APAC Bulletin - May 2019
03 June 2019
Welcome to the May 2019 edition of our APAC Bulletin covering the latest employment and immigration updates across the region.
We had a very successful event in March to celebrate becoming a Hong Kong local law firm, with over 100 guests and colleagues attending. We were delighted to have been joined by Privacy Commissioner, Stephen Wong; Hong Kong Legislative Councillor, The Honourable Dennis Kwok MP; and Deputy Head of Mission, British Consulate General Hong Kong, Esther Blythe, who lead a topical discussion for our guests.
We also hosted another HR Breakfast Club session in March, on terminations in Hong Kong, China and Singapore and in April, we ran a Hong Kong employment law overview session in London for our UK contacts.
Last week we hosted two “GDPR: one year on” seminars in May in Hong Kong and on 17 May 2019 in Singapore – in collaboration with our affiliate law firm, Rajah & Tann. The sessions discussed the key learnings regarding the GDPR and local data privacy laws from the last 12 months for APAC businesses, the impact of Brexit on data protection and what to expect over the next year.
This edition of the APAC Bulletin covers recent developments in:
- Hong Kong
- New Zealand
- South Korea
We hope you enjoy this edition!
Anti-Religious Discrimination Bill to be introduced
Following the release of the Religious Freedom Review’s Expert Panel report in December 2018, the Australian Federal Government has announced that it intends to introduce an anti-religious discrimination bill to Parliament.
This proposed bill will give wider protections against religious discrimination than are currently found in the Fair Work Act 2009. Currently employees are protected from discrimination on the grounds of religion, but only where there is a separate anti-discrimination law that makes religious discrimination specifically unlawful in the location where the discriminatory act has taken place. This means that there is currently no protection against this form of discrimination for employees in Australian states and territories that have no specific legislation outlawing religious discrimination.
The Federal Government’s proposed bill will extend the scope of protection to all Australian employees, shielding them against discrimination on the grounds of religion, or lack of religion. The bill is expected to be introduced to Parliament in 2019. However, whether this transpires may depend on the outcome of the Federal election held on 18 May 2019.
Proposed amendments to the Fair Work Act extending casual employee rights
In February 2019 the Fair Work Amendment (Right to Request Casual Conversion) Bill 2019, which seeks to allow eligible casual employees to make a request to be converted from their casual status to become full or part-time employees, was introduced into the House of Representatives.
Changes proposed by the Bill include: extending existing conversion rights to all employees regardless of whether they are covered by an enterprise agreement or modern award that does not provide a right to request conversion; and requiring enterprise agreements to include a conversion term going forward. Under the proposed bill, employers will need to provide a written reply to an employee’s conversion request, stating whether it has been accepted, within 21 days of receipt of the request by the employer. A request must not be rejected unless the employer has consulted with the employee and there are reasonable grounds based on known or reasonably foreseeable facts to do so.
However the Bill lapsed on the calling of the May 18 Federal election, which will be critical in determining if these protections for casual employees are ultimately enacted – or if stronger protections proposed by the Labor Opposition find their way onto the statute books.
Update on Whistleblower Protection Laws
The Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 has been passed by both Houses of Parliament and the new legislation will to take effect on 1 July 2019. The new legislation will: expand protections for whistleblowers making disclosures under the Corporations Act 2001; and mandate public and large proprietary companies to implement and publish their own whistleblowing policies. This means that companies caught by the Bill should begin to make preparations as soon as possible in order to mitigate risk, including the adoption of suitable whistleblower policies setting out the processes involved in receiving, investigating and responding to disclosures, and training senior managers and other eligible recipients of disclosures on how to deal with disclosures.
Changes to the current whistleblower regime under the Corporations Act include:
- expanding the definition of “eligible whistleblower” to include former as well as current employees, officers or directors, contractors, suppliers and associates, as well as their dependants and relatives;
- broadening protections to apply to disclosures relating to misconduct or an “improper state of affairs or circumstances”, meaning that an element of illegality will no longer be required;
- removing the requirement for whistleblowers to be acting in good faith and to identify themselves when making disclosures. Whistleblowers will only be required to satisfy the objective test of having “reasonable grounds to suspect” wrongdoing and they can choose to remain anonymous if they so wish.
Under the new legislation, employers may also be liable for detrimental conduct by an employee towards a whistleblower, taking into account a number of factors including whether due diligence was exercised by the employer.
Increased penalties for non-compliance will also be implemented, and the maximum penalties for contravening a civil penalty provision of the Corporations Act will be: $1.05million or three times the benefit derived / detriment avoided, for individuals; and $10.5million or three times the benefit derived / detriment avoided or 10% of annual turnover, up to a maximum of 1 million penalty units, for companies.
Strengthened Regulations on Social Insurance Contributions
From 1 January 2019, responsibility for collecting social insurance contributions was planned to be gradually transferred from the social insurance institutions to the tax authorities. This has been taken as a step to ensure that companies comply with their social security obligations to make contributions based on their employees’ salaries. Previously, it was common for companies to base their contributions on the local minimum wage as a means to reduce their payments. This was possible as the social insurance institutions did not have direct access to employee wage information; however, the tax authorities will have access to that information via tax returns declared by employers and so the transfer of responsibility in respect of the collection of social insurance contributions will prevent employers artificially reducing their social insurance liabilities. A draft of administrative measures by the Ministry of Human Resources and Social Security strengthens this deterrent by proposing a “blacklist system” where employers found to be breaching the social insurance regulations will be restricted in participating in government procurement, tendering and bidding, applying for a production license, financing, receiving tax incentives etc.
Potential New Individual Income Tax Obligations for Employers
At the close of 2018, a raft of supporting rules to the Amendment to the Individual Income Tax Law were disseminated and brought into force, aiming to address some of the uncertainties found in the Amendment. With the new individual income tax regime now in place for a number of months, its implications are becoming clear.
Part of the Amendment’s effect is to allow for a number of additional deductions to be made before tax, such as education or medical costs. For an employee to make use of this, they can submit a settlement statement declaration annually to the tax authority, or they can submit the documents supporting any deduction to their withholding agent (usually their employer). In these instances, the employer cannot refuse such a request, and must also retain supporting documents for additional special deductions if applicable. Should an employer notice any inconsistencies between the deduction being applied for and reality, it can request the employee to correct the information and it must submit a report to the local tax authority if that request is not complied with.
Previously, IIT was levied on actual monthly salary but the Amendment has introduced an annual and cumulative withholding method which requires IIT to be calculated with reference to annual salary. Employers may therefore face a more complex process with their monthly filing; however, the onus and responsibility is still on the employee to make any deduction claims clear and to provide accurate information to their employer.
From the beginning of 2022, the preferential tax rate on one-time year-end bonuses will become heavier, increasing the tax liability of those who rely heavily on these bonuses. Also at that time, the existing policy applying to foreign nationals regarding housing allowance, language training fees, and children’s education fees will be replaced with as of yet unpublished rules. It is thought that the new rules will be broadly similar to those found in the new Additional Special Deduction Rules, leading to a tax hike for foreign workers.
Ban on Employers asking about Pregnancy or Marital Status
The government has now outlined its plans to begin enforcing existing laws on workplace gender discrimination. It has focused on clearly defining gender discrimination in an employment context, where it has previously been inadequately defined or enforced. It has also forbidden employers and recruiters from: enquiring about a woman’s marital or childbearing status; limiting the number of births as a condition of employment; or requiring a woman to take a pregnancy test as a prerequisite.
Additional measures that the government plans to implement includes strengthening the ability of victims of discrimination to bring a claim before the court; increasing childcare services in the workplace; and better supporting women re-entering the workplace after having a child. A maximum fine of 50,000 yuan may be levied against employers or recruiters who are found to be discriminating based on gender, with harsher penalties possible for repeat offenders.
Contribution Rates of Social Insurance for Employers Reduced
On 1 April 2019, the General Office of the State Council issued the notice on Comprehensive Plan to Reduce Social Insurance Contribution Rates (the “Plan”). The Plan is part of the ongoing social insurance reform which aims to lower the burden of social insurance premiums on enterprises, and it explicitly states three important points regarding social insurance to be implemented throughout the country:
Firstly, from 1 May 2019, the employer’s contribution rate to their employees’ pension shall be reduced to 16%. Secondly, the current policy of reducing premiums for unemployment insurance and work-related injury insurance will continue. And thirdly, the contribution base of social insurance for a number of employers and employees will be adjusted by resetting the upper and lower limit of pensionable earnings to further reduce social insurance premiums.
In practice, some provinces/cities have already published supporting rules to reduce the contribution rates for employers as well as contribution base of social insurance.
Proposal to increase Statutory Maternity Leave
A proposed increase to statutory maternity leave was flagged by Hong Kong’s Chief Executive, Carrie Lam, at the end of last year; however, such increase is yet to receive legislative approval. The current proposal will involve an increase in statutory paid maternity leave from 10 to 14 weeks. As with the existing 10 weeks’ leave, the additional four weeks would be paid at a rate of four-fifths of the employee’s average daily wages over the previous 12 months. However, payment for the additional leave would be capped at HK$36,822 per month, which is equivalent to four-fifths of the wages of an employee with a monthly wage of HK$50,000. It is expected that employers will be able to seek reimbursement from the Hong Kong government for payment of the extended leave. Payment for the initial 10 weeks’ leave will remain the burden of the employer.
A bill amending the Employment Ordinance with these proposed amendments is expected to be introduced to the Legislative Council in late 2019.
Increased Tax Deductions for MPF Voluntary Contributions and Annuity Premiums
The Inland Revenue and MPF Schemes Legislation (Tax Deductions for Annuity Premiums and MPF Voluntary Contributions) (Amendment) Bill 2018 was passed on 20 March 2019 and the Ordinance came into operation on 1 April 2019.
This amendment implements the 2018-19 Budget initiative of introducing tax deductions for contributions paid into tax deductible MPF voluntary contributions accounts and qualifying deferred annuities premiums as a means to encourage voluntary savings for retirement.
Each taxpayer will be able to benefit from an aggregate maximum of $60,000 per year in tax deductions. Previously, the aggregate maximum was HK$36,000 per year.
Introduction of the Occupational Retirement Schemes (Amendment) Bill 2019
The Occupational Retirement Schemes (Amendment) Bill 2019 was introduced into the Legislative Council for First Reading on 17 April 2019.
The object of the Bill is to amend the Occupational Retirement Schemes Ordinance to:
- Ensure that occupational retirement schemes which are registered or exempted from such registration under the legislation are genuinely based on employment. Currently, occupational retirement schemes have been misused as investment schemes with investors who are not employees of the relevant employers. The proposed amendment is designed to outlaw such practice;
- Limit the circumstances under which occupational retirement schemes can be exempted from registration; and
- Enhance the powers of the Mandatory Provident Fund Schemes Authority, being the Registrar of Occupational Retirement Schemes, to investigate, approve or reject applications for registration.
The Bill, if passed, is anticipated to come into operation on the day on which the enacted Ordinance will be published in the Gazette.
Digital India Helping Employers Comply with Employment Obligations
As part of the government’s campaign to adopt a series of e-governance initiatives, the e-portal (Shram Suvidha Portal) developed to act as a single point of contact between employers and regulatory agencies has gained further traction due to recent amendments to the law. For example, the recent amendments mean that employers must now apply for registration under certain labour laws through this portal, as opposed to the previous regime of employers approaching separate authorities for registration under separate legislations, making the process of complying with employment obligations much more streamlined.
Employees are also benefitting from the recent technological advancements, with the Employees’ Provident Fund Organisation launching their own online portals and a mobile app to allow easy access to a number of pension-related services.
Supreme Court Clarifies definition of ‘Basic Wages’
Under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, employers are required to pay a certain percentage of an employee’s ‘basic wages’ towards provident fund in order to discharge their provident fund liabilities. It has been unclear for some time as to what payments to employees should form part of ‘basic wages’ for the purpose of calculating provident fund contributions and the Supreme Court, in its recent landmark judgement dated 28 February 2019, has finally provided some much needed clarity around this issue.
The Supreme Court clarified that whatever is universally paid by the employer to its employees shall be considered as basic wages for the purpose of calculating provident fund contributions, whereas any variable earning that may vary from individual to individual according to their efficiency and diligence, will be excluded from the ‘basic wage’.
As a result of this, employers should review how they structure wages for their workforce in order to ensure that their current structure remains compliant despite the Supreme Court’s recent judgement.
New Visa Categories as a result of an amendment to Immigration Control Act
The majority of the amendments enacted in December 2018 to the Immigration Control and Refugee Recognition Act came into force on 1 April 2019, including the introduction of two new visa categories: “Specified Skilled Worker (i)” and “Specified Skilled Worker (ii)”, intended for foreign workers in 14 industrial sectors. Workers falling into the Specified Skilled Worker (i) category will have “a considerable degree of knowledge or experience” in specified areas together with Japanese language skills required for performing their assignments in Japan, and those falling into the Specified Skilled Worker (ii) category will include those with “seasoned skills”. Workers in category (i) will be granted a total maximum stay of five years and will generally not be permitted to bring their spouse or children, whereas those in category (ii) may renew their stay indefinitely and may bring their spouse or children subject to satisfying certain requirements.
Act on the Arrangement of Related Acts to Promote Work Style Reform (so called “Act on Work-Style Reform”)
This Act, enacted in July 2018, aims to address the imbalances of work and life found within the Japanese workforce, where the traditional emphasis on work ethic has created excessive working habits, and in some cases karoshi (death by over-working). One of the changes brought about by the Act is the imposition of a binding maximum limit on the amount of overtime that businesses can require an employee to work, unless the job falls within one of a few exceptions such as the “white collar” exemption that applies to employees in specified jobs earning a minimum of JPY10,750,000 per year meeting other requirements. This change came into force for large employers (the definition depends on the type of business of the employers. For instance, in case of an employer which carries out service business, it falls within a “large company” if the amount of its capital is more than 50 million yen and it has more than 100 employees.) in April 2019, and will be rolled out to small employers in April of the following year.
From 1 April 2019, the Act will require employers to track the working time of all employees, including those who will be exempt from the overtime limits as well as require employees to actually take at least 5 days annual paid leave if they are eligible for 10 days or more of annual paid leave. In addition, employers with at least 50 employees will also be required to provide the company industrial doctor with information to protect the health of its employees, e.g. the number of hours an employee works, and they will also be required to implement the doctors advice. Employers must also arrange for an employee to see the doctor in certain cases.
There will also be amendments to clarify the law around the prohibition on unjustified differences in working conditions for limited-term or part-time employees compared to regular employees. In determining whether differences in working conditions are justified or not, factors such as job description, possibility of job transfer and change of work location will be considered; and the reasons for any differences must be provided to an employee upon request. The majority of this amendment will come into force on 1 April 2020, but the equal pay for equal work proviso for part-time and limited-term employees will become effective for small employers on 1 April 2021.
Amendments to the Industrial Relations Act
The Ministry of Human Resources has released a list of proposed amendments to union-related laws, which generally seek to broaden the bargaining power of unions and extend bargaining rights. Some other key proposed changes are outlined below:
- Revisions to the unfair dismissal system will be made to allow the Director General of Industrial Relations to refer a claim directly to the Industrial Court. Currently, conciliation must take place before the Director General can refer a matter to the Minister of Human Resources for a decision as to whether the matter shall be referred to the Industrial Court;
- Discrimination against an employee on the grounds of gender, religion, race or disability in respect of their employment or the terms and conditions of their employment will be expressly prohibited (the only exception to this will be where the discrimination is due to an inherent requirement of the job). The Director General of Industrial Relations will also be given power to refer complaints of employment related discrimination to the Industrial Court.
Changes to the Employment Relations Act
The Employment Relations Amendment Act, passed in December 2018, effected some changes from December 2018, including placing an obligation on the Employment Relations Authority to consider an employee’s request to be reinstated as the primary remedy in cases of unfair dismissal, and will bring about further changes in May and June 2019. Many of the changes reverse amendments which were made by the National government over the last 9 years, with a particular focus on those changes made in relation to unions and collective bargaining.
Changes in effect from 6 May 2019 include:
- restoring prescribed meal and rest breaks, the duration and number of which will be determined by an employee’s working hours;
- restricting 90 day trial periods to businesses with fewer than 20 employees;
- enabling employees in vulnerable industries whose work is affected by restructuring to transfer to a new employer with their current terms and conditions intact, regardless of the size of their employer;
- restoring the duty to agree to a collective employment agreement unless there are genuine reasons (which are narrowly defined) not to;
- restoring the rule that new employees must be employed under terms consistent with, or more favourable than, the applicable collective agreement for the first 30 days of their employment;
- including pay rates in collective agreements and how this may increase during the agreement term;
- providing new employees with an approved active choice form within their first ten days of employment, and returning these to the applicable union;
- entitling union delegates to reasonable paid time to represent employees, unless the activity would unreasonably disrupt the business or the performance of the employees’ duties;
- mandating employers to pass information about the union to prospective employees if so requested by the union.
Changes in effect from June 2019 include extended protections against discrimination based on union membership status and involvement in union activities. An employer’s behaviour can be considered discriminatory if it takes places within 18 months of the employee’s involvement in union activities, union membership or intention to join a union.
Proposed Simplifications to Temporary Work Visa System
The government has undertaken consultation on proposed changes to the employer-assisted temporary work visa system. One of the aims is to ensure that work visas issued reflect skill shortages in certain regions and to streamline the process, making it easier for employers to fill any skill gaps they may have.
The consultation looked at the possibility of introducing a temporary work visa system led by employers; implementing sector agreements in sectors that rely heavily on low-skilled migrant workers; and replacing the Essential Skills in Demand Lists with Regional Skills Shortage Lists.
If the proposals are accepted, it could mean that employers will be required to take on more responsibility in providing information when employing foreign workers and that they may have to meet new labour market testing standards.
Decisions resulting from the consultation are expected to be announced in mid-2019.
Strengthening the Protection of Confidential and Personal Information
A proposed Privacy Bill is currently moving through Parliament aiming to replace and modernise the existing law in this area, with some concepts being adopted from the European General Data Protection Regulation (GDPR). This Bill will confer increased enforcement powers to the Privacy Commissioner, allowing them to issue compliance notices to organisations to take specific steps to comply with the law, and also giving the Commissioner the power to approve or deny requests for access to personal information.
A major part of the Bill is the proposed introduction of a mandatory notification requirement in the event of a privacy breach, obligating an entity to notify the Privacy Commissioner and the affected individual(s) of a “notifiable privacy breach” as set out in the Bill. This could also lead to an affected person lodging a complaint about the privacy interference or utilising their private right to take action if they were not notified of the breach.
Another aspect of the Bill is to oblige entities to obtain explicit consent from individuals before being permitted to send their personal information outside of New Zealand to countries with comparable privacy laws. These individuals should also be made aware of the risks associated with the transferral of their personal information before consent is given.
With the Bill currently expected to come into force in early 2020, employers should begin to consider how they can ensure the security of the personal information that they hold, and to familiarise themselves with their obligations.
Expanded Maternity Benefits
Republic Act No. 11210, or the Expanded Maternity Leave Act, was recently signed into law on February 22, 2019. Under the new law, employers in both the public and private sectors are required to grant expectant mothers 105 days or over three months of paid maternity leave. Previously, Section 14-A of the Social Security Law granted female members 60 days or 78 days of paid leave for normal or caesarian delivery, respectively. Under the new law, 105 days of paid maternity leave will be provided to all female workers regardless of whether said worker gave birth via caesarian section or natural delivery. In cases of miscarriage or emergency termination of pregnancy, female workers shall be granted 60 days of paid leave. The previous legislation only allowed female workers to claim leave benefit for up to four instances of pregnancy or miscarriage, but under the new law, the leave benefit shall be granted regardless of frequency.
The new law also allows 7 days from the mother’s 105 days to be transferred to the new father, regardless of their marital status. The current law under the Paternity Leave Act of 1996 only provides 7 days of paternity leave to those who are married and living with the mother and child.
Republic Act No. 11165, or the Telecommuting Act, encourages employers to adopt telecommuting - a work arrangement that allows an employee to work from an alternative workplace with the use of telecommunication and/or computer technologies. While the adoption of the work-from-home scheme is not mandatory on the part of the employers, telecommuting arrangements must be offered to employees on a voluntary basis, the terms and conditions of which shall not be less than the minimum labor standards set by law.
The law further provides for the establishment of a telecommuting pilot program in select industries for a maximum of three years to enable the Department of Labor and Employment (DOLE) to determine the advantages and disadvantages of a telecommuting program in the Philippines.
On March 25, 2019, the DOLE released the implementing rules and regulations that provide guidelines for the enactment of the law to ensure fair treatment of employees.
Labor Advisory on Occupational Health and Safety Standards
On March 13, 2019, the DOLE issued Labor Advisory No. 04-19 (“Advisory”), which provided an occupational safety and health (“OSH”) guideline under Republic Act No. 11058, or An Act Strengthening Compliance with Occupational Safety and Health Standards and Providing Penalties for Violations Thereof. Among others, the Advisory tasked establishments to self-classify (whether low risk, medium risk, or high risk); appoint Safety Officers as needed; conduct workers’ OSH seminars; and file mandatory reports regarding accidents, annual medical reports, and the like.
The Bureau of Immigration (BI) has announced that it will be tightening rules in the issuance of permits to foreign nationals who intend to work in the Philippines due to the influx of foreign nationals working in the Philippines in emerging industries such as online gaming.
Joint guidelines for the issuance of work and employment permits to foreigners were signed on May 1, 2019, Labor Day, by the BI, Department of Justice (DOJ), DOLE, and Bureau of Internal Revenue (BIR).
Under the new rules, a Special Work Permit (SWP), which was previously granted to foreign nationals under a tourist visa with short term employment or consultancy arrangements, will only be issued to foreign nationals who intend to work outside an employment arrangement such as extended business activities, transfer technologies, or performance in concerts or shows. Further, applicants of SWPs are now required to obtain a separate Alien Employment Permit (AEP) from the DOLE, which was only required for foreign nationals who entered into long term employment agreements with local employers under the old rules.
Foreign national workers are also required to obtain tax identification numbers from the BIR to ensure that taxes are properly withheld and remitted. Foreign nationals will be required to submit proof of payment of taxes prior to issuance of the SWP or the work visa.
For the AEP, the DOJ emphasized that it will be issued to a foreign national only if no Filipino is qualified or available to perform the work which the foreign national seeks to discharge.
Lastly, foreign nationals may be required to apply for and secure work visas in their countries of origin prior to arriving in the Philippines, instead of simply converting their tourist visas upon arrival under the old rules.
Note that information on the above rules have only been circulated through various press releases, and the contents of the joint guidelines have not yet been made available to the public at the time of publishing this bulletin.
Legal Technology Advances
Singapore’s Chief Justice recently highlighted in his speech at the Opening of the Legal Year 2019 that the shift towards technology within the legal sector is inevitable, and that the judiciary are focussing on utilising data and artificial intelligence within the judicial process. Progress has also been made within the sphere of employment law, with the Community Justice and Tribunal System going live on 7 January 2019, allowing parties before the Employment Claims Tribunal to file claims, upload documents, negotiate, and access mediation online.
Improvements to Employee Rights
Changes include extending the coverage of the Employment Act (Chapter 91) of Singapore and the core statutory benefits provided thereunder to all professionals, managers, and executives (PMEs) regardless of their level of salary, as well as enhancing rights under wrongful dismissal, and the available remedies, with the Employment Claims Tribunal gaining jurisdiction to hear such claims. In addition, Part IV of the Employment Act, which provides for statutory protections that stipulate mandatory rest days, hours of work and other conditions of service, has been extended to protect more employees, as the applicable salary cap has been raised. Further developments in legislation relating to freelance workers and those within the gig economy are also anticipated following the acceptance by the government of a Tripartite Workgroup’s recommendations.
Introduction of a New Work Pass
Eligible Long Term Visit Pass (LTVP/LTVP+) holders will now be eligible to move to Singapore for work without first having to find a job with the new Pre-Approved Letter of Consent (PLOC), a new work pass introduced by the Ministry of Manpower in Singapore. To be eligible one must (a) be a spouse, or unmarried child under the age of 21 years, of a Singaporean citizen, or a permanent resident of Singapore, and (b) be issued with a LTVP/LTVP+ with the Immigration and Checkpoints Authority of Singapore. Individuals fulfilling the eligibility criteria to apply for a LTVP/LTVP+, can apply for a PLOC at the same time. The duration of the LTVP/LTVP+ and the PLOC will be the same and both can be renewed together.
Changes to the Dispute Resolution Framework for Employment-related Disputes
With the changes to the Employment Act, the statutory protection against wrongful dismissal contained in the Employment Act has now been extended to protect most employees in Singapore. Further, the adjudication of wrongful dismissal claims have been moved from the Ministry of Manpower (“MOM”) to the Employment Claims Tribunal (“ECT”), while the Tripartite Alliance for Dispute Resolution’s (“TADM”) jurisdiction will also be expanded to include wrongful dismissal claims, thereby allowing the TADM and ECT to become one-stop centres for claims against employers. This makes it easier for employees to make claims against employers. The MOM, National Trades Union Congress, and Singapore National Employers Federation has also jointly published the tripartite guidelines on wrongful dismissal, which aim to provide guidance to employers and employees as to what constitutes wrongful dismissal.
New Duties for Employers to act against Bullying and Harassment
Amendments to the Labour Standards Act (LSA) and the Industrial Accident Compensation Insurance ACT (IACIA) will come into force on 16 July 2019 and will seek to address workplace bullying and harassment by placing new obligations onto employers to act against it, and penalties for not doing so. For example, most employers will now have to implement workforce rules addressing non-sexual workplace bullying and harassment (with corrective orders and potential fines for not doing so), and will have specific obligations regarding their response to allegations.
While there are no specific statutory penalties for employers failing to respond to allegations in line with the new legislation, should they take retaliatory actions against an employee for reporting bullying or harassment, this will carry a maximum 3 year prison sentence or fine of KRW 30million.
Mental distress caused by workplace bullying and harassment will now be covered as an occupational illness under the IACIA, including where this is a result of abuse by a customer or client.
Guidelines on these issues have now been published by the Ministry of Employment and Labor.
Termination Notice Exemptions
The Labour Standards Act’s exemptions from the requirement to provide termination notice of 30 days or pay in lieu have now been amended to further simplify them, which will be applied to all employment contracts executed on or after 15 January 2019. The primary change is that employees will not be entitled to 30 days’ notice during their first three months of service regardless of whether they are on probation or not; previously, this applied only to probationary employees. After this amendment, there will be three listed exemptions: (i) where an employee has been employed for less than three consecutive months; (ii) where a natural disaster, calamity, or other unavoidable circumstances prevent the continuation of the company’s business; and (iii) where an employee intentionally causes substantial problems for the Company’s business or damages its property, as provided by Ministry of Employment and Labour regulation. It should also be noted that, regardless of whether advance notice is required, just cause is almost always required for a valid dismissal.
Change in Paid Annual Leave Calculation
In South Korea, an employee is, subject to some exceptions and conditions, entitled to 15 days of annual leave after the employee’s first year. Prior to the recent amendment to the LSA, during the first year, employees accrued 1 day of leave per month that could be used as an advance and, if so used, deducted from that 15 day grant of leave. Effective from 29 May 2018, that 1 day per month (11 days total) of year-1 leave will no longer treated as an advance, and cannot be deducted from the 15 days of leave granted after the first year of work.
Procedural Change for Labour Dispute
The Labour Matters Act (the LMA) was promulgated on December 2018 and is expected to come into force 12 months later, subject to its formal announcement by the Judicial Yuan. The LMA aims to address three major proceedings found in labour disputes, those being: mediation, litigation and provisional remedies proceedings. One way in which the LMA will look to achieve this will be by establishing a specialised tribunal to handle labour disputes in each court, staffed with judges and mediators with prior labour law expertise. Mediation will be mandatory for a labour dispute before a claim can be initiated with the court. Access to justice will also be improved as a number of new rights will be conferred onto employees, including the right to appear with an assistant during court sessions, the right to be temporarily exempted from 66% of the court fees, and the right to request the employer to produce and prepare certain documents, as well as shifting part of the burden of proof onto the employer in terms of producing evidence. Security payments for a preliminary relief or injunction under the LMA will also be capped at 10% of the overall value of any claim, and may be waived in some claimants’ circumstances. Finally, there will be a general principle that mediation proceedings will be concluded in up to three oral sessions within three months, and litigation proceedings will be concluded within six months at the court of first instance.
Changes Brought in by the Amended Labour Protection Act
The amendments to the Labour Protection Act were published in the Government Gazette on 5 April 2019 and came into effect on 5 May 2019. Significant changes include:
- An increased cap on severance. Despite criticism from some spheres that Thailand’s existing severance cap is already too high, a limit on severance payments for employees with more than 20 years of service will be set at 400 days’ pay, whilst employees with 10-20 years of service remain at the current cap of 300 days;
- Leave for necessary business will also be implemented into law; while it is currently at an employer’s discretion whether to offer leave for necessary business, employees will now receive 3 days’ entitlement per year of paid leave for necessary business on top of annual leave and public holidays;
- Maternity leave will be increased, with the current 90 day allowance being extended to 98 days of leave and the Amended Labour Protection Act will also allow leave for antenatal or prenatal care to be taken as maternity leave;
- Certain unpaid sums including, for example, payment in lieu of advance notice, will now accrue interest at 15% per annum, while under the old law only certain amounts accrue 15% interest (such as wages) and others accrue 7.5% per annum;
- Employers are required to announce a relocation of its office in all cases not less than 30 days before the relocation date, and employees may reject relocation of their place of work if such relocation would have a significant impact on their life or their family. Upon notifying their employer of this rejection, their employment will be deemed to be terminated on the date of relocation, upon which the employee will be entitled to receive special severance pay within 7 days. Employers may petition the Labour Welfare Committee should they disagree with an employee’s reasons in rejecting relocation.
Personal Data Protection Act (PDPA)
Upon being passed by the National Legislative Assembly on 28 February 2019, the majority of its provisions relating to the collection, use and disclosure of personal data are expected to come into force a year after its upcoming publication in the Government Gazette, with piecemeal subordinate legislation providing a procedural framework to follow. Significant provisions of the PDPA include:
- A new requirement for data controllers to obtain consent from data subjects before processing their personal data (subject to certain exemptions);
- Heightened requirements for the protection of sensitive personal data;
- Restrictions on the transfer of personal data to 3rd countries; and
- A requirement for data controllers outside of Thailand to appoint a representative within Thailand.
The PDPA will apply to data controllers outside of Thailand in certain circumstances and is designed to reflect recent developments globally in data protection legislation. Penalties for noncompliance will be harsh, and data controllers within Thailand are advised to ensure they are PDPA-compliant prior to it coming into force.
Draft Labour Code
A draft of the new Labour Code was released in September 2018 and included a number of significant changes. It will now be reviewed by the Government and the National Assembly, and is projected to be adopted in late-2019. Some of the provisions of the current draft include:
- An increase in overtime payment rates, with the introduction of time bands. For example, overtime rates on normal working days after the first hour of overtime work will be 200% of usual pay; the first two hours of overtime work on a weekend will be 200%, raising to 300% thereafter; finally work required on public holidays or during paid leave will be paid at 300% for the first two hours and 400% for each hour thereafter. This is expected to significantly affect the costs of employers who rely heavily on overtime work, such as in the clothing industry.
- An increased retirement age from 60 to 62 for men, and from 55 to 60 for women, subject to certain requirements.
- The right for employees to unilaterally terminate an employment contract without reason will be expanded to those working under any type of employment contract.
Minimum Wage Increase and Employer Self-Reviews
From 1 January 2019 a regional minimum wage regime has been in place, and is applicable to low-skilled workers working under normal working conditions. For skilled employees (generally those who have completed vocational training as a minimum), the minimum salary must be at least 7% above the relevant minimum wage of their region.
Also from the start of 2019, employers must now conduct a self-review of its compliance with employment law annually (at a minimum). These reviews should focus on recruitment and training, employment contracts, salaries, health and safety, dispute-handling and social insurances contribution payments. Employers may be requested by the State authorities to upload the results of their self-review online.
Compulsory Social Insurance Contributions for Foreign Workers
Following on from the Government issuing Decree 143, from 1 December 2018 employers have been obliged to make compulsory social insurance contributions to the value of 3.5% of their foreign workers’ salaries. This rate will rise to 17.5% from the start of 2022, at which time the foreign employees will also have to contribute 8% of their salaries. This will generally apply to workers who are in Vietnam under a work permit or practicing certificate and have employment contracts with Vietnamese employers.
With special thanks to the following firms for their ongoing efforts in assisting us with this publication and their contributions to this edition of the bulletin: Corrs Chambers Westgarth; Fangda Partners; Kochhar & Co; Anderson Mori & Tomotsune; Zico Law; Kiely Thomson Caisley; Castillo Laman Tan Pantaleon & San Jose; Rajah & Tann Asia; Yulchon LLC and Tsar & Tsai Law Firm.
Employment law across APAC
Our Hong Kong office offers a high quality and cost-effective service for all employment law needs across Asia Pacific.
Employment law in Hong Kong
Employment is a central focus of our business and we advise Hong Kong clients and multinationals of all sizes on their employment law needs.
Asia Pacific Region
Lewis Silkin is highly renowned for employment and immigration law and has received global recognition with Who’s Who Legal awarding us ‘Law Firm of the Year for Labour, Employment & Pensions’.