Saturday, August 1, 2009

Issue 14

Dear Committee Members,

Welcome to the 14th issue of the
International Employment Lawyer.

This issue (like others before it) presents articles that address topics of interest to the international employment lawyer.

We would like to thank all contributors for making this publication a great success.

Let me also take this opportunity to thank Thomas Griebe, who is retiring as co-chair of the committee, for his contribution, and to welcome Ueli Sommer, who will take his place when the new association year begins.

We look forward to see you to at the annual meeting in Chicago or the Fall 2009 Meeting in Miami (  

Best regards,
Anders Etgen Reitz
Editor in Chief


Flexi-security under French Employment Law: A New Solution to Terminate Contractual Relations 

By Katell Deniel-Allioux 


A new law enacted on June 25, 2008, offers employers and employees the possibility to use a new type of termination for their contractual relations: the amicable termination (or “rupture conventionnelle”).

Prior to the enactment of this law, employers/employees could only terminate their contractual relations if either party made a unilateral decision to terminate employment. Termination of employment contracts occurred one of two ways:

1) Employee-Initiated Termination 

An employee could decide to resign from his/her job. However such employee could risk becoming ineligible for unemployment coverage - which could translate to the loss of unemployment coverage in the amount of about 57.4% of the employee’s last wage.

2) Employer-Initiated Termination 

If the employer dismissed the employee on the other hand, such termination could also pose a problem for the employer. Under French law an employer-initiated termination would have to be backed by a real and serious cause because dismissal without cause is considered unfair and the terminated employee can be eligible to receive damages to compensate for the prejudicial/unfair treatment. The Court considers various factors when determining if a termination is unfair or done without cause.

This new process of amicable termination could however be beneficial for both employers and employees as it provides them with a non contentious way to terminate their relations without creating artificial debate while cushioning both parties from the financial risks they could incur under the unilateral means of termination.

In order to prevent abuse and undue influence by the employer, the terms of “rupture conventionnelle” provide for the intervention of the Labor authorities in order to ensure the amicable termination is done with the employee’s clear consent.

Since its enactment this type of termination has been successfully applied and observers hope it will lead to less litigation over employment termination.


Global Swine Flu Pandemic Plans: Top 10 Legal Issues 

By Donald C. Dowling
White & Case LLP

In April 2009 the World Health Organization called the Spring 2009 swine flu outbreak a “public health emergency of international concern” and the New York Times said the world was at “the leading edge of a global pandemic.” With no vaccine yet in existence and with public health officials recommending extreme local and international precautions, the emergency was truly global. 

 Any communicable-disease outbreak raises real concerns in the employment context. Employers have a keen interest in keeping staff healthy and in containing the spread of a disease, not only for the obvious reason of employee welfare but also to keep business operations running and to minimize liability exposure. A communicable-disease outbreak of “international concern” could also raise special issues for multinational employers: How can a multinational corporation implement pandemic precautions and policies across worldwide operations? What legal issues does a cross-border pandemic response policy raise?

The elements in an effective pandemic protocol vary widely by employer - with the medical issues predominating over the legal. Pandemic plans tend to address topics as disparate as: workplace safety precautions; insurance coverage; paid time off, mandatory telecommuting and vacation; disaster communications; employee travel restrictions; stranded employee travelers unable to return home; mandatory medical check-up/vaccination/medication; mandatory reporting of exposure (employee reporting to employer and employer reporting to public health authorities); employee quarantine/isolation; terminations for violating protocols; and facility shut-downs.

Medical professionals may be better experts than lawyers to advice on content of a global swine flu protocol, but any global workplace pandemic plan implicates a number of international employment law issues that should not be overlooked. A best practice is to draft a global pandemic response plan template that accounts for legal compliance internationally, and then to adapt that template to the local laws of each jurisdiction. In doing that, an employer needs to consider these ten legal issues that are most likely to be implicated:

  1. Health and safety representatives: In much of Latin America and Europe, employers must appoint health and safety representatives, and consult with them on workplace health/safety policies. Since current versions of an employer’s local health/safety plans will almost surely be silent on recent communicable-diseases such as swine flu, rolling out new pandemic procedures requires amending existing local plans. The amendment procedure needs to follow local law and involve local health/safety representatives. Neglecting this step by unilaterally imposing a pandemic policy could amount to an unfair labor practice in countries where the employer sponsors health/safety representatives.
  2. Labor/employment law: Health/safety representation aside, many countries confer on labor representatives (like trade unions and work councils) a right to consult on issues affecting the workplace. Labor representatives may not have an absolute right to veto a new pandemic plan, but they will likely have power to void one that was unilaterally-implemented. In some countries local government labor agencies will also have a voice. For example in Japan and Korea, employers are required to post written work rules. As a result, adding any pandemic contingency procedures to the terms/conditions of employment requires amending current work rules and posting them for employees.
  3. Language: A pandemic response plan rolled out internationally must be understandable. Some jurisdictions require that communications or work rules be in the local language. Even where laws are not so strict, to be understood and enforced, a pandemic plan needs to be in a comprehensible language for employees.
  4. Medical attention: In Brazil, Italy and elsewhere, many employers have on-staff doctors. It is important to enlist company doctors as crucial players on the front line of any communicable-disease outbreak. Outside of countries that permit or require company doctors, employers will have a more difficult time requiring employees to get a medical exam or take a vaccine or medications. In countries from Europe to Canada to Asia, the analysis will depend on whether an employer’s mandate for employees to see a doctor is reasonable. Other legal issues as to employer-provided medical care include: regulation of prescriptions; drug importation; employer distribution of drugs/vaccines; employer (or nurse) practicing medicine; doctor/patient privilege.
  5. Medical costs/procedures/coverage: In many countries government medical systems (sometimes partly payroll-funded) pick up sick employees’ medical costs, so medical bills of sick staff may not add to an employer’s costs. A problem, though, can arise as to immigrants, expatriates and business travelers away from home-country medical care systems. It’s important to make sure mobile employees have coverage and know where to go for medical help.
  6. Isolation: Some employer pandemic plans try to reserve an employer’s right to isolate or “quarantine” possibly infected employees. Some pandemic plans seek to restrict employee travel (business and personal) into problem areas, or return travel after exposure in a problem area. However, isolation orders and travel bans are usually scrutinized in light of employee rights. Spell out isolation procedures and travel bans clearly in the pandemic plan. Anchor them in reasonable medical advice.
  7. Personal injury liability: Multinationals implement global pandemic plans in part to reduce exposure to personal injury lawsuits from employees exposed to viruses on-premises. In most countries, worker safety laws and other rules impose an affirmative duty of care on employers. To meet this duty, pandemic plans need to address safety measures (distribute masks? distribute medication? require available vaccines?). In many countries employers can invoke a doctrine like the workers’ compensation bar to defend against employee personal injury claims. But some jurisdictions (like England) have no such defense. Other places, such as in Latin America, allow employees to surmount the workers’ compensation bar by proving mere employer negligence. Plan accordingly.
  8. Discipline: When a pandemic hits, employees may refuse to report for work or refuse business travel assignments or insist on working from home. Local law may support a no-show employee whose refusal to work is reasonable - but employers can usually discipline employees for unreasonable absences. Implement clear rules prohibiting unreasonable refusal to report. Build clear procedures for communicating when the workplace is safe.
  9. Shut-downs: Swine flu workplace shutdowns spread across Mexico in April 2009. The main employment liability here is pay: In many countries an employer that shuts down temporarily must pay those willing to work. (Sick workers often collect sick pay, from either the employer or the state, under local sick-pay systems.) In some countries, there are local laws that permit an employer to suspend operations and pay in the event of a genuine force majeure. In other countries implementing a furlough may be possible. Any pandemic policy should address these issues in a defensible way. Data privacy: In a swine flu pandemic, employers will want workers to report whether they or their family members have the flu; where they have recently traveled; and whom they have been exposed to. However jurisdictions with robust privacy laws restrict employers from forcing workers to divulge personal data - particularly health information, which in the EU is subject to special rules for “sensitive” data. Pandemic plans should spell out situations where public health factors make personal inquiries reasonable. Invoke any employer duties to report infections to public authorities and to maintain a safe workplace. Process employee flu-status data carefully.

New Zealand

Planning for Disaster – the Swine Flu Pandemic in New Zealand 

By Jennifer Mills
Minter Ellison Lawyers

There is worldwide concern about the reach and possible impact of the swine flu pandemic. Given that employees are the lifeblood of most businesses, a key issue in pandemic planning is considering how a business will cope if its employees are infected. This article briefly considers, in a New Zealand context, some of the employment issues that the swine flu pandemic raises for businesses. 

The swine flu pandemic raises a number of employment-related questions. Can an employer send sick employees home if they report for work? What about employees who seem well, but who have been in contact with someone who has, or may have, swine flu? In New Zealand, the legal position is that an employer has an obligation to take all practicable steps to ensure that the workplace is free of hazards, including health hazards such as swine flu. This may require an employer to send sick employees home, to minimize the risk of them passing any illness on to other employees. More generally, employers may also need to consider factors relating to the workplace itself, to ensure that the workplace does not pose an unnecessary risk to employees and visitors.

In addition, given that swine flu has been declared a pandemic, health authorities have quite extensive powers, including the ability to force people to quarantine themselves and to require premises (including businesses) to be closed. If this occurs, an employer has no choice but to direct employees to remain away from the workplace.

Other than in the above circumstances, however, New Zealand employers generally cannot require employees who are not sick to stay away from work. Doing so risks a claim from the employee that they have been unlawfully suspended, although in some cases an employer may be able to rely on health and safety obligations to require employees who are (reasonably) suspected of having the swine flu to remain at home, even if they seem well.

The question then becomes whether an employer must pay employees who are absent because of the swine flu. In New Zealand, under the Holidays Act 2003, employees are entitled to use sick leave in situations where they are sick or injured, or where their spouse or someone who depends on them for care is sick or injured. This entitlement will apply if an employee has to stay home because of their own illness, or to care for a family member who has swine flu. Where an employer directs an employee who is well to remain at home, then it is likely that there will be an obligation to pay the employee, although there may be special circumstances where this is not required. Where it is the employee who elects to remain at home, the situation is less clear and the best solution may be to reach some form of compromise or agreement with the employee.

A related question is whether an employer can require employees to work from home. In New Zealand, this will largely depend on any “location” provisions contained in the relevant employment agreements. In the absence of a provision which envisages the employee working from home, consent will be required. Similarly, the issue of whether an employer should compensate employees for additional costs incurred by working at home is one that should be negotiated and agreed with employees. That said, where the employee is directed to work from home and incurs extra costs, in most situations these should be borne by the employer.

In addition to these employment law issues, a number of commercial law and general business issues will arise. Swine flu has the potential to cause serious disruption to businesses – and responsible organizations ought to act now, before it is too late, to put business continuity plans in place and to take reasonable steps to avoid the spread of the disease in the workplace.


Foreign Representative Offices Face Labor Disputes in China 

By Frank Hong
Long An Law Firm

Labor and employment controversy has always been the most significant risk of dispute for foreign companies doing business in China. The ongoing financial crisis coupled with the newly effective PRC Labor Contract Law, which mandates a whole host of rights for employees, has further exacerbated the situation. 

Many foreign companies, especially those in professional service sectors such as law, investment banking, insurance, and general consulting, usually set up Representative Offices in China in order to avoid the requirement of substantial registered capital for incorporation as Wholly-Owned Foreign Enterprises (WOFEs).

For example, in Shanghai (the economic center of China) there are thousands of representative offices of international financial and shipping companies, among other types of businesses. However, such foreign offices are not considered independent legal entities under PRC laws. As a result, the liability of foreign offices in China will transfer to the parent entity under a theory of respondeat superior.

In addition to this, foreign representative offices are legally required to employ Chinese nationals through qualified human resources agencies. This requirement dates back to a State Council Regulation issued in 1980 and has survived the legal reforms engendered by China’s accession to the WTO in 2001. Per the 2008 Labor Contract Law, Chinese nationals working for foreign representative offices must first enter into written labor contracts with a qualified human resources agency, which then assigns the employee to work at a foreign representative office. Consequently, there are no written labor contracts between Chinese employees and the foreign representative offices which are their actual employers. This peculiar tri-party relationship has led some foreign companies to argue that foreign representative offices cannot be parties to labor arbitration or litigation, which are mostly initiated by employees.

However, on March 3rd, 2009, the Shanghai Supreme People’s Court issued a set of judicial interpretations of the Labor Contract Law (HuGaoFa [2009] 73), which essentially provide that in Shanghai duly registered liaison or representative offices of foreign companies may be parties to labor arbitration or labor lawsuit, as long as the employees were hired through qualified human resources agencies. If on the other hand employees were not hired through qualified human resources agencies, the concerned foreign offices may still be parties to civil actions (as opposed to labor arbitration or labor lawsuit). Consequently, foreign companies, through their representative offices in China, will have to face the employee initiated labor arbitration or lawsuits in China.


Hong Kong’s Race Discrimination Ordinance 

By Jennifer Van Dale and Diana Purdy-Tsang
Baker & McKenzie LLP

Hong Kong prepares to enforce new Race Discrimination Ordinance protecting employees against discrimination in the workplace. 

Hong Kong’s Legislative Council passed the Race Discrimination Ordinance in July 2008, and the first provisions became effective in October 2008. The Code of Practice for Employment published by the Equal Opportunities Commission is nearing finalization, and is currently with the Legislative Council for final vetting.

Once the Code of Practice is approved, the substantive provisions of the Race Discrimination Ordinance (notably, those that render race discrimination, harassment and victimization unlawful) are expected to come into effect. While no firm date has been announced by the Hong Kong Government, it should be sometime in 2009, according to the latest information from the Equal Opportunities Commission. Implementation of the Ordinance will be delayed until July 2011 for small employers with fewer than five employees.

The Ordinance prohibits discrimination, harassment, vilification and victimization based on “race”. “Race” is defined as “race, color, descent or national or ethnic origin”. Although “national origin” is included in the definition, “nationality” is not. Citizenship, resident status, right of abode, length of stay and indigenous inhabitant status are not covered by the Ordinance and it therefore does not prohibit discrimination on these grounds. Immigration and citizenship laws are not intended to be affected by the Ordinance.

While it protects employees against racial discrimination, the Ordinance also has provisions that permit differential treatment on the ground of race. The Ordinance provides for an exemption from its requirements in a number of exceptional cases such as where race is a genuine occupational requirement, or in the case of certain expatriates hired from outside Hong Kong. The greatest impact of this exception will likely be felt when hiring expatriate staff who are already working in Hong Kong but wish to be re-engaged by a new employer also on expatriate terms. These staff will not meet the requirement of being hired from outside Hong Kong and therefore will not be exempted under the Ordinance if they are re-hired in Hong Kong.

Employers should note that while individual employees may be liable for their own discriminatory acts in the workplace, the employer can also be liable for those acts even if it did not approve of or know about them. Employers may avoid liability by showing that they took all reasonably practicable steps to avoid such unlawful acts. To do this, employers must at least have policies in place prohibiting racial discrimination. These policies cannot exist in a vacuum, however. They must be made known to employees, and training should be provided to all employees on what discrimination is and what conduct is not acceptable in the workplace. In addition, recruitment guidelines should be drawn up that cover advertisements, interview questions, and selection criteria to ensure that objective criteria are used when hiring and promoting staff.

Czech Republic

Green Cards in Czech Republic 

By Pavel Jakab
Peterka & Partners

Under the amendment to the Employment Act and certain other laws which took effect on 1 January 2009, the Czech Republic started issuing green cards to foreigners at the beginning of this year. The law also permits a green card holder to apply for permanent residence after one year of residence in the Czech Republic. 

The green card is essentially a long-term residence permit and an employment license authorizing the holder to work at a specific position for the duration of the green card. Foreigners[1] are able to solicit job vacancies in which Czech Republic and other EU citizens and their family members have shown no interest in for 30 days (this does not include vacancies for state and municipal positions).

Types of Green Cards 

The Czech Republic issues three types of green cards to foreigners: type A for qualified university graduates and key personnel - valid for a maximum of three years; type B for workers who have graduated from high or trade schools - valid for two years (or a maximum of three years); type C for ‘other’ workers - valid also for two years (type C cards cannot be extended however).


If a foreigner loses their job through no fault of their own, they must find another job within 60 days in order to remain “in-status.” If they fail to do so they must leave the country after the expiration of the 60 day grace period. Vacancies are offered to foreigners through a special central register maintained by the Ministry of Labor and Social Affairs in order to help them gain new employment.

Family Reunification 

Family members of card A and B holders are allowed to join them after half a year and one year of the cardholder being resident in the Czech Republic, respectively; family members of card C holders are not allowed to do so.

Application A foreigner may apply for a green card at the Czech embassy in the relevant state or directly at the Ministry of the Interior in the Czech Republic. The Ministry issues the green card within 30 days of receiving the application; however, the Ministry retains the right to grant or deny an application for a green card. A green card application may be denied for various reasons including (but not limited to) national security concerns.

[1] It should be noted that only citizens of states included in the list drafted by the Ministry of the Interior are allowed to seek jobs in the Czech Republic. 

United States

U.S. Supreme Court Upholds Employer’s Right to Compel Arbitration of Age Discrimination Claims

By Anthony J. Oncidi and Jeremy M. Mittman
Proskauer Rose LLP

In an important and far-reaching opinion, the U.S. Supreme Court has ruled that a collective bargaining agreement (“CBA”) that requires employees who are union members to arbitrate (rather than litigate) claims arising under the Age Discrimination in Employment Act (“ADEA”) is enforceable as a matter of federal law. 

The high court’s decision validates the right of an employer and a union to agree to the manner in which employment disputes are to be resolved, even when those disputes involve individual statutory rights that are unrelated to the union contract itself. Accordingly, the decision is significant to all U.S. employers that have collective bargaining agreements with their employees.

The lawsuit was filed in federal court by three employees who alleged that they had been demoted due to their age – the ADEA protects workers who are age 40 and older. After the union declined to pursue grievances on their behalf under the CBA, the employees filed a lawsuit in federal court. While the lower courts denied the employer’s motion to compel arbitration, the U.S. Supreme Court, in a 5-4 decision, reversed the lower courts and held there is nothing in the ADEA that precludes the arbitration of age discrimination claims where the union and the employer have agreed that such claims would be subject to arbitration rather than litigation.

As a result of the Court’s ruling, and absent any intervening legislation (which already is pending in the U.S. Senate), employers in the U.S. with unionized workplaces should consider bargaining with the union over provisions requiring the arbitration of statutory discrimination claims. In negotiating and drafting such clauses, employers should consult with counsel in order to make sure they are using clear and unmistakable language that specifically identifies the types of claims to be arbitrated, while ensuring that all substantive statutory rights possessed by the employees are preserved. The employer in this case, 14 Penn Plaza LLC v. Pyett, 129 S. Ct. 1456 (2009), was represented by Proskauer Rose LLP.