under certain discriminate against someone in a manner referred to in circumstances, assist and facilitate the setting up of a European points 1–4. Work Council. The Discrimination Act also prohibits reprisals.
2.5 In what circumstances will a works council have co- 3.3 Are there any defences to a discrimination claim? determination rights, so that an employer is unable to proceed until it has obtained works council agreement The employer has the burden of proof in establishing the equal to proposals? treatment of employees. Thus, the employer must be able to show that the reasons for differential treatment have been objectively justified. With regards to works councils, the question is not relevant from a Swedish perspective. However, employers have a duty to consult with the trade unions in various situations prior to taking decisions. 3.4 How do employees enforce their discrimination rights? Can employers settle claims before or after they are initiated? 2.6 How do the rights of trade unions and works councils interact? If the employee is a member of a trade union, the trade union may raise claims on behalf of the employee. If not settled, the trade This is not relevant in Sweden. union may bring the claims before the Labour Court. If the employee is not a member of a trade union, or, if the trade union 2.7 Are employees entitled to representation at board for any reason chooses not to represent the employee, the employee level? may report the alleged discrimination to the Discrimination Ombudsman (DO). The DO will make an investigation and Privately held limited liability companies with at least 25 employees potentially raise claims on behalf of the employee. If not settled, shall give right to two employee representatives on the board the DO may bring the claims before the Labour Court. of directors. Where the number of employees exceeds 1,000 the Finally, the employee may bring claims for alleged discrimination employees have a right to three representatives. before the District Court. The parties may settle the case by way of a mutual agreement as long as the main hearing has not been held in a court.
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parents can stay at home with their child and receive parental pay 3.5 What remedies are available to employees in benefits via the social security system. successful discrimination claims?
The employee may claim damages, mainly for injury to feelings 4.5 Are there any other parental leave rights that employers have to observe? and under certain circumstances for financial loss. Further, discriminating terms of contract may be declared null and void. According to the Parental Leave Act (1995:584), employees have a right to leave in order to take care of their child during the first 18 3.6 Do “atypical” workers (such as those working part- months from birth or adoption (until the adopted child turns eight), time, on a fixed-term contract or as a temporary
a right to reduce working hours until the child is eight years of age, Sweden agency worker) have any additional protection? and further a right to temporary leave in order to take care of a sick child (until the child is 12 years of age). Employees exercising their Less favourable employment terms than those applicable to other right under the act are protected against any disadvantages related to employment relationships may not, without proper and justified the parental leave. During the first 18 months from a child’s birth, cause, be applied to fixed-term and part-time employment the parents are entitled to 480 days of parental pay benefits via the relationships merely on the basis of the duration of the employment social security system. Apart from 90 days each, the parents can contract or working hours. Information on vacancies must be divide the days between them. provided in a way which ensures that part-time and fixed-term Many collective bargaining agreements contain provisions on employees, as well as temporary agency workers of the user supplementary parental pay. company, have the same opportunity to apply for these jobs as permanent or full-time employees. If the employer, hiring its employee as a temporary agency worker 4.6 Are employees entitled to work flexibly if they have to a user company, is neither bound by a collective agreement nor responsibility for caring for dependants? required to observe a generally applicable collective agreement in its employment relationships, the provisions of the collective Please see question 4.5 above. agreement applicable to the user company must at least be applied to the employment relationship of the temporary agency worker. 5 Business Sales A temporary agency worker is entitled to benefit from the employee benefits and services offered by the user company to its employees on the same conditions as the employees of the user company, unless 5.1 On a business sale (either a share sale or asset a difference in treatment can be justified on objective grounds. transfer) do employees automatically transfer to the buyer?
4 Maternity and Family Leave Rights If the business sale leads to a change of employer, the employees automatically transfer to the buyer. However, the individual employee has a right to oppose to the transfer and stay employed 4.1 How long does maternity leave last? with the seller.
Maternity leave is defined as seven weeks of consecutive leave just before or just after giving birth. Two weeks are mandatory in 5.2 What employee rights transfer on a business connection with giving birth. sale? How does a business sale affect collective agreements?
4.2 What rights, including rights to pay and benefits, does Any individually accrued rights, such as vacation, will transfer a woman have during maternity leave? to the buyer. The terms and conditions of employment according to the collective bargaining agreement, which the seller is bound The employer has no duty according to law to pay anything to the by, transfer to the buyer for a period of 12 months. Occupational employee during the maternity leave. However, the employee pension vehicles do not transfer. is covered by the social security system. By way of collective bargaining agreements, many employers, however, have an obligation to provide parental pay. 5.3 Are there any information and consultation rights on a business sale? How long does the process typically take and what are the sanctions for failing to inform 4.3 What rights does a woman have upon her return to and consult? work from maternity leave? Both the seller and the buyer have a duty to consult with the relevant The employee has the right to return to her employer and her position. trade unions. The consultation process normally takes between two If her position is no longer available, she shall be offered another and four weeks. Should the employer fail to consult, the trade union equivalent position in accordance with her employment contract. may claim damages for the breach.
4.4 Do fathers have the right to take paternity leave? 5.4 Can employees be dismissed in connection with a business sale? Male employees have a right to paternity leave in connection with a child’s birth or adoption (10 days). During these 10 days, both Employment contracts may not be legally terminated on the grounds of the transfer itself.
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5.5 Are employers free to change terms and conditions of 6.4 Are there any categories of employees who enjoy employment in connection with a business sale? special protection against dismissal?
Harmonisation of conditions of employment according to collective Employees with reduced ability who have enjoyed certain bargaining agreements can be made by the employer organisation adjustments of work, and employees on parental leave, enjoy special and the trade union. If this is not possible, the buyer may not legally protection in connection with dismissal due to redundancy. The local change the terms and conditions of employment based on the trade union has a right to protect its elected local representatives seller’s collective bargaining agreement during the first 12 months under certain circumstances in relation to redundancy dismissals. following the transfer. For other changes in individual employment
Sweden contracts, the buyer has no more rights to change the terms and 6.5 When will an employer be entitled to dismiss for: conditions than the seller. 1) reasons related to the individual employee; or 2) business related reasons? Are employees entitled to compensation on dismissal and if so how is 6 Termination of Employment compensation calculated?
1. Just cause for personal reasons is rather difficult to reach 6.1 Do employees have to be given notice of termination of their employment? How is the notice period and is also associated with great risks for the employer. determined? Typically, the employer shall take measures in order to assist the employee in improving the behaviour and/or performance in order to avoid dismissal. In relation to employments until further notice, an employer shall 2. Dismissal for business-related reasons (redundancy) is serve written notice of termination prior to dismissal with notice, normally seen as based on just cause. However, the employer regardless of the reason therefore. The notice period according to has a duty to consult with trade unions prior to such dismissal law, can vary between one to six months depending on the length and shall under certain circumstances also apply the Last-In- of service. The employee may give notice observing a one-month First-Out principle when serving notice. notice period. If the employer has just cause for dismissal, salary and other Collective bargaining agreements often provide for notice periods employment benefits shall be paid during the notice period. No other than those according to law. other compensation is due. In the case of a serious breach of contract from the employee’s side, the employer shall serve written notice of immediate dismissal 6.6 Are there any specific procedures that an employer (dismissal without notice). has to follow in relation to individual dismissals? In relation to fixed-term contracts, the employer normally shall notify the employee that the employment will terminate on a given Dismissal due to personal reasons shall typically be preceded by date. other measures from the employer, such as a warning or performance improvement plan. If such measures do not precede a dismissal, 6.2 Can employers require employees to serve a period the breach of contract should be of a very severe nature. Every of “garden leave” during their notice period when the dismissal due to personal reasons shall be subject to a thorough legal employee remains employed but does not have to review in order to avoid the most obvious risks. Prior to serving attend for work? notice of termination, the employer shall notify the employee of the considered termination and if the employee is a member of a The employer may under certain circumstances, especially when the trade union, the trade union shall be notified as well. The employee/ employee him/herself has given notice of termination, unilaterally trade union has a right to demand consultations on the considered release the employee from the duty to perform work during the termination. notice period. When the parties agree on a mutual separation, it is In relation to dismissals due to business-related reasons also common to agree on garden leave. (redundancy), an employer bound by a collective bargaining agreement shall consult with the trade union prior to taking the 6.3 What protection do employees have against decision leading to organisational change. Who to dismiss is also a dismissal? In what circumstances is an employee topic for consultations with the trade union. treated as being dismissed? Is consent from a third Regardless of the reasons for dismissal, there are formal requirements party required before an employer can dismiss? of the written notice to be handed to the employee.
The employer shall have just cause for dismissal with notice and legal grounds for immediate dismissal (without notice). The 6.7 What claims can an employee bring if he or she is dismissed? What are the remedies for a successful employment protection in Sweden is very strong and the risk for claim? the employer is therefore significant in case of wrongful dismissal.
There are no circumstances where the employee is treated as being The employee can either claim damages for injury to feelings or for dismissed; rather, it is the measures taken by the employer which financial loss, or claim the dismissal null and void. constitute a dismissal. The damages for injury to feelings are fairly low, between EUR No consent from a third party is required prior to serving notice of 5,000–13,000. Financial damages range from six to 32 months’ pay termination. depending on length of service.
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If the restrictive covenants are not combined with a contractual 6.8 Can employers settle claims before or after they are penalty, the employer can take the matter to court and request initiated? compensation from the employee due to the breach. Violation of a non-competition obligation results in an obligation to pay damages Yes, the parties may agree on settling the claims before or after they for verifiable damage. are initiated, as long as the court has not delivered its ruling.
8 Data Protection and Employee Privacy 6.9 Does an employer have any additional obligations if it is dismissing a number of employees at the same time? 8.1 How do employee data protection rights affect the Sweden employment relationship? Can an employer transfer If more than five employees will be dismissed due to redundancy employee data freely to other countries? during a period of 90 days, the employer has a duty to notify the Swedish Public Employment Service. The protection of personal data is currently provided for in the Personal Data Act, the application of which is supervised by the Data 6.10 How do employees enforce their rights in relation to Protection Authority. The Personal Data Act gives the employer a mass dismissals and what are the consequences if an right to process and store personal data related to the employment employer fails to comply with its obligations? relationship without any formal consent from the employee. However, the processed personal data shall at all times be necessary The Swedish employment law makes no distinction between mass for the employer in order to fulfil the employer’s duties under the dismissals and other dismissals; rather, the law defines dismissal due employment contract and with due respect to the integrity of the to redundancy without regard to the number of employees concerned. employee. The personal data shall be collected from the employee directly and not a third source. A new Data Protection Act will apply as from 25 May 2018, thereby 7 Protecting Business Interests Following implementing the EU General Data Protection Regulation. Termination The employer may transfer legally obtained employee data to other countries within EU/EEC. However, transfer of employee data to 7.1 What types of restrictive covenants are recognised? third countries is strictly regulated, e.g., by way of Privacy Shield.
The most common post-termination restrictions are confidentiality, 8.2 Do employees have a right to obtain copies of any non-competition, non-solicitation and customer protection. personal information that is held by their employer?
7.2 When are restrictive covenants enforceable and for Yes, personal data which is processed and stored by the employer. what period? 8.3 Are employers entitled to carry out pre-employment The possibilities for an employer to enforce a non-competition checks on prospective employees (such as criminal clause are rather restricted. Typically, only key employees should record checks)? be subject to such restrictive covenants. These are enforceable after the employee’s own dismissal, dismissal with notice from the In principle, it is possible to carry out pre-employment checks in employer due to personal reasons and dismissal without notice. It is Sweden, but there are relatively strict and detailed rules of whom common to enforce such restrictions for a period of between six and will have access and what will be accessed, e.g., criminal records 12 months. Employers bound by collective bargaining agreements and financial status. may have other restrictions to take into consideration. If the employer carries out business within schools or the childcare Non-solicitation and customer protection clauses are widely used industry, the employer is obliged to check criminal records. Other for a period ranging between six and 18 months. employers may ask the job seeker to retrieve a criminal record and Confidentiality undertakings range from six months onwards and show the employer. However, an official government report has may not have any time limitation at all. suggested a change of law in this respect.
7.3 Do employees have to be provided with financial 8.4 Are employers entitled to monitor an employee’s compensation in return for covenants? emails, telephone calls or use of an employer’s computer system? Normally, the employer will have to pay 60% of the employee’s Yes, it is possible that, to a certain extent, employers may monitor an salary during the time under which a non-competition clause is valid. employee’s emails, telephone calls, or use of their computer system, The employer does not have to pay any compensation for confidentiality, especially if the employer has a policy, clearly stating what is being non-solicitation and customer protection clauses. monitored, how and why.
7.4 How are restrictive covenants enforced?
Restrictive covenants are normally combined with a contractual penalty. Such contractual fines range from four to six months’ salary.
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8.5 Can an employer control an employee’s use of social 9.3 How long do employment-related complaints typically media in or outside the workplace? take to be decided?
Employers may only control an employee’s use of social media, The main hearing in a District Court is scheduled between 12–18 if the employee, by use of social media, acts in breach of his/her months after summons is filed. employment contract, e.g., the duty of loyalty. The main hearing in the Labour Court is normally scheduled within 12 months after summons is filed. 9 Court Practice and Procedure
Sweden 9.4 Is it possible to appeal against a first instance decision and if so how long do such appeals usually 9.1 Which courts or tribunals have jurisdiction to hear take? employment-related complaints and what is their composition? It is possible to appeal against a District Court decision. Such appeal is directed to the Labour Court, which will first take a decision on Employment-related complaints are heard by District Courts with the merits on a leave to appeal within two to six months. the composition of one to three judges and the Labour Court with In many employment-related disputes, the Labour Court is the first the composition of three to seven members. In the standard seven- and final court for settling the matter. member court, there are three neutral members, two members representing the interests of the employer and two representing employee interests. The chairman and vice chairman are found among the neutral members of the court.
9.2 What procedure applies to employment-related Annika Elmér complaints? Is conciliation mandatory before a EmpLaw Advokater AB complaint can proceed? Does an employee have to Humlegårdsgatan 4, 2 tr. pay a fee to submit a claim? SE114 46 Stockholm Sweden
An employment-related civil case becomes pending when a written Tel: +46 70 573 89 59 application for a summons is filed by the plaintiff to the competent Email: [email protected] URL: www.emplaw.se District Court/the Labour Court. After that, a summons is issued where the defendant is requested to respond to the demands. Generally, the proceeding continues to an oral preparation in a Annika is specialised in employment law matters with a strong focus preparatory hearing and after that to a main hearing. on hands-on advice to employers. She offers employers a sensible Conciliation is not mandatory, but the possibilities for settlement are and business-related/accepted way forward in managing their human capital. Her experience covers all aspects of employment law and commonly explored throughout the process. HR related matters, but she is specifically an expert in restructuring, The District Courts collect a fee, EUR 280, from the plaintiff for performance management, dispute resolution and leadership with submitting a claim. The Labour Court collects no such fee. regards to employment law.
EmpLaw Advokater is a modern boutique law firm, offering support to employers within employment and labour law. We take pride in offering hands- on advice directly accessible to our clients and often take into account not only the law but also other aspects of managing people. Our lawyers have exceptionally long experience from the Swedish labour market and regularly advise clients on strategies surrounding establishment on the Swedish market from an employment law perspective. We represent public and private employers both in day-to-day matters and as legal counsels in court and arbitrations. We are also appointed arbitrators on a regular basis.
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Switzerland Dr. Balz Gross
Homburger Dr. Gregor Bühler
1 Terms and Conditions of Employment 1.4 Are any terms implied into contracts of employment?
1.1 What are the main sources of employment law? There are various implied terms which govern the employment relationship. Most of them are outlined in the Code of Obligations. Some terms are mandatory; others will only apply if the parties do The main sources of employment law in Switzerland are the Code of not agree otherwise. Obligations, the Labour Act and the terms agreed in the contract of employment. In some industries, mandatory collective bargaining Terms might be implied based on past practice. For example, if a agreements will apply. bonus has been paid for years, the employee might have a contractual entitlement to such payments. Additional legislation includes specific rights or obligations, e.g., the Participation Act, the Act on Equal Treatment of Women and Men, the Data Protection Act, the Merger Act or the Ordinance 1.5 Are any minimum employment terms and conditions against Excessive Compensation. set down by law that employers have to observe?
There are statutory minimum employment terms and conditions, 1.2 What types of worker are protected by employment law? How are different types of worker distinguished? e.g., at least four weeks’ holiday per year and a notice period of not less than one month. Swiss employment law does not distinguish between different types There is no statutory minimum salary. However, mandatory of workers, i.e., the same rules apply for all employees. There are collective bargaining agreements provide for a minimal pay in some additional provisions for specific types of employees, e.g., for certain industries. pregnant women. Further, statutory rules regarding overtime will not apply for members of senior management. 1.6 To what extent are terms and conditions of Only self-employed persons are not subject to employment law. It employment agreed through collective bargaining? is not the wording of the contract, but whether or not an individual Does bargaining usually take place at company or is in fact, running their own business, that is relevant to determine industry level? if they are considered self-employed. If a person works under the instructions of an employer and/or with the employer’s means of There are collective bargaining agreements in certain industries, work, he or she will be considered an employee. e.g., construction, hotels/restaurants, the pharmaceutical industry, etc. Some collective agreements were declared mandatory for the entire industry by the government. 1.3 Do contracts of employment have to be in writing? If not, do employees have to be provided with specific Bargaining usually takes place at industry level. information in writing? 2 Employee Representation and Industrial Contracts of employment do not have to be in writing. However, certain terms need to be in writing and duly executed by both Relations parties to be valid and binding, in particular if they deviate from the statutory default rules (e.g., terms regarding notice periods, 2.1 What are the rules relating to trade union recognition? overtime, probationary periods, post-contractual non-compete obligations). There is no statutory recognition process as in other jurisdictions. Moreover, the employee must be provided with the following In general, trade unions have to be separate legal entities with the particulars in writing: names of the employer and employee; starting main aim to improve conditions of employment, and they have date of employment; function; compensation; and weekly hours of to be independent from employers and other third parties and the work. membership has to be voluntary.
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2.2 What rights do trade unions have? 2.7 Are employees entitled to representation at board level? There are no specific statutory rights that employers have to be aware of. No, employees are not entitled to representation at board level. Collective bargaining agreements might provide for some rights of trade unions. In particular, to enforce the terms of 3 Discrimination collective bargaining agreements (e.g., minimal pay), joint commissions (consisting of trade unions’ members and employers’ representatives) might be established. Such commissions are 3.1 Are employees protected against discrimination? If entitled to get access to certain documents like payroll data. so, on what grounds is discrimination prohibited? Switzerland Further, there are joint commissions consisting of trade union members, employers’ representatives and governmental authorities Protection against discrimination is based on the general duty of which shall ensure that employment terms will not unduly worsen the employer to protect the employee’s rights of personality. The in certain industries. These official joint commissions have the right employer must not discriminate against an individual employee to review employment conditions and they might recommend the without objective reasons. However, employees are only protected government to declare existing collective bargaining agreements against discrimination by employers, if such discrimination resulted compulsory for the whole industry or to issue minimal terms for in a violation of their rights of personality. Within that limited scope, certain functions (such minimal terms currently apply for domestic the employees are protected against discrimination regardless of the work only on a national level). basis of the discrimination, i.e., age, disability, race, political belief, religion or otherwise. The Federal Disabled Equality Act only directly protects employees 2.3 Are there any rules governing a trade union’s right to take industrial action? of the federal government; hence, disabled persons are protected within the framework of the general protection of their rights of personality. There is, however, an increased protection in There is a constitutional right to take industrial action, but there connection with building laws. are no statutory rules. Precedents suggest that a strike should be considered as an action of last resort. Collective bargaining There is a broader protection against discrimination because of agreements will usually restrict the right to strike. It is discussed gender. The Federal Gender Equality Act provides for detailed whether further conditions apply, in particular that strikes need to be substantive and procedural rules that shall protect employees against supported by a trade union and that the strike has to aim at a matter discrimination because of their gender. that can be dealt with in a collective bargaining agreement. Further, the international agreements between the European Union (and its Member States) and Switzerland on the free movement of persons, provide for equal treatment of employees who are nationals 2.4 Are employers required to set up works councils? If so, what are the main rights and responsibilities of of a contracting party. Such persons may not, by reason of their such bodies? How are works council representatives nationality, be treated differently from employees who are nationals chosen/appointed? of the other contracting party as regards conditions of employment and working conditions, especially as regards pay or dismissal. All businesses with more than 50 employees have to set up a works council on request of the employees. A fifth of the workforce (or 3.2 What types of discrimination are unlawful and in what 100 employees) can ask for a vote; if the majority of the voting circumstances? employees support the request, elections have to take place. The election will be organised by the employer and employees jointly. The law protects against any sort of direct or indirect discrimination. Only a few companies have set up a works council in Switzerland. Discrimination is defined as treating an employee worse than others. There is no protection against the (arbitrary) better treatment of other employees. In addition, even arbitrary discrimination by 2.5 In what circumstances will a works council have co- determination rights, so that an employer is unable to the employer may be tolerated unless the discrimination results in proceed until it has obtained works council agreement the violation of the employee’s rights of personality, in particular to proposals? because the discrimination reflects a disregard of the employee’s personality. Works councils only have information rights and they have to be The Gender Equality Act protects employees against any kind consulted before certain decisions (regarding work safety, mass of direct or indirect discrimination based on gender, including dismissals, transfer of a business or pension plans) are made. discrimination because of civil status, family situation and Further, see the answers to questions 6.9 and 6.10 with regards to pregnancy. The protection exists for the entire employment the social plan in case of a mass dismissal. relationship, from the negotiations on a new employment to retirement (and retirement benefits) and termination. It includes 2.6 How do the rights of trade unions and works councils protection against unfavourable working conditions, lower salary interact? and sexual harassment.
There is no established way of interaction. In any event, only a few 3.3 Are there any defences to a discrimination claim? companies have works councils. There is no unlawful discrimination if employers are able to establish that the unequal treatment does not result in the violation
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of the employee’s right of personality, i.e., that there are valid to do so. Similarly, the employee is only required to work during reasons to treat one individual employee differently or rather pregnancy and during the nursing period if she agrees to do so. that some employees are treated better than others (and not that Moreover, collective bargaining agreements and the individual individual employees are discriminated against), or that the different employment agreements often contain additional rules which treatment is so minor that it does not result in a violation of the further improve the position of the employee during pregnancy and rights of personality. following birth. The Gender Equality Act sets much more stringent standards, and any discrimination that is based on gender, whether directly or 4.2 What rights, including rights to pay and benefits, does indirectly, is generally prohibited. a woman have during maternity leave?
3.4 How do employees enforce their discrimination During the 14 weeks’ statutory maternity leave, the contractually Switzerland rights? Can employers settle claims before or after agreed remuneration is replaced by a compensation of 80 per cent they are initiated? of the last average remuneration. The compensation is presently (2016) capped at CHF196 per day and the employer can recover A violation of the prohibition against discrimination is a violation the payments from a social security fund. It is unclear whether of statutory employment law and the employment contract. employers have to top up payments to a certain extent. Employees have to file a lawsuit with the courts that have The rules on maternity leave do not cover the issue of whether an jurisdiction for employment matters; a mandatory conciliation employee continues receiving the contractually agreed salary if she proceeding is part of the proceeding. Employees can freely dispose is not working during pregnancy and following birth (but for the of the claims made in discrimination proceedings, and claims are period of 14 weeks covered by the maternity leave rules). The right frequently settled before or after proceedings are initiated. to remuneration will depend on the duration of the employment and the contractual agreement in the employment contract. In 3.5 What remedies are available to employees in addition, employers are regularly insured against the risk of successful discrimination claims? employees not working during pregnancy and following birth. To the extent insurance coverage exists and reaches a statutory limit, The main remedy in discrimination proceedings is monetary the insurance’s payments replace the claim to remuneration. compensation. Employees also have a right to an order of the court prohibiting continuation of discrimination, or preventing a 4.3 What rights does a woman have upon her return to threatened discrimination. work from maternity leave? In gender discrimination cases in connection with an alleged discriminatory dismissal, the court can order the provisional re- Maternity leave does not change the terms of the employment employment of an employee and eventually cancel the termination relationship. Hence, the employee will have the same rights and and order definitive re-employment. This is not possible in all other obligations upon her return to work as before the maternity leave. discrimination cases in connection with alleged discriminatory She will usually have to continue the same job as before birth, dismissal, where the only available remedy is monetary unless otherwise agreed with the employer. compensation.
4.4 Do fathers have the right to take paternity leave? 3.6 Do “atypical” workers (such as those working part- time, on a fixed-term contract or as a temporary There are no statutory rights to paternity leave, but some collective agency worker) have any additional protection? bargaining agreements and individual agreements provide for a right to take paternity leave. There is special legislation on employment placements designed to protect temporary workers that are placed by professional agencies. In addition, certain collective bargaining agreements have special 4.5 Are there any other parental leave rights that rules for part-time workers, or workers that are on call. Finally, employers have to observe? legislation protects posted workers. Parents have a statutory right to stay away from work for three days to take care of sick family members. 4 Maternity and Family Leave Rights
4.6 Are employees entitled to work flexibly if they have 4.1 How long does maternity leave last? responsibility for caring for dependants?
A female employee is generally entitled to 14 weeks of paid statutory No, employees who have responsibilities for caring for dependants maternity leave following the child’s birth. are not entitled to work flexibly. In addition to the provisions on maternity leave, there are other rules on pregnancy and status following birth. These rules provide, in particular, that an employer shall not terminate the employment relationship during pregnancy and during a period of 16 weeks following birth. In addition, an employee must not work during a period of eight weeks following birth, and she is only required to work during an additional period of eight weeks if she agrees
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5 Business Sales 5.5 Are employers free to change terms and conditions of employment in connection with a business sale?
5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the Employees have to be consulted regarding changes of terms and buyer? conditions in connection with a business sale (see question 5.2 above). There are no further specific restrictions. Hence, the same If a business unit is transferred in an asset deal, the contracts of rules apply as for an amendment of employment agreements that is employment assigned to this business will automatically transfer not in connection with a business sale: employers can unilaterally from the seller to the buyer. Employees can object to the transfer. change terms and conditions, but they have to take the applicable An objection results in a termination of the employment relationship notice periods into account, i.e., no employee has to accept new Switzerland after the expiry of the statutory notice period. terms before the contractual notice period expired. After the expiry of the notice period, the employee can either continue to work under A share sale does not affect the employment agreements, because the the new conditions, or quit the employment. identity of the employer will not be altered. Hence, employees will still be employed by the same company under the same contracts. Amendments to the detriment of employees only (e.g., cuts of base salaries, increase in working hours) might be deemed to be abusive if the employer is unable to provide objective reasons for 5.2 What employee rights transfer on a business the change. Employees who will not accept the new conditions and, sale? How does a business sale affect collective therefore, quit the employment after the notice period might be able agreements? to claim an indemnity of up to six months’ salary (see question 6.3).
Employees will work for a different employer after the transfer, but under the same employment contract. Hence, all current terms of 6 Termination of Employment the employment contracts will transfer with the employees. The buyer has to comply with collective bargaining agreements for 6.1 Do employees have to be given notice of termination a period of one year after the transfer, unless such agreements will of their employment? How is the notice period expire or will be terminated earlier. In some industries, mandatory determined? collective bargaining agreements apply. A share sale does not trigger a transfer. Employees have to be given notice of termination of their employment. The length of the notice period is agreed in the 5.3 Are there any information and consultation rights on employment contract, subject to statutory rules on minimum length a business sale? How long does the process typically and equality of the notice periods for notice to be given by the take and what are the sanctions for failing to inform employer and employee. and consult? An employment relationship can be terminated with immediate effect for cause. Employees (or the works council, if there is one) have to be informed about the reasons for the transfer and its legal, economic and social implications for the employees. If measures that might 6.2 Can employers require employees to serve a period of “garden leave” during their notice period when the affect employees are considered (e.g., dismissals, change of terms employee remains employed but does not have to and conditions of employment agreements), a consultation is attend for work? required. The consultation period should not be less than two weeks (longer periods might be required in certain circumstances), and a Yes, and it is general practice to put employees on garden leave few additional days will be needed to prepare proper information during their notice period in certain industries, such as the financial and to consider any proposals made during the consultation. The service industry and for senior managers. law does not provide for specific sanctions for failing to inform and consult in the case of an asset deal. However, if the Merger Act A ‘right to work’, which excludes the employer’s right to put applies, employees have the right to block the commercial register an employee on garden leave, only exists under very special if the employer failed to duly inform/consult. This can delay the circumstances, in particular for jobs that require the employee to closing of the transaction. continuously work in order to keep certain qualifications (pilots who may lose their licence, artists, etc.). No specific information or consultation rights apply in case ofa share sale. 6.3 What protection do employees have against dismissal? In what circumstances is an employee 5.4 Can employees be dismissed in connection with a treated as being dismissed? Is consent from a third business sale? party required before an employer can dismiss?
Yes, but a business need might be required for the dismissal. An employee is treated as being dismissed if either party to the Consultation has to be completed before notice is given. Mass employment contract has given notice of termination, and the dismissals will trigger further consultation rights and notification employment relationship ends at the end of the notice period. No obligations. third-party consent is required for a dismissal.
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Employees are protected against abusive dismissal. Such abuse whether the employer and employee can agree that certain claims exists, for example, if: notice of termination is given because the (in particular claims arising out of deferred bonus schemes) are only employee raises a bona fide claim arising out of the employment due a certain period after termination. agreement; notice of termination is given because the employee Apart from claims arising because a dismissal is abusive (see above, exercises a constitutional right; notice is only given to prevent question 6.5), there are no other claims that an employee can bring the coming into existence of a claim arising out of the contract; if he or she is dismissed. or notice is given for a reason that is inherent to the personality of the other party (gender, race, origin, nationality, age, etc.). An abusive dismissal will be effective, but the employee is entitled to 6.8 Can employers settle claims before or after they are initiated? compensation (see below, question 6.5). In addition, the employer shall not give notice of termination during In case of a true settlement: yes. However, the employee may not Switzerland protected periods. Such protection against dismissal exists while waive mandatory claims arising out of the employment relationship the employee is on military or civil service or a foreign aid project, during the employment and before one month after the end of the or while the employee is totally or partially incapacitated because of employment. sickness or accident (the latter protection period is limited from 30– 180 days, depending on years of service). In addition, protection against dismissal exists during pregnancy and for a period of 16 6.9 Does an employer have any additional obligations if weeks following birth. A notice of termination given during such a it is dismissing a number of employees at the same protected period is null and void. time?
The employer must consult with the employees before a final 6.4 Are there any categories of employees who enjoy decision on the dismissals is made, if the dismissal is considered special protection against dismissal? a ‘mass dismissal’ (i.e., dismissal within a period of 30 days of 10 employees [for businesses with 20–99 employees], or 10 per cent of Whilst employees are all treated alike, certain rules will only protect the employees [for businesses with 100–299 employees], or more specific categories of employees (e.g., pregnant women, etc.). than 30 employees [for larger businesses]). In addition, the local Further, there is a (dischargeable) presumption that the dismissal of labour office must be informed of the dismissals. a member of the works council is abusive. Further, companies with more than 250 employees have to agree on a social plan with a union, a works council or the employees if they 6.5 When will an employer be entitled to dismiss for: intend to dismiss at least 30 employees. 1) reasons related to the individual employee; or 2) business related reasons? Are employees entitled to compensation on dismissal and if so how is 6.10 How do employees enforce their rights in relation to compensation calculated? mass dismissals and what are the consequences if an employer fails to comply with its obligations? Swiss law is governed by the principle that both the employer and the employee have the right to give notice of termination for any The mass dismissal will be considered abusive if the employer has reason. No special reason is required. The dismissal must not be not properly consulted with the employees. The employees have abusive, however (see above, question 6.3). a claim for payment of a penalty of up to two monthly salaries. If the employer fails to inform the local labour office, the dismissal Employees are generally not entitled to compensation on dismissal. will not become effective. In case the parties cannot agree on a A rule on mandatory severance payments for employees who are required social plan (see above, question 6.9), an arbitral tribunal more than 50 years of age and have worked more than 20 years will establish the plan. for the same employer has become practically defunct because payments made by the employer to the pension plan can be regularly deducted from the severance payment. 7 Protecting Business Interests Following The employee is entitled to a compensation of up to six monthly Termination salaries if the dismissal was abusive.
7.1 What types of restrictive covenants are recognised? 6.6 Are there any specific procedures that an employer has to follow in relation to individual dismissals? Non-compete covenants are recognised by the law. All types of post- employment restrictions on the employee are regularly considered There are no specific procedures that an employer is obligated to non-compete covenants and their enforceability is tested according follow in relation to individual dismissals. Collective bargaining to the rules established for non-compete covenants. agreements or individual agreements frequently state that the notice must be in writing or must even be served by registered mail. 7.2 When are restrictive covenants enforceable and for what period? 6.7 What claims can an employee bring if he or she is dismissed? What are the remedies for a successful claim? Non-compete covenants must be agreed in writing. The covenant is only enforceable if the employee had access to information on All claims regularly arising out of the employment contract become the employer’s customers or to business secrets. In addition, the due upon termination of the employment relationship. It is disputed covenant is only binding if the use of the information obtained by the employee could seriously harm the employer. Further, any covenant will become void if the employer gave notice without
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valid reason or if the employee terminated the employment for a legal exception or if he or she can show preeminent own interests or valid reason for which the employer is responsible. Finally, the interests of third persons not to (fully) grant the requested access. In restriction must be reasonably limited with regard to its duration, this case, the employer must disclose the applicable limitation and the place where it should apply and the type of operation covered. explain its reason to the employee. The employee can exercise the right of access without preconditions; 7.3 Do employees have to be provided with financial in particular, he or she does not need to show a particular interest. The compensation in return for covenants? right of access is exercised in writing, and is free of charge. In general, the employer has 30 days to respond in writing (and with photocopies), Payment of financial compensation is not a requirement, but provided the employee does not agree to another proceeding. increases the chances that a covenant can be enforced.
Switzerland 8.3 Are employers entitled to carry out pre-employment 7.4 How are restrictive covenants enforced? checks on prospective employees (such as criminal record checks)?
In case of a violation of the covenant, the employer can ask for Yes, employers may carry out pre-employment checks on financial compensation for the loss suffered. The contractual prospective employees. However, these checks require the clauses often provide for a liquidated damages clause. In addition, knowledge and consent of the employee; they must have a close the employer can ask for a court order to prohibit the employee connection to the employment and be proportionate. from continuing the competing activity if the non-compete covenant expressly mentions such a right of the employer. The courts weigh As the case may be, the checks may concern licences, certificates the interests of the employer and the employee, and may order and non-compete covenants. If material to the employment, they the employee to stop the competing activity if the non-compete may involve extracts from criminal records, statements from the covenant is found to be enforceable. debt collection office and statements concerning the employee’s state of health.
8 Data Protection and Employee Privacy 8.4 Are employers entitled to monitor an employee’s emails, telephone calls or use of an employer’s 8.1 How do employee data protection rights affect the computer system? employment relationship? Can an employer transfer employee data freely to other countries? To the extent that the employment falls under the Labour Act, monitoring mechanisms are not permitted if they are directed at The employer may handle data concerning the employee only to the employee’s behaviour. However, they may be permitted if they the extent that such data concerns the employee’s suitability for his pursue other aims, for example, security or controlling the proper or her job or is necessary for the performance of the employment use of the work infrastructure and working time. Monitoring contract. Such data must have a close connection to the employment, mechanisms need to be codified in internal regulations and the latter and any gathering of data must be strictly proportionate to its communicated to the employees. purpose. Gathered data may only be used for its initial purpose and In general, an employer will only be able to monitor peripheral data must be protected against unauthorised handling by third persons. (such as the point in time of the communications or interactions, As a matter of principle, the employee must be aware of any data their length, and the involved connections). Monitoring the actual gathering and of its purpose, and consent to it. The same holds true content of communications requires outstanding interests, which for any monitoring activities by the employer. the employer will not be easily able to show. As regards telephone The transfer abroad of employee data must respect the principles communications, in principle, they are protected by criminal law. explained above. In addition, Swiss law takes into consideration whether a transfer would seriously jeopardise the personality rights 8.5 Can an employer control an employee’s use of social of the concerned employee. This would, in particular, be the case if, media in or outside the workplace? from a Swiss law perspective, there is no legislation in the foreign country that can guarantee an appropriate level of protection. The An employer may control social media in the workplace if it is Federal Data Protection and Information Commissioner keeps a list necessary for the performance of the employment contract and of foreign countries that are deemed to provide an appropriate level proportionate. Under these conditions, an employer may block of protection; this list may be viewed on the Commissioner’s website. social media completely. If there is no foreign legislation that can guarantee an appropriate In contrast, it is rather unlikely that an employer is able to show a protection, employee data may only be transferred abroad under legitimate interest in controlling an employee’s use of social media certain circumstances, for example, after the employee has given outside the workplace. However, this may for instance hold true for his or her consent or if the disclosure takes place within the same ideological enterprises (“Tendenzbetriebe”). legal entity or company, or between legal entities or companies of a corporate group, provided that the entities and companies concerned have committed themselves to certain minimal data protection rules. 9 Court Practice and Procedure
8.2 Do employees have a right to obtain copies of any personal information that is held by their employer? 9.1 Which courts or tribunals have jurisdiction to hear employment-related complaints and what is their composition? Every employee is in principle entitled to get unlimited access to all data that has been collected in his or her regard. However, the The 26 cantons are responsible for organising the court system. employer may restrict, deny or postpone access in case there is a
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Hence, depending on the place of jurisdiction, either a labour court or an ordinary district court will hear employment-related 9.3 How long do employment-related complaints typically complaints. take to be decided? Labour courts will often be composed of a legally qualified district The conciliation proceeding should take a few weeks only. judge and two lay judges, one elected on behalf of the employees/ Thereafter, a straightforward claim in an oral proceeding (i.e., trade unions and the other on behalf of the employers. If there is the amount in dispute is below CHF30,000) should take less than no labour court one, or a panel of three, (usually) legally qualified six months. Other cases might be pending for one to two years. judges will hear the case.
9.4 Is it possible to appeal against a first instance 9.2 What procedure applies to employment-related decision and if so how long do such appeals usually
complaints? Is conciliation mandatory before a Switzerland take? complaint can proceed? Does an employee have to pay a fee to submit a claim? There is a right to appeal within 30 days after the judgment has been There is a mandatory conciliation hearing before a claim can be handed down. In most cantons, a panel of three judges of the court filed. Thereafter, the proceedings start with an exchange of briefs, of appeal will hear the appeal. unless the amount in dispute is below CHF30,000 and it is decided The Swiss Supreme Court will review decisions of courts of appeals that proceedings should be oral only. in employment matters if the amount in dispute exceeds CHF15,000. Courts are usually prepared to outline their preliminary view of the Appeals are limited to points of law. case during the first hearing. The majority of cases are settled based on such preliminary assessments. Acknowledgment There are no court costs if the value of the dispute is below The authors would like to thank Dr. iur. Pierre-Yves Marro, LL.M. CHF30,000; some cantons will apply a higher threshold. In all for his assistance in the preparation of this chapter. other cantons, the claimant has to advance the likely costs. The amount of the court costs depends on the value in dispute and the canton where the claim is filed; they can be considerable. If the claim is upheld, the defendant will be ordered to reimburse the paid costs to the claimant. In addition, the losing party will be ordered to compensate the other party for its lawyers’ fees (payment made according to a schedule, not actual fees paid).
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Dr. Balz Gross Dr. Gregor Bühler Homburger Homburger Prime Tower Prime Tower Hardstrasse 201 Hardstrasse 201 CH-8005 Zurich CH-8005 Zurich Switzerland Switzerland
Tel: +41 43 222 10 00 Tel: +41 43 222 10 00 Fax: +41 43 222 15 00 Fax: +41 43 222 15 00 Email: [email protected] Email: [email protected] URL: www.homburger.ch URL: www.homburger.ch
Dr. iur. Balz Gross, LL.M. (born 1964) is a Partner with Homburger and Dr. Gregor Bühler, LL.M. (born 1964) is a Partner and Co-Head of Switzerland Co-Head of Homburger’s top ranked interdisciplinary Employment Law Homburger’s Employment Law Group. He frequently represents Group. His employment practice focuses on advice on top management clients in employment disputes before Swiss courts. He further compensation, including bonus schemes, and related litigation and advises clients with respect to all areas of employment law, in arbitration. Recognised a leading individual in employment, litigation particular with respect to privacy and intellectual property aspects and arbitration in the relevant directories, he is also the head of and regarding the termination of employment relationships. His work Homburger’s Litigation/Arbitration Practice Team. He is an author also includes assistance to implement new employment terms and to of a commentary on Swiss cartel law (section on procedure), of the transfer employment agreements and employee data in connection commentary on the Swiss Federal Act on Jurisdiction and Enforcement with commercial transactions. (section on contracts), the commentary on articles 68–96 of the Swiss Gregor Bühler was admitted to the Bar in 1992. He joined Homburger Code of Obligations (relating to performance) and the commentary on in 1995, becoming a Partner in 2003. the new Swiss Federal Act on Civil Procedure (section intervention, joinder, litis denuntiatio) and has published on legal proceedings, fraud Education: Lic. iur./Dr. iur. Gallen, 1990/1995; LL.M., Georgetown and money laundering, recovery of assets and liability in tort. University, 1997. From 1989–1992, he was a scientific assistant for contract and private international law at the University of Zurich and later, a District Court Clerk (1993). He was admitted to the Bar in 1994 and joined Homburger in 1995. Education: Lic.iur./Dr. iur. Zurich, 1989/1996 (summa cum laude); LL.M., Harvard, 1995.
Homburger is a leading Swiss business law firm with more than 150 lawyers representing and advising major international and Swiss clients. The members of Homburger’s Employment Law working group are drawn from Homburger lawyers in the various practice teams, in particular from the internationally leading Litigation | Arbitration, Corporate | M&A and Tax practice teams. Homburger represents its clients before Swiss courts and arbitration tribunals in employment-related matters and advises on all employment law issues, in particular on: employment contracts for executives, including compensation packages, non-compete covenants and “golden parachutes”; standard employment contracts and customised employment concepts (contracts, regulations, employee handbooks); employee participation plans and variable compensation schemes (e.g., long-term incentive schemes, management participation on acquisitions, stock option plans, bonus and gratification schemes); transfer of business units and outsourcing; business restructuring (staff reduction, collective dismissals), contract and gardening leave; data protection; and posting of employees and work permit applications. Homburger’s employment lawyers are in regular contact with distinguished employment experts in other jurisdictions.
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Taiwan
Winkler Partners Christine Chen
1 Terms and Conditions of Employment 1.6 To what extent are terms and conditions of employment agreed through collective bargaining? Does bargaining usually take place at company or 1.1 What are the main sources of employment law? industry level?
The Labor Standards Act (LSA) is Taiwan’s primary source of Employers must seek agreement by a labour management conference employment law, covering approximately 95% of the labour force. or labour union before changes to working conditions can be made. These changes include those made to work hours, rest time and days 1.2 What types of worker are protected by employment off, and night work for female employees. Generally, collective law? How are different types of worker distinguished? bargaining takes place at the company level, but can also take place at the industry level. Most workers in Taiwan are protected under the LSA. Other workers such as civil servants, those working for state-run agencies 2 Employee Representation and Industrial and medical staff are protected under other statutes. The LSA generally makes distinctions between fixed-term and indefinite-term Relations contracts. 2.1 What are the rules relating to trade union recognition? 1.3 Do contracts of employment have to be in writing? If not, do employees have to be provided with specific Union rights are guaranteed under the Union Act. Any union meeting information in writing? the minimum requirements under this Act must be recognised.
Employment contracts do not have to be enforced in writing but 2.2 What rights do trade unions have? most businesses in the country do so. The enforcement rules of the LSA suggest up to 13 items should be included in written contracts to outline the rights and obligations of employers and employees Trade union rights include the conclusion, amendment or abolition and to avoid disputes. Written contracts are required to apply for of collective agreements, the handling of labour disputes, as well work permits for foreign nationals. as labour conditions, health and safety, and the promotion of membership benefits.
1.4 Are any terms implied into contracts of employment? 2.3 Are there any rules governing a trade union’s right to take industrial action? Employers must meet or exceed the minimum terms of the LSA and other laws. Even where the obligations and entitlements are not The Act for Settlement of Labor-Management Disputes governs the fully detailed in a written employment contract, the employer must rights of trade unions to take industrial action. Strikes are permitted nonetheless comply. except in exceptional circumstances.
1.5 Are any minimum employment terms and conditions set down by law that employers have to observe? 2.4 Are employers required to set up works councils? If so, what are the main rights and responsibilities of such bodies? How are works council representatives Employers are required to meet employment terms set out in the chosen/appointed? LSA and other laws, including the minimum wage, national health insurance contributions and other mandatory benefits. Employers are required to set up works councils. Employee representatives are elected by employees. The main responsibilities include raising issues and proposals, debating, approving or rejecting changes to work rules, benefits and other issues.
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2.5 In what circumstances will a works council have co- 3.5 What remedies are available to employees in determination rights, so that an employer is unable to successful discrimination claims? proceed until it has obtained works council agreement to proposals? Employees are entitled to owed salary and other benefits, damages and return to work depending on the type of discrimination claim. Employers are not able to make unilateral changes to work hours, rest time and days off or arrange night work for female employees without the approval of the works council. 3.6 Do “atypical” workers (such as those working part- time, on a fixed-term contract or as a temporary agency worker) have any additional protection? Taiwan 2.6 How do the rights of trade unions and works councils interact? There are no additional protections for atypical workers.
Trade unions take precedence over works councils. If an employer wants to change work conditions and there is a union present, then 4 Maternity and Family Leave Rights the union will decide whether to accept the changes or not. If there is no union present, then a works council will decide. 4.1 How long does maternity leave last?
2.7 Are employees entitled to representation at board Paid maternity leave lasts eight weeks. level?
Except for in state-owned enterprises, employees are not entitled to 4.2 What rights, including rights to pay and benefits, does a woman have during maternity leave? board representation.
Depending on how long the employee has been with the company, 3 Discrimination she is entitled to either full or half pay during maternity leave. Mandatory benefits such as health and labour insurance must be met during maternity leave. 3.1 Are employees protected against discrimination? If so, on what grounds is discrimination prohibited? 4.3 What rights does a woman have upon her return to work from maternity leave? Employees are protected against discrimination under the Employment Services Act on the basis of race, class, language, thought, religion, political party, place of origin, place of birth, Upon returning to work from maternity leave, women’s rights include gender, gender orientation, age, marital status, appearance, additional child-rearing leave, additional breaks for breastfeeding or facial features, disability, or past membership in any labour union. expressing and Parental Leave Allowance to cover unpaid time off Employees are further protected under the Labor Standards Act and work. the Gender Equality in Employment Act on the basis of gender or sexual orientation. 4.4 Do fathers have the right to take paternity leave?
3.2 What types of discrimination are unlawful and in what Yes, fathers have the right to paid paternity leave; this is currently circumstances? five days.
Employers who engage in discrimination (verbal, physical or any 4.5 Are there any other parental leave rights that other differential treatment) are in breach of the law and can be employers have to observe? fined. Parents are able to take longer periods of parental leave without pay; 3.3 Are there any defences to a discrimination claim? there are also parental rights for adoption, foster care and some other circumstances. In defence of discrimination claims, employers can claim that the employee is unable to perform their tasks correctly, does not meet 4.6 Are employees entitled to work flexibly if they have the requirements of the job or that they have provided inaccurate responsibility for caring for dependants? information at the time of hiring. Employees with children less than three years old working in 3.4 How do employees enforce their discrimination companies of 30 employees or more may request a one-hour rights? Can employers settle claims before or after reduction each work day or the rescheduling of their work hours. they are initiated? Employers cannot reject such requests.
Employees can report instances of discrimination to the local government labour department, who will form a committee to conduct a primary investigation to determine whether discrimination has occurred. Employers are able to settle claims before a decision has been reached by this committee.
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5 Business Sales 6.2 Can employers require employees to serve a period of “garden leave” during their notice period when the employee remains employed but does not have to 5.1 On a business sale (either a share sale or asset attend for work? transfer) do employees automatically transfer to the buyer? Employers and employees can agree to garden leave. No, employees do not automatically transfer to the buyer on a business sale. Employees have the right to refuse a transfer and 6.3 What protection do employees have against must be compensated accordingly. dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third Taiwan party required before an employer can dismiss? 5.2 What employee rights transfer on a business sale? How does a business sale affect collective In cases of dismissal, causes under the LSA should be met first. agreements? Employees are protected from dismissal if the situation meets one of any criteria specified in the Labor Standards Act. If the causes are Retirement reserves, employee welfare funds, pension benefits and met, an employee can be treated as dismissed. years of service must transfer in the case of a business sale. This also applies to any collective agreements in place agreed between a works council, a union and the original employer. 6.4 Are there any categories of employees who enjoy special protection against dismissal?
5.3 Are there any information and consultation rights on Workers who: are receiving prolonged medical treatment; are a business sale? How long does the process typically pregnant; are on parental leave; or have experienced a miscarriage, take and what are the sanctions for failing to inform and consult? are further protected from dismissal.
Employers are only required to inform employees of a business 6.5 When will an employer be entitled to dismiss for: sale because the employer-employee relationship will change. 1) reasons related to the individual employee; or 2) Minimum notice periods are required before completion of the business related reasons? Are employees entitled business sale and the length depends on whether employees are to to compensation on dismissal and if so how is compensation calculated? be transferred (at least 30 days’ notice) or dismissed (between 10 and 30 days’ notice depending on years of service). If thresholds 1. Employers are entitled to dismiss an employee if they are for mass redundancy are met, then the process is longer. Employers incapable of carrying out their duties under Article 11, or if who do not follow notice period requirements can be fined and are they have misled the employer at the time of hiring, or for any liable to civil action. behaviour in violation of Article 12 of the LSA. 2. Employers are entitled to dismiss employees when business 5.4 Can employees be dismissed in connection with a is suspended, transferred, operates at a loss, or closes for business sale? more than a month due to force majeure under Article 11 of the LSA. Yes, employees can be dismissed in connection with a business sale Employees dismissed for reasons covered in Article 11 should be but legitimate redundancy packages must be paid out. paid compensation. Compensation is calculated at half an average month’s wage per year of service or portion thereof if service is less than one year, up to a maximum of six months. 5.5 Are employers free to change terms and conditions of employment in connection with a business sale? 6.6 Are there any specific procedures that an employer Any changes to the terms and conditions of employment must be has to follow in relation to individual dismissals? provided in writing to transferring employees at least 30 days before the business sale takes place. Notice periods must be adhered to in order to avoid possible administrative fines if the employee reports the matter to the labour authorities. 6 Termination of Employment
6.7 What claims can an employee bring if he or she is 6.1 Do employees have to be given notice of termination dismissed? What are the remedies for a successful of their employment? How is the notice period claim? determined? Employees can report claims of unlawful dismissal to the local The notice of termination given to an employee depends on the labour authority or pursue civil action through the courts. If they causes the employers use. Under the causes stipulated in Article 11 decide on civil action, they are required to enter mediation first. of the LSA, notice periods are based on length of service. If the employee wishes to be reinstated, and it is proven that the employment relationship is intact; they can claim salary unpaid before reinstatement. If they decide to end their relationship with the employer, they can claim severance pay, unpaid wages before the termination occurred, payment in lieu of unused annual leave and be issued with an involuntary resignation certificate.
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6.8 Can employers settle claims before or after they are 8 Data Protection and Employee Privacy initiated?
8.1 How do employee data protection rights affect the Yes. The labour authorities encourage settlement during the employment relationship? Can an employer transfer mediation process. employee data freely to other countries?
6.9 Does an employer have any additional obligations if Employers are able to transfer employee data freely, except where it is dismissing a number of employees at the same the transfer is in conflict with the interests of the state, where there time? are international agreements in place that prevent data transfers, Taiwan where the recipient country has an unsatisfactory data protection Yes. Employers dismissing specific numbers of employees within regime or where there is a likelihood that the employee’s personal a specific period of time must meet the requirements of the Act for data could be compromised. Worker Protection of Mass Redundancy. 8.2 Do employees have a right to obtain copies of any 6.10 How do employees enforce their rights in relation to personal information that is held by their employer? mass dismissals and what are the consequences if an employer fails to comply with its obligations? Yes. Employers must comply with employee requests for copies of their data. Employees can enforce their rights through the local authority, works councils, a labour union (if one exists), or by initiating a class 8.3 Are employers entitled to carry out pre-employment action lawsuit. Employers are liable to civil and administrative checks on prospective employees (such as criminal penalties, and may be barred from employing people in the future. record checks)?
7 Protecting Business Interests Following No, employers are not permitted to carry out checks other than Termination those that specifically relate to employment.
8.4 Are employers entitled to monitor an employee’s 7.1 What types of restrictive covenants are recognised? emails, telephone calls or use of an employer’s computer system? Non-compete agreements meeting the requirements of the Labor Standards Act Article 9-1 are recognised. Yes, employers are entitled to monitor communications in the line of business. It is recommended that employers inform employees of any monitoring. 7.2 When are restrictive covenants enforceable and for what period? 8.5 Can an employer control an employee’s use of social Restrictive covenants are enforceable for a period of up to two years media in or outside the workplace? from the end of employment date. Generally speaking, employers are only able to control use of social media in the workplace and during work hours. 7.3 Do employees have to be provided with financial compensation in return for covenants? 9 Court Practice and Procedure Yes, financial compensation should be reasonable in return for covenants. The law considers reasonable to mean: 1) at least 50% of the employee’s average wage upon resignation; 2) an amount 9.1 Which courts or tribunals have jurisdiction to hear sufficient to support the employee during the restrictive period; 3) employment-related complaints and what is their equivalent to the loss incurred by the employee in complying with composition? the period, area, scope and prospective employer clauses of the covenant; and 4) other criteria relevant to determining compensation. Employment-related complaints can be applied to the labour authority in each city or county. They are empowered to compel employers/employees to attend mediation and can arrange 7.4 How are restrictive covenants enforced? settlement before a court case is brought against the employer/ employee. The claimant can choose to have their claim heard by a Restrictive covenants are enforced through the courts, who can mediation committee with members chosen by the labour authority, order an employee to pay compensation and/or damages. the employer and the employee.
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Taiwan’s Administrative High Court and the Supreme Administrative Court hear administrative cases, while civil and 9.4 Is it possible to appeal against a first instance criminal cases are handled by District Courts, High Courts and decision and if so how long do such appeals usually take? the Supreme Court. Some courts have special divisions which labour-related cases may be brought before. Depending on the dispute, employment-related complaints could be heard in either the Appeals are possible against a first instance decision, and can be administrative court system or the common court system. filed within 20 days of a first instance decision. The length of an appeal will depend heavily on the nature of the individual claim.
9.2 What procedure applies to employment-related
complaints? Is conciliation mandatory before a Taiwan complaint can proceed? Does an employee have to pay a fee to submit a claim? Christine Chen Winkler Partners 12F, 86 Chongqing South Road Section 1 If a dispute arises, the claimant can choose mediation, arbitration Taipei 10045 or litigation. If they choose mediation through the local labour Taiwan authority, there are no fees. If they choose litigation, the court will Tel: +886 2 2311 8307 require them to first enter mediation. Court-mandated mediation Email: [email protected] may result in a fee, based on the nature of the claim (proprietary or URL: www.winklerpartners.com non-proprietary).
Christine heads Winkler Partners’ employment practice and is an 9.3 How long do employment-related complaints typically experienced litigator, handling employment, IP and commercial take to be decided? disputes. Her employment practice covers contentious and non- contentious employment work, including advising on employee handbooks, termination matters, and localisation of employment Disputes mediated by a single mediator can take 20 days. Those agreements (including restrictive covenants and trade secrets referred to a mediation committee take between 42 and 49 days. protection), as well as attending mediation on behalf of clients. She has assisted in the issuing of work permits and residency for foreign executives, as well as Taiwan entry permits for Chinese nationals, on behalf of some of the most prominent entertainment, technology and pharmaceutical corporations in the world. Christine is a regular contributor to the Littler Mendelson Guide to International Employment and Labor Law, Towers Watson’s Employment Terms and Conditions, the World Bank’s Doing Business Report, and Ogletree and Taylor Vinters’ employment law newsletters.
Winkler Partners is a full service law firm in Taipei, Taiwan and was the first law firm permitted to operate as a partnership between Taiwanese and foreign attorneys. Our employment practice, led by partner Christine Chen, advises global corporate leaders in the entertainment, construction, medical device, pharmaceutical, and computer technology industries, regarding contentious and non-contentious employment matters.
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Turkey Pelin Baysal
Gün + Partners Beril Yayla Sapan
In other cases, the employer should provide a written document 1 Terms and Conditions of Employment to his/her employees, which demonstrates the general and special working conditions, daily or weekly working hours, basic salary and 1.1 What are the main sources of employment law? other benefits (if any), salary payment period and parties’ obligations in the case of termination. The main sources of employment law are as follows: ■ The Constitution. 1.4 Are any terms implied into contracts of employment? ■ Turkish Labour Act numbered 4857 (the “TLA”). ■ Law on Trade Unions and Collective Bargaining Agreements Workplace practices can be considered as terms implied into numbered 6356 (the “Union Law”). employment contracts. Workplace practices come into existence ■ Law on Civil Service Trade Unions and Collective Bargaining when a benefit is unilaterally provided by the employer consistently Agreements numbered 4688. and under the same conditions and, thus, it becomes a provision of the employment contract in case such practices continue for at least ■ Maritime Labour Law numbered 854. three years. ■ Press and Media Labour Law numbered 5953. ■ Turkish Code of Obligations numbered 6098 (the “TCO”). 1.5 Are any minimum employment terms and conditions ■ Occupational Health and Safety Law numbered 6331. set down by law that employers have to observe? ■ Labour Courts Act numbered 7036. ■ The secondary laws and regulations including annual leave, Employers are under the obligation to pay the employees’ salary, working hours, overtime work, minimum wage and female taking all necessary precautions to ensure the health and safety of and child employees. employees, abiding to the equal treatment principle. They also have ■ Communiqués and circulars published by the Ministry of a duty of care to their employees including protection of employees’ Labour and Social Security with regards to the application personal rights, personal data and protection of employees against and recommendation of the labour legislation. mobbing. ■ Court of Appeal’s Assembly of Civil Chambers decisions on the unification of the conflicting judgments. ■ Employment contracts, collective bargaining agreements, 1.6 To what extent are terms and conditions of employment agreed through collective bargaining? internal regulations/personnel regulations. Does bargaining usually take place at company or industry level? 1.2 What types of worker are protected by employment law? How are different types of worker distinguished? Collective bargaining agreements can be made between trade unions of employees and employer unions or with employers which are not Different types of employment contracts are regulated under affiliated to a union. In this regard, there are certain conditions that Turkish employment law such as: continual – transitory; definite- need to be fulfilled in order for a trade union to be authorised to (fixed) term – indefinite-term; full-time – part-time; and temporary conclude a collective bargaining agreement and an employee to be employment contracts. Additionally, there are on-call, team and subject to a collective bargaining agreement. Bargaining usually seasonal service employment contracts. takes place at workplace or company level, in fact more than 50% of employees in the workplace or at least 40% of the employees in the enterprise subject to the collective bargaining agreement to be 1.3 Do contracts of employment have to be in writing? If not, do employees have to be provided with specific made must be affiliated to a trade union seeking to make a collective information in writing? bargaining agreement for the workplace or enterprise.
In principle, employment contracts do not have to be in writing. However, fixed-term employment contracts with a term of at least one year should be in writing.
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2 Employee Representation and Industrial 2.5 In what circumstances will a works council have co- Relations determination rights, so that an employer is unable to proceed until it has obtained works council agreement to proposals? 2.1 What are the rules relating to trade union recognition? Although there is no legal obligation for setting up works councils, Trade unions can be established with at least seven workers and it is upon the employer’s initiative to establish one. they can be established without prior authorisation. There are 20 different lines of business (such as the food industry, communication, 2.6 How do the rights of trade unions and works councils construction, health and social services, etc.) enumerated in the Turkey interact? Union Law and they need to conduct their activities in one of these lines of business in compliance with the main business activity Trade unions may have an impact on workplaces through workplace conducted in the workplace. trade union representatives and their rights do not interact with work councils since the related law did not regulate such interaction. 2.2 What rights do trade unions have?
2.7 Are employees entitled to representation at board Trade unions are entitled to enter into collective bargaining and level? negotiate the terms and conditions of collective employment contracts. No, employees are not entitled to represent at board level. Trade unions are entitled to act on behalf of the employees and represent them. They can take collective actions in order to enforce the terms and conditions of collective bargaining agreements, file 3 Discrimination actions and represent the employees or their successors during the proceedings for protecting their rights arisen from the employment 3.1 Are employees protected against discrimination? If relationship, legislation and/or custom. so, on what grounds is discrimination prohibited? Trade unions are also authorised to assign a workplace union representative among the employees. Turkish Constitution, TLA, and the Law on Human Rights and Equality Institution of Turkey numbered 6701 (“Law No. 6701”) 2.3 Are there any rules governing a trade union’s right to prohibit discrimination of the employees. take industrial action? According to the TLA, discrimination regarding language, race, political opinions, philosophical beliefs, religion and sex or similar Trade unions are entitled to take industrial action in order to protect reasons are prohibited. the economical and social statutes, working terms and conditions of the employees. 3.2 What types of discrimination are unlawful and in what In the event that one of the parties fails to attend the collective circumstances? bargaining meeting, or does not start negotiations or continue negotiations despite attending the meeting, or parties do not reach According to the principle of equal treatment regulated by the an agreement within the negotiation term, then one of the parties TLA, discrimination of the employees who sign different types of should notify the dispute to the authorised institution (Regional employment contracts and/or work in similar positions and/or who Directorate of Employment and Labour or the Ministry of Labour are trade union members is prohibited. and Social Security depending on the jurisdiction) within six days. Law No. 6701 also prohibits employers from discriminating while Upon receiving the notification of the dispute, the authorised determining the conditions regarding job applications and recruitment. institution appoints a mediator within six days. The term of mediation is 15 days but it can be extended for a maximum of six working days by the agreement of parties. If the parties fail to reach 3.3 Are there any defences to a discrimination claim? an agreement at the end of the term of mediation, then the mediator drafts an official report within three days regarding the dispute and In principle, the employee should prove discrimination. However, his/her suggestions for resolution and submits it to the authorised if the employee proves a strong likelihood that the equal treatment institution. The authorised institution notifies the official report to principle has been violated, then the employer should prove that the the parties within three working days. Following the notification of discrimination did not take place. According to the TLA, except the official report, strike action can be taken within 60 days. for biological requirements or requirements due to nature of the job, the employer must not make any discrimination, either directly or indirectly, against an employee in the conditions, execution and 2.4 Are employers required to set up works councils? If termination of his/her employment contract due to the employee’s so, what are the main rights and responsibilities of sex or maternity. such bodies? How are works council representatives chosen/appointed? 3.4 How do employees enforce their discrimination It is not regulated under the related law and regulations to set up rights? Can employers settle claims before or after works councils. Employee representation in the company takes they are initiated? place primarily through trade unions. The employee can apply to the employer or directly file a claim before the court. The parties can settle claims before or after they are initiated.
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3.5 What remedies are available to employees in 4.5 Are there any other parental leave rights that successful discrimination claims? employers have to observe?
If an employer breaches the equal treatment principle, the employee Provided that both parents work, one of the parents can work part- is entitled to request compensation up to four months of his/her time until the child reaches the age to attend primary school. This salary. The employee can also claim rights, to which he/she has leave is unpaid and the employee’s request to take such leave is been deprived, i.e., loss of salary. The employer will also be subject required. There is also three days of paid leave for adoptive parents to an administrative fine amounting to TRY 146 (subject to review) and ten days of paid leave for the parents of a disabled or chronically per employee. ill child. Turkey
3.6 Do “atypical” workers (such as those working part- 4.6 Are employees entitled to work flexibly if they have time, on a fixed-term contract or as a temporary responsibility for caring for dependants? agency worker) have any additional protection? Employees are provided paid leave up to 10 days which they can use Provided that there is no essential reason, the employer cannot in whole or separately within one year provided that it is used by one make discrimination between full-time and part-time employees or of the working parents and based on the doctor’s report showing that between an employee who works under a fixed-term agreement and their child is at least 70% disabled or chronically ill. one who works under an open-ended employment contract. This principle is also applicable for temporary agency workers. 5 Business Sales 4 Maternity and Family Leave Rights 5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the 4.1 How long does maternity leave last? buyer?
Employees are entitled to take maternity leave of 16 weeks; eight In the case of a share sale, the employer will not change and the weeks before, and eight weeks after confinement. In case of employment shall continue. multiple pregnancies, an extra two-week period shall be added to In the case of an asset transfer, employment contracts which are the eight-week period before confinement. Upon the employee’s effective on the transfer date will be automatically transferred to the request and doctor’s approval, female employees can continue to transferee together with all the rights and obligations. work until three weeks before confinement. If necessary, these periods may be extended depending on the employee’s health and 5.2 What employee rights transfer on a business special requirements of the job, subject to a medical report. sale? How does a business sale affect collective Following the maternity leave, the employee is also entitled to agreements? part-time leave (a 60-day period for the first child, 120 days for the second child and 180 days for more children). An additional 30 In the case of an asset transfer, after the transfer date, the transferor days will be added in the case of multiple pregnancy or 360 days in employer will be jointly and severally liable together with the the case of the birth/adoption of a disabled child. Employees who transferee for two years, regarding the obligations arising from the are taking part-time unpaid leave are paid in ratio by their employer. TLA and employment contracts. For the hours not worked due to their part-time leave, they can be According to the Union Law, rights and obligations arising from the entitled to a part-time payment from the Social Security Institution. applicable collective agreement remain in force until the conclusion An employee can also take unpaid maternity leave for six months. of a new collective agreement unless there is a collective agreement applied in the incoming employer. 4.2 What rights, including rights to pay and benefits, does a woman have during maternity leave? 5.3 Are there any information and consultation rights on a business sale? How long does the process typically During the 16 weeks of maternity leave (for multiple pregnancies, 18 take and what are the sanctions for failing to inform weeks), employees are entitled to receive maternity payment from and consult? the Social Security Institution in the amount of two-thirds or half of their gross daily salary depending on the treatment. In this regard, There are no information and consultation rights on a business sale. the employers are not obliged to make maternity leave payment. 5.4 Can employees be dismissed in connection with a 4.3 What rights does a woman have upon her return to business sale? work from maternity leave? The employees cannot be dismissed due to the business sale. Employees are entitled to have daily nursing leave for one-and-a- However, the employer’s right to terminate the employment due to half hours for feeding their child under the age of one. economic, technological grounds or changes in working organisation and just causes, is reserved.
4.4 Do fathers have the right to take paternity leave?
Paternity leave is five days.
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5.5 Are employers free to change terms and conditions of 6.5 When will an employer be entitled to dismiss for: employment in connection with a business sale? 1) reasons related to the individual employee; or 2) business related reasons? Are employees entitled Employers are not entitled to freely change the terms and conditions to compensation on dismissal and if so how is compensation calculated? of employment due to a business sale without the employee’s written consent. If the employee benefits from job security provisions, then the employer should rely on a valid reason or just cause to terminate the 6 Termination of Employment employment. Valid reasons can be related to the individual employee
such as the employee’s capability or behaviour, or business-related Turkey reasons such as requirements of the enterprise, workplace or work. 6.1 Do employees have to be given notice of termination Just causes are classified under three categories: health reasons; of their employment? How is the notice period cases incompatible with morals, goodwill and similar circumstances; determined? and force majeure.
The TLA sets forth the minimum notice periods. If the length of the If there is just cause, the employment will be terminated with employee’s service is less than six months, the notice period must be immediate effect. The employer will not pay severance payment at least two weeks; if it is six to 18 months, the notice period must be if the just cause is based on the cases incompatible with morals, at least four weeks; if it is 18 months to three years, the notice period goodwill and similar circumstances. If the just cause is based on is six weeks; and if it is more than three years, the notice period health reasons or force majeure, the employer should pay severance must be at least eight weeks. The parties can increase those periods payment. through employment contracts. If there is valid reason, the employer should comply with the notice period or pay notice compensation. If the employee has at least one year’s service, the employer must also pay severance payment at the 6.2 Can employers require employees to serve a period rate of 30 days’ salary for each full year as of the date on which the of “garden leave” during their notice period when the employee remains employed but does not have to employment relationship has commenced. Payment must be made attend for work? pro rata to the service period of the employee within a year. In any case, the maximum amount to be paid to an employee as severance Garden leave is not regulated under the TLA. However, the parties payment is TRY 473,248 per year (subject to review). can agree on garden leave terms in writing. 6.6 Are there any specific procedures that an employer has to follow in relation to individual dismissals? 6.3 What protection do employees have against dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third If the employer terminates the employment contract relying on a party required before an employer can dismiss? just cause for cases incompatible with morals, goodwill and similar circumstances, the employer must use his right within six working The termination of a fixed-term agreement before its expiration days as of the date when it learns of the employee’s act. In any case, should be based on just cause. Otherwise, the employee may the employer cannot use this right if the act took place a year or request the amount that he would have earned until the end the more before the employer discovers it. fixed-term agreement. As for the termination of an indefinite-term For the employees who are subject to job security provisions, the agreement, in principle the employer can terminate it by complying employer must inform the employee of his/her low performance with notice periods. If there is a probation period in the employment or misbehaviours and obtain his/her written statements regarding contract, the employee can terminate the agreement during the first the reasons for his/her low performance or behaviours before two months without complying with any notice. terminating the employment. Consent from a third party for termination of the employment is not If the terminations arising from the requirements of the enterprise, required. workplace or the work, according to the Court of Appeals’ precedent, the employer should take an operational decision before terminating 6.4 Are there any categories of employees who enjoy the employment. special protection against dismissal? The employer should state the termination reasons in writing in the termination letter. According to the job security provisions, if an employee has been working for at least six months at a workplace which has 30 or 6.7 What claims can an employee bring if he or she is more employees, the employer can only terminate the employment dismissed? What are the remedies for a successful contract by relying on a valid reason or just cause. However, the claim? employer’s representative and his/her deputies who are entitled to manage the entire enterprise with authorisation to hire and terminate The employee is entitled to file a reinstatement action in one month employees, cannot benefit from job protection provisions. as of the notice of termination and request determination of the invalidity of the termination and his employment.
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If the court accepts the case, it also decides for the employee’s four- month salary and other benefits to be paid for the period in which 7.2 When are restrictive covenants enforceable and for the employee has not worked. Considering the possibility of the what period? employer not to reinstate the employee upon his/her application, the court also determines the compensation amount between four to According to the TCO, the non-compete clause should be in writing eight months of the employee’s salary. and applicable for the employees who are in contact with customers and have access to customers’ trade secrets. The covenant should be reasonably limited with regard to place, time and subject. The 6.8 Can employers settle claims before or after they are restricted period should be limited to two years but it can exceed two initiated? years in specific circumstances. Turkey Regarding confidentiality, as per the TCO, the employee is also Yes, employers can settle claims before or after they are initiated. under the confidentiality obligation during the post-employment period, as long as it is required for the protection of the employer’s 6.9 Does an employer have any additional obligations if rightful interest. it is dismissing a number of employees at the same time? 7.3 Do employees have to be provided with financial In case the employer terminates the employment contracts of: compensation in return for covenants? ■ at least 10 employees out of a total workforce of between 20–100 employees; According to the TCO, employees do not have to be provided with financial compensation in return for covenants. ■ at least 10% of the employees out of a total workforce between 101–300 employees; or ■ at least 30 employees out of a total workforce of 301 or more 7.4 How are restrictive covenants enforced? employees, within one month on the same date or different dates as a result of Employers can request their damages arising from the breach of a economic, technological, structural or similar enterprise, business or non-compete agreement. If the parties agreed on a penalty clause, work requirements, it constitutes a collective dismissal. the employer can demand from the employee to pay the penalty clause. Also, the employer can request from the court to cease such As a first step the employer should take an operational decision. breach provided that there is a clause in the employment contract Then, the employer should notify the trade union representative which gives the employer such right. (if any), the Provincial Directorate of Social Security Institution and Turkish Employment Agency at least 30 days in advance. This notification must be in writing and include reasons for the 8 Data Protection and Employee Privacy termination, number and the group of employees to be dismissed and a timeframe for redundancy proceedings. According to the TLA, the termination notice will be deemed effective after 30 days 8.1 How do employee data protection rights affect the from the employer’s notification to the said official authorities. employment relationship? Can an employer transfer employee data freely to other countries? After the notification, the employer should also consult with the trade union representative, if any, regarding such redundancy. According to the TLA, employers are obliged to process employee’s data lawfully and in good faith. As per the TCO, employers can 6.10 How do employees enforce their rights in relation to use employee’s personal data only if it is related to the employee’s mass dismissals and what are the consequences if an tendency to work or the execution of the employment contract is employer fails to comply with its obligations? required to do so. For the transfer of employees’ personal data outside of Turkey, the The employer is obliged to pay an administrative fine for each employee’s explicit consent is required. Under the Data Protection employee subject to the collective redundancy if it does not Law numbered 6698 (“DPL”), if there is an exceptional situation, comply with its obligations. The administrative fine is TRY 606 per transfers abroad can only happen if the foreign country has employee (subject to review). sufficient measures. Otherwise, the employer in the foreign country The employee can file a reinstatement action if the employee must guarantee in writing to the Data Protection Institution (“DPI”) benefits from job security provisions. sufficient protections for equivalent measures.
7 Protecting Business Interests Following 8.2 Do employees have a right to obtain copies of any Termination personal information that is held by their employer?
According to the DPL, an employee should apply to their employer 7.1 What types of restrictive covenants are recognised? in writing in order to obtain a copy of any personal data. The employer should conclude the request within 30 days at the latest, Non-compete, non-solicitation and confidentiality clauses are free of charge. If there is a cost to provide employees with their own included in employment contracts as restrictive covenants. data (e.g., photocopying), the employer may charge a fee according to the tariff which will be prepared by the DPI.
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8.3 Are employers entitled to carry out pre-employment 9.2 What procedure applies to employment-related checks on prospective employees (such as criminal complaints? Is conciliation mandatory before a record checks)? complaint can proceed? Does an employee have to pay a fee to submit a claim? Employees are not entitled to carry out a criminal record check against potential employees since criminal records can only be For employment-related complaints, simple procedure is applied. provided to the individual to whom it relates or his/her proxy. Therefore, only plaint and response petitions can be filed by the However, in practice, employers request from the potential parties and no further exchange of petitions can be carried out. employees to provide their criminal records during the recruitment Conciliation is not mandatory. However, the new Law of Labour period. Courts published on 12 October 2017 made it mandatory for Turkey employees to apply for mediation before initiating lawsuits 8.4 Are employers entitled to monitor an employee’s regarding employee receivables, reinstatement claims and emails, telephone calls or use of an employer’s employment and collective bargaining agreements. computer system? The main costs of civil proceedings such as application fees, litigation expenses and official attorney fees should be paid. The According to precedents of the Court of Appeals, employers can Turkish Civil Code of Procedure enables those who cannot afford monitor their employees’ email messages and it is deemed legal litigation expenses to request legal aid from the court. regardless of the employees’ consent, as long as the employer’s/ company’s computer, equipment, etc. are used. The Constitutional 9.3 How long do employment-related complaints typically Court made a decision on 24 March 2016 and stated that if an take to be decided? employer has notified its employees that business email accounts can be reviewed and used only for business purposes, the employer A usual first instance proceeding before a Labour Court takes around has a right to review these emails even if they contain personal one year excluding the mandatory mediation period. information. The Constitutional Court also stated in this decision that the conflicted interests of the employer and employees should be balanced in a fair way and intervention by monitoring the email 9.4 Is it possible to appeal against a first instance accounts should be evaluated on the grounds of whether or not it is decision and if so how long do such appeals usually proportional with the legitimate purpose of the employer. take? Employees’ phone conversations and text messages cannot be Final decisions rendered by Labour Courts can be subject to examined or recorded. The judge may decide to listen or record examination before regional appellate courts within two weeks as telephone communications for the purpose of conducting an of the notification of the decision. Depending on the dispute type investigation or criminal prosecution if there is no other way and the monetary value of the case, decisions given by regional for obtaining evidence and there are strong grounds for such appellate courts can be appealed before the Supreme Court within investigation concerning the crime that has been committed. two weeks as from the notification date of the regional appellate court’s decision. 8.5 Can an employer control an employee’s use of social Regional appellate courts began to operate on 20 July 2016. media in or outside the workplace? Therefore the total appeal stage before the regional appellate court is usually shorter than the final appeal stage before the Supreme Court Under Turkish law, there is no specific regulation regarding the act and since regional appellate courts are newly established, depending of monitoring employees’ use of social media. It is accepted that of the kind of the labour dispute an appeal before a regional appellate employers can monitor employee’s social media activities without court usually takes six to 12 months and appeal before the Supreme having the prior consent of the employee if the social media content Court takes around one year. is public, if it is not, then the employer cannot control it.
9 Court Practice and Procedure
9.1 Which courts or tribunals have jurisdiction to hear employment-related complaints and what is their composition?
Labour Courts are the specialist courts for disputes related to employment relationships and are entitled to hear all claims arising out of the employment relationship.
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Pelin Baysal Beril Yayla Sapan Gün + Partners Gün + Partners Kore Şehitleri Cad. 17 Zincirlikuyu Kore Şehitleri Cad. 17 Zincirlikuyu 34394 İstanbul 34394 İstanbul Turkey Turkey
Tel: +90 212 354 00 00 Tel: +90 212 354 00 00 Email: [email protected] Email: [email protected] URL: www.gun.av.tr URL: www.gun.av.tr Turkey Pelin Baysal is one of the partners in the commercial and corporate Beril Yayla Sapan is a managing associate in the commercial and department of Gün + Partners. She received her LL.M. from Ruprecht- corporate department of the firm. She received her LL.M. in Economy Karls University and her LL.B. from Ankara University Faculty of Law. Law from Galatasaray University and her LL.B. from Bilkent University Faculty of Law. She concentrates on commercial and corporate law matters with a special focus on dispute resolution and arbitration in addition to Beril’s practice focuses on corporate and commercial litigation, insurance and reinsurance matters. She has advised on large-scale business crimes and employment. She has been involved in several arbitration matters and represented many international and local high-profile commercial conflicts and various high-profile debt clients on high-value commercial disputes. collection procedures. Beril successfully represents many companies’ interests before various courts in this field. Her practice also focuses on labour law; she represented and advised local and multinational clients in various employment issues including Beril is experienced also in areas where commercial and criminal termination of employment, restructuring, confidentiality and non- laws overlap. She has advised several multinational companies in compete obligations. relation to white collar crimes. She has also been involved in several compliance and legal audits. She is recommended for commercial litigation, insurance and reinsurance in Turkey by several global publications and directories. Beril’s practice also includes labour law issues. She has advised several clients in relation to employment contracts and policies, restrictive covenants, collective bargaining agreements, employee related data protection, business immigration, terminations, collective redundancies and settlement. She also represents several clients in litigation relating to termination, employment-related debts, mobbing and discrimination claims.
Gün + Partners is one of the largest law firms in Turkey. It provides a full range of legal services for local and international corporate clients. The firm has nine partners and over 60 lawyers. All the firm’s lawyers are bilingual and fluent in English, and some have German, French and/or Russian as a third language. The firm has working offices in Ankara and Izmir and corresponding attorneys in other major cities. Gün + Partners has a specialist employment practice group providing advisory and litigation services. The employment practice group regularly advises and represents clients on employment contracts, internal policies, confidentiality and non-compete obligations, internal investigation of mobbing claims, data protection, collective bargaining, employee-related IP rights and employee inventions, terminations, restructurings and reorganisations, collective redundancies, business immigration, workplace accidents and related litigation.
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United Arab Hamdan Al Shamsi Emirates
Hamdan AlShamsi Lawyers and Legal Consultants Dr. Ghandy Abuhawash
1 Terms and Conditions of Employment 1.5 Are any minimum employment terms and conditions set down by law that employers have to observe?
1.1 What are the main sources of employment law? The Labour Law also defines the working hours, leave entitlements, safety and healthcare as minimum conditions. These should be With the exception of employment laws applying to government mentioned in the employment contract and records maintained by employees of the UAE, in respect of the employees with employers the employer. Furthermore, Article 7 of the Labour Law states operating under the DIFC, the DIFC Labour Law applies otherwise that “Any conditions contrary to the provisions of this Law, albeit for employers within the UAE. The Federal Law No. 8 of 1980 (the precedent to the date of effectiveness, shall be null and void unless “Labour Law”) is the main source of law for employment-related they are more advantageous to the worker”. The DIFC Employment matters. Law sets out a number of minimum conditions of employment and can be considered to be a code. 1.2 What types of worker are protected by employment law? How are different types of worker distinguished? 1.6 To what extent are terms and conditions of employment agreed through collective bargaining? With the exception of those stipulated in Article 3 of the Labour Does bargaining usually take place at company or Law, the Labour Law applies to all employees in the UAE. These industry level? exceptions are, in brief, government employees, members of the armed forces, police and security, family members working for Collective bargaining over employment terms seldom occurs in the other family members with whom they live, housekeepers and UAE, rather an employee would usually bargain with the employer/ farming and grazing workers. management at the time of hiring and then later in respect of salary For any employees in the DIFC, the DIFC Law No. 4 of 2005 or if the circumstances of the employee changes where certain terms applies. like working hours need to be amended. In all circumstances after employment, both the employer and employee need to agree in writing to amend the contract. 1.3 Do contracts of employment have to be in writing? If not, do employees have to be provided with specific The DIFC Employment Law does not provide for collective information in writing? bargaining to take place.
Employment agreements should be in writing and registered with the Ministry of Labour, however if in essence the employee can prove a 2 Employee Representation and Industrial regular salary and qualifies to be considered as an employee under Relations the law, then a court may find an employment relationship present. Article 13 of the DIFC Employment Law requires contacts to be in 2.1 What are the rules relating to trade union recognition? writing. Trade Unions are not recognised under UAE Labour Law or DIFC 1.4 Are any terms implied into contracts of employment? Law.
Terms are implied in employment contracts. The contract will have 2.2 What rights do trade unions have? a notice period for termination, an amount of days of annual leave, confidentiality obligations by the employee and other standard There are no trade unions recognised in this jurisdiction. terms prescribed by law. The requirement of the DIFC Employment Law will be imposed 2.3 Are there any rules governing a trade union’s right to upon employment contracts. However, few implied terms will be take industrial action? imposed by DIFC Employment Law and, in particular, there is no implied term relating to unfair dismissal. Conducting strikes is not allowed and it is unlawful to do so. Article
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112 of the Labour Law clearly indicates that if the employee is found guilty of a strike that he may be terminated by the employer 3.4 How do employees enforce their discrimination without pay. rights? Can employers settle claims before or after they are initiated?
2.4 Are employers required to set up works councils? If Under UAE law, the Labour Ministry first investigates claims so, what are the main rights and responsibilities of and attempts settlement with the employer. The Ministry will, if such bodies? How are works council representatives necessary, take a case on behalf of the employee to the Labour chosen/appointed? Court. Whether employees can bring a Labour Claim in the Labour Court utilising the Federal Law Against Discrimination and Hatred There are no work councils in this jurisdiction. is unclear. In the DIFC, employees have direct access to the DIFC Courts, usually in the Small Claims jurisdiction. 2.5 In what circumstances will a works council have co- determination rights, so that an employer is unable to United Arab Emirates proceed until it has obtained works council agreement 3.5 What remedies are available to employees in to proposals? successful discrimination claims?
This is not applicable to the UAE. Article 6 of the UAE Labour Law is a broad catch-all provision which states that a person who commits an act of discrimination may face imprisonment of up to five years and/or a fine of between 2.6 How do the rights of trade unions and works councils AED 500,000 and AED 1,000,000. Under the UAE Labour Law, interact? a discrimination claim would be resolved by the finding that there was an arbitrary dismissal without cause under Article 120, which There are no laws governing trade unions and works councils and provides, under Article 123, that the employee shall receive up to they are not common practice in the UAE. three months’ compensation plus notice.
2.7 Are employees entitled to representation at board 3.6 Do “atypical” workers (such as those working part- level? time, on a fixed-term contract or as a temporary agency worker) have any additional protection? There are no laws requiring employees to be entitled to representation at board level. There are no additional protections for part-time workers or seconded employees. They receive the same protections as full-time employees. 3 Discrimination 4 Maternity and Family Leave Rights 3.1 Are employees protected against discrimination? If so, on what grounds is discrimination prohibited? 4.1 How long does maternity leave last?
Employees are protected against discrimination by law and anyone Article 30 of the UAE Labour Law stipulates that a woman is who discriminates by acts can be prosecuted. This is a constitutional entitled to maternity leave with full pay totalling 45 calendar days protection which is not specific to the UAE Labour Law. Article if she has completed a year of employment. Where she has not 58 of the DIFC Employment Law prohibits discrimination on the completed a full year, she will be entitled to the same number of grounds of sex, marital status, race, nationality, religion and mental days but at half pay only. A woman is entitled to a further maximum or physical disability. of 100 days, consecutive or intermittent, of unpaid leave after the passing of the initial 45-day period if the same is due to sickness as 3.2 What types of discrimination are unlawful and in what evidenced by an authorised health authority. The leave shall not be circumstances? deducted from other leave periods. Under Article 37 of the DIFC Employment Law, the maternity leave Discriminating on the basis of religion, belief, sect, faith, creed, entitlement is 65 working days. Payment is at the normal rate of pay race, colour or ethnic origin is unlawful under the UAE Constitution for the first 33 days and at 50% for the next 32 days. and the Federal Law Against Discrimination and Hatred, No. 2 of 2015. Discriminatory Conduct may be by speech, writing, drawing, 4.2 What rights, including rights to pay and benefits, does photography, singing, acting or miming and irrespective of the means/ a woman have during maternity leave? channels through which it is expressed (e.g., online, by phone or video, and whether written or oral). Discrimination under the DIFC Under Article 37 the DIFC Employment Law, a person with 12 Employment Law is less favourable treatment or any disadvantage not months’ continuous service shall be paid. faced by others, or being subject to unwanted treatment or conduct.
4.3 What rights does a woman have upon her return to 3.3 Are there any defences to a discrimination claim? work from maternity leave?
Under the UAE Labour Law, employers are required to prioritise According to Article 31 of the UAE Labour Law, for a period of UAE Nationals over all other nationalities and this is a defence to 18 months from the date of the delivery of her child, a woman is any discrimination claim. A bona fide occupational requirement is a entitled to two further breaks per day where each of these breaks defence to a discrimination claim under the DIFC Employment Law. shall not exceed half an hour each.
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Under Article 39 of the DIFC Employment Law, the employee is will be applied by the relevant courts. Article 120 of the Labour entitled to return to the same or similar role with the same terms and Law does not stipulate business sale as a cause for non-arbitrary conditions and seniority she would have had if she had not taken dismissal. maternity leave.
5.5 Are employers free to change terms and conditions of 4.4 Do fathers have the right to take paternity leave? employment in connection with a business sale?
The UAE Labour Law and DIFC Employment Law are silent on If both parties agree to change the conditions of employment in fathers’ rights to paternity leave. connection with a business sale, then they are permitted to do so, otherwise the employer must continue to abide by the terms before the business sale. 4.5 Are there any other parental leave rights that employers have to observe?
6 Termination of Employment United Arab Emirates Under the DIFC Employment Law, pregnant employees are entitled to paid time-off for antenatal care. 6.1 Do employees have to be given notice of termination of their employment? How is the notice period 4.6 Are employees entitled to work flexibly if they have determined? responsibility for caring for dependants? With the exception of non-arbitrary dismissals of employees under Under the UAE Labour Law, a person returning from maternity Article 120 of the Labour Law, Article 117 of the Labour Law leave is allowed two additional breaks for a period of two years. requires that employees be given a minimum 30 days’ notice of termination of their employment or the period stipulated in their contract of employment (whichever is higher). 5 Business Sales Under Article 59 of the DIFC Employment Law, where an employee has been employed for a month or more, notice shall be provided of: 5.1 On a business sale (either a share sale or asset seven days for less than five months’ service; 30 days for less than transfer) do employees automatically transfer to the five years’ service; and 90 days for more than five years’ service. buyer?
Yes, where the entity that the employees are employed by is 6.2 Can employers require employees to serve a period of “garden leave” during their notice period when the transferred or bought out by another company, the employees employee remains employed but does not have to transfer over to the buyer or transferee. attend for work?
5.2 What employee rights transfer on a business Yes, Article 118 of the Labour Law stipulates that it is the employer’s sale? How does a business sale affect collective decision as to whether he wishes the employee to continue to agreements? serve during his notice period or go on “garden leave”. The DIFC Employment Law is the same. According to Article 126 of the UAE Labour Law, the contracts of employment of all employees transfer onto the new owners and both 6.3 What protection do employees have against the new and old owners will be jointly responsible and liable, for a dismissal? In what circumstances is an employee period of six months, to uphold the obligations, rights and benefits treated as being dismissed? Is consent from a third provided for in these contracts of employment. After the passing of party required before an employer can dismiss? this six-month period, the new owner becomes solely responsible and liable. The DIFC Employment Law is silent on this issue. An employer is entitled to terminate an employee under any reason, the only difference between a non-arbitrary dismissal, in accordance 5.3 Are there any information and consultation rights on with Article 120 of the Labour Law, and an arbitrary dismissal is a business sale? How long does the process typically the payment of compensation as per Article 123 of the Labour Law. take and what are the sanctions for failing to inform Consent from a third party is not required before an employer can and consult? dismiss an employee. There is no implied term preventing unfair dismissal in DIFC There are no consultation rights on business sales nor requirement Employment Law. Article 59 of the DIFC Employment Law allows for information to be shared before the sale occurs. termination for reasonable cause without notice.
5.4 Can employees be dismissed in connection with a 6.4 Are there any categories of employees who enjoy business sale? special protection against dismissal?
The employee cannot be dismissed for a business sale, if an UAE Nationals enjoy special protection under the UAE Labour Law employee is dismissed for any reason other than those stipulated but not under DIFC Law. in Article 120 of the Labour Law; the same will be considered an arbitrary dismissal and compensation, as detailed in Article 123,
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6.5 When will an employer be entitled to dismiss for: 6.10 How do employees enforce their rights in relation to 1) reasons related to the individual employee; or 2) mass dismissals and what are the consequences if an business related reasons? Are employees entitled employer fails to comply with its obligations? to compensation on dismissal and if so how is compensation calculated? Chapter IX (Articles 154 to 165) of the UAE Labour Law is about Collective Labour Disputes; if the employer fails to comply with its There are as many as 10 grounds where the employer can dismiss obligations, the articles are clear about settling the disputes amicably the employee for reason without notice and immediately under otherwise a conciliation committee shall be set up by resolution of Article 120 of the Labour Law in particular if the employee has the Minister of Labour and its decision shall be binding by both forged, been convicted of a crime, committed battery in the office parties or if any party wishes to appeal, then a Supreme Arbitration or against the employer, etc. For business-related reasons we have Board will be set up and its decision will be final and enforceable. found that an employer, if restructuring was necessary and the job post has become obsolete, may terminate the employment without United Arab Emirates notice. In each of the cases above the amount of compensation can 7 Protecting Business Interests Following range from not being paid any end-of-service benefits, to being paid Termination all possible entitlements including arbitrary dismissal. Article 59 of the DIFC Employment Law allows termination for 7.1 What types of restrictive covenants are recognised? reasonable cause without notice.
In terms of restrictive covenants, confidentiality is recognised as 6.6 Are there any specific procedures that an employer an implied term. If the employment contract has included a non- has to follow in relation to individual dismissals? competition clause it will be recognised so long as it qualifies and is acceptable to the courts. Non-compete and restrictive employment The employer has to notify the employee and give notice of 30 days clauses are common in DIFC Employment Contracts. according to Article 117 of UAE Labour Law. If the employee has caused substantial material loss to the company as a result of the employee’s own fault the employer must notify the The Ministry of 7.2 When are restrictive covenants enforceable and for what period? Human Resources and Emiratisation (“MOHRE”) within 48 hours. In the event the employee breaches a basic term of his employment contract the employer must conduct a written interrogation and Confidentiality is not for a specific period and non-competition notify him of the employer’s intention to dismiss the employee in should be for a reasonable period in light of the risks to the employer. case of repetition before dismissing the employee. Under Article 60 of the DIFC Employment Law, a dismissed 7.3 Do employees have to be provided with financial employee of more than one years’ standing is entitled to a written compensation in return for covenants? statement of reasons for dismissal. No, employees do not have to be provided with financial compensation in return for covenants. 6.7 What claims can an employee bring if he or she is dismissed? What are the remedies for a successful claim? 7.4 How are restrictive covenants enforced?
The employee can claim compensation only if he is dismissed Restrictive covenants are enforced by either by temporary whether arbitrarily, unlawfully or otherwise for lawful reason. orders, compensation claims or criminal complaints in respect of The remedy to a successful claim is compensation plus up to 12% confidentiality. The DIFC Court has jurisdiction to enforce restrictive interest on the claim amount plus costs and expenses awarded by employment covenants and compensation will be calculated the courts. according to common law assessment of damages. There is no implied term preventing unfair dismissal in the DIFC Employment Law. Notice is the only requirement. Article 59 of 8 Data Protection and Employee Privacy the DIFC Employment Law allows termination for reasonable cause without notice. 8.1 How do employee data protection rights affect the employment relationship? Can an employer transfer 6.8 Can employers settle claims before or after they are employee data freely to other countries? initiated?
Yes, claims raised by the employee can be settled by the employer According to Article 127 of the UAE Labour Law, an employer is before or after they are initiated. not allowed to share an employee’s data inside the UAE. The DIFC has its own Data Protection Law No. 1 of 2007.
6.9 Does an employer have any additional obligations if it is dismissing a number of employees at the same 8.2 Do employees have a right to obtain copies of any time? personal information that is held by their employer?
No, there are no additional obligations on the employer if they are Yes, employees do have the right to obtain copies of personal dismissing a number of employees at the same time. The DIFC information held by their employer. Employment Law is silent in this regard.
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MOHRE, the matter is transferred over to the Courts of First 8.3 Are employers entitled to carry out pre-employment Instance. The DIFC Courts exercise employment jurisdiction for checks on prospective employees (such as criminal DIFC employees. record checks)?
Yes, and from February 2018, expatriates applying for employment 9.2 What procedure applies to employment-related in the UAE must provide a Certificate of Good Conduct from their complaints? Is conciliation mandatory before a complaint can proceed? Does an employee have to home country or country where they have lived for five years. pay a fee to submit a claim?
8.4 Are employers entitled to monitor an employee’s In relation to employment-related complaints, conciliation and a emails, telephone calls or use of an employer’s complaint to the MOHRE are mandatory requirements and there are computer system? no fees for the complaint itself unless there is a service fee involved. If compliant to be submitted to MOHRE, MOHRE will arrange
Yes, employers are entitled to monitor an employee’s emails, meetings between the parties and attempt to settle. If the settlement United Arab Emirates telephone calls and use of the computer system, as long as the is not possible the respective offer will refer the matter to the courts. employees are using the employer’s property. At the courts the employee will be required to pay the court fees for any claim. Direct access to the DIFC Courts is available. The DIFC 8.5 Can an employer control an employee’s use of social Small Claims Tribunal runs a mediation service. media in or outside the workplace? 9.3 How long do employment-related complaints typically Within the workplace the employer may control an employee’s take to be decided? use of social media; however, outside the workplace they are not particularly entitled to unless the employee breaches the rights of Employment-related complaints typically take between one week the employer under the law. to one month to be decided and thereafter in the Courts of First Instance, approximately nine months. 9 Court Practice and Procedure 9.4 Is it possible to appeal against a first instance decision and if so how long do such appeals usually 9.1 Which courts or tribunals have jurisdiction to hear take? employment-related complaints and what is their composition? A party may appeal against the award from the first instance courts and the appeal would typically take another six months or more. MOHRE is the first authority that handles employment-related complaints, with few exceptions of freezone authorities and the DIFC. Should the parties fail to reach an amicable solution before
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Hamdan Al Shamsi Dr. Ghandy Abuhawash Hamdan AlShamsi Lawyers and Hamdan AlShamsi Lawyers and Legal Consultants Legal Consultants Office 1611, Al Manara Tower Office 1611, Al Manara Tower Al Abraj St., Business Bay Al Abraj St., Business Bay Dubai Dubai UAE UAE
Tel: +971 4346 9262 Tel: +971 4346 9262 Email: [email protected] Email: [email protected] URL: www.alshamsilegal.com URL: www.alshamsilegal.com
With nearly a decade of successful litigation experience across the Dr. Ghandy Abuhawash has over 15 years of experience in legal United Arab Emirates, Mr. Al Shamsi has built one of Dubai’s most services. He has represented clients in both contentious and non- reputable and respected law practices. He is widely regarded as a top contentious matters. Dr. Ghandy Abuhawash specialises in company litigator in the Dubai Courts, with extensive experience in corporate, law, advising on shareholder agreements, compliance issues, labour United Arab Emirates banking and finance and insurance law. Mr. Al Shamsi advises both law, intellectual property law, criminal disputes, commercial disputes local and international companies and governmental entities in cases and corporate matters. In addition to private and in-house practice, involving complex litigation. He appears regularly before the Appeals Dr. Ghandy Abuhawash is a leading arbitrator and has handled various Court and the Court of Cassation, as well as UAE’s Federal Supreme high-profile cases within the UAE and abroad. Moreover, Dr. Ghandy Court. Mr. Al Shamsi has been described as being “…very thorough Abuhawash is an accomplished academic and holds a Ph.D. in Law and highly efficient – Hamdan faced each challenge with strategy, and Legal Studies, as well as a published thesis. professionalism and confidence which ultimately resulted in our successful outcome”. It is no surprise that he has been awarded as one of the most influential young leaders in the Middle East and the young achiever award, amongst many more
Hamdan AlShamsi Lawyers & Legal Consultants was established in 2011. It has since become a name synonymous with success and is well- known in the legal circuit. The success of the law firm is due to its specialisation in advising on commercial issues, insurance, due diligence, family law, intellectual property law, banking, companies law and other matters locally, and its dedication towards offering unparalleled, high-quality and culturally sensitive legal services, while adhering to the highest standards of integrity and excellence.
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United Kingdom Stefan Martin
Hogan Lovells Jo Broadbent
to destroy or damage the relationship of confidence and trust 1 Terms and Conditions of Employment between them. The implied duty of loyalty and fidelity prevents an employee from 1.1 What are the main sources of employment law? competing with his employer while he remains in employment and from disclosing confidential information. Employees are under an The main source of employment law is legislation. Rights agreed at implied obligation to exercise reasonable skill and care and to obey a European level are normally brought into force through national reasonable instructions. Employers have a duty to pay wages and legislation. Other rights are included in contracts of employment. to provide a suitable and, so far as practicable, safe environment. There are likely to be future changes to employment law following Terms can also be implied by custom and practice if an employer the UK’s decision to leave the European Union. However, at the invariably follows a particular practice over a period of time. moment, the UK continues to be subject to obligations under EU law and employment rights remain unchanged. 1.5 Are any minimum employment terms and conditions set down by law that employers have to observe? 1.2 What types of worker are protected by employment law? How are different types of worker distinguished? Employees have certain minimum legal rights, including the right to receive a week’s notice per year of service up to a maximum of The law distinguishes between employees, workers and the self- 12 weeks. employed. Employees have the most extensive rights. Individuals A national minimum wage of £7.50 per hour (for workers aged 25 or are employees if: the employer has control over the work; there is over; lower rates apply to younger workers) and a maximum average mutuality of obligation (an obligation on the employer to offer and working week of 48 hours apply to most workers. Minimum wage on the employee to perform work); and there is nothing inconsistent rates increase in April each year. Workers can “opt out” of the with an employment relationship. maximum working week. Individuals are workers if they are obliged to perform services Workers are entitled to minimum daily and weekly rest periods and personally and do not carry on a business. Workers are not protected to 5.6 weeks’ holiday each year. against unfair dismissal and are not entitled to receive redundancy payments. 1.6 To what extent are terms and conditions of The self-employed typically have very limited protection. employment agreed through collective bargaining? Does bargaining usually take place at company or industry level? 1.3 Do contracts of employment have to be in writing? If not, do employees have to be provided with specific According to government statistics, in 2016 around 26.3 per cent information in writing? of the total UK workforce, but only 14.9 per cent of private sector employees, were covered by collective agreements. Contracts of employment do not have to be in writing. However, Collective bargaining takes place almost exclusively at company or employees must be provided with a written statement of particulars, workplace level. including: the names of employer and employee; job title; when continuity of employment began; pay rates and payment intervals; place and hours of work; holiday entitlement; sick pay; disciplinary 2 Employee Representation and Industrial and grievance policies; notice provisions; and whether the terms of Relations employment are governed by a collective agreement.
2.1 What are the rules relating to trade union recognition? 1.4 Are any terms implied into contracts of employment?
Trade unions can gain recognition through agreement with an Various terms are implied into employment contracts. The duty of employer, or under the statutory recognition process. Under mutual trust and confidence is particularly important: employers and the statutory process, unions are entitled to apply to the Central employees should not behave in a way that is calculated or likely Arbitration Committee (CAC) for recognition if the employer, in
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conjunction with any associated employer, has 21 or more employees and at least 10 per cent of employees are trade union members. The 3 Discrimination application will succeed if it is supported by a majority of workers, demonstrated by trade union membership or employee surveys. The 3.1 Are employees protected against discrimination? If CAC may arrange a ballot to check support. The trade union must so, on what grounds is discrimination prohibited? secure the votes of the majority of workers voting and at least 40 per cent of the total workers constituting the bargaining unit. If Employees and workers are protected against discrimination successful, the trade union will be entitled to collective bargaining because of age, disability, gender reassignment, pregnancy, race, on pay, hours and holidays. religion or belief, sex, sexual orientation or marriage or civil partnership status (“protected characteristics”). They are also 2.2 What rights do trade unions have? protected against certain types of discrimination because someone with whom they are associated has a protected characteristic. United Kingdom Recognised trade unions have a variety of rights, including the Discrimination is prohibited at every stage of the employment disclosure of information for collective bargaining, to be informed relationship, including recruitment and after termination. and consulted in relation to collective redundancies and transfers of undertakings, pension matters and training, and given information on health and safety issues. 3.2 What types of discrimination are unlawful and in what circumstances?
2.3 Are there any rules governing a trade union’s right to Direct discrimination occurs if an employee is less favourably take industrial action? treated because of a protected characteristic. Only direct age discrimination can be justified. Complex rules govern a trade union’s right to take industrial action. Indirect discrimination occurs where an employer adopts a A union must obtain support for industrial action from members in a secret ballot, and must provide the employer with details of the ballot “provision, criterion or practice” which puts people who share a and its result. If the union fails to comply with the requirements, protected characteristic at a particular disadvantage. If employers employers can obtain an injunction to prevent the action. can justify a “pcp” by showing it is a proportionate means of achieving a legitimate aim, the treatment is not unlawful. Harassment is conduct related to a protected characteristic which 2.4 Are employers required to set up works councils? If so, what are the main rights and responsibilities of has the purpose or effect of violating an employee’s dignity such bodies? How are works council representatives or creating an intimidating, hostile, degrading, humiliating or chosen/appointed? offensive environment. It is unlawful to victimise an employee because they have taken Employers are not obliged to set up works councils in the UK unless action to enforce their right not to be discriminated against, or they have 50 or more employees and a request is made by at least 10 because they have made or supported someone else’s allegations per cent of the workforce. Such requests are unusual. of discrimination. If a request is made and a works council is set up, its rights and Disabled employees have a right not to be treated unfavourably responsibilities will be a matter for agreement. In the absence of for a reason arising from a disability and to have reasonable agreement, default rules require representatives to be elected and to adjustments made for them if they are put at a disadvantage by be informed and consulted about the economic situation, threats to a provision, criterion or practice adopted by the employer or by a employment, and substantial changes in work organisation. physical feature of an employer’s premises.
2.5 In what circumstances will a works council have co- 3.3 Are there any defences to a discrimination claim? determination rights, so that an employer is unable to proceed until it has obtained works council agreement to proposals? An employer is vicariously liable for the acts of its employees, so is liable if one employee discriminates against another in the course Works councils do not have co-determination rights. of employment. An employer can avoid liability if it can show that it has taken all reasonable steps to prevent the discrimination occurring. 2.6 How do the rights of trade unions and works councils interact? 3.4 How do employees enforce their discrimination Trade union rights generally take precedence over those of a works rights? Can employers settle claims before or after council. If collective redundancies or a transfer of an undertaking is they are initiated? proposed, an employer must consult with a recognised trade union and (if the default rules apply) must notify, but does not have to Employees can bring discrimination claims before the Employment consult, the works council. Tribunal. Claims can be settled before or after they are initiated if a settlement 2.7 Are employees entitled to representation at board agreement is entered into which complies with various formalities level? – for example, the employee must have received independent legal advice on the terms and implications of the agreement. Claims can There is currently no general statutory right to representation at also be conciliated by the Advisory, Conciliation and Arbitration board level. It is very rare for an employer to appoint employee Service (ACAS) and any settlement will be binding. directors voluntarily.
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3.5 What remedies are available to employees in 4.4 Do fathers have the right to take paternity leave? successful discrimination claims? Eligible fathers are entitled to one or two weeks’ paternity leave, Compensation is the main remedy in discrimination claims, which is paid at a rate of £140.98 per week (from April 2017). Some comprising an injury to feelings award and a loss of earnings award. employers offer enhanced company paternity pay. Injury to feelings awards range between £800 and £42,000 (with the most exceptional cases capable of exceeding £42,000) depending 4.5 Are there any other parental leave rights that on how serious the discrimination was and how long it lasted. A employers have to observe? loss of earnings award compensates the employee for the financial loss they have suffered because of the employer’s discrimination. Adoptive parents enjoy rights to ordinary and additional adoption There is no limit on compensation in a discrimination claim. leave which are broadly similar to maternity leave rights. Parents United Kingdom Employment Tribunals can make recommendations requiring an have the right to 18 weeks’ unpaid leave to care for a child under employer to take steps to reduce the impact of the discrimination. the age of 18, although a maximum of four weeks’ leave is generally permitted each year. Employees have the right to take unpaid time 3.6 Do “atypical” workers (such as those working part- off work to deal with family emergencies. time, on a fixed-term contract or as a temporary A new right to shared parental leave was introduced in 2015. If agency worker) have any additional protection? a woman chooses to bring her maternity leave to an end early, the balance of any leave and pay can be taken by either parent as Part-time workers have the right not to be treated less favourably flexible shared parental leave before the baby is a year old. Similar (on a pro rata basis) than those who work full-time. rights apply to adoptive parents. Fixed-term employees have the right not to be treated less favourably than comparable permanent employees. The use of successive 4.6 Are employees entitled to work flexibly if they have fixed-term contracts is limited to four years, unless the use of further responsibility for caring for dependants? fixed-term contracts is justified on objective grounds. Agency workers who have been engaged for a period of 12 weeks Employees with at least 26 weeks’ service are entitled to request have an entitlement to the same basic terms and conditions in flexible working, regardless of their reasons for doing so. Employers relation to pay and working hours as comparable employees. must consider requests reasonably. There is no right to have a request granted and employers can reject requests for a number of business reasons. The penalty for failing to follow the correct 4 Maternity and Family Leave Rights procedure is fairly low (a maximum of £3,912) but the employer could also face discrimination (particularly indirect discrimination) 4.1 How long does maternity leave last? claims if a request is refused.
Employees are entitled to a period of six months’ ordinary maternity 5 Business Sales leave (OML) and six months’ additional maternity leave (AML). At least two weeks’ leave must be taken after a child’s birth (compulsory maternity leave). 5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the buyer? 4.2 What rights, including rights to pay and benefits, does a woman have during maternity leave? An asset sale will generally amount to a transfer of an undertaking if tangible and intangible assets are transferred and the business A woman’s usual terms and conditions of employment continue continues as a going concern. The contracts of employment of throughout OML and AML, except remuneration. Remuneration is employees employed by the seller and assigned to the business will replaced by Statutory Maternity Pay (SMP) which is currently paid automatically transfer to the buyer. In the UK, an outsourcing will at a rate of 90 per cent of normal pay for the first six weeks, followed often amount to a transfer of an undertaking. by a flat rate of £140.98 a week (from April 2017) (or normal weekly pay if lower) for a further 33 weeks. Some employers offer In a share sale, there is no change in the identity of the employer. enhanced company maternity pay. 5.2 What employee rights transfer on a business sale? How does a business sale affect collective 4.3 What rights does a woman have upon her return to agreements? work from maternity leave?
A woman returning to work from OML is entitled to return to the Employees transfer to the buyer on their existing terms and conditions job in which she was employed before her maternity leave on the and with their continuity of employment preserved. The buyer must same terms and conditions, and with the benefit of any general observe those terms following the transfer. Most pension benefits do improvement in terms and conditions. A woman returning to work not transfer. Collective agreements are treated as having been made from AML has the same right, unless it is not reasonably practicable with the buyer, so their terms may continue in force. for her to return to the old job, in which case she is entitled to return On a share sale, employees continue to be employed on their to a job which is suitable and appropriate and on no less favourable existing terms and conditions. terms and conditions.
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5.3 Are there any information and consultation rights on 6.3 What protection do employees have against a business sale? How long does the process typically dismissal? In what circumstances is an employee take and what are the sanctions for failing to inform treated as being dismissed? Is consent from a third and consult? party required before an employer can dismiss?
Representatives of affected employees (trade union representatives Employees with more than two years’ service are protected against or, in their absence, elected representatives) must be informed and unfair dismissal. An employee is treated as dismissed if his employer may need to be consulted on an asset transfer. They must be told terminates his contract (with or without notice), if he is employed on about the fact of the transfer, when it is likely to take place, the a fixed-term contract which expires, or if he resigns in response to reasons for it, the implications for the employees, and whether a fundamental breach of contract by the employer. Consent from a any measures are proposed by the buyer or seller. If measures are third party is not required before a dismissal takes place. proposed, the employee representatives should be informed long United Kingdom enough before the transfer to allow consultation to take place. A 6.4 Are there any categories of employees who enjoy failure to inform and consult can result in a protective award of up special protection against dismissal? to 13 weeks’ pay per employee. Unless the company has an information and consultation agreement It is automatically unfair to dismiss an employee for a variety of (which is still unusual) there should be no information and reasons, including: reasons related to pregnancy or maternity or consultation obligations on a share sale. family leave; reasons related to health and safety; for acting as an employee representative or taking part in trade union activities or protected industrial action; for making a protected disclosure; for 5.4 Can employees be dismissed in connection with a business sale? making a flexible working request; or for working as a part-time or fixed-term employee. There is no qualifying period of employment to bring such claims. Dismissals because of a transfer are effective but automatically unfair unless the employer can point to an “economic, technical or organisational” reason entailing changes in the workforce, such as a 6.5 When will an employer be entitled to dismiss for: genuine redundancy situation. Dismissals that are not automatically 1) reasons related to the individual employee; or 2) unfair may be unfair on normal principles. business related reasons? Are employees entitled to compensation on dismissal and if so how is No special rules apply to dismissals in connection with a share sale. compensation calculated?
5.5 Are employers free to change terms and conditions of Employers must show that they have a potentially fair reason for employment in connection with a business sale? dismissal. The potentially fair reasons are misconduct, capability (health or performance), illegality, redundancy or “some other Changes to terms and conditions because of a transfer are only substantial reason”. allowed if the buyer can point to an “economic, technical or Employees are entitled to receive a statutory redundancy payment organisational” reason entailing changes in the workforce. This is if they are dismissed for redundancy. This is calculated as a week’s difficult to show. pay (capped at £489) for each year of service, with certain age- No special rules apply to changes to terms and conditions in related discounts and uplifts. The maximum statutory redundancy connection with a share sale. payment is £14,670. Employees dismissed for a reason other than redundancy are not entitled to receive a statutory payment.
6 Termination of Employment 6.6 Are there any specific procedures that an employer has to follow in relation to individual dismissals? 6.1 Do employees have to be given notice of termination of their employment? How is the notice period Employers must follow a fair procedure to avoid a finding of unfair determined? dismissal. What amounts to a fair procedure depends on the reason for the dismissal, but will generally involve warning the employee Employees have to be given notice of termination unless they are that he is at risk of dismissal, giving him a chance to comment on the dismissed for gross misconduct. The length of the notice period is employer’s reasons for wanting to dismiss and a chance to appeal set down in an employee’s contract of employment, subject to the against a decision to dismiss. It is unlikely to be fair to dismiss on statutory minimum (see question 1.5). capability grounds unless the employee has been given a reasonable opportunity to meet the required standard of performance or attendance, and in this case the process can take a number of 6.2 Can employers require employees to serve a period months. Medical evidence about an employee’s condition might of “garden leave” during their notice period when the employee remains employed but does not have to also be required in a capability dismissal. attend for work? 6.7 What claims can an employee bring if he or she is An employer can require employees to serve a period of “garden dismissed? What are the remedies for a successful leave” if this is permitted under the employee’s contract. Garden claim? leave may also be permitted if the employee has indicated that he does not intend to be bound by the terms of the contract (for An employee with more than two years’ service can bring an unfair example, he has sought to misuse confidential information). dismissal claim in the Employment Tribunal. If the claim succeeds, the employee would be entitled to a basic award (a week’s pay capped
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at £489 per year of service, with permitted age-related discounts and covenant goes no further than reasonably necessary to protect that uplifts, to a maximum of £14,670). The employee would also be interest. If the covenant is too wide in its scope or duration, it will entitled to a compensatory award, to reflect the financial loss caused not be enforceable. Restrictions usually last between three and 12 by the dismissal. The maximum compensatory award is currently months, depending on the seniority of the employee and the nature £80,541, or 12 months’ pay if lower. of the interest to be protected. There is no qualifying period of service for a claim of automatic unfair dismissal (see question 6.4). 7.3 Do employees have to be provided with financial Employees can also bring a discrimination claim if they believe compensation in return for covenants? their dismissal was because of a protected characteristic. There is no qualifying period of service for discrimination claims and no cap Employees do not have to be given financial compensation in return on compensation. There is also no cap on compensation for a claim for covenants. If a covenant is not justified, or it is too wide in scope that an employee was dismissed for making a protected disclosure. or duration, a court is unlikely to enforce it, even if the employer United Kingdom In practice, many claims for unfair dismissal are accompanied by makes an offer of financial compensation. one or more claims of discrimination and/or dismissal for making a protected disclosure. 7.4 How are restrictive covenants enforced?
6.8 Can employers settle claims before or after they are If a former employee is acting in breach of his covenants, an initiated? employer can apply to the court for an injunction to prevent further breaches. The employer may also be entitled to recover damages to Unfair dismissal claims can be settled in the same way as compensate for any loss caused by the employee’s breaches. discrimination claims (see question 3.4).
8 Data Protection and Employee Privacy 6.9 Does an employer have any additional obligations if it is dismissing a number of employees at the same time? 8.1 How do employee data protection rights affect the employment relationship? Can an employer transfer If an employer has proposals to dismiss 20 or more employees as employee data freely to other countries? redundant within a period of 90 days, it must consult with trade union representatives or employee representatives before any final At present, employers must comply with the Data Protection Act decisions are taken. Consultation must last at least 30 days if 1998 (DPA) when processing employee data. In particular, data between 20 and 99 dismissals are proposed, and at least 45 days if must be processed fairly and lawfully, for specified and lawful 100 or more dismissals are proposed. Consultation must take place purposes, and adequate security measures must be in place. There about avoiding dismissals, minimising the number of dismissals and are restrictions on transferring data outside the EEA unless adequate mitigating the consequences of dismissals. The employer must also protection for the data is in place. The Information Commissioner notify the Department for Business, Energy & Industrial Strategy of can impose fines of up to £500,000 for serious breaches of the DPA. the proposed redundancies. From 25 May 2018, the General Data Protection Regulation (GDPR) will come into effect in the UK, superseding the DPA. Similar 6.10 How do employees enforce their rights in relation to restrictions on data processing and transferring data outside of the mass dismissals and what are the consequences if an EEA will apply. Employees will have to be given more information employer fails to comply with its obligations? about how their data is used. Infringements of the GDPR may give rise to significantly higher fines; with maximum fines for serious If an employer fails to inform and consult on a collective redundancy, breaches of the GDPR of up to EUR 20 million or four per cent of claims can be brought in the Employment Tribunal. If the claim is worldwide annual turnover, whichever is the greater. successful, the tribunal can order the employer to pay a protective award of up to 90 days’ pay per affected employee. 8.2 Do employees have a right to obtain copies of any personal information that is held by their employer? 7 Protecting Business Interests Following Termination At present, under the DPA, employees are entitled to make a subject access request (subject to payment of a £10 fee). Employers then have 40 days to tell the employee whether their personal data is 7.1 What types of restrictive covenants are recognised? being processed, the purposes for which data is processed and to whom it is disclosed, and to provide a copy of all personal data that Covenants typically prevent an employee from competing with, is held unless this would involve “disproportionate effort”. dealing with customers of, or soliciting the customers or staff of a From May 2018, under the GDPR, employees will have broadly former employer. similar rights to make a subject access request; however, they will not be required to pay a fee. Employers will be required to provide 7.2 When are restrictive covenants enforceable and for a response and a copy of all personal data within one month. what period? Employers can extend this period to three months if the subject access request is complex. Employers can refuse to respond to Employers will only be able to enforce covenants if they can requests or charge an administrative fee for providing information in show that they have a legitimate business interest to protect (such response to requests which are “manifestly unfounded or excessive”. as confidential information or customer connections) and that the
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(who is legally qualified) and two lay representatives, who usually 8.3 Are employers entitled to carry out pre-employment have relevant experience as trade unionists or HR professionals. checks on prospective employees (such as criminal Many claims (including claims of unfair dismissal) are now heard by record checks)? an Employment Judge sitting alone.
Employers can carry out pre-employment checks, but it is good practice to limit this to checking information provided by the 9.2 What procedure applies to employment-related candidate. More detailed vetting may be appropriate where the complaints? Is conciliation mandatory before a complaint can proceed? Does an employee have to role entails risks to the employer, clients, customers or others. pay a fee to submit a claim? Criminal records checks can be made through the Disclosure and Barring Service in relation to specified roles. Different levels of Employees normally have to refer disputes to ACAS for pre-claim disclosure are available depending on the nature of the job applied conciliation. If pre-claim conciliation is not successful, claims can
United Kingdom for, with more detailed disclosures available where candidates will be lodged with the Employment Tribunal. Generally, claims have be working with children or vulnerable adults. to be lodged within three months of the matter complained of, with extensions to allow pre-claim conciliation to take place. 8.4 Are employers entitled to monitor an employee’s The parties must exchange documents and witness statements, emails, telephone calls or use of an employer’s and there is a hearing to decide the complaint. As of July 2017, computer system? employees are no longer required to pay a fee to submit a claim in the Employment Tribunal. Monitoring may be permissible if there is a good reason for it and It is relatively rare for the losing party to be ordered to pay the other it is a proportionate response to the problem it seeks to address. party’s costs. An employer will normally need to conduct an impact assessment, weighing up the purpose of monitoring against the adverse impact for employees or others, to judge whether monitoring is justified. 9.3 How long do employment-related complaints typically If electronic communications are being intercepted, the employer take to be decided? will also need to make sure that it complies with the Regulation of Investigatory Powers Act. A case generally takes around six months from being lodged until it is heard by the Tribunal.
8.5 Can an employer control an employee’s use of social media in or outside the workplace? 9.4 Is it possible to appeal against a first instance decision and if so how long do such appeals usually take? Misuse of social media in or outside the workplace may amount to misconduct, which an employer can deal with in the normal way Employment Tribunal decisions can be appealed on a point of law through its disciplinary procedure. Whether a dismissal is fair to the Employment Appeals Tribunal, which is a specialist appeal will depend on the damage or potential damage to the employer’s tribunal that normally comprises a judge sitting alone. In cases of reputation, whether the employer has a clear policy on the issue, particular importance, the judge may sit with lay members with and whether dismissal is proportionate (as well as whether a fair practical experience of employment relations. Appeals typically take procedure has been followed). nine to 12 months. As of July 2017, there are no fees for submitting a claim to the Employment Appeal Tribunal. 9 Court Practice and Procedure
9.1 Which courts or tribunals have jurisdiction to hear employment-related complaints and what is their composition?
Employment Tribunals have jurisdiction to hear most employment- related complaints. They are composed of an Employment Judge
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Stefan Martin Jo Broadbent Hogan Lovells Hogan Lovells Atlantic House, Holborn Viaduct Atlantic House, Holborn Viaduct London EC1A 2FG London EC1A 2FG United Kingdom United Kingdom
Tel: +44 20 7296 2751 Tel: +44 20 7296 2026 Fax: +44 20 7296 2001 Fax: +44 20 7296 2001 Email: [email protected] Email: [email protected] URL: www.hoganlovells.com URL: www.hoganlovells.com
Stefan is Head of the London Employment Practice and advises on all Jo is PSL Counsel in the Hogan Lovells employment team. As well aspects of employment and employment relations law. His practice as keeping clients and the team up to date with legal developments,
includes advising on individual employment disputes, unfair and she develops and presents internal and external client training courses United Kingdom wrongful dismissal, discrimination and equal pay, enforcement of post- and workshops and sits on the Employment Lawyers Association termination covenants and protection of confidential information, and training committee. One of her particular interests relates to maternity employment aspects of regulatory and other investigations. Stefan and other family-friendly policies – she is the main contributor to the also advises on collective employment law, employee consultation, “Family friendly” section of the CIPD’s HR-inform tool, and the updating trade union recognition and industrial action. In addition, Stefan author of much of Xpert HR’s family-friendly rights section. Jo is also a has extensive experience advising on employee matters arising in co-author of the book “Informing and Consulting Employees: the New connection with all types of corporate transactions, business transfers Law”, and contributed the UK employment law section to a book on and outsourcing agreements. European cross-border mergers. Stefan has been listed as a leading UK employment law practitioner in both UK and international directories.
Today’s market challenges Employment law frameworks around the world are complex and pose many challenges for global companies. They affect the way business is conducted and have an impact on how strategy is built and rolled out. The ability to work swiftly and effectively across borders – in a variety of languages and cultures – is essential. How we help We have the geographic reach and local knowledge our clients need. From this platform, we provide sophisticated, coordinated guidance on the most pressing and difficult employment issues, wherever they arise. Our work covers the full spectrum of employment matters. We help navigate workplace policies and practices. We develop comprehensive risk avoidance strategies. We advocate in litigation and arbitration. We negotiate with unions and other employee representatives. And we regularly implement strategic domestic and international initiatives. Our team approaches all of these challenges creatively, strategically and cost-effectively. Over and above being a legal adviser, we aim to be a business partner. And we always put our clients first.
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USA Ned Bassen
Hughes Hubbard & Reed LLP Nathan Cole
non-exempt from overtime. Exempt employees are not protected by 1 Terms and Conditions of Employment the Fair Labor Standards Act (FLSA) and thus not entitled to overtime pay, whereas non-exempt employees are entitled to overtime pay. 1.1 What are the main sources of employment law? 1.3 Do contracts of employment have to be in writing? If The Department of Labor administers and enforces over 180 federal not, do employees have to be provided with specific employment laws. However, the primary federal employment laws information in writing? in the United States are: Section 1981 of the Civil Rights Act of 1866 (Section 1981); Title VII of the Civil Rights Act of 1964 (Title VII); No, written contracts of employment are not required. Federal the Americans with Disabilities Act (ADA); the Age Discrimination employment laws do not require employers to provide employees in Employment Act (ADEA); the Equal Pay Act (EPA); the Fair with specific information; however, state and local employment Labor Standards Act (FLSA); the Family and Medical Leave Act laws may require particular information to be in writing. (FMLA); the Immigration Reform and Control Act (IRCA); the National Labor Relations Act (NLRA); the Occupational Safety and 1.4 Are any terms implied into contracts of employment? Health Act (OSHA); the Pregnancy Discrimination Act (PDA); and the Uniformed Services Employment and Reemployment Rights Contract law allows the parties to lay out the terms of the employer- Act (USERRA). employee relationship. Employers are under a duty of good faith In general, employers are prohibited from discriminating against and fair dealings when an employment contract exists. Depending employees on the basis of race, colour, religion, sex, sexual on the applicable state and local laws, other terms may be implied orientation, pregnancy, national origin, age, disability, or genetic into an express or implied contract. information. In addition to the federal statutes, there are numerous state and local 1.5 Are any minimum employment terms and conditions laws enacted to protect against employment discrimination. Some set down by law that employers have to observe? state and local statues expand protections, providing protections to employees not covered under the federal statutes. Yes, minimum employment terms and conditions are set down by federal, state, local laws. Under the Fair Labor Standards Act 1.2 What types of worker are protected by employment (FLSA), employers are required to pay covered employees the law? How are different types of worker distinguished? federal minimum wage and overtime pay for hours worked in excess of 40 hours per week. Additionally, many states and localities enact In order to be covered by federal employment laws, an employer laws regarding minimum wage, overtime, and mandatory breaks. must employ a certain number of employees (depending on the type of employer and the discrimination being alleged). State and local 1.6 To what extent are terms and conditions of laws cover smaller employers that lack the number of employees employment agreed through collective bargaining? required under federal laws. Does bargaining usually take place at company or Employees are distinguished by the existence of an employment industry level? contract (or collective bargaining agreement) or employment-at- will. At-will employment can be freely terminated by either the Collective bargaining agreements are governed by the National employer or employee, for any or no reason, with or without notice, Labor Relations Act (NLRA), which sets out the requirements for so long as a federal, state, or local law is not violated. Typically, bargaining. The number of employment agreements covered by employees are presumed to be at-will unless a contract creating collective bargaining has decreased over the years; however, they a different relationship exists. Where employment is established are more prevalent in certain regions of the United States and by contract, the employer-employee relationship is governed by particular employment sectors. the terms and conditions of the agreement. Employment is also Typically, bargaining occurs at a company level, between the distinguished by: whether the employee works in the public or employer and employees (or employee representatives). In some private sector; whether the worker is considered an employee or an industries, bargaining occurs at a regional or industry level, between independent contractor; and/or whether the employee is exempt or employers and unions.
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2 Employee Representation and Industrial 3 Discrimination Relations 3.1 Are employees protected against discrimination? If 2.1 What are the rules relating to trade union recognition? so, on what grounds is discrimination prohibited?
Under the National Labor Relations Act (NLRA), employers are Yes, various federal, state, and local laws protect employees from forbidden from interfering with, restraining, or coercing covered employment discrimination. Federal employment laws prohibit private sector employees from exercising their rights to organise, employers from discriminating against employees and job applicants USA form, join, or assist a trade union. Employees are free to elect a on the bases of race, colour, sex, pregnancy, religion, national union to represent them. origin, disability, genetic information, or age. Under federal laws, employees are also protected from workplace harassment and retaliation for reporting violations or exercising a legal right. 2.2 What rights do trade unions have? Many of the state and local laws mirror the federal protections, but some states and localities have extended protections to categories Employers and unions are required to meet at reasonable times not covered by federal employment laws, such as ancestry, marital and bargain in good faith regarding wages, hours, vacation time, status, and domestic or sexual violence status. insurance, safety practices, and other mandatory subjects. Parties must bargain in good faith for successor contracts. It is considered an unfair labour practice for a party to refuse to bargain collectively, 3.2 What types of discrimination are unlawful and in what but parties are not obligated to reach an agreement or make circumstances? concessions. It is unlawful to harass employees based on their membership in a protected class. Unlawful harassment comes in two forms: hostile 2.3 Are there any rules governing a trade union’s right to work environment; and quid pro quo harassment. Hostile work take industrial action? environment harassment occurs when an employee is subjected to unwelcome conduct based on his or her protected class that is Yes, the National Labor Relations Act (NLRA) protects employee severe or pervasive enough that it creates a hostile or offensive rights to strike and engage in picket lines in a lawful manner. The work environment. Quid pro quo harassment generally results in a purpose, timing, and conduct during the strike and picket lines are tangible employment action based upon the employee’s acceptance considered when assessing the lawfulness of employee conduct. or rejection of unwelcome sexual advances or requests for sexual Strikes and picket lines must address an economic or an unfair favours, but can also result from unwelcome conduct based on labour practice issue to be found lawful. protected classes other than sex. Quid pro quo harassment is generally committed by someone who can make or recommend 2.4 Are employers required to set up works councils? If employment decisions (such as termination, promotion, demotion) so, what are the main rights and responsibilities of that will affect the victim, whereas a hostile work environment such bodies? How are works council representatives can result from the conduct of supervisors, co-workers, clients, chosen/appointed? customers, or anyone else with whom the victim interacts at work.
No, trade unions represent employees in work-related negotiations. 3.3 Are there any defences to a discrimination claim?
2.5 In what circumstances will a works council have co- Yes, if an employer can establish that the action in question was determination rights, so that an employer is unable to taken for a legitimate, non-discriminatory reason, they will not be proceed until it has obtained works council agreement to proposals? held liable. Under certain circumstances, employers are allowed to hire employees based on qualities that would generally be considered discrimination. Employers must establish that the This is not applicable under United States employment and labour bona fide occupational qualification is reasonably necessary for the law. business operations. Some states and localities provide additional affirmative defences. 2.6 How do the rights of trade unions and works councils interact? 3.4 How do employees enforce their discrimination This is not applicable under United States employment and labour rights? Can employers settle claims before or after they are initiated? law.
Employees that believe their rights have been violated can file a 2.7 Are employees entitled to representation at board claim with the appropriate federal agency and/or bring a civil level? lawsuit against the accused employer. However, most allegations of discrimination require the employee to first file a charge with the No, employees are not entitled to representation at board level. appropriate federal agency before a lawsuit can commence. Employers are free to settle employment discrimination claims before or after they are initiated.
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3.5 What remedies are available to employees in 4.5 Are there any other parental leave rights that successful discrimination claims? employers have to observe?
The purpose of employment law is to place the victim of Under the Family and Medical Leave Act (FMLA), eligible discrimination in the same position as though the discrimination employees may take up to 12 weeks of leave for the care of an never occurred. Available relief depends on the type of adopted or foster child within one year of placement, for the discrimination. Remedies for an employee who successfully asserts care of an employee’s spouse, child, or parent with a serious employment discrimination could include, but are not limited to, health condition, or to recover from a serious health condition
USA compensatory and punitive damages, attorneys’ fees, court costs, or that prohibits an employee from performing essential job duties. back pay. Eligible employees may also take leave for any qualifying exigency arising out of the fact that the employee’s spouse, child, or parent is a covered military member on a covered active duty. 3.6 Do “atypical” workers (such as those working part- time, on a fixed-term contract or as a temporary agency worker) have any additional protection? 4.6 Are employees entitled to work flexibly if they have responsibility for caring for dependants? No, “atypical” workers do not have any additional protection. Yes. Under the intermittent leave or reduced leave provisions of the Family and Medical Leave Act (FMLA), eligible employees 4 Maternity and Family Leave Rights are allowed to take leave in separate blocks of time due to a single qualifying reason, or reduce their working hours per workweek or 4.1 How long does maternity leave last? workday.
Currently, there is not a national law mandating paid maternity 5 Business Sales leave. Under the Family and Medical Leave Act (FMLA), eligible employees are provided up to 12 weeks of unpaid, job-protected leave per year. The FMLA also requires the employee’s group 5.1 On a business sale (either a share sale or asset health benefits be maintained during the leave. Eligible employees transfer) do employees automatically transfer to the are those who have worked for their employer for a minimum of 12 buyer? months, have worked at least 1,250 hours over the past 12 months, and work for an employer who employs 50 or more employees. Generally, the employment relationship ends when a business is Some states have enacted laws providing leave similar to the FMLA, sold; successor owners have no duty to retain former employees. while some have expanded employee rights. However, depending on the nature of the sale of shares, the employer-employee relationship may not be affected since the employing entity remains the same. 4.2 What rights, including rights to pay and benefits, does Employers covered by the Worker Adjustment and Retraining a woman have during maternity leave? Notification Act (WARN) are required to give employees notice. Some states have also enacted laws requiring notice be given. Under the Family and Medical Leave Act (FMLA), a gender-neutral statute, eligible employees of covered employers are entitled to take up to 12 weeks of unpaid, job-protected leave per year with 5.2 What employee rights transfer on a business continuation of their group healthcare benefits. sale? How does a business sale affect collective agreements? Some state laws provide leave benefits to employees not eligible under the FMLA and/or extend the length of leave permitted. Typically, sellers and buyers enjoy the freedom to negotiate the terms and conditions of a sale, and the successor owner may set 4.3 What rights does a woman have upon her return to new initial terms. work from maternity leave? Yet, a successor owner may have collective bargaining obligations if: (a) the successor owner retains all or some employees, the The employer must reinstate the employee to the same or equivalent employee’s work is largely unchanged, and the employing entity’s position held prior to the leave. An equivalent position under the nature of business is essentially the same; (b) the successor Family and Medical Leave Act (FMLA) is one that is virtually employer, either expressly or implicitly, demonstrates an intent to identical in pay, benefits, and working conditions. Employers are recognise agreements; or (c) the National Labor Relations Board also prohibited from retaliating against employees for requesting (NLRB) determines the successor employer intended to continue FMLA leave, exercising their FMLA rights, or otherwise interfering with the existing bargaining unit without indicating new terms and with the rights afforded by the FMLA. conditions of employment.
4.4 Do fathers have the right to take paternity leave? 5.3 Are there any information and consultation rights on a business sale? How long does the process typically The Family and Medical Leave Act (FMLA) is a gender-neutral take and what are the sanctions for failing to inform statute that allows for fathers and mothers to request and take leave. and consult? Fathers are afforded the same rights as mothers under the FMLA. No, an employee does not have rights to information unless the employer is covered by the Worker Adjustment and Retraining
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Notification Act (WARN). Employees must be given at least 60 days’ notice if the employment site will be shut down or there is to 6.3 What protection do employees have against be a mass layoff. dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third party required before an employer can dismiss? 5.4 Can employees be dismissed in connection with a business sale? Employment is presumed to be at-will and can be ended at any time, with or without notice, by either party. Termination may be Yes, the seller and buyer are free to negotiate the terms of the sale, found unlawful if: (a) based on the circumstances, the employer and the successor employer can decide whether to continue or and employee established an implied contract; (b) termination USA terminate the status quo employment relationship. of employment violates public policy (i.e. firing an employee because of jury duty, military service, or refusing to engage in 5.5 Are employers free to change terms and conditions of illegal conduct); (c) termination of employment violates federal, employment in connection with a business sale? state, or local laws prohibiting discrimination; or (d) termination of employment amounts to retaliation. Employers are free to change the terms and conditions of an at- Dismissal happens through termination or layoffs. Termination will employee at any time. Additionally, upon sale of the business, of employment is final and primarily based on an employee’s the successor employer may establish new terms and conditions performance or behaviour, whereas a layoff may be temporary and of employment that the employee must accept prior to continuing based on business reasons. employment. The consent of a third party is not required, unless a collective bargaining agreement or employment contract requiring consent exists. 6 Termination of Employment
6.4 Are there any categories of employees who enjoy 6.1 Do employees have to be given notice of termination special protection against dismissal? of their employment? How is the notice period determined? Employees are protected by federal laws (as well as applicable state and local laws) from dismissal that is discriminatory, retaliatory, Generally, at-will employees do not need to be given notice of or in violation of public policy. If applicable, employees may be termination. If the employer is covered by the Worker Adjustment protected by collective bargaining agreements or other employment and Retraining Notification Act (WARN), covered employees must contracts. be given at least 60 days’ notice of termination. WARN is applicable when the employer has 100 or more employees and will shut down an employment site or conduct a mass layoff. An employment 6.5 When will an employer be entitled to dismiss for: site closing occurs when employment for 50 or more employees is 1) reasons related to the individual employee; or 2) business related reasons? Are employees entitled terminated during any 30-day period. A mass layoff occurs when to compensation on dismissal and if so how is 500 or more employees lose employment during any 30-day period, compensation calculated? or 50–499 employees lose employment and they make up 33% or more of the business’s active workforce. An employer can dismiss an employee for individual or business reasons, so long as: those reasons are not discriminatory or 6.2 Can employers require employees to serve a period retaliatory in nature; they do not violate federal, state, or local laws; of “garden leave” during their notice period when the no contract or agreement to the contrary exists; and/or the dismissal employee remains employed but does not have to is not against public policy. attend for work? Upon dismissal, employees are entitled to receive their final pay. Eligible employees have the right to continue healthcare coverage Generally, at-will employment allows employers or employees to for a limited period of time and receive unemployment benefits from end employment at any time. Garden leave is a fairly new concept the state government. Employees may also be entitled to severance in the United States and not as prevalent as it is in Europe. Thus, pay pursuant to state laws or if it is found that the employer led the the courts have reached inconsistent conclusions when deciding employee to believe they would be paid severance. the enforceability of garden leave clauses. The enforceability of a garden leave clause depends on the terms of the agreement, the nature of the employment relationship, and the jurisdiction in which 6.6 Are there any specific procedures that an employer enforcement is sought. Courts generally enforce a garden leave has to follow in relation to individual dismissals? clause when the employer establishes a willingness to continue paying an employee’s wages during the restricted period. However, No, unless a collective bargaining agreement or other employment garden leave agreements that extend too long or are geographically contract requires specific procedures. overbroad have been found unenforceable – regardless of the fact the employer continues paying the employee. 6.7 What claims can an employee bring if he or she is dismissed? What are the remedies for a successful claim?
The claims a dismissed employee can plead depend on the jurisdiction in which the claims are brought and under what laws the
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employee asserts his/her rights were violated (federal, state, and/or to state. However, in determining the enforceability of restrictive local). Potential claims include: unlawful discrimination; retaliation covenants, courts will assess, among other things, whether the for exercising a legal right; wrongful termination; breach of an covenant: protects a legitimate business interest; is reasonable in express or implied contract or agreement; and breach of covenant of scope, time period, and geographic restriction; and is reasonable good faith and fair dealings. under the circumstances. Remedies for a successful claim include: back pay; front pay; lost benefits; out-of-pocket losses; attorney’s fees and costs; injunctive 7.3 Do employees have to be provided with financial relief; equitable relief; and punitive damages. Available remedies compensation in return for covenants? vary depend on the governing jurisdiction and claims. USA Employment is a contractual relationship governed by contract 6.8 Can employers settle claims before or after they are law, thus restrictive covenants require adequate consideration to be initiated? enforceable. Since employment is presumed to be at-will, absent an agreement to the contrary, many states find adequate consideration Yes, employees can settle claims before or after they are brought. through the continued employment of at-will employees. No other Depending on the claims asserted, approval by the court or United compensation is required. States Department of Labor (DOL) may be required. 7.4 How are restrictive covenants enforced? 6.9 Does an employer have any additional obligations if it is dismissing a number of employees at the same To enforce a restrictive covenant, employers must file a civil lawsuit time? against the accused breaching employee, seeking injunctive relief and/or damages caused by the breach. If a covered employer dismisses a significant number of employees or closes an employment site, the employer must give adequate notice under the Worker Adjustment and Retraining Notification Act 8 Data Protection and Employee Privacy (WARN) or other applicable state laws. Furthermore, an employer may have additional obligations if a collective bargaining agreement 8.1 How do employee data protection rights affect the exists. employment relationship? Can an employer transfer employee data freely to other countries? 6.10 How do employees enforce their rights in relation to mass dismissals and what are the consequences if an In the United States, there are numerous federal and state laws and employer fails to comply with its obligations? regulations that regulate the collection, use, and transfer of personal data of current, former, and prospective employees, as well as The Worker Adjustment and Retraining Notification Act (WARN), independent contractors and non-employees. The primary federal and equivalent state laws, are enforced by the courts. Employees laws that govern data protection are: the Fair Credit Reporting Act may bring either an individual or class action civil lawsuit in the (FCRA), which applies to those who obtain consumer reports; the appropriate court. Employers who violate the WARN provision Federal Trade Commission Act (FTCA), which prohibits unfair or by closing an employment site or ordering mass layoffs without deceptive practices; the Genetic Information Nondiscrimination providing adequate notice are liable for back pay and benefits Act (GINA), which applies to genetic information; and the Health to each aggrieved employee. Employers who fail to provide the Insurance Portability and Accountability Act (HIPAA), which required notice to the local government are subject to civil penalties regulates medical and health information. Most states have enacted not to exceed $500 for each day of violation. some form of privacy legislation, while nearly all have implemented To enforce other employment law violations, employees may file laws requiring notification of personal information security breaches. either an individual or class action claim with the appropriate court and/or employment agency. Consequences depend on the violations 8.2 Do employees have a right to obtain copies of any found. personal information that is held by their employer?
There are no federal laws requiring employers to provide employees 7 Protecting Business Interests Following access to their personal information, however, some states do Termination have such laws. State laws often address who has access to the information, how often the information can be accessed, whether copies can be made, what records can be kept, and whether third- 7.1 What types of restrictive covenants are recognised? party disclosure is allowed. The enforceability of restrictive covenants is determined by state law and varies depending on the jurisdiction in which a party seeks 8.3 Are employers entitled to carry out pre-employment to enforce it. Types of restrictive covenants include non-competition checks on prospective employees (such as criminal agreements, garden leave provisions, non-solicitation of customers, record checks)? non-solicitation of employees, and confidentiality agreements. Yes, employers are permitted to conduct pre-employment checks on prospective employees. However, employers must comply with 7.2 When are restrictive covenants enforceable and for federal laws that protect applicants from unlawful discrimination what period? and the Fair Credit Reporting Act (FCRA) when compiling background information. Laws governing restrictive covenants vary significantly from state
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Many states have laws governing how prospective employees’ State courts have broad jurisdiction and may hear cases arising criminal and credit history can be used when making employment out of state or federal law claims. Each state has a court system decisions. comprising of trial courts, appellate courts, and a court of last resort (generally, the state supreme court).
8.4 Are employers entitled to monitor an employee’s Federal agencies such as the Equal Employment Opportunity emails, telephone calls or use of an employer’s Commission (EEOC), the Department of Labor (DOL), and the computer system? National Labor Relations Board (NLRB) have the power to hear employment-related claims arising out of federal laws. Generally, an employer has the right to monitor its own property. Therefore, employers are entitled to monitor computers, servers, USA 9.2 What procedure applies to employment-related and other electronic devices that the employer owns. Furthermore, complaints? Is conciliation mandatory before a under the Electronic Communications Privacy Act of 1986 (ECPA), complaint can proceed? Does an employee have to employers are allowed to monitor employee communications pay a fee to submit a claim? if there is a legitimate business purpose or if the employer has obtained consent. Employers are governed by different restrictions The procedures to bring an employment-related claim depend on depending on the form of monitoring. the forum in which it is brought. The procedures to bring a claim in States have also enacted regulations governing the monitoring of federal court are governed by the Federal Rules of Civil Procedure employee activity. (CPLR) and the judge’s local rules. The procedures for claims in state court are governed by the state’s rules of civil procedure and the judge’s local rules. Likewise, each federal agency has its own 8.5 Can an employer control an employee’s use of social rules and procedures for bringing a claim. media in or outside the workplace? Conciliation is a voluntary process that parties can choose to Although an employer may generally limit an employee’s use of partake in before proceeding with a complaint. However, the social media during working hours and the way in which it is used Equal Employment Opportunity Commission (EEOC) is required regarding the employer’s business, employer’s control is limited by by federal statute to attempt to resolves findings of discrimination the National Labor Relations Act (NLRA) and applicable state laws. through conciliation. Employers should steer away from implementing broad, blanket If a civil lawsuit is brought, applicable fees and court costs policies prohibiting the use of social media. The NLRA protects will apply, but typically there is no fee for filing a claim with an employees’ rights to engage in “protected concerted activity”, which administrative agency. includes social media postings and discussions. Some states have implemented laws limiting how and under what circumstances an 9.3 How long do employment-related complaints typically employer may control an employee’s use of social media. take to be decided?
9 Court Practice and Procedure The length of time an employment-related claim takes to be resolved depends on the claims, parties involved, complexity of the issues, and the court. 9.1 Which courts or tribunals have jurisdiction to hear employment-related complaints and what is their composition? 9.4 Is it possible to appeal against a first instance decision and if so how long do such appeals usually take? Federal courts have jurisdiction to adjudicate employment-related cases arising out of federal employment law, and employment Yes, decisions can be appealed. Typically, there must be a final cases where the amount in controversy exceeds $75,000 and each ruling before a decision can be appealed, but interlocutory appeals party is a citizen of different states or non-U.S. citizen (diversity are allowed in some cases. The length of time an appeal takes jurisdiction). Federal courts are divided geographically across the depends on the decision being appealed, the claims, and the parties country in 12 judicial circuits. involved.
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Ned Bassen Nathan Cole Hughes Hubbard & Reed LLP Hughes Hubbard & Reed LLP One Battery Park Plaza One Battery Park Plaza New York, NY 10004 New York, NY 10004 USA USA
Tel: +1 212 837 6090 Tel: +1 212 837 6098 Email: [email protected] Email: [email protected] URL: www.hugheshubbard.com URL: www.hugheshubbard.com USA
Ned Bassen is Chair of the Employment & Unfair Competition Nathan Cole is an associate in the litigation department of Hughes department of Hughes Hubbard & Reed LLP. His work is recognised Hubbard & Reed LLP. His area of focus is employment law. He has by such publications as Chambers USA, Euromoney’s Guide to the experience researching matters involving federal constitutional rights World’s Leading Experts in Labour and Employment, Best Lawyers in violations. He graduated from Michigan State University in 2009 America and Super Lawyers. He was named Best Lawyers’ 2016 New and Brooklyn Law School in 2017, where he was Articles Editor of York City Labor Law-Management “Lawyer of the Year”. He also is the Brooklyn Journal of Corporate, Financial & Commercial Law, included in Human Resource Executive’s The Nation’s Most Powerful a National Trial Division Moot Court Honor Society member and Employment Attorneys Top 100 and in Lawdragon’s The Guide to Alternative Dispute Resolution Honor Society member, and received World-Class Employment Lawyers. Mr. Bassen has been awarded the NYC Trial Lawyers Alliance Trial Advocacy Award in 2017. the Burton Award for Legal Achievement, Distinguished Writing Award In Law. He graduated from Cornell University’s School of Industrial and Labor Relations in 1970 and Cornell Law School in 1973, where he was Note and Comment Editor of the Law Review.
Hughes Hubbard & Reed LLP is a New York City-based international law firm with a relentless focus on providing quality service to our clients and delivering successful results in the most complex matters. With a powerful combination of scale and agility, we offer clients innovative and effective solutions, while remaining flexible to adapt to their needs and market developments. Known for a collaborative culture, as well as our diversity andpro bono achievements, Hughes Hubbard has a distinguished history dating back more than a century. For more information, visit hugheshubbard.com.
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