Friday, August 1, 2008

Issue 10

Dear Committee Members,

We are glad to present the 10th issue of the International Employment Lawyer.

The issue focuses on general employment issues, however due to the overwhelming interest in last issue’s topic, several articles continue the focus on issues related to the expatriation of employees. The program on expatriation at the Spring meeting in New York was a tremendous success. The program, which was cosponsored by the international tax law committee and immigration committee, once again confirmed the relevance of co-sponsored sessions.

We still have openings as national reporters in some jurisdictions related to our new online regional updates and we encourage all members to volunteer if you are interested in contributing with employment law updates. Please contact Vice-Chair Philippe Desprès or myself for more information.

We hope to see many of you at the annual meeting in New York or the fall meeting in Brussels. Please look out for the calendar of events in the back of this issue.

Best regards,
Anders Etgen Reitz
Editor in Chief


Chinese Government and Trade Unions Are Pushing for Collective Wage Bargaining 

By Ma Jianjun
Jun He Law Offices

In early 2003, the Regulations on Minimum Wage were issued by the Ministry of Labor and Social Security in China. Together with the corresponding local regulations, they set up statutory minimum wages applying to enterprises. The government and the trade unions also provide non-mandatory guidelines for the rate of wage increases. The policy is that the rate of wage increases should correspond to the increase of profit for enterprises.

Since the Labor Contract Act became effective in China, collective labor contracts have received much attention in the public. The Labor Contract Act, which was promulgated on June 29, 2007 and came into force on January 1, 2008, has a whole section under the chapter of “Special Regulations” addressing this issue. It provides that, upon equal bargaining, employees may enter into a collective labor contract with employers regarding remuneration, working hours, rest and leave, labor safety and health, insurance and benefits, etc. Also, section 4 of this act provides that employers are required to consult the trade union or employee representatives when making decisions on important matters that directly involve the interests of employees, such as remuneration.

Against this legislative background, in May, 2007, a chief official of the Wage Department under the Ministry of Labor and Social Security announced that “China will endeavor to establish a collective wage bargaining mechanism among enterprises and form a regular wage increase mechanism within five years. To that end, China needs to improve relevant laws so as to make collective wage bargaining a statutory requirement.” Following that, the Labor and Social Security Bureau in Shanghai issued a “Three Years Action Plan”, indicating its effort to enforce collective wage bargaining.

Collective Wage Bargaining Mechanism As a matter of fact, up till this day no specific collective wage bargaining mechanism exists in China. The current collective bargaining mechanism in general is provided in the Collective Labor Contract Regulations and its corresponding local regulations. An overview is provided in the following paragraphs.

Either party, i.e. the employee or the employer, may initiate a collective bargain. The employer should respond within 20 days (15 days in Shanghai) upon receipt of a written letter for bargaining issued by the trade union. If the employer does not respond, the trade union may request its superior trade union for mediation. If the employer refuses the bargaining without reasonable cause, the labor protection administrative department may communicate with the employer and request such employer to have collective bargain with the trade union.

The two parties are to have an equivalent number of representatives, at least three persons representing each side, of whom one should be the chief representative. The employee representatives are to be designated by the trade union, or, in the absence of a trade union, recommended by the employees and accepted by more than half of the employees. Employee representatives are protected in various ways under the law. For instance, the time for attending collective bargaining must be considered as normal working time (in Shanghai, the employee representative is further allowed to take a maximum of three working days to collect materials for bargaining) and the employer is not allowed to change the position of the employee representative during the term of representative without reasonable cause. Penalties such as compensation for damages and fines may be imposed for violation thereof according to different local regulations.

After collective bargaining, a draft collective agreement must be produced and submitted to the congress of employee representatives or all of the employees. The draft may be passed if more than two-thirds of the representatives or employees attend and more than half agree. The passed agreement must then be submitted to the labor protection administrative department. If the department does not object within 15 days, the collective agreement becomes legally binding.

If disputes arise during the bargaining, the labor protection administrative department may be involved for mediation. In case disputes arise out of the performance of a collective agreement, the means of settlement vary. In provinces like Jiangsu, Hunan and Guangdong, either party may initiate labor arbitration; the party who disagrees with the arbitration award may file a lawsuit in court. In Shanghai, only the trade union may initiate labor arbitration or alternatively file a lawsuit.

Response from the Public Although the state authorities and trade unions are striving to establish a collective wage bargaining mechanism, it is still under consideration, and the enterprises do not see it as a big deal. The response from economists is quite interesting. Some economists warmly welcome such mechanism, arguing that governmental power should play a more central role in determining wages. Some insist that the invisible hand, i.e. the market, should play the leading role.

Inflation and appreciation of RMB has haunted China during the last year, which seems to have a major influence on the legislative trend. Before that, the State Council had indicated that it would put an end to the dispute over collective wage bargaining in its upcoming Wage Payment Regulation. Now, due to the macroeconomic situation, it will probably continue to be an issue.

As to the issue of strike, this is barely mentioned in the current discussion about the collective wage bargaining mechanism. In retrospect, the Constitution of China as amended in 1975 and 1978 provided that citizens have the right to strike; however, it was deleted in the Constitution as amended in 1982 and never found its way back into the Constitution or other laws. In the absence of a statutory right to strike, Chinese laws and regulations provide other remedies. In general, employees can resort to the administrative department for settlement; the department can demand employers to attend the bargaining. In Jiangsu Province, if an employer refuses or delays the bargaining and does not rectify as demanded by the department, such employer may be fined between 3000 RMB and 30000 RMB (417 US dollars to 4170 US dollars) and its legal representative or person in charge may also be fined between 500 RMB and 2000 RMB (69.5 US dollars to 278 US dollars).


New Decree requires the application of French rules to all persons working in France 

By Roselyn S. Sands & Laurebt-Paul Tour
Ernst & Young Société d’Avocats, Paris

As Europe becomes a reality as opposed to just an idea, more and more workers are freely moving throughout the continent in search of a better life. One can certainly remember the "polish plumber" (one of the stated reasons why the French Referendum on Europe failed) being viewed in France as "unfair competition" with a French worker. Indeed, the French workforce is among the most protected in Europe.

In order to fight against unequal treatment between French and foreign workers, a law of August 2, 2005[1] (implementing the 1996 EU Directive on the posting of workers[2]) requires the application to foreign workers working in France of French rules on matters including, but not limited to, individual and collective freedoms in the scope of the work relation, working time, leaves, illicit work, minimum wage, night work, the right to strike, health and safety at work.

The scope of this protection has been recently expanded by a Decree of December 11, 2007[3].

With this new Decree, all persons working in France are entitled to the protection offered by the French industry-wide Collective Bargaining Agreements (CBAs) in the above matters.

Industry-wide CBAs are negotiated between representatives of both employers and employees. They address issues such as working time, working conditions, remuneration, termination conditions, complementary insurance and welfare scheme. Their provisions are more favorable to the employees than what French laws provide on identical matters.

They are binding upon the signatories’ members of the employers’ unions only, but they may be (and usually are) "extended" by the Department of Labor and, therefore, become binding upon all employers which activities fall within the scope of the agreement.

Thus, the December 2007 Decree requires the application to foreign workers of industry-wide CBAs when such industry-wide CBAs are applicable to employees working for companies implanted in France which perform a similar activity.

[1] Law n° 2005-882 of August 2, 2005
[2] Directive n° 96/71 of December 16, 1996
[3] Decree n° 2007-1739 of December 11, 2007 


Tuning Up the Antidiscrimination Law 

By Branislav Hazucha
Čechová & Partners

On April 1, 2008, the level of protection against discrimination was raised up by an amendment to the Antidiscrimination Act. Act No. 85/2008 Coll. is already the second amendment to the Antidiscrimination Act within the last four months. The aim of both amendments is to implement EC directives in this field by clarifying its terminology and solving problems uncovered by enforcement of the Act. 

One of the most important clarifications is the express ban on sexual harassment together with its definition which was previously covered implicitly by the definition of harassment. Sexual harassment was thus recently defined as any verbal, non-verbal or physical form of conduct of a sexual nature with the purpose or effect of violating the dignity of a person and of creating an intimidating, hostile, degrading, humiliating or offensive environment.

In addition to clarification of individual forms of discrimination, amendments attempt to narrow down the scope of acceptable differential treatment. Before both recent amendments entered into force, employers were allowed to treat employees differently when such treatment was objectively justified by the characteristics of work and working conditions. Furthermore, the extent and way of acceptable differential treatment had to be appropriate to and necessary for the work and working conditions. The new regulation introduces a more restrictive test. In addition to the requirement of objective justification by the characteristics of work and working conditions, it also requires that the reason of acceptable differential treatment must be an actual and decisive requirement for employment of employee under the condition that its aim is legitimate and the requirement is appropriate.

Further changes relate to court proceedings. The most significant change is that a plaintiff is not required to submit evidence anymore. It is sufficient just to inform the court about events of unequal treatment. The defendant is then required to prove that he or she has not violated the equal treatment principle.


Employer’s right to monitor emails
Recent case law in Spain

By Sonia Cortes & Patricia Molina

A recent decision by the Spanish Supreme Court provides a new approach to employees’ right to privacy with respect to evidence provided by employers to justify termination for cause based on employees' unauthorized personal use, or misuse, of electronic devices made available by the company to the employee in order for him or her to carry out his/her duties during working time.

In this particular case, an employee was terminated due to access to pornographic websites from the company’s computer during working time.

The company became aware of this fact due to a virus that was caught during one of the visits to these websites. Technical support was required to repair this problem. Once the virus was found, the company decided to further analyze the computer to ascertain where these viruses were coming from. It was through this process that the company discovered that the employee had been visiting pornographic websites during his working time. The company terminated the employee based on his use during working time of a working tool supplied by the company to access pornographic websites and the serious damage that the virus had caused.

The employee challenged his termination arguing that evidence had been illegally obtained in that his fundamental right to privacy had been violated and that the search performed on the computer was not performed in accordance with the legal protection provided under employment law in connection with searches, namely: (i) that the employee must be notified of the search, (ii) that the employee is requested to be present during the investigation, (iii) that the employee representatives must be notified about the search, (iv) that witnesses are requested to be present during the search and (v) that the search is performed during hours of work.

The Court of First Instance stated that the termination was unfair given that the evidence had been unlawfully obtained. The court declared that the company had not complied with the provisions provided by law for searches of the personal belongings of employees. The Court of Appeal upheld this decision. The Supreme Court, however, overruled the decision by declaring the evidence legally obtained and thus declaring the termination to be fair.

It its decision, the Supreme Court rules that company computers should not be deemed personal belongings and thus, the protection provided by law in connection with searches of personal belongings is not applicable.

The Spanish Workers Statute provides that searches of the personal belongings of employees at company premises (the act specifically refers to employees' lockers) should be subject to certain requirements, namely that the employee is present or, in his or her absence, that two witnesses are present to secure the employee’s right to privacy. In addition, employee representatives should be informed of the search to ensure that the search does not infringe the employee’s privacy. The act also states that this search has to be carried out during working hours and at company premises.

In this particular case, the search performed on the computer used by the employee was (i) done without witnesses being present, (ii) without notifying the employee or the employee representatives and (iii) outside the premises of the company.

According to the Supreme Court, the key issue here is to ascertain whether electronic devices or tools are to be deemed personnel belongings of the employee in order for these tools/devices to enjoy the protection provided by law. In this sense, the Supreme Court declares that electronic devices or tools provided by the company to the employee in order to perform his/her professional tasks are work tools rather than personal belongings, and thus the relevant restrictions to searches are not applicable as long as the employee is informed beforehand through a company policy. The second key issue here is to determine how the company should proceed to control and monitor the use of these tools made available to employees taking into account that it is really difficult to prevent the employee from using such tools for personal purposes. Given the fact employees spend almost all their time working with such tools, it would be very difficult to prohibit personal use of them given the general practice that employees use company IT for personal use to a certain extent.

Monitoring and controlling tools as computers is thus justified (i) since these latter are tools offered by the company to the employee in order to develop his/her functions and to perform his/her tasks within the company and (ii) because of the normal course of business of the company, since it helps the company to coordinate and to ensure the continuity of the activities carried out by the employee in case this latter is absent.

Following the Supreme Court judgment, when the act refers to search conducted of “lockers” or personal belongings, it is not referring to any tool made available by the employer to the employee to render his/her services (i.e. computers), but to a place where the employees keep their personal belongings when at work.

Consequently, given that the Supreme Court has considered computers to be a work tool provided by and belonging to the company, the company can exercise the power of control offered by the workers statute in order to ensure the normal course of business of the company. Consequently, these searches will be justified when the normal course of business is involved and when this may result in damage to the company. However, in order to guarantee some protection to employees when electronic tools searches are to take place, the Supreme Court stated that companies should provide the employees with a handbook or company policy specifying the use that is allowed and what use is not.

It is thus essential that the company provides the employees with a handbook or company policy describing the use that is prohibited in order to guarantee operability as well as to keep the normal course of business of the company, and informing that management or other designated employees may have access to such tools, so that employees know that they should not expect privacy. The policy should provide: (i) the expected use of company tools and (ii) the employer‘s right to control and monitor employees’ work on a regular basis for purposes of maintaining the normal course of business of the company.

To the extent that the employee is aware of the lack of privacy, the company is entitled to access and monitor the content of electronic information contained in such computers. This is deemed part of the company’s right to monitor and control employees’ performance at work.

Therefore, according to this ruling, it is strongly advisable for employers to set up a company policy regarding authorized and unauthorized use of electronic tools (i.e. email, Internet, etc.) so that the company may justify termination for breach of this policy and may set forth the required evidence that would sustain a lawful termination, thus avoiding the risk that termination is declared null and void, thus resulting in employee’s right to reinstatement.


By Ueli Sommer 

On January 1, 2008, the Foreign Nationals Act (the “Act) came into effect. The provisions of the Act mainly apply to citizens from outside the European Union (“EU”) and the European Free Trade Association (“EFTA”). The Act, in principal, is a compilation of the former Federal Law on the Residence and Settlement of Foreigners as well as of various related ordinances and guidelines. There are, in principal, no substantial amendments with regard to the issuance of work and residence permits for Non-EU/EFTA citizens. 

According to the Act, the requirements for a work and residence permit for Non-EU/EFTA citizens are handled strictly and applicants have to pass through a multi-level procedure on a cantonal and federal level. Cantonal quotas limit the number of permits to be issued (limiting quota). Non-EU/EFTA citizens are granted access to the Swiss labor market only upon proof that no suitable Swiss national or EU/EFTA citizen could be found for the vacant position (priority to Swiss and EU/EFTA nationals). Further, the salary and working conditions must be in accordance with the conditions customary to the region and the particular sector. Finally, the foreign national must fulfill certain personal requirements and residence permits may be issued to managers, specialists or other qualified employees only. In addition, a sustainable integration in the Swiss labor market and the social environment of the applicant must be expected, inter alia, based on the language abilities. As an exception, not all personal requirements have to be met. E.g. with regard to management transfers within international companies, a residence and work permit may be issued even if the relevant person is not fluent in one of the Swiss national languages (German, French, Italian and Rhaeto-Romanic). The admission and residence of EU/EFTA citizens are governed by the Agreement on the Free Movement of Persons between the EU and Switzerland. Citizens from a primary EU country (Belgium, Denmark, Germany, Finland, France, Greece, United Kingdom, Ireland, Italy, Luxembourg, Netherlands, Austria, Portugal, Sweden, Spain), from Malta, Cyprus or from an EFTA country (Iceland, Norway, Liechtenstein) do, in principal, not need a work permit and have to apply for a residence permit only. Citizens of a new EU member state (Poland, the Czech Republic, Hungary, Slovakia, Estonia, Latvia, Lithuania and Slovenia) have to apply for a work and residence permit and fulfill further requirements based on the temporary regulations negotiated between Switzerland and the EU.