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The world of employment law: Pay and reward

02 March 2021

Employer responsibilities in terms of fair pay and contributions towards taxes and company benefits have remained high on the agenda, despite a difficult year for business.

The EU has published a draft minimum wage directive, which seeks to improve workers’ access to minimum wage protection, including promoting collective bargaining and mechanisms to ensure compliance. The draft now needs to be approved by the European Parliament and European Council.

Switzerland took the title of the world’s highest minimum wage payer - 23 Swiss francs per hour (roughly £19 / US$ 26) as of November last year. 

The Netherlands changed employer contributions for unemployment insurance from a sector-specific approach to a calculation based on two fixed rates. The higher rate of 7.94% applies to most employment contracts. As of January 2020, employees became entitled to a statutory transition payment on termination from day one of employment (rather than after two years’ service, as previously).

Ireland launched a consultation, which closed at the very end of last year, on how a statutory sick pay scheme would work following the government’s earlier commitment to enacting statutory sick pay by the end of 2021. This will be a major change for employers in Ireland where no statutory obligation to pay sick pay currently exists.

Meanwhile in Australia, Victoria introduced a bill creating criminal offences relating to employers dishonestly underpaying employee entitlements or failing to keep proper records of entitlements. A new Wage Inspectorate has also been created, with the legislation due to be in force by 1 July 2021.

New Zealand promised to introduce legislation to double minimum sick leave entitlements to ten days per year.

Mexico has introduced a new bill to increase employer pension contributions from 5.15% of salary to 13.875% by 2030.

In the US, New York State adopted state-wide paid sick leave of up to seven days (depending on employer size) and New York City expanded its own paid sick leave law to mirror and expand upon the state law provisions.

In Canada, the Ontario Superior Court of Justice ruled against the employer in Canada’s largest unpaid overtime class action. The Court found that the employer breached the Canadian Labour Code by implementing unlawful overtime policies and hours-of-work recording practices. The decision affirms that there is an obligation on the employer to pay overtime when employees are required to work excess hours.

New employment regulations came into force in the Abu Dhabi Global Market at the beginning of last year, introducing an overtime scheme (with exclusions for managerial employees) and mandating compensation supplements where an employee works in excess of 832 hours over a period of four months. Statutory sick pay entitlement was reduced.

The Dubai International Finance Centre introduced a new Employee Workplace Savings Plan in January 2020 (replacing the former gratuity payment scheme). This requires all non-exempt employees to be registered within two months of the qualifying commencement date and contribute 5.83% of the monthly basic wage during their first five years of service, rising to 8.33% of the employee’s monthly basic wage after that.

In South Korea, organisations with more than 300 employees are now obliged to provide paid holiday on public holidays. And in Hong Kong, there are proposals to increase statutory holidays (12 days) to align with public holidays (17 days).

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