Belgium
Salary indexation finally agreed and effective 1 January 2023
Employers covered by business sector collective agreement No. 200 (most white-collar employees) are required to increase their employee’s basic salary by 11.08%, from 1 January 2023. The increase is mandatory (an annual event following an agreement struck in 2016) and comes as a result of lengthy negotiations within the sector. It should be noted that the increase cannot be absorbed by other salary increases – such as merit increases.
Changes to when notice of termination is deemed delivered
Under the Employment Contracts Act a notice of termination issued by registered letter would be deemed served three working days after the day of posting and a Saturday considered a working day, ie a registered letter posted on Wednesday could be effective the following Monday.
The new Civil Code published in July 2022 changed this rule by removing Saturday as a working day. Therefore from 1 January 2023 a termination letter would need to be posted by registered mail on Tuesday in order to be deemed served by the following Monday.
France
New agreement on cross border workers struck with Switzerland
Cross border workers reside in one EU Member State and commute daily to their place of work in another EU Member State. During COVID lockdowns rules were relaxed between Switzerland and its neighbouring countries so that cross border workers retained their status, despite working from home. The temporary relaxation has now been removed.
Acknowledging that remote working has continued to some extent, despite the removal of lockdown restrictions, the French and Swiss governments have agreed that cross border tax status can be maintained if the time spent home-working does not exceed 40% of working time. Put another way a Geneva employer will be able to tax 100% of their cross-border workers’ pay as long as they work 60% of their time in Switzerland.
The new rule applies from 1 January 2023, despite the addendum to the current agreement not being formally published until later in 2023.
Germany
New electronic certificates for sick leave
From 1 January 2023 employees now evidence sickness absence using electronic certificates. As with the previous process an employee should still have their incapacity for work assessed by a doctor after the third day of sickness absence. Unlike before, however, once the employee has notified their employer of their absence the employer can access a digital certificate directly from the employee’s health insurance company.
Action pointThe risk with the new system is that the employer fails to act on the employee’s notification – previously the employer would receive a yellow slip. There is a danger that without a policy that requires an employee to send an email, sickness absence could go unnoticed.
Ireland
New auto-enrolment pension plans
Currently Ireland requires employers to establish a Personal Retirement Savings Account (PRSA) as a facility to accept employee contributions should they wish to contribute. Employers have not been required to make contributions.
Early in 2022 the Irish government issued details of its plans to introduce a mandatory workplace pension plan that requires automatic enrolment of employees (who can then opt out). Under the scheme an employer that does not already have a qualifying retirement plan would be required to enrol employees aged 23 to 60 and earning at least EUR 20,000 per year. Employer and employee contributions would initially be set at 1.5% rising to 6% by 2034 and applied to capped annual earnings of EUR 80,000.
The changes are expected to come into force in early 2024.
From 1 January 2023 employer contributions into a PRSA pension arrangement are no longer taxed as a benefit in kind and will have the same tax treatment as contributions to other pensions, with no limit on the amount of contributions.
Italy
Pink Label can reduce employer social security
The Pink Label (Bollino Rosa) is a gender equality certification introduced in 2021 and granted to employers that reduce the gender gap in relation to opportunities and pay and that have effective workplace equality systems in place.
Since 2022 private companies can be granted a reduction in their social security contributions if they hold the Pink Label. A decree issued on 29 November 2022 provided detail on the arrangements in relation to the social security saving – namely that the exemption is a maximum of 1% of the employer’s social security liability (up to a maximum of EUR 50,000) and applies for three years.
Hungary
Changes in abuse of rights claims
The Hungary Labour Code includes a general prohibition on the abuse of rights, which requires a general standard of conduct for both employer and employee. Often an employee will claim an abuse of rights in connection with their termination. Previously the employee had the burden of proof when making an abuse of rights claim. From 1 January 2023 the employee needs only to evidence the circumstance and the resulting disadvantage and it is then for the employer to prove there is no causal link between the two.
Action point - This development is likely to increase the number of claims made by employees and employers will need to take additional care when investigating the background of performance or conduct issues before terminating.Netherlands
Pension reform further delayed
Back in March 2022 the Dutch Minister of Social Affairs submitted its proposal for pension reform to the House of Representatives. The proposal aimed to abolish defined benefits schemes and set flat contribution rates for defined contribution schemes (instead of the current arrangement where rates are set according to age).
The proposals were due to be implemented in January 2023, but this has been postponed to 1 July 2023 with a transition period to 31 December 2026.
Employers can make changes to their pension schemes ahead of the reform which would be advisable for larger employers who will undoubtedly have to engage in consultation exercises.
Changes to the 30% tax rule
The Netherlands operates a very attractive expat tax concession which enables an employee to ringfence 30% of their income as a tax-free allowance. The Dutch Ministry of Finance has announced that they will be introducing an income cap of EUR 223,000 in 2024. From 1 January 2023 an employee can no longer switch between the 30% ruling and compensation for actual extraterritorial expenses during the year.
Poland
Changes to Labour Code on remote working
The amendment to the Labour Code was adopted on 1 December 2022 and requires employers to have formal rules covering remote working which must be agreed with the trade union or, in its absence, with employee representatives. The employer also has the option of agreeing its terms directly with the employee.The formal rules should cover H&S, costs, services installation, maintenance of work equipment etc. The employer will also be required to have appropriate procedures that protect personal data in the hands of remote workers. Additionally, the employer will be obliged to offer remote working to pregnant employees, those with children under the age of four and employees with caring responsibilities for disabled persons living with them unless the employer can justify a refusal because the work is not suitable for homeworking.
Where employees are occasional home workers (less than 25 days per year) there is no requirement for an agreement or for the employer to contribute to the costs of homeworking.
Action point - Labour Code changes are likely to become law in March 2023 and will require employers to introduce formal remote working rules for their homeworkers.Time running out for pensions opt-out
Polish employers must enrol employees into a workplace pension scheme called PPK, however employees had the right to opt out.
Automatic re-enrolment is new for 2023. Employees who have previously opted out of the PPK will be automatically renewed into it on 1 March 2023 unless they formally renew their opt-out before the end of February. The employer has a duty to notify their employees of this requirement.
If an employee renews their ‘opt-out’ it will remain valid for four years (ie until 2027) whereupon it will once again need to be renewed.
Action point - during February employers should ensure their employees are aware of the deadline to renew their opt out.
Spain
Electronic notification of sick leave
From 1 April 2023 employees on sick leave are no longer required to submit medical certificates to their employer. Instead the social security authorities (INSS) will notify the employer of key particulars relating to sick leave - such as confirmation and date of return to work. This notification must be made no later than the first business day following the date of receipt. The change in process will also apply to any temporary incapacity which, as at 1 April 2023, has already begun but has not yet exceeded 365 days in duration.
Sweden
Changes to the ITP pension scheme
The ITP1 pension plan is the standard pension scheme for white collar employees covered by a collective agreement. Effective 1 January 2023 the plan rules will be changed so that a cap is applied to the salary used for the contributions. The salary cap will initially be set at SEK 177,500 per month (approximately EUR 16,000).
Action point - Employers not covered by a collective agreement will often mirror the ITP1 for their pension schemes and therefore a decision needs to be taken as to whether changes are to be made so that they continue to mirror the ITP1.
Switzerland
Extended adoption leave
Effective 1 January 2023, following an amendment to the Swiss Code of Obligations, Swiss employees will benefit from two weeks’ adoption leave for children placed that are less than four years old. Pay during adoption leave is paid as a daily allowance from the Swiss authorities corresponding to 80% of the average earned income but no more than CHF 220 per day.
UK
The ICO is now naming and shaming
To date the UK’s data protection regulator, the Information Commissioners Office (ICO), has managed data breach cases and compliance matters so that the details are kept confidential. In a change to this approach the ICO has recently started to publish the names of organisations that have been subject to complaints, breaches or reprimands.
Action point - given the reputational damage that could result from such disclosure its recommended that organisations get to grips with their data protection responsibilities sooner rather than later.Menopause not a protected characteristic
In response to a House of Commons Women and Equalities Commission report the UK government has chosen not to follow its recommendation to make menopause a protected characteristic in its own right. It confirmed that in making its decision it considers sex, age and disability are all protected characteristics that, depending on the circumstances, could be called upon to ensure protection against discrimination for those experiencing menopause. However the government accepted the report’s recommendation that the Health & Safety Executive publish guidance on how employers can support employees experiencing long term health conditions, including menopause.
Action point - despite the government’s approach we recommend that employers ensure they are operating a working environment that can support employees through the menopause.EU/UK Data Protection
Latest developments on data transfers to the US
Following the demise of the US/EU Privacy Shield, transfers of EU personal data to the US have had to rely on other measures to ensure that the transfer is legal, such as the use of data flow agreements (EU Standard Clauses). Behind the scenes the EU commission, the UK government and the United States have been making progress on adopting adequacy measures that would permit the flow of EU personal data to the US.
In October 2022 President Biden signed an Executive Order which created additional privacy and civil liberties safeguards for intelligence collection activities (intelligence services access to EU data was the previous sticking point under the Privacy Shield). In response, on 13 December the European Commission published its draft adequacy decision for the US which is expected to be adopted in mid-2023.
With regards to UK personal data both the UK and the US have made plenty of positive comments regarding progress and it is likely that an adequacy decision will be put before UK parliament in early 2023, with a data bridge agreed later in 2023 (similar to the data bridge regulation recently agreed with Korea).
Australia
Respect at Work Bill
On 28 November 2022 Australia passed the Anti-Discrimination and Human Rights Legislation Amendment (Respect at Work) Bill 2022.
The bill creates a positive duty on employers to take reasonable and proportionate measures to eliminate unlawful sex discrimination, sexual harassment and sex-based harassment. What will be considered a reasonable and proportionate measure will depend on the size and resources of the business.
The bill also prohibits a person from subjecting another to a hostile workplace environment on the ground of sex. Courts will assess the seriousness, frequency and role of the wrongdoer when assessing whether there has been a contravention.
Action point - employers should look beyond their workplace policies and assess their working environments and culture more closely to eliminate unfavourable practices.
New South Wales amends H&S laws to include psychosocial risks
On 1 October 2022 the Work Health and Safety Regulation 2017 was amended to include requirements around managing psychosocial risks. The regulation defines a psychosocial hazard as one that arises from or relates to the design or management of work, work environment, plant, workplace interactions or behaviours – that may cause psychological harm, whether or not it may also cause physical harm.
Action point - Employers are now required to identify psychosocial risks as part of H&S risk assessments and put in place actions that reduce those risks.
Hong Kong
Why you need to pay termination payments on time
Final salaries must be paid to Hong Kong employees within seven days of their termination. Failure to meet the deadline can result in a criminal conviction, a fine of up to HKD 350,000 or imprisonment.
Recently there has been a spate of cases on the issue and the Labour Department has stated that it won’t tolerate late payments. On 21 November 2022 the Labour Tribunal issued a fine of HKD 90,000 for failure to pay wages on time, and in October two directors were prosecuted for their neglect in the company’s failure to make payments within seven days – one receiving a fine of HKD 22,500 and the other receiving 160 hours of community service.
Action point - care should be taken to ensure that payments to a terminated employee are always made within the seven day timeline and records are retained as evidence of meeting the deadline.
Taiwan
Approvals relaxed for micro enterprises
Under the terms of the Labour Standards Act an employer is required to seek the approval of the labour union or a labour-management meeting (in the absence of a union) for
- implementation of flexible working
- overtime work
- reduced rest periods
- adjustment of regular non-working days.
Labour management meetings must comply with formal notice requirements and must have written resolutions. The process is burdensome. Nonetheless in the absence of appropriate approvals the employer can face hefty fines.
In order to help micro enterprises with three or fewer employees the requirement for union or labour management meeting approvals has been removed and instead the employer can simply seek the agreement of the individual employee.
UAE
Mandatory employment insurance scheme introduced
Under the terms of Federal Decree No 13 of 2022 employees are required to have unemployment insurance. The law applies to all employees other than those in the UAE free trade zones, although this may change in future.
The Decree comes into force on 1 January 2023 and puts the responsibility on the employee to subscribe and pay for insurance – they must do this by 30 June 2023.
The insurance covers an employee’s wages in the event of unemployment provided the termination is not for a disciplinary reason or resignation. The cost of contributions is set at five United Arab Emirates Dirham (AED) per month for employees earning a monthly salary of AED 16,000 or less (known as category 1 contribution) or AED 10 per month for employees earning more than AED 16,000 per month (known as category 2 contribution).
In the event of qualifying unemployment the insurance payment covers 60% of the employee’s salary up to a maximum of AED 10,000 per month for employees who paid category 1 contributions and capped at AED 20,000 per month for employees who paid category 2 contributions. The claim period is capped at 12 months. To claim an employee must have been insured for at least 12 months prior to the claim.
Employees who do not take out insurance will be subject to fines and also risk not being granted new work visas.
While the obligation is on employees to organise and pay for the insurance, the employer has a responsibility to encourage and direct their employees to take out the insurance. Employers have a vested interest to ensure employees comply given that their future work visas could be in jeopardy.
Be Aware - for most employers that operate from free trade zones the new rules relating to employment insurance are not yet a requirement, though this may change.
