Employment law across the globe - what's happened and what's coming up?
21 June 2023
Our round-up of key developments in employment law since our last conference in June 2022.
Our review last year began with the war in Ukraine. Sadly, the fighting continues with no obvious end in sight, and as predicted this has had ongoing global economic consequences.The cost of living crisis has become the dominant economic concern around the globe and is having a significant impact on both employers and employees.
Inflation has been driven by dramatically rising costs for fuel and food.Current predictions are that inflation peaked globally in 2022 and will slowly decrease into 2024, but will remain above pre-pandemic levels and not return to target until 2025. Global growth is also expected to continue falling in 2023 before stabilising the following year. Although economists now tentatively predict that the cost of living and energy crises are likely to ease by the end of the year, conditions currently remain very difficult for businesses and households alike. There are fears that this will lead to a period of “stagflation” (high inflation and low growth), at least in north America and Europe, that will depress the labour market.
For employers, this has caused a dual problem – an increase in the costs of running a business, and a drop in income as demand for many goods and services has decreased because consumers have less disposable income.This has driven a wave of restructuring and redundancy exercises in many countries around the world, starting in the second half of 2022 and continuing into 2023.The trend began with many of the global tech companies who found they had over-expanded during the pandemic, but is now affecting all types of employer including those in finance and manufacturing.
For employees, the cost of living crisis means that wages have simply not been keeping pace with inflation.While employers have been attempting to reduce costs, employees have been asking for large pay rises.As discussed below, many countries have responded by significantly increasing their national minimum wage and introducing other measures to help with the cost of living.
Union power has also continued to rise as workers look for support with their demands for higher wages and improved working conditions.There have been waves of strikes across Europe, largely concentrated on public services and the transport industry.There has been ongoing labour unrest in the US and across the Americas, large-scale government strikes in India, and increasing numbers of strikes and protests in China amid the reversal of the country’s zero-covid policy and a downturn in manufacturing.The mass strikes and disruptive (and sometimes violent) demonstrations in France following the introduction of a new law that would raise the country’s retirement age show how politically contentious these issues have become.Governments have responded to this in different ways – the UK has introduced draft legislation to limit strikes in key sectors, while there has been a trend in many other countries towards a strengthening of collective rights and trade union powers, including encouragement of collective bargaining.
Although it has proved so controversial in France, some countries have begun raising retirement ages, and it is likely that many will look at doing so in order to extend the working age of the population. Alongside the (hopefully) short-term impact of the cost of living crisis, employers are facing longer-term issues caused by demographic change. Shrinking birth rates mean fewer younger workers entering the workforce to replace older workers who are retiring.Employers are starting to think harder about how to attract and retain older workers, and how to find and compete for candidates with the best skills.Recruitment and retention remain key issues despite the difficult economic times – meaning that radical job cuts made now may backfire when conditions improve.Changes to the way office-based work is done that were initially driven by the pandemic, such as increased use of technology, home working and overseas working, have now become an expected part of an attractive package for potential talent, although this is counter balanced by a drive in some businesses to get employees “back to the office” more.
Looking at the main developments over the last 12 months, we have identified a number of key themes. We cover each theme below then conclude with a final comment.
Many countries have focused on strengthening anti-harassment laws (particularly sexual harassment) this year. In December 2022, Australia passed its landmark Respect at Work Bill which introduces, among other things, a positive duty on employers to take reasonable and proportionate measures to eliminate, as far as possible, sexual harassment and discrimination, including conduct which amounts to a “hostile workplace environment”. The idea is that employers need to take a more proactive approach to assessing the cultural and systemic factors present in their workplaces which could create a risk of sexual harassment or discrimination and must then take steps to reduce the risks. UK employers should take note as the government here plans to introduce a similar proactive duty to prevent harassment.
China has passed a new law (effective 1 January 2023) on the Protection of Rights and Interests of Women, which explicitly prohibits gender discrimination in the workplace and requires employers to adopt anti-harassment policies and take measures to prevent sexual harassment. Employers will also be prohibited from asking job applicants about marital status or children. In India, recent developments have shown serious lapses in the implementation of its prevention of sexual harassment law. Following a case in May 2023, employers, management and authorities must conduct regular orientation programs, workshops, seminars, and awareness campaigns to ensure the provisions of the legislation are properly implemented in both letter and spirit. Malaysia also has a new law designed to address harassment in all situations (not specifically in the workplace). New Zealand has just extended the time limit for raising a grievance about sexual harassment to 12 months (up from 90 days) while Colombia has also extended the time limit for bringing a sexual harassment claim to three years (up from six months). Brazil has introduced a series of measures to fight harassment and violence against women, including requirements on employers to adopt channels for raising complaints and a new requirement to carry out anti-harassment training at least annually. Chile also has a new requirement to investigate sexual harassment, while Peru has introduced rules concerning the ability of labour inspectorates to be involved in sexual harassment complaints.
In the US, the city of Chicago has widened the definition of harassment and introduced new requirements for annual training and written anti-harassment policies containing prescribed information. New York State has recently updated its model sexual harassment policy, which employers must adopt or exceed. This emphasises the relatively low bar set by New York state for defining behaviour as harassment, pointing out that sexual harassment does not need to be severe or pervasive to be illegal. Significantly, the model policy now refers to the existence of the gender spectrum and the need to respect gender identity.
Denmark is following up on the initiatives we mentioned last year to combat harassment in the wake of the #MeToo movement. Changes include increasing the compensation available in harassment cases. Spain has also introduced new sexual harassment prevention laws requiring companies to adopt anti-harassment procedures, address complaints and recognise sexual violence as a potential occupational risk to be considered in risk assessments. Belgium has also adopted new rules against victimisation of employees who complain about workplace violence, psychological or sexual harassment, and this extends to colleagues who support the complainant as well as the complainant themselves.
Sex, gender and sexual orientation
In Belgium, the Gender Act, which combats discrimination between women and men, has been amended to replace the original protected characteristic of “gender” with 11 protected characteristics: gender, pregnancy, medically assisted reproduction, childbirth, breastfeeding, maternity, family responsibilities, gender identity, gender expression, gender characteristics and gender reassignment. The addition of “family responsibilities” is completely new. In Australia, new laws now protect employees from discrimination on the grounds of breastfeeding, gender identity or intersex status.
Earlier this year, Spain passed a new LGBTI Equality Act which provides a wide range of rights for lesbian, gay, bisexual, transgender and intersex people in relation to education, medicine, legal documentation and more. It also impacts the workplace, as it prohibits workplace discrimination on all of these grounds. In a development that attracted much media attention, Spain also became the first country in Europe to introduce rights for menstruating women. This is not (as originally proposed) a right to unlimited and fully-paid leave during any painful period. It is instead a more limited right to access public sick pay during the first three days of incapacitating menstruation rather than having to wait for the fourth day of sick leave. Mexico may also be introducing a similar right, with a proposal in place for menstruating employees to be able to request three days’ paid leave per month if this has been confirmed by a medical professional.
After more than 10 years of negotiations, the EU has finally enacted the Women on Boards Directive. EU member states have until the end of 2024 to put their legislation in place, and every large listed company in the EU must then adopt a target of having at least 40% of its non-executive director positions or 33% of all its board positions held by women by 30 June 2026. Some EU member states already have requirements around gender balance on boards and Spain and Ireland look set to join them, with both countries recently proposing legislation on this topic. Meanwhile, Denmark has just expanded its requirements into the two levels of management below the board of directors.
Pay transparency continues to be a major theme. In the US, more jurisdictions have adopted laws on this topic. New York State’s new pay transparency law comes into force on 17 September 2023 and will require employers with four or more employees to include salary ranges and a job description for all advertised jobs, promotions and transfer opportunities. With effect from 1 January 2023, both Washington (state) and California have introduced laws requiring employers with 15 or more employees to include salary ranges in all job adverts. The Californian law also requires employers with 100 or more employees to report the median and mean hourly pay of their employees by race, ethnicity, and gender to the relevant state department. In Australia, the Workplace Gender Equality Agency is going to start publishing the gender pay gap information provided to it by employers (it has previously only published aggregated industry-wide data). In Australia, employers are also prohibited from using pay secrecy clauses in employment contracts, which is intended to assist with closing the gender pay gap. Israel has updated its guidance on annual reporting to provide that employers should include average wage gaps between male and female employees. Pay transparency and gender pay gap reporting legislation is now also in force in British Columbia, Canada.
The biggest news on this topic, however, has to be the enactment of the new Pay Transparency Directive in the EU. The Directive must be implemented in local law by 7 June 2026 and looks set to establish new global standards for pay transparency with the introduction of gender pay gap reporting across all 27 EU member states, together with requirements to undertake what are effectively equal pay audits and reach agreements with worker representatives where excessive gender pay gaps for those doing comparable roles are identified. The Directive will also lead to new laws requiring employers to state salary ranges on job adverts and banning questions about salary history.
Ireland has joined other EU member states in implementing its own gender pay gap reporting rules ahead of the Directive. Employers with at least 250 employees had to publish their gender pay gaps by the end of December 2022. The reporting threshold will eventually drop to employers with just 50 employees in 2025.
In the UK, where gender pay gap reporting is already required, the government has now published guidance for employers on how to calculate their ethnicity pay gaps.
Other areas of discrimination
Moving to other types of discrimination, Spain passed new equal treatment laws in July 2022 outlawing discrimination on a wide range of grounds including nationality, age, right to legal residency, birth, racial or ethnic origin, sex, religion, convictions or opinions, disability, sexual orientation or identity, gender expression, sickness or health condition, serological status and/or genetic predisposition to pathologies and disorders, language, socio-economic status or any other personal or social condition or circumstance. Belgium has expanded its Anti-Discrimination Act to cover an individual’s past medical history (not just current or future state of health). Mexico introduced new laws around hiring people with disabilities and multiple US states and local areas have enacted the Crown Act (Creating a Respectful and Open World for Natural hair).
Last year, we reported on Florida's controversial “Stop WOKE” Act, prohibiting mandatory training for employees that promotes certain controversial theories, such as critical race theory. This was signed into law but, as predicted, immediately became subject to legal challenge. This fierce debate is showing no signs of abating and is beginning to impact employment law outside the US. In Ontario, Canada, an employee leaked details of his employer’s anti-racism training to a right-wing media outlet in the hope that he would create a backlash and have the training cancelled (as has happened with a number of US company training programmes). The arbitrator in Ontario ruled, however, that the employee was lawfully dismissed by his employer for bypassing internal channels for raising his concerns in favour of going to the media.
Issues of race, ethnicity and religion in the workplace tend to vary depending on location. In Europe, we are still seeing cases about whether employers can require Muslim women to remove their headscarves at work, with the European Court of Justice issuing another ruling on this topic last year. Consistently with earlier decisions the ECJ ruled that employers can impose neutral dress codes as long as they apply to everyone without distinction and are a proportionate means of achieving a legitimate aim. Projecting an image of neutrality towards customers and avoiding social conflict can be legitimate aims.
In Denmark it is now unlawful for employers to ask about a candidate’s age during the recruitment process. In Mexico, there is a bill proposing that at least 5% of an employer’s workforce should be made up of older workers and that employers should implement measures to create jobs for older people. And in South Korea, the Supreme Court ruled for the first time that a “wage-peak” system amounted to unlawful age discrimination. Wage-peak systems, which are common in South Korea, involve reducing an employee’s pay as they near retirement, and the lawfulness of these systems has now been thrown into doubt.
And finally, New York City has just passed a Bill outlawing size discrimination (i.e. discrimination on the basis of size or weight), becoming the latest US legislature to enact laws along these lines. More legislation on this topic is expected throughout the US.
It’s clear from the rapid advance of AI in the past 12 months that this technology will have a transformative effect on working life. The launch of ChatGPT in November 2022 propelled generative AI into the forefront of public consciousness, but as the G7 leaders declare the need to urgently take stock of the opportunities and challenges of the technology, the creator of the product himself is urging legislators to accelerate regulation. As the full implications of the technology are still emerging, regulators and legislators are playing catch up; what is seen as an appropriate method and level of control diverges significantly around the world.
Last year we flagged the progress of the EU’s AI Act. In May of this year this was approved by the European Parliament and the interinstitutional negotiation process continues. The AI Act aims to put in place safeguards that will prevent risks posed by AI systems from arising. Although the Act predominantly focusses on system “providers” (i.e. developers), obligations also fall on “users” – catching those, like employers, who authorise the use of an AI system. The scope of the Act is very wide but it proposes a risk based approach, with compliance determined by the risk category into which the proposed use falls, ranging from prohibited (such as the use of real time biometric identification systems) to low risk. Certain use cases in the employment sphere – including those used for promotion and termination decisions and monitoring or evaluation – would be considered “high risk” and would therefore be subject to the most stringent level of safeguarding measures. This would require record-keeping, transparency and human oversight.
The AI Act is expected to come into force late 2023 / early 2024 and there would then be a two year grace period to allow organisations to comply. However, ongoing disagreement over where general purpose AI models (such as ChatGPT) should sit within the risk framework could threaten this timescale. To plug this gap, the US and EU are preparing a voluntary code of conduct for AI, a draft of which is expected imminently, and the US and UK have entered into the Atlantic Declaration, signalling cooperation on the safe development of the technology. The AI Act will have extra-territorial scope, applying to providers and users outside the EU where the output is used in the EU, and this is backed up by the scope for significant fines. As we see below in relation to the GDPR, this legislation is likely to become a benchmark not only for EU located businesses, but everyone acting within the European market.
Turning to individual member states, this year has seen Italy take a firm stance on the use of AI. The Italian Data Protection Authority ordered a US IT provider to restrict the processing of personal data of Italian-based users of a chat bot due to concerns about age verification and vulnerable users, and in March of this year, the country implemented an all-out ban on ChatGPT while privacy concerns were investigated. This was reversed in April after Open AI introduced a number of improvements, addressing concerns around transparency, control over data and age restrictions. Regulators around the world have confirmed they are monitoring and investigating complaints about large language models (LLMs) and their uses, and the European Data Protection Board has established a dedicated taskforce to “foster co-operation and to exchange information on possible enforcement actions conducted by data protection authorities”. Indeed , earlier this month, Google was forced to delay the launch of its generative AI tool, Bard, in the EU, due to privacy concerns raised by the Irish Data Protection Commission.
Outside the EU, the Senate in Brazil is considering a bill that would regulate AI systems and take a risk based approach. Decisions relating to access to employment would fall into the “high risk” category and would require, amongst other things, mandatory algorithmic impact assessments. In South Korea, a comprehensive AI bill is making significant progress. This aims to both support the development of AI technology and ensure adequate risk management in high risk areas, including employment uses cases.
The highly detailed, interventionist approach being taken by the EU sits in contrast with that seen in both the UK and at a federal level in the US. The UK’s White Paper on the regulation of AI directs regulators to five guiding principles and proposes no new legislation in case it holds back innovation. These principles come with no statutory authority but are likely to be supplemented by regulator-specific guidance in the future. This approach is comparable to that envisaged by the US AI Bill of Rights, published in October 2022. Not legally binding, this sets out voluntary guiding principles for the safe design, use and deployment of AI. Companies with automated systems that could “meaningfully impact” on the public’s rights, opportunities or access to resources or services are encouraged to follow these. Early last year Congress introduced the Algorithmic Accountabilty Act, which would have resulted in regulations requiring companies to conduct impact assessments for systems that make automated decisions, but this did not pass the Committee stage. However, at the end of May, soon after the founder of ChatGPT made a call to Congress for tighter regulation, the Federal government announced consultation on national priorities for mitigating AI risks. This has already included a listening session on the use of AI in employment, so it appears this issue is under increasing scrutiny.
Regulation of AI has also been taken up at a state level. That most directly addressing the use of technology in employment was perhaps in New York City. From July of this year it will be unlawful for an employer or an employment agency to use automated employment decision tools (AEDT) to screen candidates for recruitment or promotion unless a bias audit has been conducted first. A summary of the audit must be made publicly available, and every employee and candidate who resides in the city must be given a notice of the AEDT use and the opportunity to request an alternative selection process. It remains to be seen whether this will be a model replicated in other legislatures across the country. And in California, the California Consumer Privacy Act (discussed further below) will impact on the use of personal data in AI and other automated decision-making processes.
At an earlier stage of its regulatory journey is Canada, which in June 2022 introduced the Artificial Intelligence and Data Act, providing a framework for responsible design, development and deployment of AI systems. By taking a risk based approach, the focus will be on systems that have a high impact on Canadians’ lives. The level of impact is likely to depend on factors including health and safety, scale of use, and the effect on vulnerable groups. From an employment perspective, regulation looks likely to cover screening systems impacting on access to employment, and would impose assessment, record keeping and mitigation obligations. In New Zealand, the Privacy Commissioner has released guidance on the use of generative AI by businesses, emphasising the need for transparency and a human review of output.
As seems common in this field, this legislation is not expected to come into force for some time, potentially 2025 at the earliest - by which time the developments in this technology are likely to be astonishing.
We have seen an overall theme this year of measures being introduced that are intended to help working parents and carers balance their family responsibilities and career - including changes intended to help deter employees from leaving their jobs due to childbirth or childcare needs, and to enable both men and women to balance work and childcare responsibilities. We have also seen initiatives intended to encourage marriage and parenthood, particularly in Asia Pacific.
In Europe, member states had until 2 August 2022 to implement the Work Life Balance Directive. The European Commission calls the directive a “game-changer” for working parents and carers, making it easier for them to balance their family responsibilities and career. It sets minimum standards for paternity leave (fathers must be entitled to at least ten working days of paid paternity leave around the time of birth of the child), parental leave (each parent is entitled to at least four months of parental leave, of which two months are paid for and are non-transferable), carers' leave (workers providing personal care or support to a relative or person living in the same household have the right to at least five working days of carers' leave per year), force majeure leave (allowing workers time off for urgent family reasons such as illness or accident) and flexible working arrangements (all working parents with children of up to eight years old and all carers have the right to request flexible working arrangements for caring purposes).
A considerable number of member states were late in implementing the directive, resulting in the European Commission taking infringement procedures against Belgium, Czech Republic, Ireland, Greece, Spain, France, Croatia, Cyprus, Luxembourg, Austria, and Slovenia.
Outside Europe we’ve seen a number of developments relating to paternity leave and encouraging men in particular to take time off after birth.
In Colombia, there is a proposal to increase paternity leave to five weeks in 2023 to eight weeks in 2024 and 12 weeks in 2025. In Malaysia, eligible male employees became entitled to seven consecutive days paternity leave from 1 January 2023. In Japan, “childcare leave after birth” was introduced from 1 October 2022 in an effort to encourage men to take paternity leave – this allows male employees to take up to four weeks’ leave in total within the eight weeks after birth. In Singapore, paternity leave is increasing from two weeks to four weeks for fathers of Singaporean children (from 1 January 2024 for babies who are born after that date). Unpaid infant care leave is also increasing from the current six days a year to 12 days for parents of Singaporean children under two years old who have worked with their employer for at least three months. These Singaporean initiatives are intended to encourage marriage and parenthood. Similarly, in China, since February 2023, provinces can decide to offer newlyweds up to 30 days (currently three days) paid leave to try to increase the fertility rate.
In Australia steps are being taken to make parental leave more flexible and generous. Paid parental leave will increase on 1 July 2023 from 18 weeks to 20 weeks and also be available to non-birth parents if they meet eligibility criteria. There are also proposals for this to increase from 20 to 26 weeks by 2026. From 6 June 2023, an employer can only refuse an application from an employee to extend unpaid parental leave beyond 12 months if the employer has discussed and genuinely tried to reach an agreement with the employee, the employer has considered the consequences of refusing the extension and the refusal is on ‘reasonable’ business grounds. There are also proposals to increase flexible unpaid parental leave from 30 to 100 days. In Japan, it has been possible to separate childcare leave into two instalments since 1 October 2022, effectively allowing employees to split the period in which they use their leave entitlement. Also in Japan, since 1 April 2023, employers with more than 1000 full-time employees are required to publicly disclose on an annual basis the amount of childcare leave taken by their employees. In New York State, since February 2023, eligible employees have been entitled to 12 weeks’ paid parental leave, and this is set to be expanded to cover most employees in the state.
In Malaysia maternity leave was extended from 60 to 98 days from 1 January 2023. There have also been two important developments in Spain in relation to pregnancy-related sick leave (in addition to menstrual leave discussed under theme 1), applying from 1 June 2023. Firstly, a special sick leave for pregnant employees is available from the first day of the 39th week of pregnancy (which is in addition to the 16 weeks of maternity leave). Secondly, employees dealing with miscarriage or the interruption of pregnancy, whether voluntary or not, will be considered eligible for sick leave while they are receiving medical care from the Public Health Service and unable to work. Similarly in Germany, from 1 June 2023, sick leave for pregnant employees is available from the first day of the 39th week of pregnancy (in addition to maternity leave).
Laws have also been introduced relating to nursing mothers. In the US, amendments have been made to federal law extending protections for employees who need to express milk at work. Additionally, with effect from June 2023, the rights of employees in New York State to express milk have been expanded, particularly in relation to requirements for the designated lactation room. In Ireland, the period during which employees have an entitlement to paid time off from work or a reduction of working hours for breastfeeding purposes has been increased from 26 to 104 weeks (commencement date awaited).
In Switzerland, since 1 January 2023, adoptive parents have a statutory right to two weeks’ paid adoption leave. In Romania, the duration of adoption leave has increased from one to two years.
Family leave law in New York State has been expanded from 1 January 2023 to allow employees leave to care for siblings with a serious health condition. Also from 1 January 2023, in California the class of people for whom an employee may take leave to care has been expanded to include a “designated person” – an individual related to the employee by blood or whose association with the employee is equivalent to a family relationship.
In Illinois, unpaid bereavement leave rights are being extended (beyond being available to parents following the death of a child) to include additional family members and reasons for leave including miscarriage, IVF and a failed surrogacy agreement. In Canada, employees are now entitled to unpaid leave of up to eight weeks for the death of a child or a stillbirth (if an employee has completed three months’ employment, they are entitled to three days’ paid bereavement leave). In California, up to five days’ bereavement leave is now available. This is also the case in Peru, where bereavement leave of five calendar days is available for private sector employees whose family member has passed away, limited to the passing of the employee’s spouse, parent, child or sibling. In Northern Ireland, parental bereavement leave rights following miscarriage are to be introduced by 2026 (which builds on existing entitlements).
We’ve also seen developments in relation to domestic violence leave with varying practices of countries granting five or 10 days’ entitlement. Australia recently changed the entitlement to family and domestic violence leave from five days’ unpaid leave to 10 days’ paid leave, starting with employers with 15 or more employees from 1 February 2023 and all employers from 1 August 2023. From February 2023, restrictions apply in relation to referring to this leave in employees’ pay slips. In Ireland, despite a political push for a 10-day leave entitlement during the legislative process, a five-day paid entitlement was introduced in April 2023. As we covered last year, this follows Northern Ireland’s introduction of 10 days’ paid domestic violence leave in April 2022.
In the US, Illinois has become the third state to pass a mandatory paid time off law called the “Paid Leave for All Workers Act”, which grants employees a minimum of 40 hours of paid time off per year for any reason. Only Nevada and Maine provide similarly sweeping mandatory paid leave. This new law, which would be effective from 1 January 2024, will have a major impact on the landscape of paid leave in Illinois.
Finally, perhaps Monaco’s proposed new law allowing employees to “donate” leave to their colleagues who have to deal with a particularly serious family situation is something we’ll see being replicated in more places (it’s already in place in France). Watch this space!
Sickness and sick leave
Ireland has come into line with most other European countries by introducing a right to paid sick leave. From 1 January 2023, the right is to three days paid sick leave, rising to five days in 2024, seven days in 2025 and ten days in 2026. There are various qualifying conditions and sick pay will be 70% of wages, subject to a daily cap of EUR 110.
The sick note regime has changed in Germany, Belgium and the UK. From January 2023 in Germany employees insured under the statutory health insurance scheme must provide a digital medical certificate for work absences. Belgium has done away with the requirement for a sicknote for one-day absences up to three times per year in companies that employ 50 or more employees. In the UK from July 2022 nurses, occupational therapists, physiotherapists and pharmacists have been able to issue sick notes, to help with GPs’ workload.
The effects of the Covid-19 pandemic linger. There are court decisions emerging around the world connected to the illness and to government pandemic responses. In Canada there are numerous decisions about the reasonableness of employers’ mandatory vaccination policies; most decisions have favoured employers to date, but there are exceptions. In New York the Covid-19 vaccination paid leave law was extended until 31 December 2023, requiring employers to give time off for Covid vaccinations. In the UK a tribunal decision found that Long Covid could amount to a disability for the purposes of a disability discrimination claim.
The interaction of new technologies which make atypical working easier, the Covid-19 pandemic which encouraged homeworking, and work-life balance concerns (which drive flexible working initiatives but also an awareness of the risks of being always “on-duty”), continue to influence legal developments around working arrangements, hours and holidays.
Flexible and home working
As discussed in the previous section, EU member states had until 2 August 2022 to implement the Work-Life Balance Directive, which included a right for workers who are parents or carers to request flexible working arrangements. Flexible working arrangements contemplated by the Directive include remote work (e.g. from home), adjustments to work schedules and reductions in working hours. Belgium concluded its implementing legislation at the end of last year. It applies to employees in the private sector with certain caring responsibilities, who can request a flexible working arrangement which the employer can refuse, delay or counter with an alternative if it has concrete justification. Additionally, on 29 September 2022, the Belgium government approved “the Labour Deal” which includes a measure permitting companies to introduce a work pattern in which employees may apply to work “compressed hours” under which they perform their normal full time work in four days or alternating schedules across two weeks, without a reduction in pay.
Other EU member states implementing the Directive’s provisions on flexible working include Ireland, Hungary, and Poland. Poland also passed new regulations on remote working under which employers have to meet the costs of such work and fulfil many other legal formalities that are limited only in the case of so-called occasional remote work of up to 24 days a year.
In addition to complying with the Directive’s provisions, Italy extended the right of certain vulnerable employees to work in “agile mode” (remotely) until 31 March 2023. From 1 January 2023, employees working remotely were required to enter into individual agile work agreements with their employers.
Outside the EU, other countries also enhanced rights to flexible working over the last year. In December 2022, Australia passed a range of measures designed to “modernise” the workforce. These include expanded rights to make flexible working requests, including a requirement that employers give reasons and limiting the permissible reasons for refusal. The Fair Work Commission will also have the power to arbitrate disputes which arise as a consequence of the employer refusing or failing to respond to the request. Eligible employees in Malaysia also have a new statutory right to request a flexible working arrangement (varying their hours, days or place of work) from 1 January 2023. In Singapore, guidelines on flexible work arrangements will be implemented in 2024, requiring employers to consider staff requests for such arrangements fairly and properly.
The growth of flexible and home working has also led to a range of new governing regulations. In Portugal, changes to the Labour Code require remote working agreements to specify compensation due to the employee for additional expenses, which is not taxed as employee income but as an employer expense. Brazil has a new law providing that remote working employees are subject to time tracking, that companies can adopt remote working for interns and apprentices, and that employers must give priority to employees with disabilities and those with children when assigning activities that can be carried out remotely. The Revenue Office also determined that allowances to cover the expenses of remote working (such as the internet) are not considered salary and so not taxable.
Argentina passed a new remote working regulation in October 2022 requiring employers to register a list of remote working employees and whether they are providing services under a remote working scheme, while Peru has published draft regulations aimed at ensuring employers pay internet and electricity expenses when employees work remotely. In India, information technology entities operating in Special Economic Zones (SEZ) are allowed to permit employees to work from home or any place outside the SEZ.
Chile has modified its protocol for the surveillance of psychosocial risks at work in various ways, amongst which is a requirement to report and investigate impairment caused by remote working. The Ministry of Labor and Social Welfare in Mexico has prepared an Official Standard focusing on home office conditions which sets out employment agreement requirements and adequate health and safety conditions for home workers. Thailand has legislated that if an employer agrees a remote working arrangement, there must be a written agreement.
In the Philippines, there are revised rules on remote working through electronic means. These affirm the government’s policy to encourage employers and employees to use so-called “telecommuting programmes”. Telecommuting programmes (which can be set out in policies or contracts) should include specified provisions on matters such as equipment, health and safety and performance management. Remote working employees should have the same rights as other employees and employers should take steps to prevent employee isolation. Employers must now notify the Department of Labor and Employment of employee remote working arrangements.
Proposed changes to the law in Ontario, Canada would make remote workers eligible for the same enhanced notice periods as office employees in the context of a “mass termination” (the termination of 50 or more employees at an employer’s establishment within a four-week period).
There have been two decisions in Denmark regarding employer liability for workplace accidents when employees work from home. If employers set clear conditions for the performance of work from home and employees are injured while doing so in violation of those conditions, the injury is not considered to be an occupational injury.
The same technology that permits employees to work from home allows them to work from another country to the employer, an increasingly common request from employees. Austria has established agreements with Slovakia and the Czech Republic for employees to work up to 40 per cent of their working hours from their home state whilst staying within the social security system of the country where the employer is based. In the Netherlands a new draft “Work where you want” act would require employers to balance their own and employees’ interests if an employee makes a request to work from home, whether in the same country or another EU member state. It must grant the request if the employee’s interests outweigh the employers. Costa Rica is also bearing digital nomads in mind, with a new non-resident immigration status (“fifth stay”) which allows remote workers with flexible working conditions to telework. In Spain, a new digital nomad law allows foreign nationals to work remotely for a non-Spain based company for an initial period of up to 12 months, which can then be extended for a period of 3 years and subsequent periods of 2 years.
Right to disconnect
The other side of the “remote working” coin and the technological advances that made it possible is the danger that employees are always on duty. This has led some countries to implement a “right to disconnect” to ensure employees are not expected to be online, even in leisure time. In Belgium, all companies in the private sector with 20 or more employees will be obliged to establish a policy on the right to disconnect (incorporated in a collective bargaining agreement or in the work rules), to help facilitate employees’ work-life balance by ensuring they get uninterrupted rest breaks and holidays. Employers were required to introduce the policy by 1 April 2023. In the UK the opposition Labour Party has signalled its intention to introduce a right to disconnect if it wins the next election.
From 2 June 2022, employers with at least 25 employees in Ontario, Canada have also been required to have a written policy on disconnecting from work. And in July 2022, Costa Rica implemented similar legislation and reformed its remote work law to require that employers permit disconnection time for employees outside working shifts. In Australia, right to disconnect proposals are in place and the amendments also seek to incorporate the right to disconnect into the National Employment Standards.
Working hours and rest
Chile and Colombia are amongst the countries legislating to reduce weekly working time. In Colombia the current maximum working week of 48 hours is being gradually reduced to 42 hours; since 15 July 2022 weekly working hours should be no more than 47. There are also proposals to start additional rates of payment for night work from 6pm, rather than 9pm. Chile approved a bill in April 2023 to reduce the length of the working week from 45 to 40 hours over the course of the next five years (certain exclusions will apply).
In South Korea, the government has announced plans to amend the current working week and give workers more flexibility. The current system limits workers to 52 hours a week. Under the new proposals, workers can continue to manage their time on a weekly basis or they can choose to do so on a monthly, quarterly or yearly basis. An exemption for small employers (with fewer than 30 employees) to use a written labour-management agreement to authorise additional weekly overtime hours has been ended. There is a nine-month enforcement grace period, expiring at the end of September 2023. From August 2023 it will also be mandatory for employers with 20 or more workers (or 10 or more, if at least two are in particular jobs) to provide rest facilities.
Meanwhile, the Federal Labour Court in Germany ruled in September last year that under EU law employees’ complete working time must be recorded by employers. Previously, employers were only under a statutory duty to record overtime and Sunday working. In April this year, the Federal Ministry of Labour and Social Affairs published a draft bill on how to meet this duty.
In Australia, the Fair Work Commission has also varied the Professional Employees Award 2020 in respect of two issues: the hours of work and overtime provisions; and the coverage provisions. Notably, from 16 September 2023, employees will be required to maintain and provide a time sheet or other record which sets out when they commenced and concluded performing any remote work and a description of the work performed.
Holidays and holiday pay
Various jurisdictions have increased leave entitlement over the last year or plan to do so shortly.
As discussed in the previous section, Illinois has introduced a new requirement for employers to provide employees with up to 40 hours of paid time off (for any reason) during a 12 month period. Mexico passed a “dignified vacation” law increasing vacation days for employees with more than 1 year’s service. In Colombia the national government and congress have issued several bills proposing to increase the number of holiday days from 15 to 20 days a year. Ireland introduced an additional public holiday day this year and British Columbia is also set to introduce a new public holiday day later this year. In contrast, Denmark is abolishing a holiday on “Great Prayer Day” (a long-standing public holiday) to boost the country’s revenue to be spent on NATO contributions. Meanwhile, Belgium aligned its leave legislation with the European Working Time Directive and European Court of Justice caselaw to provide that employees who fall sick whilst on statutory annual leave can convert those days to sick leave. Also that if holiday was not taken because of sickness or certain other absences, employees will be able to take it up to 24 months from the end of the relevant leave year. Both changes take effect from the 2024 leave year.
There have also been various significant cases on annual leave entitlement.
The European Court of Justice has ruled that the Austrian Vacation Act breached the Working Time Directive by permitting employers to withhold holiday pay if the employee resigns early without justification.
A recent New Zealand court decision found that employers cannot just instruct employees to take annual leave but must seek agreement, follow the procedure in the Holiday Act and act in good faith. Similarly, an Australian court found it was unlawful to require employees to work public holidays before requesting they do so.
And in the UK a Supreme Court decision is eagerly awaited on whether a 3-month gap between a series of underpayments of holiday pay, will break the chain, preventing employees from recovering amounts deducted before the gap. In the UK too, the government has just announced it will legislate to permit “rolled up” holiday pay, now that it is no longer prevented from doing so by EU law. With “rolled up” holiday pay, the worker’s holiday pay is accrued in the same proportion as holiday entitlement bears to the working year and paid as a percentage of salary every month. The government proposal is, in part, a reaction to a July 2022 Supreme Court decision which held that under UK law a term-time worker was entitled to 5.6 weeks holiday which could not be pro-rated downwards to reflect the fact that they only worked a proportion of the year. The UK government was already consulting about changing the law for term time workers to ensure they accrued holiday in proportion to hours worked but allowing rolled up holiday pay would provide an even simpler answer to the issues thrown up by this case for employers.
There have been moves towards increased protection of platform workers this year – individuals who work through digital platforms, who often have unpredictable work patterns and unclear employment status – particularly in Europe.
The EU is still negotiating about the draft Platform Workers Directive, specifically aimed at improving working conditions for such workers. In short, the new rules would regulate how to determine the employment status of platform workers as well as how digital labour platforms should use algorithms and artificial intelligence to monitor and evaluate workers. Whilst there had been concerns that the definition of “platform” was broad enough to catch more traditional employers, the European Council have now narrowed the scope by adding a requirement of using automated monitoring or decision-making systems. The Directive remains under discussion, with one of the most controversial areas being the legal presumption of employment it would create (reclassifying platform workers from self-employed to employees when certain conditions are met). If the Directive is passed, members states will have two years to implement it in national law.
Other countries in Europe have recently taken steps to enhance the rights of platform workers. Belgium’s “Labour Deal” includes two measures to improve platform worker protection - a rebuttable presumption that platform workers are bound by an employment contract if certain conditions are satisfied, and a requirement for digital work platforms to provide industrial accident insurance for all of their workers. Meanwhile, Portugal has increased regulation of digital platforms and there is now a presumption of the existence of an employment contract where certain conditions are met.
The Dutch government has announced measures designed to reduce the number of self-employed workers which are expected to take effect from 1 January 2025. These include reducing the preferential tax treatment of self-employed workers and clarifying when an individual can be said to be working under the “authority” of an employer. In March 2023, the Dutch Supreme Court held that a contract used by Deliveroo qualified as an employment contract and provided new criteria for determining this classification, which is expected to result in a wave of reclassification claims. In a similar vein, a February 2023 decision by Switzerland’s Federal Supreme Court determined that Uber drivers qualify as gainfully employed for social security purposes. In contrast, however, a French court recently determined that individuals performing work for the delivery platform Stuart were independent contractors rather than employees.
In November last year, the Norwegian government proposed several changes designed to strengthen the position of workers which, if implemented, would result in more people (including digital platform workers) being given employee status. The legal definition of “employee” would mean “anyone who performs work for and is subordinate to another”, and companies would bear the burden of proof of showing that an individual is not an employee. Similarly, in Finland, legal changes providing clarity on distinguishing between an employment relationship and self-employment will enter into force on 1 July 2023.
Malta introduced a new Legal Notice which seeks to regulate platform work performed by individuals engaged by or assigned to digital labour platforms. Amongst other things, this creates a rebuttable legal presumption that those performing digital platform work are employees.
This trend of increasing protection for platform workers has also been reflected in the rest of the world. Effective from September 2022, Chile introduced a new law that regulates the contracts of platform workers in relation to working hours, remuneration, and a duty to protect life and health. In October, the Department of Labour also issued an opinion setting the scope of the law regarding digital platform workers which distinguishes between dependent and independent digital platform workers and states that the Department of Labour is legally empowered to qualify and classify the type of worker.
In Australia last year, the Full Bench of the Fair Work Commission reaffirmed the primacy of contractual terms when determining the employment status of a gig worker. However, the current government is keen to protect platform workers and has put forward proposals that could significantly change the position, such as giving the Fair Work Commission the power to set minimum pay and conditions for gig workers. Additionally, in its 2023 Budget, the Canadian Government announced plans to amend the Canada Labour Code to strengthen prohibitions against employee misclassification for federally regulated gig economy workers.
In Singapore, the Ministry of Manpower has accepted 12 recommendations of the Advisory Committee on Platform Workers, which aim to provide basic protections for platform workers by ensuring adequate financial protection in the case of injury at work, enhancing representation available to them and improving retirement and housing. It is understood that the recommendations will not be implemented until at least 2024.
In Thailand the government has approved, in principle, new legislation to protect self-employed workers which would entitle them to basic rights such as fair compensation, safety at work and social security. In the US the Department for Labor has also proposed a rule regarding independent contractor status. This would introduce a six-factor test for determining whether the worker is an employee or independent contractor which is expected to result in more individuals being classified as employees.
The last 12 months have also seen developments with the regulation of non-competes and non-standard contractual arrangements, including irregular working patterns and use of fixed-term contracts.
The deadline for EU member states to implement the EU Transparent and Predictable Working Conditions Directive was 1 August 2022. The Directive extends the list of information that must be provided to workers at the outset of employment, limits the length of probationary periods to 6 months and restricts the use of exclusive service clauses preventing employees from working for other employers. It also gives workers on irregular hours contracts the right to receive reasonable advance notice of their shifts, be compensated for last minute shift cancellation and request more predictable contractual arrangements. Although the deadline for transposing the Directive has passed, many countries were late implementing it and some countries (including Spain, Greece, Czech Republic, Austria, Slovenia, Denmark and Latvia) have still not done so - although Denmark’s new rules will be in force from 1 July 2023 and other countries, including the Czech Republic, now have drafts.
Meanwhile in the UK, although not required to implement the Directive, there is a draft bill introducing a new right to request predictable working patterns. This would apply after 26 weeks’ employment for all workers who have a lack of “predictability” in relation to their work and in respect of any part of their working pattern.
Fixed-term contracts have also been the focus of attention in a number of countries. In Sweden, as part of a major employment law overhaul, fixed-term contracts are now converted into permanent contracts more quickly (after 12 months and in other situations), and employers must be able to explain the reasons for hiring an employee on a fixed-term basis. In Poland, employers must now give genuine and justifiable reasons when terminating fixed-term contracts and those reasons are open to legal challenge, bringing the rules on fixed-term contracts close to those applicable to permanent employment. Belgium has closed a loophole in its rules limiting the maximum duration of successive fixed-term contracts to two years. The loophole allowed employers to avoid the cap if an employee alternated between fixed-term contracts and temporary “replacement” contracts to cover for absent employees. Portugal has also tightened its rules, for example by reducing the number of times that a temporary fixed-term contract can be renewed down to four times (from six), and Croatia has introduced a cap on the number of successive fixed-term contracts allowed (three) and the maximum total length of fixed-term contracts (three years). And in Australia, new restrictions on fixed-term contracts will be in place from December this year, preventing employers from employing employees on fixed-term contracts for more than two years, unless an exception applies.
In Italy, by contrast, greater flexibility is being introduced, with new rules allowing for fixed-term contracts to be extended beyond 12 months in some situations. In the UAE, meanwhile, the focus is on migrating employees on to fixed-term contracts. Employers based outside the Dubai International Financial Centre and Abu Dhabi Global Market must convert all employment contracts into new fixed-term contracts by the end of 2023 (the deadline was originally February 2023 but has been extended). Those contracts can be renewed any number of times.
There have also been significant developments in relation to restrictions on employees after termination of employment. In the US, President Biden has been calling for restrictions on non-compete clauses since his election, and the Federal Trade Commission has now answered those calls with a proposed new rule. The proposal is at the more extreme end of the options for regulating in this space and would essentially ban the use of non-competes altogether except in very limited situations (such as for people who sell their business). The FTC have not, however, brought this rule into force and are likely to face immediate legal challenge if or when they do so. In the meantime, Washington DC and Minnesota moved to introduce their own ban on non-compete clauses (joining California and North Dakota). In a surprise move, the UK government has announced plans to limit non-compete clauses to three months. And in the Netherlands, the government has also just announced plans to regulate non-compete clauses and include a new requirement to compensate the employee for the non-compete,
Canada has amended the federal Competition Act with effect from 23 June 2023 to criminalise agreements between employers to fix wages or not to poach one another’s staff. There is no cap on the fines employers can face, executives potentially face imprisonment for breaches, and individuals can also bring civil actions against employers for violations.
Pay and cost of living support
Amidst the cost of living crisis, the issue of pay has become ever more critical. It is not surprising, given rampant world-wide inflation, that there have been some hefty increases in the national minimum wage (NMW) in many jurisdictions. We’ve also seen increases in allowances and some governments have given extra one-off help to employees and employers.
Turkey, for example, raised its NMW by 54% from 1 January 2023, meaning it had doubled since the same point the previous year – but in the context of an inflation rate which at one point exceeded 80%, the increase looks less stark. In Hungary, the NMW increased by 16% from 1 January 2023. Mexico and Peru increased it by 20% on the same day. Poland also increased its NMW from 1 January and intends to increase it again in July 2023. The Netherlands normally benchmarks its NMW to wage increases in the labour market and had been due to increase this from 1 January by 1.934% but high inflation caused it to make a one-off further increase of 8.05%, bringing the rise to 10.15% in total (for the first time since it was introduced in 1969). Ireland plans to replace its NMW with a “living wage” set at 60% of the median wage, which will be introduced over a four year period.
The United States is an outlier in that its federal minimum wage remained unchanged, as it has since 2009. However, over half of the individual states plan to raise their minimum wage.
In addition to increasing their NMW, France and Germany took other steps to help with cost of living increases. France introduced the “purchasing power package”, a series of urgent measures to help employees. These included a “value sharing” bonus of up to EUR 3000 that employers could pay to employees tax free, a deduction in employer contributions if employees work overtime or on rest days, extending agreements for profit-sharing bonus arrangements and entitling employees to use meal tickets to purchase food products until 31 December 2023. This is in addition to a series of other measures to help employee finances. In Germany from 26 October 2022, employers can make a tax-free voluntary payment to employees of up to EUR 3,000, and employees were also entitled to a EUR 300 one-off payment to help towards rising energy costs.
Meanwhile, Belgium passed employment-related measures to help businesses and employees cope with the energy crisis, including a state-supported temporary unemployment scheme for “energy-intensive” companies. It also increased the mileage allowance because of the rise in fuel costs, a move that was also made by other countries, such as the Netherlands. Even though the Belgium government limited salary increases to mandatory indexation for the period 2023-2024, it nonetheless provided that companies which achieved good results in 2022 could grant employees a “purchasing power premium” voucher (exchangeable for goods but not cash) of up to EUR 750 in 2023.
New Zealand is proposing to make it a criminal offence for an employer intentionally not to pay employees’ wages.
Finally, the final text of a EU Directive on adequate minimum wages was adopted in October last year, and must be transposed into national law by 15 November 2024. Its aim is to improve the adequacy and increase the coverage of minimum wages, while also strengthening collective bargaining as the main instrument to ensure fair wages and working conditions. A key feature of the Directive is that it promotes collective bargaining and, perhaps most notably, requires member states to draw up national action plans to increase the collective bargaining coverage in the workforce if it is below 80% (which is the case in most member states).
Collective rights and trade unions
There has been a general trend towards a strengthening of collective rights and trade union powers, including encouragement of collective bargaining.
In the EU, the European Parliament has recommended significant changes to the European Works Council (EWC) Directive. The proposed changes would include strengthening consultation rights, shortening the timescale within which an EWC or an information and consultation procedure should be established, and increasing enforcement. However, these changes may still be some way off as there are a number of legislative steps that need to take place before they can become binding.
In Ireland, a report by the LEEF Working Group on Collective Bargaining recommended that there should be an obligation on employers to engage in good faith with trade unions, even where employers don’t typically recognise trade unions. The report also provides that the minimum threshold for collective bargaining should be 10% of the workforce with no minimum limit on the number of employees.
In July last year, Poland published a new law on collective labour disputes that aims to update existing law to reflect the shifting labour market, which has seen a greater threat of such disputes. The proposals include allowing all hired persons to undertake collective labour disputes (not just employees) and new statutory time limits for conducting such disputes. Meanwhile, in February, Ukraine adopted a new law covering collective agreements. This introduces a number of changes, including a concept of sectoral collective agreements of limited effect which can be concluded in the absence of representative parties for a relevant industry sector.
Norway has reintroduced trade unions’ right to collectively institute legal proceedings in cases of illegal hire from temporary work agencies (irrespective of whether the employees involved support this). In November, the International Labour Organisation reviewed Belgium’s laws imposing limits on private sector wage increases and determined that these were incompatible with the right to collective bargaining. It has asked the Belgian government to consult with social partners and take the necessary measures to ensure free wage negotiations are possible in the private sector.
Australia has introduced new collective bargaining reforms which, in effect, allow employees and unions to compel multiple employers to bargain together about the same CBA, as long as certain requirements are met. This means that from 6 June 2023, employers will have less control over CBA terms and conditions, competitors may be forced to negotiate terms for the same CBA, and there may be industry-wide strike action during negotiations.
New Zealand has introduced the Fair Pay Agreements Act. This creates a new collective bargaining framework which facilitates industry/sector wide collective bargaining to establish minimum terms and conditions (including standard hours, minimum pay, training and development and annual leave) for all employees in a particular occupation or industry. If the employer and union sides cannot reach an agreement, the Employment Relations Authority has the power to fix the terms of a fair pay agreement. In the UK, the Labour Party has also committed to establishing fair pay agreements, negotiated through sectoral collective bargaining, if it wins the next election.
There have also been a number of interesting cases in this area over the past year. In Brazil, in a claim involving the dismissal of 4,000 employees at one company, the Supreme Court held that union intervention is an essential procedural requirement in cases of mass dismissal. In South Africa, the Labour Appeal Court has broadened the scope for trade unions to represent employees at a Commission for Conciliation, Mediation and Arbitration hearing.
Notwithstanding the overall global trend towards increased collective bargaining and union involvement, it is notable that the UK government has recently taken steps to curtail union powers – including a new proposed legal framework to ensure minimum service levels are maintained in key services during industrial action, and repeal of the ban on agencies supplying workers to fill in for striking staff.
Termination and retirement
As ever, there are many developments in laws surrounding termination of employment. The following are noteworthy.
In France from the start of 2023, a fixed-term or temporary employee who refuses two offers of permanent employment within a 12-month period may lose unemployment benefits. Sweden has made far-reaching reforms to its laws. Changes which aim to give more flexibility to employers include the fact that employees disputing their termination no longer remain employed whilst the dispute is resolved, with limited exceptions for some trade union representatives. However, punitive damages for unlawful dismissals have been increased.
A proposed bill in New York City would effectively eliminate “at will” employment and prohibit dismissals without just cause or a bona fide economic reason, and also restrict the use of electronic monitoring in dismissing or disciplining employees. Chile’s Supreme Court held that justification of the dismissal of an employee for “business needs” requires a serious, external reason, not just the decision of the employer.
Brazil’s Supreme Court may make a determination in 2023 on a significant case which dates back 25 years. International Labour Organization (ILO) convention No.58 dealing with justification for terminations and consultation with workers’ representatives was ratified in Brazil in 1996, but after only seven months in force the President revoked it. Several trade unions brought claims about this, and a decision was made last year but immediately subject to requests for re-examination. The court will resume its hearing this year. Once finally determined, it may limit employer’s discretion to terminate employees without just cause.
In the context of aging populations, several governments have sought to amend their retirement and pension provisions. As has been much reported, France is attempting to increase its state retirement age from 62 to 64. Sweden too proposes an increase, in its case from 68 to 69. Finland is amending its health and safety legislation from 1 June 2023 to oblige employers to take steps to ensure workers remain fit for work for longer, to encourage older workers to remain employed.
Various administrations have introduced or amended pensions auto-enrolment. Ireland has started a new scheme under which employers must automatically enrol eligible employees into a workplace pension scheme. It will be phased in over the ten years from 2024 and contributions will be paid by employers, employees and the state. In Poland, from February 2023 all existing pension opt-outs expired and anyone who does not submit a new declaration must be automatically enrolled in a retirement plan with a minimum employer contribution of 1.5%.
New pension legislation in the Netherlands affects all Dutch companies with a pension scheme. With the new law, defined benefit schemes (DB) become a thing of the past. Defined contribution schemes (DC) with flat-rate contributions will be the new norm. This requires all existing DB schemes to be converted to a DC scheme with a flat-rate contribution, by 1 January 2028. Existing DC schemes with contributions that increase with age can be continued only for staff in service before 1 January 2028. Companies will need to act quickly, as the change process can be complex and time-consuming and may lead to discussions with employee representatives on compensation measures for the change.
In Hong Kong the government has introduced the long-awaited legislation that proposes to abolish the Mandatory Provident Fund offsetting mechanism, intended to be in place by 2025. Once passed, employers would no longer be able to use employees’ retirement funds to pay severance or long-service payments.
While ESG was originally a concept used by investors to assess sustainability, it is now understood to encompass a wider range of company actions under the broad umbrella of doing business responsibly. Legislation relevant to the workplace is being targeted at this area, especially within the EU.
Whistleblowing is considered part of the ESG agenda. All EU countries were required to implement the provisions of the EU Whistleblower Directive into their national legal systems by 17 December 2021. The Directive provides EU-wide protection for individuals who blow the whistle about infringements of certain EU laws, including in the areas of public procurement, financial services, money laundering, product safety, environmental protection and data privacy. Many member states were late in implementing this and 18 months on, several jurisdictions have still not done so including Estonia and Poland. Germany’s legislation came into force in June 2023, and initially applies to large employers from 2 July 2023.
In February 2023, the European Commission referred eight member states to the European Court of Justice for failing to transpose the Directive. According to the EU, the eight member states (the Czech Republic, Estonia, Germany, Hungary, Italy, Luxembourg, Poland and Spain) failed to give satisfactory replies to previous notices sent by the European Commission.
In February 2023 the European Court of Human Rights issued a judgment in the case of Halet v Luxembourg. The case has been reported as a new benchmark in the field of whistleblowing with the court stating that whistleblowers should be protected under Article 10 of the European Convention on Human Rights when they report facts of public interest.
Countries – and regulators – outside the EU have also been introducing or strengthening whistleblowing laws. In July 2022, New Zealand introduced new whistleblowing legislation, replacing previous legislation. In May 2023, measures came into effect in China encouraging the public to report illegal social insurance activities. According to the Interim Implementing Rules for Rewarding Whistleblowing on Supervision of Social Security Fund at the Central Level (which came into force on 20 March 2023), a whistleblower would be rewarded at 2% of the amount of losses of social security fund caused by the violation verified to be true, ranging from RMB200 to RMB100,000. In the UAE, the Abu Dhabi Global Market published “Guiding Principles on Whistleblowing”, setting out aims, objectives and best practice for its many registered companies to consider as part of their own whistleblowing frameworks. This guidance builds on the growing body of regulatory oversight of whistleblowing in the UAE.
In the US, new anti-money laundering legislation was introduced on 29 December 2022 which broadens the protections for whistleblowers, expands the scope of violations to include laws concerning US economic sanctions and strengthens financial incentives for whistleblowers to report.
The EU is also putting wider ESG issues firmly on the radar of all companies operating in its market with two Directives.
The first is the Corporate Sustainability Reporting Directive (CSRD), which came into force on 5 January 2023. Member States have 18 months to transpose it into national law, so by June 2024. The CSRD builds on the framework of the EU Non-Financial Reporting Directive (NFRD), which established a minimum level of sustainability reporting obligations for certain companies. It introduces more detailed sustainability reporting requirements with required disclosures going beyond environmental and climate change reporting to include social and governance matters including respect for employee and human rights, anti-corruption and bribery, corporate governance and diversity and inclusion. According to the European Commission, the new rules have been introduced to create more transparency about the impact of companies on people and the environment.
While companies currently subject to the NFRD remain in scope, under the CSRD the reporting obligations are extended to many large and listed companies, including companies based outside the EU which have activities within the EU which meet criteria in terms of size. The reporting obligation dates range from 2025 to 2029 and HR managers will need to be closely involved in the preparation of annual sustainability reports.
The second is the proposed Corporate Sustainability Due Diligence Directive, which will require EU and non-EU companies meeting certain criteria to take appropriate measures to identify actual or potential adverse human rights and environmental impacts in their own operations and in the operations of their value chain (a concept that includes established suppliers and customers). In-scope companies must also have a plan to ensure their business model and strategy are compatible with the Paris Agreement goal of limiting global warming to 1.5 degrees. The new law has been described as projecting European values on value chains and will complement the CSRD.
Within Europe, some countries are also considering or passing their own supply chain due diligence legislation. Most notably, a new Supply Chain Act in Germany came into force on 1 January 2023 requiring companies to assess their supply chain’s compliance with human rights and environmental standards. The law will apply initially to companies with 3000 employees and a registered office or branch in Germany. From 2024 this threshold will be reduced to 1000 employees.
In late 2022 the Netherlands amended its proposed mandatory human rights due diligence legislation which requires companies to prevent adverse impacts on human rights or the environment in their supply chains. An amendment includes climate change being added as an adverse impact. The amended bill proposes a 1 July 2024 effective date.
Outside Europe, Canada has draft legislation requiring companies to disclose the steps they have taken to eradicate forced labour or child labour in their supply chains, which is expected to become law in its current form. In the US, new efforts to combat exploitative child labour were announced in February 2023. The announcements include a new inter-agency child labour task force to further collaboration and improve information sharing among agencies, as well as advance the health, education and wellbeing of children in the US.
Around the world, the last 12 months have seen a flurry of activity in the sphere of data privacy. GDPR inspired regulation has proliferated; enforcement action has continued apace; and international data transfers remain a focus for many jurisdictions.
We continue to see the GDPR serve as a benchmark for the development of privacy regimes in other jurisdictions. In Thailand, the Personal Data Protection Act became fully enforceable in June 2022, regulating the collection, processing, use and disclosure of personal data. As the consequences for non-compliance are significant - covering civil, administrative and criminal sanctions – this is likely to be a business priority. In Indonesia, the Personal Data Protection law – the country’s first data protection act - came into force in October 2022. The change has a two year transition period during which it’s expected that a data protection authority will be introduced, and many organisations will consider an advance audit of their data processes. February 2023 saw South Korea pass its amendments to the Personal Information Protection Act, which will take effect in September 2023. As the risk of administrative penalties has now increased, data controllers need to review and strengthen their compliance practices and update privacy statements and policies. And in July, Vietnam’s first comprehensive data privacy law will take effect, again mirroring various aspects of the GDPR.
November 2022 saw India release the Personal Data Protection Bill 2022, the fourth iteration of a proposed comprehensive data protection regime. Governing data controllers, processors and subjects, this has fundamental similarities to the GDPR, and would require personal data to be processed for a lawful purpose. Consent is a key ground for processing, but, unlike the GDPR, the proposed legislation has a broad concept of deemed consent. If passed by both houses in Parliament, this Act is likely to be introduced in phases. The Digital India Act is also on the horizon, although it is in the very early stages of its legislative journey. It will overhaul the existing IT legislation, which is now 22 years old and therefore requires updating for the digital age.
In August 2022 Switzerland adopted a revised Data Protection Ordinance with a Federal Act on Data Protection due to come into force in September of this year. With similarities to the GDPR, this will increase governance obligations (such as recording processing activities and reporting data breaches) and introduce new, higher fines. However, the processing of personal data will remain generally permissible even without specific justification.
In January of this year, the GDPR-inspired California Consumer Privacy Act (CCPA) came into effect. This significant reform looks likely to shape other state and national approaches to privacy. The CCPA introduced onerous obligations relating to privacy notices, data subject access requests and enhanced rights relating to the use of sensitive personal data. Most medium and large companies doing business in the state –one of the world’s largest economies in its own right - will be caught by these provisions which go beyond federal requirements. The CCPA follows the expansion of protection for consumers in a number of states (including Virginia, Connecticut, Utah and Colorado) but goes further, extending protection to employees, applicants and contractors for the first time.
In Canada, at a federal level June 2022 saw the Digital Charter Implementation Act introduced into parliament which would bring in three pieces of legislation: the Consumer Privacy Protection Act, the Personal Information and Data Protection Tribunal Act, and the Artificial Intelligence and Data Act (see theme 7). If enacted, this would require prior informed and specific consent before collecting, using or disclosing personal information (including in recruitment processes) and would introduce data subject rights – such as erasure and access rights – taken from the GDPR. Looking at specific provinces, significant changes to Quebec’s data privacy laws came into force in September 2022, with amendments staggered over the next two years. Provisions include mandatory privacy impact assessments and notification requirements relating to data breach incidents. In Ontario, in an effort to ensure greater transparency, since April 2022 employers with 25 or more employees must have a written policy if they electronically monitor their staff.
In South America, in Argentina reform of the Personal Data Protection Act was initiated in August 2022. The draft bill mirrors the GDPR in many respects, but goes further in some – for example the speed at which a data controller must flag a data breach to the relevant authority. And in Africa, in Nigeria, the Data Protection Bill 2022 was introduced in October last year. After an expedited process, this now only awaits Presidential approval. Again, this legislation mirrors many aspects of the GDPR.
Returning to the GDPR itself, in Denmark, the Data Protection Agency has recently published revised guidelines on data protection in employment relationships. In Germany, an employer was successful in its appeal against a decision that hand movement scanners (used to record work steps) were unlawful. In Ireland, the Court of Appeal considered the legality of the use of CCTV in employment disciplinary proceedings and confirmed that the purpose limitation principle requires that controllers of CCTV ensure that data subjects are informed of all purposes for which CCTV might be used.
The European Court of Justice, on a referral from the Supreme Court of Austria, issued a preliminary ruling on the issue of disclosure of personal data by data controllers. It held that where personal data has been or will be disclosed, the data controller must provide the data subject with the identity of the recipients of the data if asked to do so. A further referral from Austria resulted in a ruling that the right to obtain a ‘copy’ of personal data means a summary of the data is unlikely to suffice. On a referral from Lithuania, the court ruled that disclosure of personal data that may indirectly disclose the sexual orientation of a person constitutes the processing of special category personal data under Article 9 GDPR.
In the EU, the European Data Protection Board produced guidance on Rights of Access in April 2023 which will be of application to employers. In October 2022 the UK’s ICO also published draft guidance on monitoring at work. The ICO also announced topic-specific guidance on employment practices and data protection which will replace the employment code of practice in the UK, with guidance for employers on responding to subject access requests published last month
International data transfers have also been the subject of adequacy decisions enabling data to be transferred without additional safeguards in place. In February of this year, the EU Data Protection Board published its opinion on the European Commission’s draft adequacy decision regarding the EU-US Data Privacy Framework. This contains new US data privacy principles, replacing the previous US Privacy Shield. While the EDPB Opinion was positive it still raised concerns, and the European Parliament was less positive in its analysis, recommending the outstanding issues were addressed prior to a finding of adequacy being granted. These opinions are persuasive but not binding on the European Commission. If, as expected, it proceeds regardless, the next stage is sending the draft adequacy decision to the EU member states for their approval. Once this hurdle is passed the EU Commission will make its final decision, and we may have a partial adequacy decision for the US as early as July, but certainly by October 2023. UK adequacy regulations for the US had been expected to a finding of adequacy by the EU, but the recent announcement of a commitment in principle to a new UK-US data bridge indicates that these bi-lateral negotiations are pressing ahead. Adequacy status was also a focus for Israel, which in November 2022 published proposals to update its privacy laws to better align with the GDPR. Since December 2022 adequacy regulations between the UK and South Korea have been in force and the UK has stated its intention to expand the list of jurisdictions recognised as adequate post Brexit. Although reform is also on the agenda in the UK, any steps taken to update and simplify the UK data protection framework would ensure data adequacy with the EU is maintained. On 24 May 2023 it was announced that the EU and Association of Southeast Asian Nations (ASEAN) were co-operating on model clauses for data transfers.
In China, after the introduction of the Personal Information Protection Law (PIPL) in 2021, last year saw the Chinese Data Protection authorities making efforts to enforce certain of its provisions. Enforcement action saw ride-hailing firm DiDi Global receive a USD$1.2 billion fine for non-compliance. In June and July 2022 the Cybersecurity Administration of China (CAC) provided guidance on the three available mechanisms for transferring data out of China under the PIPL, highlighting the high hurdles and significant risks of these processes. In February of this year, the CAC published the final version of its standard contractual clauses, which became effective as of 1 June 2023: entering into a data transfer agreement which complies with this standard contract is one of these three permissible routes for outbound data transfers.
Disruptive cyber-attacks provided motivation for urgent toughening-up of Australian privacy laws, with the Privacy Legislation Amendment Bill 2022 passed by both houses in less than a month and taking effect in December 2022. Changes included significant increases to penalties for data breaches, an increase in enforcement authority for the Data Commissioner and greater extraterritorial reach for legislation. A broad suite of reforms including enhanced data subject rights and accountability standards, and a new tort of serious invasion of privacy, has also been proposed in a Privacy Act Review Report.
In Europe, enforcement action by regulators continues to result in significant fines. In Ireland Meta received three substantial fines for violation of the GDPR: €1.2 bn, €405m and €390m – all of which Meta stated they intend to appeal. In France, the data protection regulator, CNIL, continued to impose an increasing number of sanctions. These included a €20m fine against a provider of facial recognition technology – notably an organisation not established in France and without an EU representative – a sanction which was aggravated by the company’s lack of co-operation with the regulator and non-compliance with the original order, which resulted in a further fine of €5.2m. This was alongside those fines already imposed on the facial recognition company by data protection authorities in Italy and Greece of €20 million each, and £17m by the ICO in the UK (reduced to £7.5m on appeal). In the Netherlands, the Dutch DPA issued its highest ever fine, imposing a €3.7m sanction on the Dutch Tax Authority.
By tracking trends in employment law around the world, this paper draws into sharp relief the legal convergence caused by globalisation, as countries influence one another, sometimes seeking solutions to similar problems, or a supra national authority such as the EU passes law to be implemented in multiple nations states.
Globalisation is of course not limited to our legal systems, influencing fashion trends, art, and architecture, the products we buy, the TV we watch, the books we read and the language we speak. Many countries deplore the way their culture is diluted or dissipated by the effects of globalisation and make significant efforts to protect local culture and language. The Canadian province of Québec already has a Charter of the French language to preserve the position of its official language. This charter was significantly modified on 1 June 2022 by Bill 96, an Act respecting French, the official and common language of Québec. Amongst other matters unconnected to employment, it will require written communications to employees to be in French and employment contracts to be provided in French, with employees only being bound by contracts in another language if they first examine the French version and express a wish to be bound by the agreement in a different language. Jobs must be advertised in French as well as any other language and employees can bring a claim if they believe they have been discriminated against because they have little command of a language other than French or wish to exercise their French language rights. Bonne chance!
With thanks to our colleagues and contributors from our international alliance, Ius Laboris.