Monday, December 14, 2015

Dear all

Welcome to the Winter edition of the International Employment Committee newsletter. A short and sweet edition, but we are looking forward to a bumper edition early next year.

Wishing you all happy holidays and a wonderful 2016. We look forward to seeing you in New York in April!

Helen Colquhoun
(England & Wales, New York, Registered Foreign Lawyer in Hong Kong)

France - Measures improving the relationship between employers and employee representative bodies

By Roselyn S. Sands, EY Société d’Avocats, Paris, France

The law on social dialogue and employment, dated August 17, 2015 (the “Rebsamen law”), has brought substantial changes to the manner in which employee representative bodies function in France and has also simplified employer obligations with the Works Council.
In addition, recent legislation has rendered mandatory the creation of an economic and social database containing all information provided to employee representative bodies.
The purpose of these modifications is to improve the relationship between employers and employee representative bodies, in order to guarantee constructive and useful discussions between both parties.

I. Simplified obligations with the Works Council

Instead of 17 mandatory meetings with the Works Council required before on a variety of subjects, the employer now must only meet in the information and consultation process 3 times a year. Moreover, only 3 subjects need be addressed: 1) the strategic orientation of the company, 2) the financial and economic situation of the company and 3) the company’s human resources policies and the working and employment conditions.
In addition, instead of having to collectively bargain 12 different subjects with the unions, they are now regrouped into only 3 negotiations.

II. Merging employee representative bodies

Before the Rebsamen law, companies with under 200 employees could opt to merge the Works Council and the personal delegates (“délégués du personnel”). The Rebsamen law provides greater relief for employers: they may now opt to merge into a single representative body the personal delegates, the Works Council but also the Health and Safety Committee. Employers who employ less than 300 employees can proceed with this merger after having informed and consulted the relevant representative bodies. Employers with more than 300 employers may do so but only if collectively bargained with a representative union.

III. The economic and social database

Since June 2015, all public and private companies with more than 50 employees must create and kep up to date an economic and social database to hold information sent to the employee representatives during the 17 mandatory meetings mentioned above. In essence, the information which must be provided is the same as before, however, it must now be centralized in a single database.
The database must be accessible to all employee representatives at all times; therefore, even if it is not mandatory, almost all companies have implemented an electronic economic and social database. Failure to implement such a database could result in a € 7.500 fine.

a. The purpose of the economic and social database

The main purpose of the economic and social database is to:
- Create a database containing information on the company’s strategic orientations
- Make accessible to employee representatives, at all times, all of the information which it has been provided with in order to ensure useful dialogue between them and the employer
- Organize and centralize information which must be mandatorily provided to the employee representatives in a coherent and organized manner

b. Contents of the economic and social database

The database must contain information on the company’s strategic orientation and its impact on employment, the company’s activity, the evolution of skills, working conditions, the use of subcontracting, interns and temporary workers. This information must not be mere data, but must be presented by the employer in a clear and understandable manner, in order to detail the strategic options which are available as well as their internal consequences for the company.

Therefore, in addition to information which is traditionally provided to the employee representatives, such as the “social data report” (i.e. “Bilan social”), the employer will have to provide, for instance, information on potential growth opportunities or the company’s need for restructuring.

The economic and social database must also include all information which must be provided to employee representatives, such as information on investments, social and cultural activities, the report on health and safety at work.
However, information which must be provided to employee representatives in specific circumstances, such as information notes provided during restructuration.

c. Confidentiality

All employee representatives are bound by an obligation of discretion regarding the information with which they are provided and which is marked as confidential by the employer. Given that the information provided is particularly sensible, employers should take protective measures such as providing each employee representative with his own personal access code or making sure that the sanctions applicable to employees who violate their obligations are mentioned on confidential documents.

Ireland - Recent Developments

By Deirdre Lynch, BYRNEWALLACE, Dublin, Ireland


Bullying is not defined in legislation in Ireland. However, the Health and Safety Authority’s Code of Practice on Bullying defines the term. This definition has been widely accepted in case-law on the issue. Bullying is defined in the Code as "repeated inappropriate behaviour, direct or indirect, whether verbal, physical or otherwise, conducted by one or more persons against another or others, at the place of work and/or in the course of employment, which could reasonably be regarded as undermining the individual‘s right to dignity at work.” As will be apparent, this definition has a number of elements.

In May 2014, the High Court awarded damages in the sum of €255,000, comprising general and special damages, in a bullying claim, Ruffley v Board of Management of St. Anne's School. The employee had been employed as special needs assistant in a school and the High Court held that the grossly unfair disciplinary process which had been followed amounted to bullying. The school appealed the decision.

The Court of Appeal has now overturned the High Court's decision. By a majority, the Court of Appeal found that the manner in which the employee had been treated did not fall within the definition of bullying set out in Irish Law. This decision will be widely welcomed by employers in Ireland.

In finding in favour of the employee, the High Court had held that she had been subjected to bullying. By way of background, the employee had worked for the school in question for over 14 years. She was employed as a special needs assistant. An incident occurred in September 2009 when she was with a pupil in the school’s sensory room. The principal of the school had tried to gain entry to the room in question; however it was locked. A disciplinary process followed. The disciplinary process itself was not conducted appropriately and had a significant number of flaws.

The High Court had concluded that the manner in which Ms. Ruffley had been treated during the disciplinary process fell within the legal definition of bullying. However, the Court of Appeal has now concluded that such treatment did not fall within the definition of bullying and that whilst the disciplinary process was conducted in a "hopelessly flawed manner", the school's conduct did not come anywhere close to meeting the established legal definition of bullying.

2. BUDGET 2016

The Irish Government recently delivered its 2016 Budget. A number of its provisions are relevant to companies employing individuals in Ireland, including:-

The minimum wage will increase from €8.65 to €9.15 per hour from 1 January 2016. The employer social insurance threshold will also be increased in order to offset the higher cost businesses may face as a result of the increase to the minimum wage.

Until now, Ireland has had one of the most limited paternity leave regimes in Europe (a father could only take leave in the circumstances where a mother died during her maternity leave and the father became entitled to the balance of the leave). However, from September 2016, two weeks’ paid paternity benefit will be introduced.

Hong Kong - Contracts and Third Party Rights

By Helen Colquhoun, Withers


The Contracts (Rights of Third Parties) Ordinance (Cap.623) ("Ordinance") is due to come into force on 1 January 2016. The aim of the Ordinance is to bring Hong Kong into line with other common law jurisdictions (such as England & Wales, Canada and New Zealand) by reforming the common law doctrine of privity of contract.

Under this common law doctrine, only the parties to a contract have the right to enforce the contract against another party to the contract. A third party, even if granted rights under the contract, cannot bring an action to enforce the terms of the contract.

The Ordinance

The aim of the Ordinance is to reform this doctrine and protect third parties who expect to benefit from a contract, by giving them the ability to enforce the terms directly against the contracting parties. Thus, under the Ordinance a third party will potentially be able to enforce a term under a contract if:

1. the contract expressly provides that the third party may do so; or

2. a term in the contract purports to confer a benefit on the third party, and the contracting parties intend for the term to be enforceable by the third party.

The second limb above clearly gives rise to uncertainty and thus a risk of dispute as to whether or not a benefit is conferred and/or as to what the contracting parties intended. Parties to contracts covered by the Ordinance (as set out below) should therefore clearly and expressly state whether or not a particular term is intended to be enforceable by a third party. Third parties should also be expressly identified in the contract by name, as a member of a class or as answering a particular description.

It is important to note that it is permissible under the Ordinance for parties to an agreement to select which terms are intended to be enforceable by third parties and which are not.

Which contracts does the Ordinance cover?

The Ordinance will apply to contracts entered into on or after 1 January 2016. However, the Ordinance can be contracted out of by the parties (provided this is expressly stated in the contract).

There are also a number of contracts which are automatically excluded from the Ordinance, including negotiable instruments, bills of exchange, covenants relating to land, and promissory notes.

In relation to employment contracts, a partial exemption applies - the Ordinance does not permit third parties to enforce terms against an employee. A third party can, however, enforce a term in an employment contract against an employer. Importantly, other employment related documents (such as settlement agreements, standalone confidentiality agreements and restrictive covenant agreements and independent contractor agreements) do not benefit from this exemption and will all be covered by the Ordinance (and can therefore potentially be enforced by third parties against both employers and employees assuming the conditions set out above are met).

What does this mean for employers?

The Ordinance will be relevant to employers in a number of areas. By way of example:

1. many employees will have access to confidential information across group companies and it may be important for group companies (as 'third parties') to have the ability to enforce any confidentiality obligations which the employee has entered into with the employing entity. To ensure this is permissible under the Ordinance, an employer will need to ensure that a separate confidentiality agreement is entered into with the employee (rather than simply having confidentiality obligations within the employment contract itself). The confidentiality agreement should also include an express clause stating that the obligations can be enforced by group companies. Similar considerations will apply in relation to a group company wishing to have the ability to enforce post-termination restrictions;

2. in a settlement agreement, group companies are likely to want to have the ability to enforce any obligation upon the employee to release claims against them. The settlement agreement should expressly confirm that group companies are permitted to enforce the agreement;

3. an employer may wish to limit the ability of a third party to enforce rights under the employment contract against the employer. For example, employers often extend fringe benefits to both employees and their dependants (such as health insurance and education allowances). Family members will be entitled under the Ordinance to enforce their rights to such benefits against the employer, unless the contract expressly states otherwise;

4. if an employer outsources the provision of benefits to employees to a service provider, the employer will wish to avoid the risk of an employee (as a third party) being able to bring a claim against the employer by virtue of an agreement between the employer and the service provider. Again, such an option will be available to employees unless the agreement between the employer and the service provider expressly excludes the application of the Ordinance.

In many cases, employers will wish to exclude (or at least limit) the operation of the Ordinance. Employers should therefore review their contracts and agreements to see if any terms purport to confer a benefit on third parties and, if so, consider whether they wish to expressly exclude or modify application of the Ordinance in relation to any or all such terms and/or in respect of particular classes of third parties.

Employers should also consider whether there are any scenarios in which they want to ensure that the Ordinance does apply (for example to allow for enforcement of obligations by group companies). In such a scenario, and to minimise the risk of any dispute, employers should ensure that agreements are carefully drafted to ensure: (i) they do not fall within the exemptions to the Ordinance, (ii) they expressly confirm that the Ordinance applies, and (iii) the third parties who are intended to be able to enforce the agreement are clearly identified.