International Labor and Employment Law

Romania Amends Labour Code to Provide In-Vitro Fertilization Leave

Romania’s fertility rate is statistically low, with only 1.54 children born per woman in 2018. The country’s birth rate has continued to decline since the early 90s, and more families are choosing to have one or no children. In-vitro fertilization, while increasingly common in the European Union, is rare in Romania. Approximately 5,000 Romanian couples undergo the procedure each year, in comparison with 40,000 couples in France.

Romania recently made changes to its Labour Code to promote in-vitro fertilization. As of April 23, 2019, female employees who decide to undergo the in-vitro procedure are now afforded three days of paid leave. This new leave law allows women to take one day of paid leave on the day of the ovarian puncture procedure, and the remaining two days may then be used in concurrence with the embryonic transfer procedure. Employees must file a formal request for this non-medical leave with an attached letter from their doctor confirming that they will undergo in-vitro fertilization.

While there are no sanctions outlined for employers who refuse to grant in-vitro leave, Romania has demonstrated its interest in supporting population growth and may strictly enforce this new leave law. Employers should consider how requests for in-vitro fertilization leave should be scheduled in conjunction with female employees’ annual leave, and they should update leave policy language to reflect these Labour Code changes.

Dubai International Financial Center Enacts Sweeping Changes to Employment Law

Background

On June 12, 2019, the Dubai International Financial Center (“DIFC”) in Dubai, UAE announced its new employment law regime, which will come into force on August 28, 2019.  This new employment code replaces the DIFC’s previous employment code from 2005 and aims to rectify various issues that arose under the old system.  While many changes to the law can be viewed as employee-friendly, others push back on employee rights.  As Dubai is increasingly becoming the financial hub for the Middle East, Africa, and South Asia, these changes will affect many workers.  The major changes are summarized below.

Discrimination

Under the new law, pregnancy, maternity, and age are now protected categories of employment (in addition to the previously recognized categories of race, nationality, religion, sex, marital status, and disability).  Additionally, employees will now be protected after engaging in protected activity, including filing a complaint of discrimination or providing evidence against an employer in a discrimination proceeding.  The law now specifies available remedies for discrimination claims, which are capped at one year’s wages.  Additionally, there is now a six-month statute of limitations for all employment claims.

Parental Rights

The new law introduces the concept of parental leave, providing fathers five days of leave after the birth of a child or adoption of a child less than five.  Maternity leave is also expanded, and nursing mothers will have the right to a one-hour nursing break if their shift is more than six hours in a day.

Sick Leave

Pay for sick leave is reduced from the old employment law system.  While employees were previously entitled to sixty days of leave at their full salary, sick leave is now provided on the following scale: (i) employees will receive full wages for their first 10 days of sick leave; (ii) 50% wages for the next 20 days; and (iii) no pay thereafter.

Late Payments

Under the previous employment law, employers were liable to pay a statutory penalty of one full day’s wages for each day past 14 days that they were late in paying post-termination payments.  This system occasionally produced absurd results, such as having statutory damages eclipse actual damages if, for instance, there was a dispute over a small bonus or gratuity.  It also meant that damages would grow from an employee’s own delay in filing suit or from court delays.  Now, statutory damages will only apply if the amount the employer owes exceeds the employee’s weekly wage.  Additionally, statutory damages will not apply for any period in which a court proceeding is pending or for which the employee’s own unreasonable conduct is shown to be a material cause of the employer’s failure to pay.

Probation, Secondment, and Part-time Employees

The new law formally recognizes the concepts of probation, secondment, and part-time employment.  Probation is capped at six months.  Secondees in the DIFC will be entitled to certain rights under the new employment law and employees seconded out of the DIFC can choose foreign law to govern their employment contracts.  Finally, the law explains that the concept of part-time employment shall apply to any employees working less than eight hours per day or less than five days per week.  Any required periods of leave shall be calculated on a pro-rata basis for part-time employees.  All other provisions of the employment law are equally applicable.

Termination

Finally, the new provides specifications on terminations.  The previous minimum notice periods are maintained, which the employer and employee can agree to lengthen but not shorten.  Employers can place employees on garden leave and payment in lieu of notice is permissible if agreed to by both parties.  The law is now more accepting of mutual settlements ending employment, but courts maintain the ability to void settlements found to be unreasonable.

UK Supreme Court Examines Restrictive Covenants First Time in 100 Years: A New Test for Severance

In the case of Tillman v Egon Zehnder [2019] UKSC 32, the UK Supreme Court, for the first time in over 100 years, has examined the law of post-termination restrictive covenants. As well as providing clarity of the law, the decision serves as a reminder of the importance of the doctrine of restraint of trade, which, in the words of Lord Wilson, who delivered the judgement:

is one of the earliest products of the common law. It epitomises the nation which developed it: a nation which has ascribed central importance to the freedom of all of us to work – in the interests both of the self-sufficiency of ourselves and our families and of our common prosperity

In the employment context, the doctrine of restraint of trade means that post-termination restrictive covenants will be enforceable only if they go no further than is reasonably necessary to protect the legitimate interests of a business. However, this is subject to one safety-valve for employers: where a covenant goes to go too far, a court will sometimes save it by severing offending words from it.

The most important issue examined in this case is the circumstances where severance is available to save an otherwise unenforceable restrictive covenant.

The facts

Egon Zehnder are headhunters. In January 2004, the employed Ms Tillman, who rose through the ranks from consultant to joint global head of its financial services practice group. Ms Tillman resigned and her employment came to an end in January 2017. In April 2017, she informed Egon Zehnder that she would be starting work for a competitor from 1 May 2017.  Egon Zehnder considered that working for a competitor at this time would be a breach of the post-termination restrictive covenant contained in Ms Tillman’s contract of employment which prohibiting her, for six month from:

directly or indirectly engage or be concerned or interested in any business carried on in competition with any of the businesses of the Company or any Group Company which were carried on at the Termination Date or during the period of 12 months prior to that date and with which you were materially concerned during such period.”

Ms Tillman argued that this covenant was unenforceable because the use of the term “or interested” prevented her from owning even a tiny minority shareholding in a competitor, which in turn rendered the non-compete too wide to be enforceable. Egon Zehnder raised various arguments to counter this, the most significant one being as follows: even if the words “or interested” prevented Ms Tillman having a minority shareholding, and such a prohibition constituted unreasonable restraint of trade, it was nonetheless permissible to sever the offending words “or interested” from the covenant to render the remainder of it enforceable and therefore rely on it to prevent Ms Tillman from working for a competitor.

The decision on severance

Lord Wilson provided a succinct tour de force of cases on severance going back to the 1726 case of Chesman v. Nainby which led to the following conclusion as to the conditions necessary to enable offending words to be severed from a restrictive covenant to render it enforceable. He held that three conditions are as follows:

  • The offending words are capable of being removed without the necessity of adding to or modifying the wording of what remains” (i.e. the “blue-pencil” test);
  • The remaining terms of the restrictive covenant continue to be supported by adequate consideration; and
  • The removal of the offending words must not generate any major change in the overall effect of the restrictive covenant in the contract, focusing on the legal (rather than the practical) effect of the covenant with the wording severed from it.

Based on the facts, the Supreme Court concluded all three conditions were satisfied and accordingly, the words “interested in” should be severed from the restrictive covenant to leave an enforceable restraint that Egon Zehnder could rely upon.

Analysis

There is much that can be learned from this decision.

The obvious lesson is to ensure that restrictive covenants are drafted so that they are no wider than is reasonably necessary to protect a legitimate interest. This avoids the uncertainty of having to rely on a court to determine whether offending words can be severed. Applied to this particular case, the covenant would have been enforceable if there had been a provision (of the type often seen) making explicit that Ms Tillman was permitted to have a small shareholding in a competing business (for example of up to 5%). Indeed, there was a suggestion that the need for Egon Zehnder to rely on severance (rather than the covenants as actually drafted) may have adverse cost implications for Egon Zehnder such that the general rule, that a successful party can recover a significant proportion of legal costs from an unsuccessful party, may not apply here because the litigation arose, in part, as a result of defective drafting.

The case also implicitly confirms that under English law, forfeiture provisions that are conditional upon some form of not competing (e.g. a clause under which an individual forfeits commission or a bonus if they compete after their employment ends), are considered to be restraints of trade and therefore subject to the same reasonableness requirements as pure restrictive covenants (i.e. a clause prohibiting competitive activity). This implicit confirmation derived from the reference in the decision to various cases on forfeiture for competing, where the assumption was that such provisions invoke the restraint of trade doctrine. However, not all jurisdictions take this approach. Conceptually, there is a distinction between on the one hand an absolute prohibition against competition and on the other, a choice between competing and losing a payment. This distinction was not addressed in the decision and it remains possible that future decisions may scrutinise this distinction more closely.

Ireland Moves Forward with New Parental Leave Policies

The President of Ireland is on track to sign into law a new amendment to parental leave laws after the country’s upper house (“Seanad Éireann”) approved it on May 8, 2019. The law had previously passed the lower house (“Dáil Éireann”) on June 13, 2018. The amendment now returns to Dáil Éireann for final approval before the President signs and enacts it into law.

The Parental Leave (Amendment) Bill 2017 (the “Parental Leave Bill”) expands existing protections for Irish employees. The original Parental Leave Bill was passed in 1998 and provided 14 weeks leave for parents of children up to five years old. In 2006 leave was extended to parents with children up to eight, and to 16 years of age for children with disabilities or long-term illnesses. In 2013, leave was extended from 14 to 18 weeks. The Parental Leave Bill makes two big changes.

  1. Parents will now be entitled to up to six months of leave for each child; and
  2. Parents will be entitled to leave for children up to 12 years old.

Regarding paid parental leave, the amendments will provide new parents with two weeks’ paid leave each at a rate of €245 per week.

Coverage for Existing Parents

The new entitlements will be extended to parents who have already exhausted the four months provided under existing law as long as their children are 12 years of age or younger. The changes will be phased in over the next two years. An additional four weeks of parental leave will be available starting in September 2019, with the final four weeks available beginning in September 2020.

Motivation for the Bill

The bill’s authors, the Social Democrats, say that the legislation is aimed at helping working class families with work life balance. The emphasis is driven at least in part by the European Pillar of Social Rights, a non-binding charter that Ireland endorsed in November 2017. The charter names parental leave and work-life balance as key objective and the European Commission has created corresponding proposals to increase such policies in member states.

As of a 2018 European Commission assessment of paternity and parental leave policies in the EU, all member states offered some parental and/or paternity leave, but the benefits varied and the distinction between the two types of leave was often confusing. Parental leave specifically was provided in 16 member states, but was only well-paid in 13 of those states and in only 10 did the period of well-paid leave extend to eight or more weeks.

Potential Effects

While the short-term impact for employers will be increased costs corresponding to the new entitlement payments, the goal is for the new policies to allow more parents to remain in an increasingly more accommodating and attractive workplace. Some employers may also choose to follow the state’s lead and offer greater paid parental leave.

For example, this month one multi-national company announced it would provide 26 weeks of fully paid paternity leave to new fathers in Ireland, matching a previous commitment to maternity leave.

 

An Increasingly Hairy Situation: Discriminatory Employment Decisions Based on Hairstyles

Hairstyles are gaining more attention in the labor and employment context. Earlier this year, Austria’s Supreme Court allowed a former employee to reopen his discrimination claim upon discovering evidence that the employer may be engaging in discriminatory conduct by imposing hairstyle-related requirements on employees. In 9 ObA 4/19g, a staffing agency’s employee was denied a position on account of his long hair, and sued the staffing agency for sex discrimination under the Equal Treatment Act, which prohibits differing treatment on the basis of sex without an objective justification. The employee lost the initial suit but successfully revived the claim upon discovering that the staffing agency’s handbook prescribed the manner in which both males and females were to wear their hair, including requiring that males keep their hair short. The Supreme Court confirmed the lower courts’ rulings to reopen the case, finding that the handbook could shed “new light” on the initial legal assessment. The employer will likely have to change its policy in order to avoid further claims in the future.

In the United States, New York and California are leading the fight against discriminatory decisions based on hairstyle. As we previously reported, the New York City Commission on Human Rights (“NYCCHR”) recently issued enforcement guidance on race discrimination on the basis of hair with regard to employer policies that restrict or ban certain hairstyles commonly associated with “communities of color, religious minorities, and other communities,” and stating that the City’s Human Rights Law “protects the rights of New Yorkers to maintain natural hair or hairstyles that are closely associated with their racial, ethnic or cultural identities.” We also recently reported that proposed legislation in California seeks to amend the State’s education and government laws to define “race or ethnicity” to include certain hairstyles and hair texture. The preamble to the proposed legislation notes that “hair today remains a proxy for race.”

We suspect that an increasing number of jurisdictions, both in the United States and abroad, will turn their attention to protecting individuals against discriminatory action on the basis of their hairstyle. Employers should note these early developments and carefully evaluate their appearance and/or grooming policies, and decisions based on those policies. We will continue to monitor this trend.

In Historic First for Asia, Taiwan Legalizes Same-Sex Marriage

On May 17, 2019, the Taiwanese Parliament approved a bill legalizing same-sex marriage, making Taiwan the first country in Asia to adopt such legislation.  Under the new law, same-sex couples now are able to marry legally, effective May 24, 2019.

The Parliament’s actions came about as a result of a 2017 decision by the Taiwanese Constitutional Court.  In that decision, the court rejected the Taiwan civil code’s definition of marriage as being between a man and a woman as unconstitutional.  The court offered the Taiwanese government two years to amend that provision in light of its ruling.

Instead of amending the definition, Taiwanese lawmakers opted to pass a new law altogether.  The Parliament had debated three separate bills.  Two of those bills had been offered by conservative groups and would have recognized same-sex unions by terms other than “marriage.”  The Parliament rejected those versions and instead passed the most progressive of the three bills, one permitting same-sex couples to apply for marriage.  Interestingly, this is despite the fact that a 2018 Taiwanese referendum showed that the majority of Taiwanese people oppose same-sex marriage.

After learning that the law had passed, Taiwan’s President Tsai Ing-wen tweeted “On May 17, 2019 in #Taiwan, #Lovewon. We took a big step towards true equality, and made Taiwan a better country.”

Certain issues with the law remain, including that it may not allow cross-national same-sex marriages and only allows same-sex couples to adopt children that are blood relatives.  But advocates are still pleased with the progress that this law signifies, and hope that it signifies the start of a broader trend across Asia.

Taiwan has long been considered the most progressive country in Asia in terms of gay rights, and its annual gay pride parade draws visitors from many other countries.  In neighboring China, same-sex marriage is still illegal, but homosexuality was decriminalized in 1997.  Taiwan’s progressive step forward is especially welcome in light of recent actions taken in Brunei, which we reported on in our April 17, 2019 blog post.

Mexico Overhauls Federal Labor Law in Workers’ Favor

Mexico Overhauls Federal Labor Law in Workers’ Favor

On May 1, 2019, International Workers’ Day, Mexico published amendments to its Federal Labor Law in the Federal Official Gazette and secured the right of Mexican workers to organize and enter into collective bargaining agreements. The Mexican Senate voted 120 to 0 to pass the Labor Reform Decree, which will regulate amendments made to Mexico’s Federal Constitution in February 2017.[1] The Decree also ensures Mexico’s compliance with Convention No. 98 of the International Labor Organization and memorializes the labor reforms that President Andrés Manuel López Obrador promised to implement when he negotiated the United States – Mexico – Canada Agreement (“USMCA”) in November of 2018.[2]

Workers’ Rights

The Decree outlines Mexican workers’ right to engage in collective bargaining and to organize and join a union. The right to freely organize is coupled with union members’ right to a personal, free and secret vote. Importantly, the Decree states that workers may not be forced to join a union. These changes are major. They are meant to alter the fabric of Mexican labor relations by creating independent unions and workplaces free from coercion, discrimination and violence.

Prior to these changes, Mexican unions were largely controlled by companies. For decades, Mexican workers did not have the right to organize freely, there were no democratic elections, and labor contracts were negotiated with little input from workers. Companies often entered into “protection agreements” by recognizing unions and signing contracts, creating “white unions” or “protection unions” that represented the interests of the companies, not the workers. Now, the law requires proof that a union represents the majority of workers and that those workers consent to any proposed union contracts. Before entering into a collective bargaining agreement, a union must prove that it represents the interest of the workers it represents by obtaining a certificate of representation from the federal conciliation entity created by the Decree. The same certificate will be necessary in order for a strike to begin.

With respect to workers’ voting rights, the personal, free and secret vote of workers is required before a collective bargaining agreement is concluded, for the election of union leadership, and the resolution of inter-union conflicts. Union representatives must secure at least 30% of the vote of workers participating in the election process. These new voting mechanisms are meant to ensure the eradication of “protection unions” from Mexico’s labor landscape.

Labor Justice Reform

The Decree also includes major changes to Mexico’s labor justice system. State and federal labor courts, resolving labor disputes as a part of the judiciary, will replace current Conciliation and Arbitration Boards. Conciliatory efforts must now take place in a single, mandatory hearing before a matter reaches a labor court. The Federal Conciliation and Labor Registration Center will preside over these conciliatory procedures and register labor organizations, union contracts and internal work rules. State-level conciliation centers will only preside over conciliation procedures. Changes to the labor justice system will be implemented within the next three years.

USMCA

The Mexican Senate passed the Decree before its close of session in anticipation of the American Senate reviewing these changes within the context of USMCA. Annex 23-A of USMCA requires Mexico to pass and implement certain labor reforms, essentially bringing Mexican labor law in line with U.S. labor law. Mexico has now passed the Decree, but the U.S. has made clear that it will not ratify USMCA unless Mexico can show that it will implement these changes.

Impact on Employers

These changes are likely to engender a global effect given the potential for independent unionization to lead to pay raises and other company concessions in a country where the minimum wage is currently around $5 USD.

Employers with a workforce presence in Mexico should revisit existing labor relations policies and prepare for a significant increase in independent unionization. Employers should also review any existing union contracts to ensure compliance with the Decree’s mandates.

Most immediately, the Decree requires certain human resources changes. Employers must:

  • Provide employees with an opportunity, in their individual contracts, to designate a beneficiary who will receive payment of their salary and accrued benefits in case of death or disappearance.
  • Provide employees access to all information concerning their income and deductions, including pay stubs, whether in printed form or by other means. (Online Digital Tax Receipts may replace printed pay stubs.)
  • Implement policies and protocols addressing the prevention of gender discrimination, violence and sexual harassment and the elimination of forced labor and child labor.

[1] Amendments to Mexico’s Federal Constitution Articles 103 and 123, in effect since February 24, 2017, promulgated changes to the labor justice system in Mexico by creating specialized labor courts, centralizing collective bargaining agreements and union organization registration, requiring unions to prove that they represent a majority of a company’s workers before executing a collective bargaining agreement, and guaranteeing personal, free and secret voting.

[2] In September of 2018, Mexico ratified Convention No. 98 of the International Labor Organization, which protects the rights of union members to organize freely and participate in collective bargaining. Convention No. 98 will enter into force on November 23, 2019.

Major Reform to the Thailand Labor Protect Act

On December 13, 2018, the National Assembly of Thailand approved significant amendments to the country’s Labor Protection Act (“LPA”). The amendments took effect on May 6, 2019.

Under the amendments, employees with 20 or more uninterrupted years of service will be entitled to receive 400 days’ pay as severance. This is an increase from the current maximum payment of 300 days’ pay for employees with 10 or more uninterrupted years of service.

The amendments also increase the amount of maternity leave employers must provide pregnant employees. Whereas the current LPA requires employers to provide employees with 90 days of maternity leave, the amendments require employers to provide 98. Public holidays during a period of leave as well as pre-natal doctor visits are counted against the period of maternity leave. Employers are responsible for up to 45 days’ wages during an employee’s maternity leave.

The current Labor Protection Act provides employees “necessary business leave,” but does not define how many necessary business leave days an employee is entitled to. The amendments address this issue, requiring employers to provide employees with a minimum of 3 days of paid necessary business leave per year. Neither the current law nor the amendments define “necessary business leave,” however, leaving open the question of when an employee may take such leave.

The amendments also provide that employees cannot be transferred as a result of a change in employer without their consent and a new employer is obligated to assume all of the rights and obligations of the old employer.

An employer who plans to relocate an employee’s current work location must provide at least 30 days’ advance written notice. Such notice must be placed conspicuously at the workplace and state which employees will be relocated along with the date of the relocation. An employee who believes that his or his family’s ordinary course of living will be materially affected may refuse to relocate. In this case, the employee’s employment contract will be deemed terminated on the date of relocation and the employee will be entitled to severance.

Under the current LPA, an employer may terminate an employee who has an indefinite term employment contract without cause and without giving otherwise statutorily required notice by making a payment in lieu of notice. The law, however, does not specify when this payment must be made. The amendments address this by requiring that employers make payments in lieu of notice on the effective date of termination.

The new amendments also require all wages, including overtime and holiday pay to be paid equally to male and female employees who engage in the work of the same type, quality, and quantity. Additionally, employers who temporarily suspend business operations (for any reason other than an act of god) are required to pay employees 75% of their usual daily wages, at a minimum, during the suspension of business.

Employers who fail to make payments in lieu of notice of termination, payments pursuant to a temporary suspension of business, or other payments under the Labor Protection Act must pay their employees interest on such payments at a rate of 15% per year.

Failure to comply with the LPA’s amendments will subject employers to penalties. Accordingly, employers should review their policies and work rules to ensure compliance with the new amendments to the LPA.

The European Parliament Approves EU-Wide Standard for Whistleblower Protection

Per our previous post, the European Parliament and the Member States agreed to adopt new rules that would set the standard for protecting whistleblowers across the EU from dismissal, demotion, and other forms of retaliation when they report breaches of various areas of EU law. According to a press release issued by the European Parliament on April 16, 2019, the Parliament approved these changes by an overwhelming majority. The new rules require that employers create safe reporting channels within their organization, protect whistleblowers who bypass internal reporting channels and directly alert outside authorities, including the media under certain circumstances, and require that national authorities provide independent information regarding whistleblowing. This legislation marks a significant departure from the jurisdiction-specific approach that has resulted in disparate protection across Europe, with some jurisdictions, like Germany and France, offering relatively limited protection when compared to other jurisdictions, such as the UK. These changes, if approved by the EU ministers, will set a uniform baseline and therefore considerably increase whistleblower protections in the EU. Member States will have two years to achieve compliance. For an additional discussion as to the implications of this legislation, see this article by The New Times. We will continue to monitor this development.

 

Brunei Now Penalizes Homosexuality with Death by Stoning

At a time when much of the world is accepting LGBTQ individuals and relationships, the pendulum has swung in the opposite direction in the small nation of Brunei.  Earlier this month, Brunei put into force a new set of harsh criminal provisions mandating extreme physical punishment for certain acts forbidden by Islamic law, most notably that any individual found guilty of a homosexual act will now be punished with death by stoning.

The new criminal provisions were originally announced by Brunei’s Sultan Hassanal Bolkiah in 2014.  Bolkiah has led Brunei since 1967 and is one of the wealthiest people in the world due to Brunei’s oil exports.  In December 2018, Brunei’s Attorney General released a notification that the laws would be put into force beginning in April 2019.

The new laws also require the death penalty for adultery, abortion, and certain forms of blasphemy against the Quran or the Prophet Muhammad.  The law additionally requires amputation of limbs for stealing and 40 lashes for lesbian intercourse.  Children that have reached puberty are treated as adults under the law, while children older than seven may be punished by whipping.

Many members of the LGBTQ community already have fled Brunei fearing persecution.  Meanwhile, governments and NGOs around the world have urged Brunei to reverse its new mandate.  Human Rights Watch described the laws as “barbaric to the core” and against international law.  The United States Department of State released a statement that the new code “runs counter to [Brunei’s] international human rights obligations, including with respect to torture or other cruel, inhuman or degrading treatment or punishment.”  Despite the opposition, Brunei officials thus far have stated that Brunei will keep the laws in place.

Brunei joins nine other countries[1] that penalize homosexuality with the death penalty.  At a time when multinational companies are making increasing efforts to promote global diversity, Brunei exemplifies the special challenges posed in understanding and working with a variety of legal requirements, as well as cultural values and perspectives.

[1] Afghanistan, Iran, Mauritania, Nigeria, Qatar, Saudi Arabia, Somalia, Sudan, and Yemen.

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