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Calculating holiday pay – should voluntary overtime be included?

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Over the past few years we have seen a number of cases considering what payments should be included in the calculation of holiday pay. These cases have held that commission, contractual overtime and certain allowances should all be included.  The question has remained as to how voluntary overtime should be treated.  A recent employment tribunal decision has held that voluntary overtime should, depending on the facts, be included in the calculation of statutory holiday pay.

The case involved 56 claimants all of whom had various different elements of pay in their remuneration including contractual overtime, voluntary overtime, standby allowances, and call out allowances.   The Employment judge considered that, applying previous case law, those payments which are intrinsically linked to the performance of the required tasks should be taken into account.  The tribunal therefore held that the claimants were entitled to have the allowances and the regular additional voluntary overtime considered as part of a week’s pay for the purpose of calculating statutory holiday pay. The payments were intrinsically linked to normal work and paid in such a manner and with sufficient regularity to be considered a part of the claimant’s normal remuneration.

In two instances, the payments were either expected under the job description or were seen clearly by the employee as an extension to the working week. They were both regular overtime payments, not unusual or rare. As a result they should be considered  within normal pay.  However, for another employee, although he too was subject to voluntary overtime provisions, he advised that such overtime was very rare and therefore could not be said to be part of his normal pay.  The tribunal therefore focused on the regularity of the payments in considering the facts.

The tribunal also held that in the absence of wording to the contrary in the contract, leave is accrued in the order of; Regulation 13 Leave (the four weeks deriving from EU law) first, followed by the additional 1.6 weeks holiday under Regulation 13A.  This is important as case law has held that the “normal remuneration” only applies to the entitlement under Regulation 13. The extra 1.6 weeks is calculated according to the provisions of the Working Time Regulations 1998, which provides a right simply to basic pay.    Although this order of leave will be appropriate for most employers, some may want to consider whether this should apply in all contracts depending on whether there is a seasonal increase in overtime which coincides with the timing of the holiday year.

Whilst this case focused on the fact specific nature of each payment, it should also be noted that this decision is not binding on other courts or tribunals. It does however indicate the likely approach that will be taken on voluntary overtime and other regular payments

Other issues in relation to holiday pay also remain outstanding: What is the reference period for making this calculation?  If a period of 12 weeks is used then again this could cause concern for employers who have peaks in overtime due to seasonal requirements.  A 12 month reference period may therefore be a more appropriate calculation.

 


The Foreign Nationals Employment Act

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Financial risks when using foreign workers in the Netherlands

Hiring contractors or temporary employment agencies that employ foreign workers in the Netherlands, can create financial risks of which you should be aware. If foreign workers carry out activities for the benefit of your business, you should comply with legal obligations under the Foreign Nationals Employment Act (Wet arbeid vreemdelingen) (the Act). Non-compliance with the Act can result in significant fines.

The European Union has been very active in implementing regulations in order to prevent exploitation of foreign workers. In this regard, amongst others, the Posting of Workers Directive (96/71/EC) has been implemented and more recently the Enforcement Directive (2014/67/EU), which have a significant influence on Dutch legislation with respect to the protection of (foreign) workers. More obligations and liabilities are created for companies that employ foreign employees and parties that use the services of these companies. The Act has similar objectives and effects. We note that most companies are not aware of their legal obligations under the Act and the related (financial) risks. Therefore, the main obligations and risks are set out below.

“Employer” under the Act

The Act requires that the employer obtains a valid work permit for all foreign workers. Such work permit is not required for employees with a nationality of one of the countries within the European Economic Area (EEA) (with the exception of Croatia) or Switzerland.

The term “employer” under the Act is interpreted very broadly. Therefore, not only the party that entered into an employment contract with the employee has responsibilities. In addition, any other party for whose benefit the services are provided (whether directly or indirectly) can qualify as an employer under the Act. For example, in the construction industry, it is very common for the main client to work with contractors and subcontractors or temporary employment agencies. It is not unusual for there to be a large chain of contracting parties involved in a project. Due to the broad interpretation of the term “employer”, all parties in “the chain” may fall under this definition. The party that enters into the employment contract with the employee has the primary responsibility to make sure that the required permits are in place. In addition, any other party that uses the services of this party, directly or indirectly, needs to ensure that all legal requirements have been met. Consequently, in principle, all parties will be fined separately, if somewhere in the chain foreign workers are performing labour without a valid work permit being in place.

Possible fine in case of breach

Where there is a breach of the requirements of the Act, the Ministry of Social Affairs and Employment can impose a fine of up to EUR 8,000 per employee. The fine can be increased to up to EUR 12,000 per employee if there are any aggravating circumstances, such as: i) a repeated offence within five years; ii) the foreign worker has no right of residence in the Netherlands; iii) the employer has consciously circumvented the law; and/or iv) the offence involved three or more foreign workers. As the fine is calculated per employee, the imposed fines can be significant.

Possible defence

Case law has established that it is very difficult for an “employer” to defend himself once a fine has been imposed. As already mentioned, every “employer” has a responsibility to comply with the Act. It is not possible to contractually exclude this responsibility.

In order to avoid the fine, the “employer” must prove that it did everything within its abilities to avoid any breach of the Act. The fact that the employer had no knowledge of the breach of the Act is no ground for defence. Therefore, a company should not rely on the other contracting parties to comply with the Act. In order to fulfil their own responsibilities as an employer, the parties should make clear contractual arrangements regarding compliance with the Act, before commencement of the work. The contractual arrangements should amongst other things include arrangements in respect of identity checks, monitoring presence and validity checks of the work permits. Furthermore, parties should make efforts to verify that all the requirements under the Act are met, while the work is being performed.

Moreover, we would advise employers to include an indemnity in agreements with other contracting parties against any fine imposed on them for breach of the Act by the other contracting parties or any of their contractors or subcontractors.

Should you have any further questions in respect of the above, please feel free to contact Thomas Timmermans or Saskia de Schutter.

“What rights and protections are there for workers on zero hours contracts in Germany?”

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Unlike in the U.K. and other EU member states, zero hours contracts are not (yet) common practice in Germany. To date, other arrangements aimed at achieving “flexible working” such as fixed-term or part-time contracts, secondment of personnel and – more recently – contracts to provide services have been more widespread. However, as German case law and legislation are gradually restricting the flexibility once offered by these arrangements, zero hours contracts are increasingly being used in Germany (in particular with regard to care workers, teachers, and paramedics).

Typical provisions which can be found in employment contracts read for example:

“The working time is variable. An assignment of the employee shall occur on the instruction of the employer. The employee has no entitlement to a monthly average working time in order to obtain remuneration of a certain amount”

By way of such provisions, many employers – in particular those operating in highly competitive markets – seek to circumvent their obligation to assign the employee a fixed working time and a fixed amount of remuneration, therefore intending to achieve a high level of flexibility and reduced personnel costs.

However, unlike in other countries, it is not possible to enter into a valid zero hours contract in Germany. German law follows the inherent principle that the economic and employment risk of the employer should not rest with the employee. The parties must either always designate the specific working time in the employment contract or conclude a “work on demand” relationship as part of an employment limited in time pursuant to Sec. 12 of the German Act on Part-Time Work and Fixed-Term Employment (TzBfG). A “work on demand” relationship is only valid on complying with strict requirements to protect the employee, which in certain cases may be varied by way of a collective agreement. The work on demand agreement must include a specified duration of weekly as well as daily working time. The law merely permits the employer flexibility with regard to the allocation of each work assignment, not the overall working time. Where weekly working time is not provided for, the agreement will be deemed to provide for ten hours. Where the contract is silent as to the daily working time, the employer must always provide the employee with a minimum of three successive hours where engaged to provide work. Furthermore, the employee is only under an obligation to provide work where the employer has made the request at least four days prior to the intended assignment. Where the parties agree a flexible work on demand component in addition to a fixed minimum working time, the Federal Labor Court has held that the weekly amount of flexible work on demand may not amount to more than 25 per cent of the weekly minimum working time. Notwithstanding this, the employer is in any case obliged to set out a fixed weekly or monthly working time and pay a certain monthly remuneration.

Furthermore, even if the parties do enter into a zero hours contract, disregarding the rules set out above, this will be considered to amount to an employment relationship therefore granting the employee all applicable rights and protections guaranteed under German law. In particular the employee would be entitled to:

  • Minimum wage;
  • Protection against unfair dismissal pursuant to the German Protection Against Dismissal Act (KSchG);
  • Special protection against dismissal (pregnant women, employees on parenting leave, severely disabled persons);
  • Continued payment of salary in case of illness and on public holidays;
  • Minimum amount of holidays as statutory;
  • Working hours as restricted by the German Act on Working Time (ArbZG);
  • Statutory notice periods; and
  • Adherence to occupational safety regulations.

What rights and protections are there for workers on zero hours contracts in the UK?

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In the UK, a zero hours worker is a casual worker engaged on a zero hours contract. A zero hours contract is defined in UK legislation as a contract of employment or other worker’s contract under which a worker undertakes to perform work conditionally on the employer making such work available, but there is no certainty of such work being made available. In essence it is a contract under which the worker is required to be available to work when requested but no minimum amount of work is guaranteed.

Ban on exclusivity clauses in zero hours contracts

Following significant media coverage on the use of zero hours contracts and allegations of their abuse by employers, recent legislation (which came into force in May 2015) has banned the use of “exclusivity” clauses in zero hours contracts which do not guarantee a minimum number of hours. This means that any clause in the contract which prohibits the worker from either:

  • doing work or performing services under another contract or under any other arrangement; or
  • doing work or performing services under another contract or under any other arrangement without the employer’s consent,

will be void and unenforceable.

Protection for zero hours workers

In order to tackle avoidance by employers of the ban on exclusivity clauses, regulations came into force in January this year which provide zero hours workers with a remedy where the contract includes a banned “exclusivity” clause.

The Regulations provide:

  • A right for employees working under zero hours contracts not to be unfairly dismissed if the reason, or principal reason, is that the employee has failed to comply with an exclusivity clause.
  • A right for workers working under zero hours contracts not to be subjected to any detriment by, or as a result of any act, or deliberate failure to act, done by an employer for the reason that the worker has failed to comply with an exclusivity clause.

The right not to be unfairly dismissed is not subject to the usual two-year qualifying period of employment applicable to most other unfair dismissal claims. Where an employer breaches these rights, the employee may issue a claim in the tribunal and seek a declaration and/or compensation.

Regulatory References – Employer’s obligations

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On 28 September 2016 the Financial Conduct Authority (FCA) published final rules on regulatory references. The purpose of the rules is to support the FCA objectives of “consumer protection and market integrity by providing firms with effective tools to better assess individuals fitness and propriety and ensure individuals take greater responsibility for their own conduct.”

The obligation is on banks and insurers to request a reference from all previous employers over the last six years for individuals applying for a senior management function or senior insurance management function within the Senior Managers Regime or Senior Insurance Managers Regime, a significant harm function under the certification regime, Notified Non-Executive Directors and Key Function Holders. The rules will come into force in March 2017. The FCA feels that this will give firms sufficient time to ensure that their processes are up to speed particularly as some of the most challenging requirements will arise after the rules have been in force for some time.

The FCA have sought to address some of the concerns raised in the previous consultation issued in October 2015, relating to legal considerations about data protection, the practicalities of updating historic references, how to obtain regulatory references from certain overseas employers, the rationale of applying the references to intra-group moves and concerns regarding proportionality.

The final rules allow firms within a group not to request a reference from each other where the group has centralised records or alternative means of sharing relevant information. The rules also clarify that the obligation is on the firm to take reasonable steps to obtain a reference. Some respondents to the consultation had raised concerns over the difficulty of obtaining a reference from an overseas firm or even a non-financial services firm more generally.  The rules also allow for some flexibility in timing, where providing a reference would require the recruiting firm or the existing employer to make a public announcement. If that is the case there is no time limit and references can be obtained at any point during the application process.

The rules include a standard template which regulated firms should use to provide a reference. This template has also been amended so that breaches of individual conduct are only required where the breach is subject to disciplinary action and further additional guidance has been given as to the level of detail required in the standard template.  The rules also remove the requirement to provide details of an employee’s responsibilities in addition to their role.

Another important change to the final rules is in relation to the obligation to update a reference for six years since the date of the original reference. Concern was expressed that this could lead to data protection issues about sharing personal information with firms that may not have a legitimate reason for receiving such information. The amendment requires that a firm is only required to update the current employer to revise a reference already provided if new relevant information comes to light.

The FCA has also extended its guidance to assist firms in determining whether to give an employee the “right to reply “ to both the reference and the updating of any reference. Much of this guidance would in any event comply with the common law and employment law duties which apply to an employer in giving a reference

Firms will need to ensure that they are ready to implement the new regulatory reference rules on 7 March 2017.

What rights and protections are there for part-time workers in the UK?

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In the UK, before June 2000 there was no express protection for part-time workers against less favourable treatment when compared with those who work full time. Their only options for legal redress were by way of an equal pay or sex discrimination claim. In 2000 the Part-time Workers (Prevention of Less Favourable Treatment) Regulations (the Regulations) came into force providing specific protection for part-time employees and workers.

What is a part-time worker?

In the Regulations, a part-time worker is defined as a person who is paid wholly or in part by reference to the time they work, and who is not a full-time worker having regard to the employer’s custom and practice in relation to workers employed under the same type of contract. A “worker” includes a person who works under a contract of employment or under any other contract for the personal performance of work or services with the exception of services which are provided for a client or customer on a professional basis or by a business undertaking carried on by the individual.

Identifying a comparator

In order to bring a claim under the Regulations, a part-time worker must identify a suitable full-time worker as a comparator.

The comparator must be:

  • Employed by the same employer.
  • Employed under the same type of contract.
  • Engaged in the same or broadly similar work having regard, where relevant, to whether they have a similar level of qualification, skills and experience.
  • Working or based at the same establishment as the part-time worker or, where there is no such worker who satisfies the three requirements listed above, working or based at a different establishment and satisfying those requirements.

Protection against less favourable treatment

Under the Regulations, a part-time worker has the right not to be treated less favourably than the employer treats a comparable full-time worker with regard to the terms of their contract; or by being subjected to any other detriment by their employer.

This means, for example, that a part-timer worker is entitled to the same hourly rate of a pay as comparable full-time workers.

This applies only where the less favourable treatment is on the ground of the worker’s part-time status and the treatment is not justified on objective grounds. For example, if the part-time worker brought a claim because of not being promoted, the employer may have a valid defence if it can show that the reason for the lack of promotion was not the worker’s part-time status but performance issues.

In deciding whether a worker has been treated less favourably under the Regulations, the pro rata principle must apply unless it is inappropriate. This means, for example, if a full-time comparator working 5 days per week is entitled to 25 days’ paid holiday each year, a part-time worker who works 3 days per week should be entitled to 15 days’ paid holiday each year.

Remedies

There is no minimum qualifying period of employment or upper age limit for bringing a claim under the Regulations but a claim must be brought within three months of the act or omission complained of.

If the claim is successful, the tribunal can:

  • make a declaration as the rights of the parties; and/or
  • order the employer to pay compensation; and/or
  • recommend that the employer take action to address the matter complained of.

 

 

Zero hour contracts in Italy

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Back in 2003, with the objective of giving employers and employees maximum flexibility to agree to working relations, the so-called zero hour contract, also known informally as “job on call,” was formally introduced into the Italian employment law regime. Under these contracts, the employee agrees to be available to work for the employer only at specific times, at the request of the employer.  In Italy, the typical employment contract is still the traditional full-time, open ended one, so it comes as no surprise that this arrangement  is largely viewed as punitive to employees and is subject to multiple restrictions.

The current rules provide for two different kinds of zero hour contracts:

  • One type is when the employee is obligated to work whenever he or she receives the call from the employer. Under this arrangement, the employee is paid for his or her work plus his or her availability to be “on call” to work whenever the request comes in from the employer.
  • A second type is when the employee can decide whether to accept or refuse to work when he or she receives the call from the employer. Under this arrangement, the employment contract, and the related remuneration, exists only if  the employee accepts and performs the relevant work.

For both types, except for contracts covering certain types of work (such as, for example, industrial plant cleaning, providing internet services, lifeguarding, translating,  performing hotel-related services or services at fairs and/or congresses, and others listed by the Minister of Labour Decree),  the employee must be either under 24 years of age or over 55 years of age. The age restriction can be overcome for other types of work, if this is specifically allowed pursuant to a collective bargaining agreement at a national or local level.

Zero hour contracts can never be used, however, in the six months subsequent to mass redundancies procedures and they can never be used to replace employees who are on strike. Moreover, Italian statutory law provides for a maximum duration for these types of contracts: 400 working days in a period of three years (although this limit is not applicable to tourism business, shops and show business).

Update: Assessment of Employment Relationships (Deregulation) Act (DBA)

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Working with independent contractors/freelancers?

In May 2016, we discussed http://www.globalworkplaceinsider.com/2016/05/var-declaration-replaced-by-model-agreements-as-of-may-1-2016/ the abolition of the VAR-declaration as a result of the implementation of the Assessment of Employment Relationships (Deregulation) Act (Wet deregulering beoordeling arbeidsrelaties) (the Act) which came into force on 1 May 2016. The first year is intended as a transitional period, during which law enforcement merely serves an informative purpose. At present, there is a great deal of uncertainty among companies and freelancers as their underlying relationship from a legal and tax perspective is often unclear. The Secretary of State for Finance, Mr. Wiebes, has introduced several measures to deal with some of these concerns. Are these measures sufficiently reassuring?

No fines and additional tax assessments after May 2017

With effect from 1 May 2017, the Dutch Tax Authorities can take measures to impose additional tax assessments and fines on the parties if they find that the relationship between the independent contractor and the client is truly an employment relationship. Mr. Wiebes has, however, clarified that after May 2017 the Dutch Tax Authorities shall abstain from such measures towards well meaning entrepreneurs who reasonably apply the model agreements that are published on the website of the Dutch Tax Authorities. Freelancers who work under the terms of the model agreements (where possible) should therefore not be exposed to many risks. This is reassuring for some; although often the model agreements do not sufficiently cover the intended relationship between two professional parties. Furthermore, not all relationships fit within the model agreements. One area of difficulty is that the model agreements are only available in Dutch. Moreover, there is often a need for additional clauses to be included (for example, IP, non-compete, tax-indemnities, complex remuneration and bonus structures). Pre-approval of the agreement by the tax authorities is possible, although such approval currently takes more than 10 weeks. In addition, the Dutch Tax Authorities seem to decline most agreements that deviate from the standard forms.

On 19 September 2016, Mr. Wiebes confirmed that the ‘obvious undertaker’, (i.e an independent contractor and not a person who evidentially works on the basis of an employment relationship), should not worry. The abolition of the VAR-declaration should not have any consequences for this group. It is not intended by the Dutch Tax Authorities to punish well meaning entrepreneurs who just fall outside the scope of law. However, entrepreneurs who are considered to abuse the system can count on a tough approach. It would therefore still be possible to contract with an independent contractor using a template which differs from a model agreement, although the risk that the relationship in fact is seen as an employment relationship is often too great.

Reporting centre and new register

In order for the Dutch government to identify all the unintended consequences of the Act in the labour market, the Dutch Tax Authorities have opened a reporting centre where the difficulties that stakeholders are facing can be reported (https://www.meldpuntdba.nl/). Moreover, the Dutch Tax Authorities will open a register where users are able to verify if a specific aspect of an agreement or an arrangement between parties has been allowed. This could create more flexibility for parties that contract on the basis of their own templates.

Law enforcement is currently possible

The transitional period should allow companies to adjust to the new system. However, not everyone is exempt during this transitional period. The Dutch Tax Authorities are currently able to impose additional tax assessments and fines in the following circumstances:

  1. If, prior to May 2016, contractors worked on the basis of a VAR-DGA (Declaration of Income Tax Status-income from activities at the company’s risk and expense) or a VAR-WUO (Declaration of Income Tax Status-profits from business activities), while factually an employment relationship was in place;
  2. If the Dutch Tax Authority were aware, prior to 1 February 2016, that the working relationship was in fact an employment relationship; or
  3. In cases of gross negligence or intent, as further stipulated in the Administrative Fines (Tax and Customs Administration) Decree (Besluit Bestuurlijke Boeten Belastingdienst).

As both financial and legal risks are present, a legal assessment of every contract that is currently in place or to be entered into is highly recommended.

For any advice in this respect or further questions in respect of the above, please feel free to contact Thomas Timmermans.

 

Thomas Timmermans (Senior Associate – Employment and Benefits Amsterdam)

Iza van Erkel (Paralegal – Employment and Benefits Amsterdam)

 


What protections and rights exist for part-time employees?

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Under French employment law, part-time employees enjoy rights identical to those granted to full-time employees by law, collective bargaining agreements and company agreements employees.

Consequently, there exists a principle of equality between part-time and full-time employees, such that part-time employees enjoy either the same or proportional rights as those so full-time employees.

Part-time employees enjoy legal protection and right applicable to their status.

  • Protections for part-time employees

First of all, unlike the full-time indefinite term contract, the part-time employment contract must be in writing and must contain certain mandatory provisions the aim of which is to ensure the protection of the employee concerned.

Furthermore, the duration of their trial period cannot exceed that of full-time employees.

Contrary to the case in some countries, the law requires a minimum number of hours, thus working time may  not be less than 24 hours per week. The aim of this rule is ensure a minimum level of revenue for part-time employees. There are some exceptions to this rule, for example for students, for which no minimum is set. The distribution of working hours (for the week or the month) and any subsequent amendment thereto must be in writing. It should also be noted that the distribution of working time for a part-time employee for the week, month or year must comply with the limits set for daily working hours: a maximum of 10 hours.

Finally, in order not to disadvantage part-time employees in the event of termination of their employment contract, French employment law provides a particular rule for the calculation of compensation in the event of termination of the contract of an employee having been successively employed full-time and part-time in the same company. In such case, the Labor Code provides that the termination payment and retirement allowance for an employee having been employed full-time and part-time in the same company must be prorated as a function of the periods of employment completed for each of such periods.

  • Rights of part-time employees

With respect to the employee’s length of service, the calculation for part-time employees is made as for full-time employees. Therefore, they are entitled to the same rights related to their length of service as full-time employees, such as family-related leave, maintenance of wages in case of sickness, professional training leave, notice period and conventional rights, such as additional paid leave.

The principle of equality and proportionality also applies to all elements of remuneration including those having a complementary nature. Part-time employees must be paid proportionally with respect to those who, with equal qualification, hold an equivalent position in the company.

Part-time employees are entitled to paid annual leave, as well as public holidays on equal terms as full-time employees.

In the event of sickness or maternity, they benefit from the same rights as full-time employees.

Regarding profit-sharing and incentive agreements, all employees bound to the company by an employment contract, regardless of the characteristics of the contract, should benefit from profit-sharing and incentive implemented in the company. However, the agreement may determine specific terms of distribution, especially for part-time employees.

Lastly, there is nothing that legally prohibits the accumulation of part-time jobs. However, an employee who holds multiple jobs must comply with the maximum permitted work level and should not work more than the permitted legal duration.

  • Sanctions for breach of these regulations

In the absence of a written contract or if the employment contract does not include mention of: the working time’s reference, the distribution of working time over the week or the month and the volume of overtime, the employer is subject to civil and penal sanctions. Such sanctions apply equally to employers who impose overtime beyond conventional or legal limits.

In such case, the employer is subject to a fine of 1,500 euros for a physical person or 7,500 euros for a corporate entity. The amount of these penalties is doubled in the event of a repeated infringement.

In addition, the contract is deemed to have been concluded on a full-time basis in the absence of a written agreement, failure to mention the distribution of work between the days of the week or weeks of the month (except where such disclosure is not required), non-compliance with contractual terms on the duration and distribution of working time.

Infringements give rise to as many penalties as there are employees concerned. However, this is a simple presumption that the employer can rebut by proving the contrary.

Finally, the omission of compulsory mentions regarding the working time or its repartition may justify a judicial termination of the employment agreement on the basis of fault by the fault of the employer.

 

What rights and protections are there for part-time workers?

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This post was also contributed by Dimitri Schaff, Trainee, Norton Rose Fulbright LLP (Munich).

Currently, about one quarter of all employment relationships in Germany are based on part-time models, the proportion of part-time to full-time employees having increased by about 12 per cent since 2001. Furthermore, as a result of the implementation of the EU Part-time Workers Directive 97/81/EC into German law in 2001, an enforceable right for current full-time employees to switch to part-time work exists in Germany. Besides this, employees with children (under the age of eight) may additionally claim the right to part-time parental leave.

Although employers and employees may agree upon a reduction of working time mutually, employees by law have a right to reduce their regular daily, weekly or monthly working time subject to certain conditions. This entitlement not only comprises the mere reduction of working hours but also the specific allocation of work time (e.g. reduction from 40 to 32 weekly working hours with 4-hour days on Tuesdays and Fridays besides the normal working days).

In the case of employees who have been employed for at least six months and where the employer employs more than 15 employees, employees may request a working time reduction from their employer once every two years. However, opposing operational reasons might exclude the employee’s entitlement if they are claimed and properly recorded by the employer. Such opposing operational reasons may be justified for organisational or financial reasons.

In practice, organisational reasons for precluding part-time employment of former full-time employees are hard for employers to establish. Almost exclusively in cases where business concepts or processes are likely to be significantly disturbed, the employer may lawfully reject the employees’ request. Relevant case law indicates, for example, that a complex shift system with adapted machine operating hours may constitute a relevant opposing operational reason on organisational grounds. Employers involved in service-oriented businesses, where customers attach great importance to dealing with a single seller or consultant,  may also be able to justify denying an employee’s request.

It is, however, not sufficient for an employer merely to argue that the redistribution of work would cause a high administrative burden. In fact, the employer has to set out and record such opposing operational reasons with regard to each individual situation. Wherever the employer fails to do so and, at the same time, rejects the employee’s request for a working time reduction, the employee in question may institute legal proceedings before the labour court in order to obtain such approval.

Moreover, an approval of a reduction request is deemed granted irrevocably if the employer fails to reject the request in writing one month prior to the intended date set for the start of the work time reduction. Once a working time reduction is granted, however, employees cannot go back to the previous working hours unless both the employer and employee mutually agree.

Apart from the “general” part-time working scenario discussed above, employees are also entitled to request a working time reduction in cases of parental leave. Parental leave may be claimed up to the child’s eighth birthday but may not exceed three years in total. Although both entitlements (general and parental part-time) are broadly similar, they differ in two substantial respects. Unlike the general entitlement, the right to part-time working within the parental leave period is limited in time, entitling employees to increase their working hours after the period of parental leave. Secondly, opposing operational reasons claimed by the employer must be pressing in order to preclude the employees’ rights to reduce working time during parental leave. In practice, this requirement sets the bar very high for lawfully rejecting an employee’s request.

All part-time employees are entitled to the same conditions as to workplace and salary (calculated pro rata) as under their former full-time employment. They are also granted all applicable rights and protections guaranteed under German law. In particular part-time employees are entitled to:

  • Keep their workplace and perform the same or equivalent work;
  • Protection against unfair dismissal pursuant to the German Protection Against Dismissal Act (KSchG);
  • In the case of a working time reduction due to parental leave, special protection against dismissal;
  • Continued payment of salary in the case of illness and on public holidays;
  • Respective amount of holidays as originally agreed;
  • Statutory notice periods.

In all cases it is recommended that employers attempt a consensual solution with employees requesting a reduction in working hours. Amicably negotiating the working conditions with current employees often leads to a more appropriate basis for further collaboration. In cases where a mutual agreement cannot be reached, it is necessary for employers to determine and record the opposing reasons that may lead to the rejection of the employee’s request.

An employee alleging harassment at work cannot be the object of a claim for defamation by the employer

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In France, employees alleging harassment enjoy legal protection against any retaliation by their employer. The employee cannot be made subject to sanctions as a consequence of such allegations, whether by outright dismissal or some lesser sanction. Obviously, there are some caveats around this, including the requirement that the employee have made such allegation of harassment in good faith. Bad faith is defined as the employee knowing that the facts alleged were false at the time he reported them, but not simply that the facts in question are ultimately not considered to constitute harassment.

The French Supreme Court recently had occasion to clarify the scope of such protection in a case decided on 28th September 2016. For the first time, the Court held that no prosecution for defamation could be brought against an employee who claimed to be the subject of harassment.

The facts were as follows:

An employee claimed she was suffering from harassment at work from her two hierarchical superiors. She decided to send a letter to the human resources department, with a copy to the Health and safety committee and the labor inspector, explaining her case.

The employer and her two hierarchical superiors in turn lodged a claim for defamation against the employee with the civil court.

Defamation is constituted by “any allegation or imputation of a fact that damages the honor or consideration of the person or body to which the fact is imputed”.

In order to refute a claim of defamation, the defendant must either demonstrate her good faith or show that the facts alleged are true, these being the only available defences to a defamation accusation. In the present case the employee was unable to produce such evidence and had therefore been ordered to pay 300 euros to each of her hierarchical superiors.

The case was appealed to the Supreme Court which held that an employee cannot be sued for defamation, noting in support of such ruling that the labor code expressly authorizes the employee to effect such denunciation.

Indeed, both the victim and the witness of moral harassment are protected against any retaliation measures, including dismissal and disciplinary measures based on such denunciations.

A defamation is deemed to be made with the intention to harm the other party. The evidence required to be produced by the defendant in the case of a claim for defamation would remove such protection as it would then be up to the employee to prove his/her good faith under very strict conditions whilst the employee can legitimately denounce facts which he/she genuinely believes (even if incorrectly) are facts characterizing harassment.

The solution adopted by the Supreme Court is intended to ensure the effectiveness of the protection of victims of harassment.

However, the employer can still defend its position in the event it can show that the employee was guilty of bad faith in alleging harassment. In such a case, the employer would be able to proceed with the dismissal of the employee and would be able to request a prosecution based on false accusation.

 

 

 

Brexit : employment law – parliamentary briefing paper

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On 10 November 2016,  the UK Parliament published a Briefing Paper setting out the Government’s position in relation to employment rights of workers following the UK’s exit from the EU.  Whilst the Government may believe that the Briefing Paper clearly sets out its position, on closer analysis it seems to raise more questions than it answers, and has given rise to some misunderstandings.

Key parts of UK employment law are derived from European law which provides minimum standards for domestic employment law. Some EU law has been implemented by way of primary legislation, for example the Equality Act 2010.  These rights are only alterable by primary legislation.  Other EU law, such as agency workers’ and working time rights, has been introduced by way of implementing secondary legislation. These laws can be revoked or amended by secondary legislation which is much quicker and less open to scrutiny. In addition, some EU rights, such as those contained in EU treaties, have direct effect in the UK.  In theory, following withdrawal from the EU, these rights would automatically cease to apply absent any saving legislation.    All EU derived employment rights could be amended or removed following Brexit.

In the 10 November Briefing Paper, the Government has set out its position in relation to four issues.

  • “The “Great Repeal Bill” (which will repeal the European Communities Act), will convert all current EU employment law into domestic law, whatever the future relationship the UK has with the EU.”   In a debate in the UK parliament on 7 November 2016 on “Exiting the EU and workers’ rights”, the Secretary of State for Business, Energy and Industrial Strategy, Greg Clark, made it clear that “all rights derived from membership of the EU will be imported into UK law through legislation in this house.” An example given is that the Working Time Directive will be transposed into UK law so that there is continuity.
  • “The direct effect of relevant EU rights will persist post Brexit”. As set out above the Government wishes to give businesses and workers certainty.
  • “Judgments of the European Court of Justice (ECJ) will be given effect in domestic law at the point of exit.” ECJ case law has interpreted the way in which EU legislation should be applied. For example, case law on the calculation of holiday pay or on the rights to rest breaks for certain workers.
  • “The Prime Minister has confirmed that workers’ existing legal rights will be guaranteed during her period in office.” This is to avoid concern that immediately following Brexit, the Government would seek to amend existing legislation. This means that although the Government is likely to come under pressure to repeal or amend certain laws, there will be no imminent changes to workers’ rights – including on such matters as working time, agency workers’ rights and holidays, which many employers would like to change.

Although the Briefing Paper is seeking to provide some certainty for employers and employees, there are points which remain subject to confusion:

  • When the Great Repeal Bill “converts” current EU legislation into domestic law, will this be implemented by primary or secondary legislation?   The Government has suggested that this will be determined by the terms of the Great Repeal Bill. However, it is not clear what EU legislation is being referred to. One of the statements by the Secretary of State during the parliamentary debate was “Of course, the Working Time Directive, like all other directives that are part of EU law, will be transposed into UK law so that there is continuity.” However, the UK already has in place legislation implementing the Working Time Directive into UK law, namely the Working Time Regulations 1998.
  • What if there is a conflict between an EU directive and our own implementing legislation? The current Working Time Regulations are interpreted in accordance with the relevant EU Directive, but, as drafted do not directly replicate the wording of the directive. In addition, the UK regulations differ from the EU Directive in that UK workers are entitled to 28 days’ paid holiday per year (1.6 weeks additional to that required under the EU Directive). Does the Secretary of State mean that the Working Time Regulations should be read in line with the EU Directive (which is effectively the situation now) or that the EU Directive itself should be transposed into UK law?
  • What is the status of past judgments of the ECJ? The Government in the parliamentary debate made it clear that the starting position of the Government is that “EU derived law, from whatever quarter, will be transferred into United Kingdom law in full at the point of exit.” It does not give any further details as to how this will be effected in practice. In addition, following this “transfer” will the Supreme Court in the UK be able to overrule the ECJ decisions?
  • What about cases which have been referred from the UK courts to the ECJ pre-Brexit, but on which judgment has not been decided at the point of exit? Again, there is no further discussion of this point, but is something which must be considered as part of the Brexit negotiations.
  • How can the Prime Minister confirm that workers’ existing legal rights will be guaranteed during her period in office? Although this could apply to amendments to legislative provisions, it is not possible for a guarantee that no court decisions will arise during her time in office which could have an impact on all workers’ legal rights.

Although the Briefing Paper seeks to give assurances to workers and employers alike, much of the detail is unclear. The Great Repeal Bill and further parliamentary discussion is awaited with interest.

Judgment on the qualification of a “payroll company” and a “temporary agency contract”

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On 4 November 2016, the Supreme Court in the Netherlands issued an important judgment  that will impact on the use of payroll companies. In this judgment, the Supreme Court held that no “allocation function” is needed to qualify as a temporary employment agency contract (uitzendovereenkomst). This e-Alert provides a summary of the judgment and further background on its impact and scope.

Court case C4C vs StiPP

In this case, the main legal issue was the interpretation and scope of a temporary agency contract. StiPP operates an industry wide pension fund that is mandatory for temporary agency workers. StiPP argued that the business activities of Care 4 Care (C4C) fall within the scope of StiPP and that C4C therefore should have joined the mandatory pension fund. C4C provides qualified medical specialist staff to clients, i.e. hospitals, care institutions and home care. Employees of C4C work on a permanent employment contract with C4C and are seconded to clients for long periods, from three months to a year, or longer if required.

C4C claimed that to qualify as a temporary employment contract the employer must fulfil an ‘allocation function’.  Such a function could be bringing together supply and demand for (temporary) employment, or – more specifically – bringing together supply and demand of (temporary) work during illness or other absence, absorbing peak time work requirements or similar sudden work needs. As this allocation function was not present, C4C argued that instead it should qualify as a payroll company which would prevent it from mandatory participation in StiPP. When a business decides to operate payrolling, it hands over the legal and administrative aspects of its role as an employer to a payroll company. The client recruits and selects the employees, and the payroll company makes them available to the client exclusively and – in principle – for the longer term.

The Supreme Court did not agree with C4C, because the concept of “payrolling” is currently not recognised under Dutch law. Article 7:690 of the Dutch Civil Code defines a temporary employment agency contract as an employment agreement under which the employer, within the framework of his business or professional practice, places the employee at the disposal of a third party in order to perform work under supervision and direction of that third party. According to the Supreme Court, the scope of this Article does not require the employer to fulfil an allocation function or require the work performed for the third party to be temporary. The application of the rules suggested by C4C would lead to results that cannot be reconciled with what the legislator had in mind. Consequently, C4C could therefore be regarded as a temporary worker agency and is therefore required to participate in StiPP.

Conclusion

As a result of this judgment, the legal scope of a temporary employment agency contract has been broadened, because the allocation function is not required. As a consequence, payroll companies and other companies that supply workers on a large scale, will have more financial obligations (e.g. pension premiums and employee insurance schemes). Operating a payroll company will therefore become more expensive. However, using a payroll company remains less expensive than hiring through a temporary worker agency. Another important consequence of the judgment is that the temporary employment agency has the flexibility to offer more definite term contracts. If you make use of a payroll agency, we suggest you review and monitor the terms of the relationship.

For any advice in this respect or further questions in respect of the above, please feel free to contact Thomas Timmermans

Employee, worker or self-employed?

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In UK employment law a person’s employment status determines both their rights and responsibilities. An individual can be an employee, a worker or self-employed.  Whilst traditionally individuals were employees or self-employed there has been a significant rise in “worker” status.  The recent reported case of Aslam and others v Uber BV considered whether drivers had rights as workers or were self-employed.  This case could have a significant impact on all workers in the “gig” economy.

A worker under UK law is defined under section 230(3) Employment Rights Act 1996 as an individual who has entered into or works under a contract of employment or any other contract…whereby the individual undertakes to do or perform personally any work or service and the employer is not a client or customer of that individual.

There have been a number of cases looking at the difference between self-employed individuals, workers and employees and tests such as the level of control imposed, whether personal service is required (or whether, for example, there is a right to “substitute”) and mutuality of obligation are applied. However, with modern working relationships the boundaries between the different statuses have become blurred and some of the “tests” may be less appropriate.

In this case, Uber claimed that the individuals are self-employed and that Uber simply provides a technology platform to facilitate the provision of taxi services. The individuals provide their own vehicles and are responsible for running costs etc, and are not required to commit to work.  However, the claimants alleged that they are workers and as such should be entitled to rights not available to self-employed individuals, including the right to the national minimum wage and holiday pay.

The Employment Tribunal found that the individuals are workers. In reaching this conclusion it looked  at the reality of the situation rather than just considering the documents themselves. Some of the points it considered included:

  • The drivers are not in a position to negotiate with the customer, they are offered and accept the trips on the terms set out by Uber.
  • Uber sets the route and sanctions may apply if the driver departs from it.
  • Conditions are applied, for example on the choice of car.
  • Uber accepted some of the financial risk.
  • A rating system applied which amounted to a performance management/disciplinary procedure.

It should be remembered that this is a tribunal decision and is therefore not binding on future cases. It is also possible that another company in the “gig” economy may in fact appoint individuals who do come within the ambit of the self-employed. The tribunal itself pointed out that Uber could have devised a business model that would have led to a different decision. Other cases referred to in the judgement provide examples of this. Uber has also indicated that it will appeal the case.

Many commentators have pointed out that people should be careful what they wish for. Some individuals operating in the “gig” economy want the flexibility in their working lives and therefore want to be viewed as self-employed.

The Department of Business Energy and Industrial Strategy has launched an inquiry into the future world of work. One of its terms of reference is whether the term ‘worker’ is defined sufficiently clearly in law at present. It will also consider the status and rights of agency workers, casual workers, and the self-employed (including those working in the ‘gig economy’), for the purposes of tax, benefits and employment law.

In addition, the Prime Minister has asked Matthew Taylor to lead an independent review into how employment practices need to change to keep pace with modern business models. This includes the extent to which the growth in non-standard forms of employment undermine the reach of policies like the National Living Wage, maternity and paternity rights, pensions auto-enrolment, sick pay and holiday pay.

Whilst we wait for these reviews to consider the ever changing world of work, we also wait to see any further claims and appeals for those working in this “gig” economy.

 

 

What rights do workers have to rest breaks in the UK?

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The Working Time Regulations 1998 (the Regulations), which implement the requirements of the 1993 EC Working Time Directive, introduced restrictions on the number of hours worked by employees and workers together with a right to rest breaks, rest periods and holidays. This post is concerned with the right to rest breaks during the working day.

Who is covered by the Regulations?

The Regulations apply to “workers”. The definition of worker includes employees, but also extends to other workers who are not independent self-employed contractors.

The right to rest breaks

Under the Regulations, subject to certain exceptions, adult workers whose daily working time is more than 6 hours are entitled to a rest break of not less than 20 minutes. This break must be uninterrupted and the worker is entitled to spend it away from his workstation if he has one. (Young workers have greater entitlements to rest breaks than adult workers). It is possible to modify this entitlement by an appropriately negotiated collective or workforce agreement.

Must employers ensure that workers take their rest breaks?

Whilst employers are not required to force workers to take their rest breaks, they must ensure that workers can take them. Where a worker is denied this right, he can bring a claim in the employment tribunal and may be awarded compensation.

The UK was challenged by the European Commission in the ECJ because Government guidance stated that whilst employers must ensure that workers can take their rest breaks, they are not required to ensure that they take them. The ECJ accepted that employers do not have to force their workers to take rest breaks but considered that the guidance encouraged a practice of non-compliance with the EC Directive. The wording of the guidance was subsequently changed but a recent case has looked at the question of whether an employer can be found liable if there is no express request and refusal of a rest break.

Is the right to a rest break denied where there is no express request and refusal?

In a recent case, the Employment Appeal Tribunal (EAT) allowed an appeal against the tribunal’s decision that a worker had not been denied the right to a rest break because there was no explicit request and refusal.

In the case, the claimant was employed by a public transport company from 2009 in a role which required him to monitor the arrival and departure times of a bus service and to regulate the service. Initially, his working day lasted eight and a half hours, the half hour being unpaid and treated as a rest break. In reality, it could be difficult for him to take this break. During 2012, the length of the working day for those in his role was reduced to eight hours, the idea being that employees would work without a break and finish half an hour earlier. This change was communicated to staff at a meeting, but this did not constitute a workforce agreement to modify the rest break.

Following an unsuccessful grievance, the claimant lodged a claim in the employment tribunal, claiming that he had been denied his entitlement to a rest break throughout different periods of his employment. An employment tribunal dismissed his claim, finding that he had not been denied his right since no actual request had been made and refused.

On appeal, the EAT held that the tribunal had been wrong in its approach as to whether or not a worker had been denied his right to a rest break. In deciding that an explicit request had to have been made and denied, the tribunal had followed earlier EAT authorities which should not be relied on.

While workers cannot be forced to take rest breaks, employers need to ensure proactively that the working arrangements allow for workers to take those breaks, regardless of whether they have been expressly requested. The entitlement to a rest break is effectively refused if the employer puts in place working arrangements that fail to allow the taking of 20 minute rest breaks.


Gender Pay Gap Reporting Regulations

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The Government has published the revised draft of the Gender Pay Gap Information Regulations which are due to come into force in April 2017. Whilst the revised regulations do clarify some of the issues raised in the previous draft in February there are still some points on which further guidance is needed.

Which employees are covered?

Whilst the term “employees” is not defined, the Explanatory Notes clarify that “employment” is as defined in the Equality Act 2010 which includes a person who works under a contract of service, a contract of apprenticeship or a contract to do work personally, therefore extending to “workers” who may not be paid via the employer’s payroll.   Whilst these individuals will be taken into account for determining the 250 threshold, a new regulation (regulation 2(3)) provides for an exemption that in compiling the relevant information, the employer is not required to include data relating to a relevant employee if the employee is a worker (i.e. employed under a contract personally to do work) in respect of whom the employer does not have, and it is not reasonably practicable for the employer to obtain, the data.

In addition, partners, including partners in an LLP count towards the 250 employee threshold but do not have to be included in the calculation of the pay gap.

The new regulations have removed the definition of employees to those who work wholly or partly outside Great Britain. However, it is assumed that employers will be expected to include those employees who have a “strong connection” with the UK as determined by existing case law on territorial jurisdiction.  It is hoped that further information on this will be included in the guidance.

What information needs to be provided?

Whilst the basic obligations on employers remains the same, the new regulations do set out further information on what is required.

Employers must publish:

  • The difference between the mean hourly rate of pay of male and female “full-pay relevant employees”;
  • The difference in the median hourly rate of those employees;
  • The difference between the mean and median bonus pay paid to relevant employees and the proportion of male and female employees who were paid a bonus; and
  • The proportion of male and female “full pay relevant employees” set out in quartile bands.

The information must be published on the snapshot date which has been changed from 30 April to 5 April.

The definition of “full pay relevant employees” for the hourly rate of pay and quartiles information excludes those employees who are not on full pay as a result of being on leave (including all types of family friendly leave, annual leave or sickness absence). Therefore, for example, any woman on maternity leave at the snapshot date will only be included if she is receiving full pay at that date. If she is receiving statutory maternity pay only, then she will not be included for those pay calculations, but should be included in the calculation of the mean and median bonus and the proportion of employees paid a bonus.

Calculating the employees’ hourly rate of pay.

Regulations 6 and 7 set out detailed steps of the method by which employers must calculate employees’ gross hourly pay, which includes using a 12 week reference period for employees whose working hours vary from week to week.

In addition, the previous draft of the regulations included the full amount of bonus payments in the gross hourly rate of pay figure if such a bonus was paid in the relevant pay period. Regulation 6 states that only a portion of the bonus payment proportional to the relevant pay period should be included in the calculation of an employee’s gross hourly pay.

Bonus information

The definition of bonus pay has been further clarified. The regulations make it clear that where the employee is paid a bonus in the form of securities, or securities options, this should be treated as paid at the time and in the amounts in respect of which it gives rise to liability to income tax. Whilst it is not expressly stated that this is the same for a deferred bonus, it would appear that this is the case.

Quartiles

The new regulations set out further details of how the quartile bands should be calculated. The hourly rates of pay should be ranked from lowest to highest and then divided into four quartiles each containing an equal number of employees. The Government has recognised that this method could be open to manipulation and therefore where employees receive the same hourly rate fall within more than one quartile, the employer must assign relative proportions to each quartile.

Sanctions     

The new regulations do not contain any sanctions for failure to comply. However, the explanatory notes state that a failure to comply with an obligation imposed by the regulations will constitute an unlawful act within the meaning of section 34 Equality Act 2006. This allows the Equality and Human Rights commission to take enforcement action against defaulting employers.

Once Parliament has approved the Regulations, we are promised the publication of a non-statutory guidance. This will be welcomed by employers.

What rights do workers have to rest breaks in Germany?

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This post was also contributed by Sebastian Kutzner, Trainee, Norton Rose Fulbright LLP (Munich).

Due to increasing demands for a work life balance, uncertainty as to employees’ rights to rest periods, in particular, is widespread. German law distinguishes between two types of rest periods:

  • Rest breaks (to be granted during working time); and
  • Resting time (the period between two working days)

Subject to special rules for different industries both are regulated by the German Working Time Act (Arbeitszeitgesetz). During both periods employees cannot be required to work but must be free to use this time for their own leisure.

With regard to the general rules on working time, the maximum daily working time for a five-day working week without breaks is 9.6 hours per day/48 hours per week (for a six-day week, this is 8 hours per day). This maximum may be extended to up to 10 hours provided that over a period of six months or 24 weeks, an overall average of 9.6 hours is observed (i.e. by working less on other days). Employees may also be required to work on Saturdays, which then counts as a regular working day.

However, collective labor agreements and/or company works agreements often provide for a shorter working week.

Rest breaks

An employee’s right to rest breaks depends on the duration of the individual’s working day. If the employee works between 6 – 9 hours he or she is entitled to a minimum break of 30 minutes. If the employee works longer than nine hours, the minimum break period must be at least 45 minutes. Although rest breaks may not be allocated to the beginning or end of working day, employers are free to decide when exactly the rest breaks are to be taken. However, employees may not work for more than six hours at a stretch without being granted a rest break. Moreover, all rest breaks may be split up into several breaks of at least 15 minutes.

Differing rules apply to minors (i.e. those under 18 years of age). Under the German Youth Protection Act (Jugendarbeitsschutzgesetz), minors working 4.5 – 6 hours a day must be granted a rest break of a minimum of 30 minutes, minors working more than 6 hours a rest break of a minimum of 1 hour.

Under the German Maternity Protection Act (Mutterschutzgesetz), breastfeeding mothers must be allowed to breastfeed at their request under continued pay. For this, a minimum 30-minute break twice a day or a one-off break of one hour must be granted, both of which may be extended under certain circumstances.

Resting time

Employees must be granted a minimum daily rest period of 11 uninterrupted hours for their leisure between the end of their daily work period and the beginning of the next work period. Although this resting time may be reduced by one hour in certain industries (such as in hospitals, nursing and care facilities, restaurants etc.), subsequent compensation periods must then be observed by the employer.

Although once again exceptions apply for certain industries, employees may not be required to work on Sundays and public holidays. In the event that an employee is required to work on a Sunday, where allowed by law, a compensatory day-off must be granted during the following two week period and if the employee is required to work on a public holiday falling on work day, a compensatory day-off during the following eight week period must be granted. A minimum of 15 Sundays per year must remain work-free.

Again, different rules apply to minors, for whom a 12-hour uninterrupted resting time must be observed and they may only be required to work 5 days a week. Although minors may be required to work on Saturdays and Sundays in certain exceptional cases, again compensatory days off must be observed. Apart from certain exceptional cases, pregnant women and nursing mothers may not be required to work from 8 p.m. to 6 a.m. or on Sundays and public holidays.

Employer obligations and sanctions

Employers are obliged to comply with these legal requirements on working time and to grant the relevant amount of rest breaks/resting time and, if applicable, to comply with any existing working time arrangements (for example, set out in collective labor agreements and/or company works agreements). Furthermore, employers are obliged to document any working time exceeding the legal maximum and to keep these records for a minimum of two years. Non-compliance with working time rules by the employer may constitute a misdemeanour sanctioned by fines of up to EUR 15,000 or in serious cases may even constitute a criminal offence. Directors and senior managers can also be held personally liable for breaches of the law.

For further information on the topic of working time please see our previous posts on night time and working time.

What rights do workers have to rest breaks in France?

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French regulations strictly supervise employees’ working time, which may not exceed a certain limit and must include break time and minimum rest periods. Not only must the employer comply with these obligations, but in the event of litigation, the employer must be in a position to produce evidence that it has done so.

Each employee is entitled to a minimum daily rest period of 20 minutes if they work 6 hours in a row. This break time is a period during which an employee can freely deal with his personal occupations without having to comply with directives of his employer.

Employees are also entitled to a daily rest of at least 11 consecutive hours and a weekly rest of at least 24 consecutive hours. Consequently, the minimum rest period over the full week is 35 consecutive hours, given that in France it is generally prohibited to work on Sundays (except if otherwise provided by law). However, most of the time, the employee benefits from 2 days of rest per week.

While it is normally prohibited to work on Sundays, there are exceptions, in particular those resulting from the nature of the Company’s business. Certain exceptions are automatic: in establishments the operation or opening of which on Sunday is required due to production constraints, the kind of activity or the needs of the public, as well as in the retail food trade. Other exceptions require the conclusion of a collective bargaining agreement or an administrative authorization applied for after consultation with the work councils.

Furthermore, apprentices and workers under the age of 18 benefit from more favourable working time and rest arrangements (including a compulsory weekly rest of 2 consecutive days).

In addition, there is an annual right to rest. Each employee is entitled to a leave paid by the employer according to the statutory regime.

An employee accrues holidays at a rate of 2,5 working days per month of actual work with the same employer. An employee who has worked 12 months is thus entitled to 30 working days of holiday. The legislative and regulatory provisions that grant and organize this right are of public order, that is to say, imperative and may not be waived by the employee. It is the employer’s responsibility to take the necessary measures to enable the employee to benefit from this right; failing to do so constitutes a fault requiring the employer to compensate the employee for the loss suffered.

Finally, it is essential to check the sector-wide collective bargaining agreement applicable to the company as it may contain more favourable provisions to the employee than those provided by law, in which case such more favourable provisions are compulsory.

Intra-Corporate Transfer Directive implemented in the Netherlands

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On November 29, 2016 the Dutch Royal Decree (the Decree) which implements the European Intra-Corporate Transfer Directive (2014/66/EU) (the Directive), came into force. The Directive applies to secondments of non-EU citizens satisfying certain conditions whose main place of residence is outside the EU (Expats) to an EU Member State. The Directive simplifies the admission procedure for Expats (and their families), in order to make the EU more attractive to international businesses. To enhance these international secondments to the EU between affiliated entities, a special ‘Intra-Company Transfer’ permit (ICT-permit) has been introduced. The ICT-permit allows the individual to work in the EU for a maximum period of three years.

Requirements to obtain an ICT-permit in the Netherlands

The new ICT-permit will apply to applicants who meet the following conditions:

  • The Decree applies to Expats with a position as manager, specialist or trainee (as defined in article 3 of the Directive);
  • The Expat must have a valid employment agreement with a company outside the EUand must have been employed by that company for at least three continuous months before the transfer to the Netherlands;
  • The ‘host-entity’ in the Netherlands must be part of the same enterprise or group of enterprises as the formal employing entity of the Expat;
  • The Expat must possess the skill and experience required by the host-entity or, where the Expat is a trainee, a Masters degree;
  • In principle, there are no minimum salary requirements. However, as the Directive intends to avoid unfair competition, the Expat should receive remuneration in line with market standards;
  • The host-entity in the Netherlands does not have to be registered as a ‘recognised sponsor’ for highly skilled workers. However, if the company is so recognised then an even more simplified admission procedure applies.

Duration of the ICT-permit

The ICT-permit can be granted for a maximum period of three years for managers and specialists. For trainees, the maximum period is one year. At the end of the secondment period, the Expat must relocate to his home country for at least six months in order to be able to re-apply for an ICT-permit in the Netherlands.

Mobility within the EU

The Directive also aims to facilitate mobility of Expats within the EU: ‘Intra-EU mobility’. Distinction is made between ‘short-term mobility’ and ‘long-term mobility’. Short-term mobility means that an Expat can stay and work in a second EU-member state for a maximum period of 90 days in any 180-day period. Depending on the legislation of the second EU-member state, the host-entity may have notify both EU-member states that the Expat intends to work in the second EU-member state.

If the Expat stays in a second host-country for a period of longer than 90-days in any 180-day period, the rules for long-term mobility apply. Depending on the legislation of the second EU-member state, a notification of this period of work may have to be made or a formal application for long-term mobility will need to be submitted.

In the Netherlands, notification should be made at the Employee Insurance Agency (UWV).

Relation to the ‘highly skilled migrant scheme’

The target group of the Directive shows similarities with the Dutch ‘highly skilled migrant scheme’ which applies to highly skilled foreign employees working in the Netherlands. If the Expat meets the requirements of the ICT-permit, he cannot apply for a ‘highly skilled migrant-permit’ and his application must be resubmitted under the ICT-permit scheme. If the parties involved consider that it is more desirable for the employee to obtain a highly skilled migrant-permit, then the Expat will need to enter into an employment contract with the host-entity rather than remaining employed by the foreign company..

Conclusion

Do you work at an international company that is (planning on) seconding employees to the Netherlands? Please feel free to contact Maartje Govaert, Thomas Timmermans or Saskia de Schutter for any advice or further questions in respect of the above.

The new French “right to disconnect”

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French law has recently implemented the “right to disconnect” from digital tools, requiring employers to limit employees’ use of digital tools outside of office hours.

The purpose of the new legislation is to protect the employees’ work-life balance and their right to rest periods.

New article L 2242-8 of the French Labour Code provides that the conditions relating to the right to disconnect must be discussed on an annual basis, as from 1st January 2017, in the course of the mandatory negotiations on equality between men and women and quality of working life. Such negotiations will take place between the employer and union representatives.

In the absence of an agreement with unions on the right to disconnect, the law provides that the employer will be required to prepare a charter, after having consulted the works council or the staff representatives. This charter should include provisions related to the implementation of training in order to learn how to use digital tools reasonably.

Although the law provides that its application should only concern companies with at least 50 employees, it appears that such obligation may also apply to companies with at least 10 employees. Therefore, it is recommended that employers begin planning how to apply the right to disconnect in their respective companies.

It is however important to emphasise that the right to disconnect will not completely prevent the employees from using their phone or computer after working hours or during week-ends and holidays. If an employee wishes to use digital tools during his rest period, he will be able to do so. However, the employer has to alert the employees to the existence of the right and implement measures which regulating such use.

The law does not provide a specific sanction for failure of the employer to comply with such obligations. However, if the employer does not comply with the right to disconnect, the employees may raise such breach as grounds upon which to base a claim that the employer has committed a violation of the safety obligation.

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