Global HR Newsletter

Draft bill to amend working time rules

The Ministry of Employment has submitted a draft bill which if passed will come into law on 1 January 2024.

The bill focusses on two main amendments. The first is to introduce a working time ‘opt-out’ so that employees can consent to working more than 48 hours a week on average. However, in its current form this will only be permitted within a collective agreement and only for employees that operate in an on-call capacity and perform functions that are critical to society.

The second area of focus is to require employers to keep ‘objective, reliable and accessible’ working time registration systems to measure the daily working hours of each employee. As part of the system requirements employees must be able to access their own information and the employer is obliged to retain the records for five years. The bill does not prescribe what systems need to be deployed and therefore the employer will have wide discretion.

The bill also proposes that the stipulations in the legislation on breaks, the 48-hour weekly hours cap, and night working do not apply to ‘employees whose length of working hours cannot be measured or determined in advance du to the special nature of the work performed’   or to ‘employees who can make independent decisions or who have managerial functions’.

As a result of these derogations the requirement to apply a working time registration system would also not apply conditional on the employment contract clearly stating that this is the case.

We will continue to monitor the passage of the bill into law and provide further updates.

One less public holiday

The Danish Parliament has passed a bill removing the Great Prayer Day from the calendar of public holidays. Effective 2024 it will simply be recognised as a normal working day. In lieu of losing a public holiday employees will be paid an additional 0.45% of their annual salary (corresponding to one additional day of pay). The additional pay can either be paid across the year in monthly instalments or in two lump sums payable in May and August.

Employers need to ensure that their internal policies and payroll processes are adapted to account for the change before January 2024.

New rules on fixed term employment contracts

In May new rules were introduced for fixed term employment contracts. Under Italian law the maximum duration for a fixed term employment contract is 24 months. The new law now requires that fixed term arrangements between 12 months and 24 months are only permissible if they meet a specific business need which is set out in a collective agreement, or are required for the replacement of employees. For agreements executed before 30 April 2024, and in circumstances where a collective agreement is silent on the issue, the parties can agree in writing on other business needs justifying the use of a fixed term contract.

Hiring incentives

For low-income employees a form of income support (‘inclusion allowance’) will be introduced from January 2024. Employers with employees receiving an inclusion allowance will benefit from social security discounts of 100% up to EUR8,000 over a 12-month period for permanent hires and a 50% discount up to EUR4,000 over 12 months for a fixed term employee.

Employers hiring employees aged under 30 and who are classified as NEET (Not Engaged in Employment, Education or Training) or who are enrolled in the National Operative Programme are entitled to claim incentives of between 20% to 60% of the monthly gross earnings of the employee. The incentives will apply to employees hired between 1 June 2023 and 31 December 2023.

Pension reform

The Dutch Senate passed the Future of Pensions Act (Wet Toekomst Pensioenen, “WTP”) with effect from 1 July 2023.

Originally employers with existing pension schemes were given until 1 January 2027 to implement the changes – however the Senate has extended this by one year so that the deadline is now 1 January 2028.

The key changes introduced by the WTP are as follows: 

• From 1 January 2028 all pension schemes will be defined contribution schemes and final pay/career average defined benefit schemes will no longer be permitted.
• Age related contribution rates are no longer permitted. All new pension schemes from 1 July 2023 are required to apply the same fixed rate of contribution to all employees regardless of age.
• Current pension schemes will need to be updated before 1 January 2028.
• The maximum contribution rate for a defined contribution scheme will be 30%.
• Effective 1 January 2024 the age at which an employee can enter a scheme will be reduced from 21 to 18.

Reintegration of employees on sick leave

From 1 July 2023 Dutch employers have additional duties when reintegrating employees from a lengthy illness.

The Dutch government has introduced a requirement for regular conversations between the employer and the employee regarding the reintegration process and to record their respective views in writing in a ‘Plan of Approach’ and ‘First-Year Evaluation’.

Employers should therefore ensure that their processes are updated to accommodate this as a failure to do so could lead to a wage sanction being imposed by the social security authorities (UWV).

Tax free mileage update

Currently set at EUR0.21/km the tax-free travel allowance will increase to EUR0.23/km from 1 January 2024. Amounts in excess of this limit will be subject to tax.

The need for a confidential advisor

The Dutch House of Representatives has approved a legislative proposal that will require employers with 10 or more employees to appoint a confidential advisor. The advisor will offer employees a resource to discuss workplace issues and they can be an internal or an external appointment such as through an existing engagement with an Arbodienst (the occupational health and safety service that all employers are required to have).

The proposal has yet to receive approval from the Senate and therefore the timing of its roll-out is not known.

Remote working expenses

On 18 September 2023 an ordinance was signed to set the tax-free amount for homeworking expenses at EUR22 per month, which roughly equates to EUR1 per day.

The ordinance also allows for the rate to be increased by up to 50% if is agreed as part of a collective agreement. Amounts paid above the limit will be subject to income tax.

The government established in 2022 that employees could claim from their employer the additional expense of working from home. Labour laws were updated in May 2023 that require the employer to set out clearly in the employment contract any teleworking arrangements and establish the amount to be paid to cover the additional expense of working from home. However, the government had failed so far to follow up with details on the tax fee cap to be applied.

Employers that have been delaying the payment for remote working allowances should now take action.

A new Act to punish illegal workers and their employers

The Illegal Migration Act 2023 received Royal Assent on 20 July 2023. The Act is an attempt by the government to crack down on people illegally coming to the UK for reasons other than genuine asylum. As an increased deterrent the Act introduces the specific offence of illegal employment and tougher penalties for non-compliance.

Fines are to be more than tripled with civil penalties raised to GBP45,000 for a first breach from the current GBP15,000 and up to GBP60,000 for repeat breaches (currently GBP20,000). Additionally, there will be increased use of criminal sentences against employers that knowingly hire illegal employees.

Employers will have a statutory defence against a civil penalty where they have conducted a compliant Right to Work check, and in the event that an employer is liable but has reported a suspected employee already in their employment they could receive a GBP5,000 civil penalty reduction.

It is likely that the changes will be come into force in early 2024 and employers not wanting to risk receiving a large fine should ensure that they are fully conversant with the current ‘right to work’ checking process and maintain appropriate records.

The Economic Crime and Corporate Transparency Bill

This bill is currently in the final stages of review before receiving Royal Assent. It will create a new corporate offence of failure to prevent fraud. A company will be liable where a specified fraud offence (offences to be listed in secondary legislation) is committed by an employee or agent, for the organisation’s benefit, and the company did not have reasonable fraud prevention procedures in place.

Failing to prevent fraud will be a strict liability offence, meaning that there is no requirement for the employer to be complicit or even know that the employee is committing the offence to be sanctioned.

When the bill becomes law employers should take extra steps to ensure they comply with the new rules. As with the Bribery Act a statutory defence will be available if the employer can prove they had prevention procedures in place which were reasonable in all circumstances. What is considered reasonable will depend upon the employer’s business - higher risk activities will require tighter procedures.

When the offence was first introduced into the bill it only applied to ‘large’ companies, however the House of Lords subsequently removed the thresholds and therefore the offence applies to all companies regardless of size. Recent amendments have also extended the offence to a failure to prevent money laundering.

The bill is likely to receive Royal Assent later this year.

Changes to EU pre-settled status

European nationals who were based in the UK before 31 December 2020 were provided with the right to remain and work in the UK after Brexit under the EU Pre Settled Status scheme. 
The UK’s Home Office has recently announced two key changes to current holders of Pre-Settled Status. 

• An automatic two year extension will be offered which will assist individuals meet the five year residency required to upgrade to Settled Status. The rules require that during the five year period an individual must have absences of no more than 180 days in any 12 month period. It is thought that, given the travel restrictions at the time of the Covid-19 pandemic, many would not be able to meet this requirement without the extension.
• From 2024 the Home Office has indicated that some holders of Pre-Settled Status will be automatically upgraded to Settled Status – it is likely this will only be extended to the simplest of cases, such as where the individual has a full record of National Insurance contributions. Details on how this will work have yet to be released.

Changes to auto-enrolment pension schemes

UK employers are required to operate a workplace pension scheme for its eligible employees under the requirements of auto-enrolment regime, so named because employees are automatically enrolled and must then opt-out if they don’t want to participate.

On 18 September 2023 the Private Members Bill aimed at expanding the auto-enrolment pension system received Royal Assent. The Pensions (Extension of Automatic Enrolment) Act 2023 will abolish the lower earnings limit for contributions so that contributions will apply to the first GBP1 of earnings rather than from GBP6,240 per annum. The Act also seeks to lower the age when employees are eligible to be automatically enrolled from 22 to 18.

It is not currently known when the changes will be introduced – the Act simply provides the Secretary of State with the authority to implement regulations to put the changes into effect.

Personal data transfers to the US 

The transfer of EU personal data into the US has been a sensitive area for many years now. The US lacks an adequacy decision from the European Commission which would allow for the processing of EU data in the US. Transfers of EU data to countries that lack an adequacy decision require the exporter to put in place additional security measures to ensure that the processing of the data at its destination meets the requirements of GDPR. Most organisations rely on the European Commission’s Standard Contractual Clauses (SCC) which create a contractual undertaking on the data importer to apply GDPR standards. However, the legality of the SCC was challenged by serial complainant Max Schrems whose focus continues to be the threat to privacy posed by the surveillance powers of the US National Security Agency. 

In response the US has introduced additional limitations in relation to US government access to personal data and has also developed the Trans-Atlantic Data Privacy Framework (DPF) which provides a voluntary registration scheme whereby an organisation publicly declares its adoption of a set of privacy principles issued by the US Department of Commerce and implements these within its organisation. As part of the registration there is a requirement for an annual recertification. The principles generally align with those detailed in the GDPR and in upholding these a US based organisation is free to receive and process EU personal data.

The European Commission adopted its adequacy decision of the DPF on the 10 July 2023 and as a result the DPF is now live and accepting applications for registration on its website.

It should be noted that both of its predecessors, the Safe Harbor and Privacy Shield regime fell victim to a legal challenge raised by Max Schrems and somewhat predictably the privacy group NOYB chaired by Schrems has already signalled its intention to challenge the validity of the DPF. Interestingly organisations that have remained certified under the Privacy Shield are automatically certified under the DPF. Watch this space!

Pay Transparency Directive

Employers throughout the EU will be required to implement gender pay gap reporting as a result of the Pay Transparency Directive. For some countries this will be a new requirement whereas for others with existing reporting requirements upgrades may be required. Provided Member States implement the directive on time this will mean employers with 150 employees or more will need to start producing reports for the 2026 calendar year. This duty will extend to employers with 100 employees or more from 2030.

Smaller employers will avoid the requirements of the directive but may have responsibilities under local law - for example Ireland who already has a gender pay gap reporting requirement will require employers with 50 or more employees to start reporting from 2025, and France already applies reporting requirements to this size of employer.

With regards to the frequency of reporting, only employers with 250 employees or more are required to report annually, smaller employers must report every three years.

When assessing headcount only the employing company needs to be factored, rather than a group of companies as a whole.

The directive includes other responsibilities that apply to all employers regardless of size. All employers will need to advertise vacancies with detailed salary ranges and provide information on what comparable employees are paid upon request. Additionally, candidates cannot be asked to provide historical salary data and an employee will have the right to disclose pay to colleagues for the purposes of enforcing equal pay rights. All these rights will apply locally once each Member State has incorporated the directive into domestic legislation which must be completed by June 2026.

New work permit designed to attract US H-1B visa holders

Effective 16 July 2023 individuals who hold a US H-1B visa can relocate with their immediate family to Canada despite not having a job offer in Canada. Individuals will receive an open permit for up to three years and which does not require a local sponsoring employer. 

The scheme is being organised under Canada’s Tech Talent Strategy and will remain open for one year or up to the point when 10,000 applications have been received. It is thought the arrangement will prove popular with H-1B visa holders who are nearing the six year immigration clearance limit.

New data protection law 

The Digital Personal Data Protection Act 2023 (DPDA) received presidential assent on 11 August 2023. For international organisations used to grappling with the requirements of the EU’s GDPR the legislation treads a familiar path and should in most parts be satisfied by an organisation’s existing global policies and practices.

The Act applies to personal data in digital form only and applies to personal data being processed in India (including data received from other jurisdictions), and also to Indian personal data relating to consumers that is processed overseas.

From an employment perspective the Act allows the processing of personal data of employees without the need for their consent ‘for the purposes of employment…’ , and in this respect the legal basis for processing would appear to be far wider than that provided for in the GDPR. However, the precise details of what is covered by this definition have yet to be outlined and therefore it is open to Data Protection Board to construe this narrowly.

If processing is not ‘for the purposes of employment’ then its open to the employer to request the employee’s consent. Where consent is used for the legal processing this needs to be ‘free, specific, informed, unconditional and unambiguous’. Early indications suggest that whereas the GDPR has an issue with the legitimacy of consent provided in an employment relationship due to the imbalance of power this perspective is unlikely to apply in India.

Similar to GDPR, the Act also requires that an individual is provided with prior notice of the processing of their data. However, the information contained in this notice is less extensive than that stipulated by GDPR and extends simply to listing the categories of data being processed, the purpose of the processing, the methods by which the individual can exercise their rights or make a compliant.

With regard to cross border transfers of Indian personal data the Act does not replicate the GDPR’s approach where transfers to countries without an adequacy decision require the roll out of additional security measures. Essentially transfers will only be an issue if the destination country has been blacklisted by the Indian government. 

On the issue of Data Protection Officers the requirement will only apply to what is referred to in the Act as a ‘Significant Data Fiduciary’ which are organisations designated as such by the Indian government and which are identified as potentially impacting the sovereignty and integrity of India, create a risk to its electoral democracy, jeopardize the security of the state and other similar criteria. As such this is unlikely to be relevant to most international organisations. 

For organisations operating in India as a minimum we would recommend that data protection policies, processed and privacy statements are extended to Indian data subjects.

Fixed term contract transition 

We previously alerted out clients to the need to convert their UAE employees from permanent employment contracts to fixed term contracts in line with the requirements of new labour regulations. The deadline originally set as 1 February 2023 was moved to 31 December 2023. 

For employers that have yet to update their contracts we would recommend steps are put into action to cover off this requirement over the coming months.

Options for end of service gratuity

Following a raft of recent labour law developments, the UAE government has recently announced the introduction of an employee saving scheme as an alternative to the end of service gratuity.

UAE workers benefit from the payment of a gratuity on termination of employment - for an employee with less than five years’ service this is 21 days of basic salary for each year of employment and for employees with five years’ service or more this rises to 30 days.

Under the new scheme all private and public sector companies and free-zone companies outside of the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) will have the option to make regular contributions into saving accounts for their eligible employees which are equivalent in value to the accrual rates for the end of service gratuity.

It is unclear whether in time the government will make it a requirement for employers to introduce savings schemes to replace the end of service gratuity – there are certainly a number of reasons why this would be a positive move forward. Incremental payments during the course of an employee’s employment remove the risk that the employer defaults on paying the end of service gratuity due to financial difficulties. A savings scheme also has the added benefit that over time the investment value could potentially exceed the amount that would have been paid out as a gratuity on termination.

As at the time of writing the legislation covering the initiative has yet to be released and therefore detail on the specifics and timing is not currently available.