ANNUAL REVIEW

Labour & Employment 2015

August 2015  |  BANKING & FINANCE

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As companies prosper and expand into new markets, labour and employment issues become an ever greater source of discussion and debate. Businesses are increasingly subject to a range of economic, technological and structural challenges that can have a significant impact on the interaction between employer and employee. These can be matters pertaining to employment law, labour relations, human capital, labour and employment litigation, and the retention of key talent, among many others.

 

UNITED STATES

Charles W. Pautsch

Pautsch Spognardi & Baiocchi Legal Group, LLP

“There has been a great deal of impetus coming from many sources, principally labour unions and social activist groups to increase the minimum wage substantially to $15 per hour, which will provide a so-called ‘living wage’. This has caused the development of local wage and hour requirements at the municipal level – most notably Los Angeles and Seattle – which is very unusual as most trend setting legislation in the past in the minimum wage area has been at the state or federal level. Other developments of significance include the National Labor Relations Board’s (NLRB) adoption of so-called ‘ambush’ election rules which greatly shorten the time period for union representation elections, favouring union organising efforts in doing so.”

 

CANADA

François Garneau

Miller Thomson

“Perhaps the most significant development occurred when the Supreme Court of Canada declared that legislation enacted by the Province of Saskatchewan which prohibited the right to strike by employees of its public sector was unconstitutional. In particular, the Court ruled for the first time that the right to strike was constitutionally protected. Thus, the right of governmental employers to eliminate the right to strike of public sector employees was substantially curtailed. In another landmark decision, the Court struck down the legislation which prevented members of the Royal Canadian Mounted Police from forming their own independent union. The Court found that legislation compelling members of the RCMP to join an association set up by the RCMP was a violation of the right to freedom of association protected by the Constitution.”

 

MEXICO

Francisco J. Peniche Beguerisse

Creel, García-Cuéllar, Aiza y Enríquez

“In February 2015, the Federal Regulation for Security and Health in the Workplace came into force. This regulation compiled pre-existing Mexican official standards and created new obligations for employers regarding health and safety in working facilities and included new economic penalties. Over the last 12 months, the Mexican Labour Ministry has intensified inspections of workplaces to verify compliance with employment conditions, resulting in more than 140,000 inspections and penalties of MXN 1.09bn. The daily minimum wage for the geographic zone B was extraordinarily increased in April 2015 to MXN 68.28 – usually the minimum wage is increased in January.”

 

BRAZIL

Rodrigo Seizo Takano

Machado, Meyer, Sendacz e Opice Advogado

“There has been one significant reform regarding the Fundo de Garantia do Tempo e Serviço (FGTS). According to Brazilian employment laws, employers are obliged to carry out monthly deposits equal to 8 percent of their employee’s monthly remuneration (FGTS deposits) into their employees’ Severance Guarantee Fund (FGTS account). Based on Precedent No. 362 of the Brazilian Superior Labour Court and Precedent N. 210 of the Superior Court of Justice, employees were able to claim before Brazilian Labour courts payments that were not deposited into their FGTS account by their employer for the 30 years prior to filing the labour lawsuit. However, as from 13 November 2014, based on a decision issued by the Brazilian Supreme Court, this will change from 30 years to five years.”

 

ARGENTINA

Enrique M. Stile

Marval O’farrell Mairal

“There have been many discussions in recent years regarding the fiscal treatment of amounts granted in excess of statutory severance. In principle, and according to tax regulations, only statutory compensation for termination was considered tax exempted. However, there were court precedents extending the tax exempt principle to other severance compensations, and the Supreme Court of Justice interpreted that compensation for maternity and union protection were also tax exempt. On the basis of these precedents, there has been a lot of litigation regarding tax treatment of amounts paid in excess of statutory severance, and employers have to opt between defending themselves from the tax authorities or from the potential claim of a former employee.”

 

CHILE

Oscar Aitken

Carey y Cía

“A relevant change to Chilean labour legislation took place last year and yet another, and more important change, is about to occur. On 9 July 2014, a new piece of legislation came into force, regulating the possibility of having companies belonging to the same holding structure being declared as a sole employer for labour and social security purposes. There is currently a bill on unions and collective bargaining being discussed by Congress, which is expected to be approved during 2015. The bill intends to substantially amend the existing collective bargaining process and give greater powers to the unions by, inter alia, appointing unions as the main actor for collective bargaining processes, banning replacements during a strike, banning employees from individually returning to work during a strike and automatically extending the benefits of a collective bargaining agreement to personnel who join the union afterwards.”

 

UNITED KINGDOM

Martin Warren

Eversheds LLP

“Among the most significant developments, of incremental rather than immediately high impact, has been the introduction of shared parental leave. Working parents may share periods of paid absence following birth, adoption and certain surrogacy arrangements. Other legal changes have given rise to additional financial penalties for employers, such as a maximum fine of £20,000 per worker, if they fail to pay the applicable rate of national minimum wage and, potentially, unlimited fines if they try to force a job applicant to disclose criminal records employers cannot legitimately obtain for themselves.”

 

GERMANY

Sascha Morgenroth

DLA Piper UK LLP

“There have been significant developments in German employment law in the recent past and there will be further important changes in the near future. Most significantly, since January 2015 a general and mandatory national minimum wage applies in Germany at €8.50 per working hour. In principle, eligible employees cannot validly waive their right to be paid minimum wage and all agreements falling below the minimum wage are void. Non-compliance with the minimum wage pay requirement can result in substantial fines of up to €500,000. It is important to note that companies are not only liable to pay minimum wage to their own employees but also for contractors and their subcontractors to pay the minimum wage to their employees in Germany. This significant financial liability risk must therefore be considered when contracting out services or works.”

 

BELGIUM

Stefan Nerinckx

Fieldfisher Brussels

“In the wake of the anti-abuse regulations, we have noticed a general trend for companies to be more legally compliant. This includes setting up procedures for the use of social media, harassment and alcohol and drugs codes, as well as control procedures to monitor whether subcontractors employ their staff legally in the Belgian territory. Reducing employment costs is still a major consideration. Flexible working conditions – including flexible contracts and innovative holiday and sabbatical policies – as well as flexible salary conditions – including variable bonus plans and additional pension plans – remain hot topics. Companies are also still in a restructuring mode, with a significant number of collective dismissals as a result.”

 

RUSSIA

Alexander Karpukhin

Orient Partners

“The most important development is the adoption of the secondment/outsourcing arrangements in Russia. On 7 May 2014, Federal law No. 116-FZ was signed into law by the Russian president. The Law will take effect on 1 January 2016 and will regulate private employment agencies and secondment/outsourcing arrangements in Russia. It amends, in relevant ways, the Russian Law on Employment, the Labour Code, the Tax Code and a few related laws. Before the Law, secondment/outsourcing arrangements were not clearly defined in Russia’s labour and civil laws, though they have been recognised for tax reporting and payment purposes. The Law, for the first time, provides a specific definition for secondment/outsourcing as ‘leased labour’, provided under an agreement for provision of the labour of workers.”


CONTRIBUTORS

Carey y Cía

Creel, García-Cuéllar, Aiza y Enríquez

DLA Piper UK LLP

Eversheds LLP

Fieldfisher Brussels

Machado, Meyer, Sendacz e Opice Advogado

Marval O’farrell Mairal

Miller Thomson

Orient Partners

Pautsch Spognardi & Baiocchi Legal Group, LLP

 


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