International Labor and Employment Law

Major Changes to Singapore’s Employment Act, Effective April 1, 2019

Major changes to Singapore’s Employment Act (“EA”) took effect on April 1, 2019. First, the EA was expanded to include more employees and offer greater protections. Before April 1, the EA’s core provisions excluded managers and executives earning more than S$4,500, and its Part IV provisions, which provide additional protection to select groups of workmen (i.e. manual laborers) and non-workmen (i.e. general white-collar employees, such as receptionists), excluded non-workmen earning more than S$2,500. Now, the EA’s core provisions apply to all employees (except for seafarers, domestic workers, and public servants who continue to be excluded), and the Part IV provisions were amended to cover non-workmen earning up to S$2,600, and increase the overtime rate payable cap to match the new threshold.

Second, wrongful dismissal claims previously were heard by the Ministry of Manpower, but now will be heard by the Employment Claims Tribunals (“ECT”). The ECT will hear these matters in addition to salary-based claims, thereby eliminating an employee’s need to navigate separate adjudicatory channels when bringing both types of claims against an employer. Additionally, the minimum service period managers and executives must complete before bringing a wrongful dismissal claim for a dismissal with notice, as applicable, was reduced from one year to six months.

Third, the EA now requires that employers accept all medical certificates issued by doctors and dentists registered under the Medical Registration Act and Dental Registration Act, respectively, when issuing reimbursements and granting paid sick leave. This is a significant change from the EA’s previous provision, which required acceptance of certificates from government and company-approved doctors and dentists only. Moreover, employers may, but are not required to, accept certificates from other types of health practitioners as well.

Fourth, employers now may make other deductions, in addition to those already authorized by law, upon the employee’s written consent, which the employee must be allowed to withdraw penalty-free at any time.

Employers who are affected by the amendments and have not made changes to their practices and policies in order to comply with the changes should do so immediately. For more information, the current version of the statute may be accessed here and a guide summarizing the changes, which was released by the Tripartite Alliance for Fair & Progressive Employment Practices and the Ministry of Manpower, may be accessed here.

U.S. Court Holds No Foreign Law Exception to the ADEA and Title VII in GM Bias Case

On January 30, 2018, Shawn Wang (“Plaintiff”), filed suit against GM (China) Investment Co., Ltd. (“GMCIC”) and General Motors (GM) alleging, among other things, age discrimination in violation of the Age Discrimination and Employment Act (“ADEA”) and race and national origin discrimination under Title VII. Plaintiff, a naturalized U.S. citizen, was a GMCIC employee in Shanghai, China until he was terminated. GM filed a motion to dismiss arguing that it was required to terminate Plaintiff in order to comply with China’s mandatory retirement age law. On March 5, 2019, the Eastern District of New York denied the motion to dismiss the suit.

Background

Title VII and the ADEA each contain a “foreign law” exception that shields employers from liability for actions involving an employee in a workplace in a foreign country. The exception applies where compliance with Title VII and the ADEA would otherwise cause the employer, or a corporation controlled by the employer, to violate the laws of the country where the workplace is located. To receive protection, the employer’s conduct in question must be necessary in order to avoid violating a foreign law.

Chinese law creates a mandatory retirement age of sixty years old for male employees. Upon reaching sixty years of age, an employee’s labor contract is terminated.

Decision

After reviewing Chinese case law, the Court noted that, although an employee’s labor contract is terminated on his sixtieth birthday, the law permits the individual to continue his relationship with his employer as an independent contractor. The Court continued by pointing out that, under Chinese case law, contracts entered into by parties to create independent contractor relationships are not subject to the statutory retirement age. Accordingly, under Chinese law, the Court found that it would have been lawful for GMCIC to maintain a working relationship with Plaintiff as an independent contractor.

Next, the Court turned to GMCIC’s retirement policies which expressly stated that the company could, at its discretion, continue an individual’s employment after reaching retirement age on a year-to-year basis until the age of sixty-five. Indeed, in response to Plaintiff’s EEOC charge, GM indicated that, in rare instances, where GMCIC’s business needs require the services of a former employee, the company will enter into independent contractor relationships for those services.

Ultimately, the Court held that GM did not meet their burden in demonstrating that they would have violated Chinese law by continuing a working relationship with Plaintiff beyond his sixtieth birthday. The Court held that, contrary to GM’s contentions, the law would have permitted GMCIC to maintain an independent contractor relationship with Plaintiff.

On April 5, 2019, GM filed a motion seeking certification of an interlocutory appeal to the Sixth Circuit. In its motion, GM argued that certification for the appeal was appropriate because the foreign law exceptions present novel legal issues for which there is no guidance from the Sixth Circuit.  Resolution of these issues on appeal, GM argued, would advance the litigation by facilitating settlement, narrowing the issues, or causing Plaintiff’s claims to be dismissed.

Implications

In light of this decision, employers should review applicable foreign laws thoroughly to determine whether compliance with those laws can be accomplished consistently with Title VII and the ADEA.

UK Court of Appeal Allows Asda Supermarket Employees’ Equal Pay Claims to Proceed

Earlier this year, the UK Court of Appeal held that a class of 30,000 female Asda retail employees could compare themselves to male employees working in Asda’s distribution warehouses for purposes of their equal pay lawsuit. The Court’s analysis and decision has broad implications for gender pay litigation in the UK.

Background

The Court of Appeal’s decision is only the latest development in this long-running litigation. In fact, although this case has been pending since 2014, this decision still only tackles the preliminary issue: whether female employees working in Asda’s retail stores may compare themselves to male employees employed in an entirely different position and at a different location. After holding a hearing on that preliminary issue, the Employment Tribunal ruled in October 2016 that the plaintiffs were entitled to make such a comparison. Asda appealed to the Employment Appeal Tribunal, which affirmed. Asda then appealed to the Court of Appeal.

Decision

The Court of Appeal analyzed UK’s Equality Act of 2010, which in relevant part permits plaintiffs in an equal pay lawsuit to compare themselves to either: (i) higher-paid comparators at their same employment establishment; or (ii) at a different establishment where “common terms” of employment apply. Here, the plaintiffs sought to rely on the second limb of the standard, meaning that the court had to determine its meaning. After a thorough review of  the case law, the Court of Appeal determined that the plaintiffs may compare themselves to male employees at Asda’s warehouses so long as the warehouse employees’ terms and conditions of employment would be the same had they worked at the supermarkets where the plaintiffs worked, and vice versa (referred to as the “North hypothetical”).

This concept can be tricky to apply. Essentially, a court must first determine the hypothetical question of whether the male distribution employees would have broadly the same terms of employment had they worked at the plaintiffs’ retail stores, even if they never would in reality. Similarly, the court then asks the further hypothetical question of whether or not the female retail employees would have broadly the same terms of employment had they worked in the distribution centers. As the Court stated, “[t]he effect of the case-law and of North in particular is that in such a case ‘wherever they work’ extends even to a workplace where they would never in practice work because the nature of its operations is so different.” To be clear, the proper analysis is not to compare the terms of the plaintiffs’ employment to the terms of their comparators. Instead, the court compares each group’s terms to the terms that the hypothetical group of the same employees working at the other location would have.

Here, the Court recognized that Asda employees enjoy the same terms of employment regardless of where they worked. Therefore, because each group would have the same terms had they worked at each other’s establishment, plaintiffs’ claims could proceed.

Implications

Unless Asda appeals to the Supreme Court, this case will now proceed to the next two relevant questions—whether plaintiffs and their comparators roles are of equal value, and if so, whether their pay differential is based on sex. Asda has argued that any pay differences are instead based on market rates for the different positions.

The Court of Appeals’ determination seems to be moving towards a high water mark of ruling that essentially all of a company’s employees will be suitable comparators in an equal pay lawsuit, provided that the company’s terms and conditions of employment do not differ for each location. With similar cases currently pending against British supermarkets Tesco, Morrisons, and Sainsbury’s, this decision likely will have an important impact on how UK courts analyze those and other equal pay cases going forward.

EU Agrees to Set the Floor for Whistleblower Protection Across All Member States

According to a press release issued by the European Commission today, the European Parliament and the Member States have agreed to adopt new rules that set the standard for protecting individuals who blow the whistle on breaches of EU law from dismissal, demotion, and other forms of retaliation. This reform, which was first proposed by the European Commission in April 2018, seeks to replace the patchwork of whistleblower protections that currently exist across the Member States with a uniform approach. If formally adopted by the Parliament and Council, the new rules would protect those who report violations of various areas of EU law, including data protection, and Member States could extend protection to other areas of the law as well. Employers would have an obligation to create safe reporting channels within the organization, and whistleblowers, while encouraged to report internally first, also would be protected when reporting to public authorities. Additionally, whistleblowers could safely report violations directly to the media if no action was taken, if a report to the authorities would be futile, or when the violation is an “imminent” or “manifest” danger to the public interest. Lastly, the new rules would require that national authorities inform citizens and train public authorities on various aspects of whistleblowing. We will continue to monitor this development.

Chinese government forbids employers from asking about childbearing or marital status

On January 15, 2019, we posted an article about the effect of the #MeToo era on China’s efforts to draft its first Civil Code enshrining the country’s civil laws (https://www.internationallaborlaw.com/2019/01/15/china-responds-to-metoo-employers-stay-alert/). While China is not expected to adopt the Code until at least 2020, the Chinese government is beginning to take steps now to address gender discrimination in the workplace.

On Thursday, February 21, the Chinese government posted a notice on the website of the Ministry of Human Resources and Social Security of the People’s Republic of China, outlining plans to enforce current laws against gender discrimination in the workplace.

The notice comes in response to a declining birth-rate driven by the “one-child” policy which has been in place since 1979, concerns over sluggish economic growth, and decreased female participation in the workforce. The notice’s main focus is to better define what constitutes “gender discrimination” in employment practices, a practice that is technically enshrined in the Chinese constitution, but in reality vaguely defined and poorly enforced.

China has a widespread issue with of sexual harassment and gender discrimination in the workplace. Recruiters and employers are known to ask female candidates about marital status or childbearing plans. Job postings may specify that the position is only open to men or highlight the “beautiful girls” working in the office. It was not until 2013 that a woman successfully brought a case claiming gender discrimination in an employment context. Indeed, 73 percent of women participated in the workforce in 1990, but that number has declined to 60 percent in 2018.

In an effort to address these concerns, the notice specifically forbids employers and recruiters from:

  • Asking about a woman’s marital or childbearing status;
  • Restricting births as a condition of employment; or
  • Asking a woman to take a pregnancy test as a condition of hiring.

Additionally, the Chinese government intends to reinforce a victim’s ability to bring claims in court, increase child and infant care services in the workplace, and provide more support for women trying to reenter the workplace after giving birth. Employers or recruiters who discriminate based on gender may face up to $7,400 in fines, and more serious or repeat violations could result in stiffer penalties.

While there are still questions around the actual implementation and enforcement of these new policy goals, the notice signifies a shift toward greater protections for women in the workforce.

2019 Brings Minimum Wage Increases Across the European Union

The New Year has brought an increase in minimum wages across the majority of European Union member countries. While most of these changes have been minimal, France and Spain, in particular, announced considerable increases to their respective minimum wages at the end of 2018.

From the beginning of his tenure in May 2017, French President Emmanuel Macron has passed numerous reforms aimed at stimulating economic growth within the country. Many of these reforms have met opposition from the French people, ultimately culminating in the “Yellow Vest” Movement (“Movement”). Since November 2018, the Movement has seen thousands of people across France take to the streets to protest President Macron’s policies.

On December 10, 2018, after weeks of political pressure applied by the Movement, President Macron announced a series of concessions and called on the French people to come together. In his address, Macron: (i) announced an increase to the minimum wage; (ii) announced that taxation on overtime pay would be abolished; and (iii) called on employers to pay tax-free year-end bonuses to employees.

President Macron announced that France’s minimum wage would increase by €100 per month in 2019. Employers will not be responsible for this additional compensation, however. Instead, the French government will foot the bill. As part of his concessions, President Macron also noted that overtime compensation would no longer be subject to taxation, effective January 1, 2019. While this abolition of taxation on overtime pay was previously scheduled to go into effect on September 1, 2019, President Macron’s concession accelerated that timeline. Finally, President Macron urged employers to pay a year-end bonus to their employees, noting that such bonuses would be tax-free.

Two days after President Macron announced these concessions, Spanish Prime Minister Pedro Sanchez announced a 22% increase in Spain’s minimum wage beginning in 2019. The increase was later approved through a royal decree, ensuring it would take effect on January 1, 2019. The increase is the largest to Spain’s minimum wage in over 40 years.

The decree raises the minimum wage from €736 per month to €900 per month. This change will bring the yearly minimum salary to €12,600 and will affect an estimated 2.6 million workers. According to statistics, this increase will also inadvertently reduce the gender pay gap. This is because more than half of the employees who will benefit from this increase (56.7%) are women. The 22% increase stands in stark contrast to recent years where the country’s minimum wage has increased by only a few percentage points.

Employers operating in the EU should review their policies to ensure compliance with the widespread minimum wage increases.

Recent UK Ruling Highlights Risks of “Independent Contractor” Status

In most jurisdictions, there is a binary distinction between “independent contractors” and “employees,” with employment rights only afforded to “employees.” In the UK, there is a third class—“worker” —who benefit from certain employment rights, including paid time off and a minimum wage.

The case of Addison Lee Ltd. v. Lange and Others provides important guidelines on the distinction between “workers” and “independent contractors” which are of critical importance for businesses that engage atypical workers. Importantly, UK Employment Appeal Tribunal (“EAT”) rejected an appeal filed by British taxi company Addison Lee Limited, and instead affirmed the Employment Tribunal’s finding that Addison Lee’s drivers were not independent contractors, but instead qualified as “workers.”

Facts

Michall Lange and two other drivers brought claims against Addison Lee, asserting that they qualified as “workers” under UK regulations. This was despite their contracts expressly stating they were independent contractors. The drivers therefore argued that they were entitled to holiday pay and minimum wage.

Under Addison Lee’s system, all drivers were provided with a hand-held computer, which they were instructed to turn on whenever available for work. When provided a job, a driver was expected to immediately accept it or provide an acceptable reason for not doing so. A failure to accept a job or provide a legitimate reason for not doing so could result in sanctions, such as logging the driver off of the system or referring the matter to a supervisor. Although Addison Lee did not promise its drivers a specific amount of work, it did instruct drivers that they should try to work an average of 50 to 60 hours per week.

The Employment Tribunal Decision

The drivers’ attorney argued to the Employment Tribunal that the independent contractor status provided in Addison Lee’s employment contracts did not reflect the true arrangement among the parties. Addison Lee countered that drivers should not qualify as workers because Addison Lee did not require them to work. Therefore, Addison Lee maintained, each driver was running his or her own small business—Addison Lee merely provided the cars and equipment.

The Employment Tribunal concurred with the drivers, holding that although they were technically free not to work, “[t]he commercial reality [was] that they are undertaking to do work when and as soon as they log on.” In other words, while logged on, a driver had undertaken to do work for Addison Lee and was expecting Addison Lee to offer such work. This created a mutuality of obligation through the contractual obligation for Addison Lee to offer work and for the individual to accept it, subject to the individual’s occasional entitlement to decline if a parcel was too heavy. This mutuality of obligation meant that the drivers should be classified as “workers” rather than independent contractors. Further, the Employment Tribunal determined that time drivers were logged on counted as “working time,” regardless of whether the driver was transporting a passenger.

EAT’s Holding

Addison Lee appealed to the EAT, contending that a driver logging on to the system should be considered only “a signal of willingness or availability, not a commitment to undertake journeys,” and that there was insufficient basis for departing from the express wording of the relevant contracts which stated that the drivers were independent contractors.

However, the EAT held that the Employment Tribunal had been right to look behind the express wording in the relevant contract in order “to glean the true agreement from all the circumstances of the case,” including, importantly, the parties’ relative bargaining power. With those principles in mind, the EAT held that it was reasonable for the Employment Tribunal to find that the drivers were workers based, in particular, on the fact that drivers was required to accept jobs when logged in to Addison Lee’s system. Regardless of the contractual provision stating that drivers need not take work, the reality was that when logged in, drivers were obligated to undertake jobs assigned to them, which meant they had the status of workers.

Implications

The analysis provided in Addison Lee confirms that the label given to a contract is not determinative. It is an example of how the commercial reality will determine the status of someone undertaking work. Relationships that have the character of a “worker” relationship, such as the mutuality of obligation in this case, requiring the individual to accept offered work, may lead to a rejection of the independent contractor status, requiring payment of applicable wages and benefits. With more and more companies seeking to take part in the “gig economy” of independent work, businesses should review their practices and policies to assess the true nature of the relationship with those that they engage.

More Countries Consider Implementing a “Right to Disconnect”

As we move into 2019, it is worth checking in on the “right to disconnect,” a French employment right that now has been adopted or proposed in multiple other countries.

Basis of the Right

We live in a hyper-connected world, and more and more companies now provide laptops and cell phones with the expectation that employees will be reachable at all hours. While some employees appreciate the increased flexibility that comes with these developments, the blurring between work time and free time comes at a price. In what some studies have coined “cognitive overflow syndrome,” answering those late night or weekend emails can seemingly affect one’s health, and an increasing number of employees report fatigue and burnout.

“El Khomri” Law

In light of these concerns, in August 2016, France adopted the “El Khomri law” (named after France’s Minister of Labour at the time), which offered French employees the right to disconnect from work calls and emails during non-working hours. While the El Khomri Law provided the right to disconnect, it did not define it, and instead obligated employers to negotiate the specifics concerning the required use of telecommunication tools with employees. If no agreement is reached, the employer may unilaterally implement its own chosen methods for honoring the right to disconnect. The law came into effect in January 2017.

A Global Push to Disconnect

Since enactment of the El Khomri law, more countries have enacted or considered similar legislation. In 2017, Italy enacted a law requiring employers to clarify their employees’ need to be responsive outside of normal working hours. Similarly, Philippines’ legislature has introduced a bill providing a right to disconnect after normal hours. Indeed, Belgium, the Netherlands, Luxembourg, India, Québec, and the federal government of Canada have all proposed or considered adopting such a right. Most recent to jump on the bandwagon was Spain, which in November 2018, adopted its “Data Protection and Digital Rights Act.” This new act provides, among other things, the right to disconnect during resting periods and holidays.

Most surprisingly, even the New York City legislature has introduced a bill providing employees a right to disconnect from work communications. Despite being the “city that never sleeps,” the proposed law would prohibit employers with over ten employees from requiring their employees to respond to calls or emails outside of normal work hours (except in emergencies). Noncompliant employers could face fines of up to $250 for requiring employees to answer after-hours emails, and even higher fines for punishing employees who refuse to do so.

First Enforcement Efforts and Companies’ Reactions

The past year also brought the first publicized enforcement of El Khomri law. In July 2018, France’s Supreme Court ordered Rentokil Initial, a British pest control company, to pay €60,000 to its former France-based employee who had been required to be constantly accessible in case a work issue arose. The ruling (believed to be the first of its kind since El Khomri took effect) demonstrates that French courts may determine that requiring employees to remain digitally connected violates the right to disconnect and requires compensation.

Since the law’s enactment, French companies have taken different approaches to compliance. Some simply encourage employees to not answer emails after work hours. Some allow employees to send emails after hours, but hold those emails within their system until the following morning. On the other hand, some have forbidden emails at night all together.

Additional Considerations

As more and more countries consider adopting the right to disconnect, it seems inevitable that the European Union will eventually consider the same. But questions remain. Can a “one size fits all” approach work for the various industries that people are employed in? Some companies simply must have their employees accessible outside of normal working hours. Additionally, some fear that requiring employees to not answer emails after work will simply force them to remain at work later. Or it might put pressure on employees to finish work by the close of business. Finally, it is unclear how the right to disconnect can be adequately enforced when employers may turn to calling an employee’s personal device, avoiding detection of such communications. As was the case with Rentokil, will enforcement depend on whistleblowers?

For the time being, we recommend that employers: (1) have a policy delineating what is expected from their employees outside of normal working hours; and (2) record any work (including phone calls and emails) that employees perform outside of normal working hours.

Germany Rings in 2019 by Adopting Intersex Gender Status

As of January 1, 2019, intersex Germans, meaning Germans with sex characteristics not fitting neatly within the standard understanding of males and females, will be able to register their gender as “divers,” which translates to “miscellaneous.” This new gender classification will be included on such documents as birth certificates, passports, and driver’s licenses.

Since 2013, Germany has permitted parents of babies born without a clear gender to leave the baby’s gender status blank so that it can decide its own gender at a later date. But the new “divers” gender classification derives from a 2017 Federal Constitutional Court decision holding that requiring intersex citizens to choose between “male” and “female” on government documents was unconstitutional and discriminatory. The plaintiff in that case had sought to change their gender identity from female to “inter/diverse,” but was rejected based on that status not being legally recognized at the time. The Federal Constitutional Court presented German lawmakers with two choices: either create a third gender option or do away with gender classifications entirely. The German government took up the challenge, and in August 2018, the Cabinet approved providing citizens a third gender option. In December 2018, Germany’s Parliament passed legislation officially permitting the same.

Under the new law, adults will be able to switch their gender identity to “divers” by producing a doctor’s statement or other medical certification confirming their intersex status. Additionally, parents will be able to use the “divers” category for newborns presenting with unclear sex traits. Some LGBTQ advocates have criticized the medical documentation requirement, arguing that gender status encompasses more than physical traits, and also should encompass those that mentally or emotionally identify as neither male nor female. But other commentators believe that the law is at least a step in the right direction towards societal acceptance of gender fluidity.

Germany is the first European country to explicitly recognize a third gender status, although other European countries permit individuals to change their gender. Other countries, such as Australia, Canada, and India, as well as certain U.S. states, already recognize a third gender status.

China Responds to #MeToo; Employers Stay Alert

China has begun work on the first draft of its Civil Code, a legislative measure aimed at reconciling and organizing the country’s extensive civil laws. The Chinese Civil Code (“Code”) is expected to be fully drafted and adopted in 2020.

Although the Code has been under development for some time, it now finds itself in the #MeToo era. China has felt the shockwaves of the movement as prominent intellectuals, activists, and officials have now been accused of sexual assault or harassment. The drafters of the Code have taken note of this increased momentum the movement has experienced. The most recent draft of the Code published on September 5, 2018, would impose increased obligations on Chinese employers and provide more protections to employees against sexual harassment.

As published, the Code would require employers to take reasonable measures for preventing sexual harassment. This includes implementing a process for reporting and investigating sexual harassment claims. In addition, it would permit victims to hold perpetrators liable for sexual harassment. Victims also could extend civil liability to employers who fail to properly investigate sexual harassment claims.

China has enacted several national laws prohibiting sexual harassment in the workplace in recent years, however, those laws have had poor enforcement. In addition, already-existing laws do not clearly define what conduct constitutes sexual harassment and these laws generally only protect women. As a result of these vague laws, between 2010 and 2017, only thirty-four lawsuits were filed that addressed sexual harassment. Most of those cases were initiated by alleged harassers and brought against either their former employers or their accusers.

The newest draft of the Code seems to signal a stark departure from China’s course on sexual harassment in the workplace over the past several years. Accordingly, employers in China should review their policies for handling and investigating sexual harassment claims in the workplace and pay close attention to any further Code developments.

We will continue to monitor the Code as it is prepared for final review in 2020. We will be sure to blog about any updates.

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