Sunday, August 1, 2010

Issue 18

Dear committee members,

Welcome to the 18th issue of the International Employment Lawyer.International employment law covers many issues. In this newsletter we cover everything from issues of overtime to green cards.

With this issue I have the pleasure also to launch the new format of the newsletter, which has changed into an online format. The new format makes it possible to search the archives and will decrease e-mail trafic. We hope you appreciate the new format and will continue to support the publication.

Please welcome the new Editor in Chief, Helen Colquhoun as well as the new committee leaders for 2010/2011 listed in the back. In the future please e-mail Helen ( with questions or contributions to the newsletter.

We hope to see many of you at the Fall 2010 Meeting in Paris (

Best regards,
Anders Etgen Reitz
Immediate Past Editor in Chief


Extension of overtime eligible employees in Argentina

By Javier E. Patrón
Marval O’Farrell & Mairal

The Argentine Government has introduced a major amendment to the Argentine labor framework, as it has extensively broadened the universe of employees that, as of the current month and onwards, will be eligible to collect overtime.

Until such amendment, introduced by Law No. 26,597, published in the Official Gazette on 11 June 2010 and effective as of 20 June 2010, any employee who fell under the generic definition of“personnel of direction and supervision” was not entitled to collect overtime because such an employee was exempt from workday limitations.

Case law used to favor the defences made by companies on grounds of the broad concept of “personnel of direction and supervision” and the examples of exempt positions that emerged from applicable law (e.g. management assistants, team leads, inspectors and professionals, among others).
However, the amendment has minimized the scope of workday limitation exempt employees, and has limited them to those employees who render services as “Directors” or “Managers”. Any other employee would in the majority of the cases be entitled to overtime payments.

In Argentina, overtime is closely related to workday limitations, as it has been repeatedly held that only employees subject to workday limitations are entitled to overtime payments when they are required to work overtime. Under Argentine law, workday is limited to 8 hours per day or 48 hours per week.
Consequently, since the commencement date of the amendment, all employees are entitled to collect overtime when they exceed statutory shift limitations with the exception of directors and managers who perform actual duties as such. Other exemptions include team work and urgent needs.

The most critical part of the amendment is focused on the intermediate positions. Whereas directors and managers continue to be overtime exempt, and as low-rank employees always have been overtime eligible; intermediate positions - such as supervisors, team leads and similar positions such as those mentioned above - were arguably overtime exempt in the past and will now transfer into the overtime eligible category.

While the new wording of the law increases the costs of the employer because it broadens the number of employees subject to overtime, it may be noted that, as an advantageous aspect of the amendment, it allows a clearer definition of exempt and non-exempt employees.

In that context, employers would be in a better position to avoid doubtful scenarios that, under Argentine labor law, are required to be interpreted and decided by judges in favor of the employees.


Changes to employment law in Chile

By Pauline Miranda

Carey y Cía

Recent and future changes to employment law in Chile As in other countries, change has been always a key feature of Chilean employment law. Over the years, and particularly the last few ones, lawyers and clients have got used to even more frequent changes and adjustments to the employment law, both in minor and in material issues.

In many matters, these changes have brought better labor conditions, albeit at the expense of an increasing inflexibility in the labor market. We, as Chilean lawyers, have made up our minds that in labor matters long term planning is getting more and more difficult, since the law may change at any time.

Among the most significant recent changes in our labor system is the new labor law procedure. This new procedure dramatically changed the form in which the trials are conducted: from a mostly written to a mostly oral system. The new system has meant a significant reduction in the duration of the trials: from approx. 2 years to 2-3 months. Reduction in the duration of trials have implied in its turn, an increase in the lawsuits against employers, especially for unlawful termination under “business necessities”, a matter in which litigation was rather rare in the past if the employer was willing to pay the basic severance inherent to such termination.
A brand new procedure was also introduced: the Tutelage Procedure, designed to protect employees against violations by the employer of their “fundamental rights” meaning certain key constitutional and civil rights. Lawsuits for discrimination almost did not exist in Chile one or two years ago. Now it is one of the most frequent grounds for lawsuits against employers under the new Tutelage Procedure.

But that is not everything: New equal pay between women and men and the full week benefit (1/6 salary) for employees receiving salary and commissions are other examples of how labor conditions have changed in only a couple of years.

Current discussions on matters such as collective bargaining and the role of the unions, and the change in the definition of “employer” in order to expand its current scope so that all the companies forming part of a holding group can be deemed as one employer, are among the several significant changes that Chile may expect in the near future.

With the constant changes in the law, planning in employment law matters is becoming a significant matter for the clients, to whom the visionary role of the experienced employment lawyer is crucial.


A more demanding workforce in the ‘Factory of the World’

By Andreas Lauffs
Baker & McKenzie

In late May, workers at a Honda factory in Foshan went on strike resulting in a shutdown of operations at the factory as well as shutdowns or significant impacts on production in other factories in the supply chain, with the main demand directed at increased wages.

The workers also demanded a more representative union and publicly condemned the local chapter of the Chinese Communist Party-controlled All-China Federation of Trade Unions (“ACFTU”) for ignoring employees’ rights and interests.

After the widespread publicity initially given to the Honda strike in the Chinese state-controlled press and the international media, many strikes followed in other parts of China.

Legal background

In China, independent union organizations are illegal. Instead, all union organizations that are established must be approved by and operate under the supervision of the ACFTU. The ACFTU has a pyramid structure, with a national congress and chapters at provincial, municipal, district, and oftentimes even at street level, with the lowest level being the company union, which is established among the employees at a particular company and whose establishment must be approved by the “upper-level” ACFTU chapter (either the street level or district level ACFTU in most cases). These company unions are the union organizations that companies would deal with on a day-to-day basis.

Company unions are given significant statutory powers, such as the right to demand collective bargaining with the company management, the right to be consulted on employment related matters, the right to attend meetings where employment related matters are discussed, and the right to be notified prior to any employee termination. However, one significant power that unions are not given is the right to lead a strike.

Political background and reaction to strikes

During the past year, the Government has repeatedly indicated that reducing the income gap and eliminating discriminatory treatment against migrant workers (who tend to be at the lower end of the income gap) are key policy goals. Against this background, the striking migrant workers’ main goal - to increase wages and thereby improve their living conditions- is supported by national policies.

On 5 May, the Government, the ACFTU and an employers’ association issued a “Rainbow Plan” notice, which called for all companies with unions to be covered by collective wage bargaining agreements by the end of 2012. It can therefore be expected that FIEs that have not yet unionized will come under renewed pressure to do so. Further, pressure to engage in collective wage bargaining will likely increase for all companies in China.

Companies will therefore need to consider whether to cooperate with the ACFTU’s unionization campaign and voluntarily help its employees establish a company union. In such cases, at least for the time being, companies may still be able to influence the process of union establishment and decrease the odds that it acts too aggressively. In addition, companies that already have unions may need to consider whether it would make sense to ensure that the union committees are more representative as to the employees’ concerns, since a company union without any credibility among the workforce will be ineffective or completely useless in helping the company to resolve a strike if one occurs, as seen in the Honda strike.

Czech Republic

Green cards - dual permit for foreigners working in the Czech Republic (CR)

By Martin Murad
Peterka & Partners

Green card (“GC”) represents a dual permit combining a Czech long-term residence permit with work permit.

GC also allows for free movement in the Schengen area for up to three months within a six months’ period (besides CR) starting from the first entry to a Schengen country. Only nationals of 12 countries (Australia, Bosnia and Herzegovina, Canada, Croatia, Former Yugoslav Republic of Macedonia, Japan, Korea, Montenegro, New Zealand, Serbia, Ukraine and USA) are eligible to apply for a GC. There are three types of GC: “A” (college graduates and key personnel, valid for three years), “B” (skilled workers, valid for two years) and “C” (others, valid for two years).

Each GC is issued for a particular work position listed in online database of positions kept by the Ministry of Labour and Social Affairs ( A position may be listed in this database if no Czech or EU national or their family members are hired within 30 days, or if this position is regarded as suitable for key personnel by the Ministry of Commerce and Industry.

Generally, applicants can apply for GC at the Czech Embassy abroad. In some cases (e.g. persons already holding a GC for a certain period), it is also possible to apply in the CR. The Ministry of Interior shall decide on (non)issuance of the GC within maximum 30 days. If an employment of a GC holder was terminated i.e. for so-called “organizational reasons” (e.g. if the employment or part of it is cancelled or transferred), the person concerned may find another job in the central database within 60 days and apply for a new green card. If a foreigner’s employment has been terminated for other reasons, he or she must leave the CR without delay.

One of the discussed issues is that the employer’s consent is not necessary for a GC to be issued. The issuance of a GC does not guarantee that its holder will be selected for the job. The final decision lies with the employer. He or she will usually decide after an interview with the foreigner. This may lead to a situation in which the employer rejects the GC holder. The Government has made a proposal for amendment to this pertinent act in order to eliminate this insufficiency, and should the Parliament adopt it, the issuance of the GC will be subject to i.a. the employer’s prior consent.


Once upon a time there was a promising young employee - who had many children 

By Roselyn S. Sands and Mathilde Truchot
Ernst & Young

The obligations upon employers to fight against discrimination are increasing every day under national and European legislation as well as through case law. One recent decision rendered by the Court of Appeal of Paris[1] is a striking illustration of this trend. 

In this case, Ms. N., a graduate from one of the most prestigious French schools was hired as a trader by a major French bank in 1982. In 1989, after several promotions, she went on maternity leave. Eventually, she returned to work eleven years later, after having given birth to five children and having combined several maternity and parental leaves. When she returned to work in 2000, she alleged that she had been assigned a less prestigious department of the bank (i.e. she went from the financial department to the retail banking department) and saw her career stagnate.

As a result, in 2007, she considered herself to have been constructively discharged and her employment contract terminated by fault of her employer, on the basis of discrimination related to her sex, her pregnancies and her family situation.

She alleged further that she estimated that her employer had not given her, after she returned, a position similar to that of before her departure, as required by French law; and that, consequently, her career progression had been impeded due to her eleven years of absence and her shift to a part-time job. Moreover, upon her return, her salary had not been readjusted in line with inflation and thus, she had never received a level of remuneration comparable to those employees of the company with equivalent length of service, experience and profile.

After relying on a comparative analysis carried out by experts from the French agency for combating discrimination and for equality (HALDE), the Court of Appeal ruled in favor of the employee and ordered the bank to pay her:

  • More than EUR 150,000 for prejudice resulting from discrimination (back pay);
  • EUR 7,000 for moral prejudice resulting from discrimination; 
  • In addition to EUR 150,000 for prejudice as a result of the constructive termination of her employment contract. 

Thus, in total EUR 307, 000 which is equivalent to nearly six years full-time salary of the plaintiff.

The decision highlights the increasing risks arising from discrimination claims and the significant financial exposure and damage to the reputation that may result from it. This is relatively new in France and suggests important preventive actions that smart employers should take.

[1] Court of Appeal of Paris, 6th chamber, 5 May 2010, GIE BNP Paribas vs. Ms. N.


New French law relating to redeployment of employees in case of lay-offs 

By Deborah Sankowicz & Stéphane Henry
Paul Hastings

Under French law, when a company terminates an employee for economic reasons (i.e. not linked to the person of the employee) without having valid grounds to do so, it may be held liable for damages for wrongful termination. Moreover, even when companies have good grounds, they remain exposed to payment of damages for wrongful termination in cases in which the court considers that they have failed to comply with their redeployment obligation. 

Article L. 1233-4 of the French Labor Code imposes, on the employers, an obligation to search for an alternative redeployment position before terminating an employee. The company has to search for and propose any vacant position (equivalent job or, if not available, a job requiring lesser qualifications) within the company or within companies belonging to the same group, even if they are located abroad.

Under the pre-existing law, without being certain that the employee would be interested in an international redeployment, the employer had to search and propose any open positions, which were available all over the world. The search process was long and burdensome, all the more in large groups with multiple locations. As a result of such redeployment obligation, employers were required, in many cases, to propose jobs located in low cost countries at low salaries, which gave rise to public and media criticism as well as litigation, these offers not being considered as fair by the courts.

To facilitate employers’ redeployment search, a new law was passed (law n°2010-499 dated 18 May, 2010): employers are now required to send a questionnaire to the employees concerned by a termination for economic reasons in order to know if each employee would accept to receive redeployment proposals abroad, and the potential restrictions that he/she may have, notably in terms of location or compensation. The employee has six working days to answer this questionnaire. If the employee accepts to receive offers abroad, the employer has to send him/her a precise proposal in writing depending on the restrictions the employee has expressed, if any. If the employee refuses to be redeployed abroad, the employer is exempted from searching for open positions abroad.

It should be noted that the possibility to use a questionnaire does not alter the employer’s obligation regarding vacant positions available within any of its French legal entities, which must still be proposed in any case.

An administrative circular letter is still to be issued, in particular to specify the content of the questionnaire.


Employer's review of personal text messages found lawful 

By Anthony Oncidi and Jeremy Mittman
Proskauer Rose

On 17 June 2010, in City of Ontario vs. Quon, 560 U. S. (2010), the U.S. Supreme Court unanimously overturned a decision by the U.S. Court of Appeals for the Ninth Circuit in a case involving an employee’s assertion that a government employer had violated the Fourth Amendment by unreasonably obtaining and reviewing personal text messages sent and received on employer-issued pagers.

The employee in question, Jeff Quon, is a police officer for the City of Ontario who had received written policies from the City notifying him that he should have no expectation of privacy in electronic messages that he sent or received on City equipment. The City conducted an audit of his messages and discovered that many of them were not work-related and some contained sexually explicit content. The lower court had ruled that the City’s search of Quon’s messages could have been less intrusive and, therefore, it violated the Fourth Amendment, which prohibits unreasonable searches and seizures by the government.

The Supreme Court, however, disagreed, and held that the search was not excessive in relation to the City’s ultimate objective and was, therefore, reasonable. The Court also noted the City had “made it clear that pager messages were not considered private” through its written policies and practices.

Employers in the United States welcome the Court’s decision in Quon. Although this case involved a government employer, the decision nevertheless reinforces the importance for all employers to implement and disseminate written policies that govern electronic communications in the workplace, which makes clear that employees should not have an expectation of privacy with respect to any communications sent or received on company networks or equipment (including company-issued mobile devices). The decision also makes clear that courts will uphold an employer’s viewing and monitoring of such information when the parameters of and motives for the searches are reasonable.