Dear all
Welcome to the December bumper issue of the International Employment Law Committee Newsletter. Many thanks to all those who have contributed articles - this edition we have great articles on a range of jurisdictions, including Canada, Hungary and Mexico.
Wishing you all a happy holidays and a successful and busy 2013!
Helen Colquhoun
Withers Bergman LLP
Dual qualified in NY and England & Wales
Friday, December 21, 2012
Canada - Reasonable Expectations of Privacy in Workplace Computer
By Paul E. Broad, Hicks Morley
The Supreme Court of Canada has issued a significant decision regarding workplace privacy. In R. v. Cole, it unanimously held that employees have a diminished, but reasonable, expectation of privacy in personal information stored on an employer-issued computer. Employers may continue to access information stored on their work systems for their legitimate purposes, though they should now use more thorough and detailed policy to establish a clear management right.
BACKGROUND
Cole is about a teacher charged with having pornographic images of an underage student on his employer-issued laptop computer. A member of his school board’s IT staff discovered the images after noticing irregular network traffic during routine maintenance.
The board provided the police with the computer and a disc that included the teacher’s temporary Internet files. The police searched the computer and disc without obtaining a warrant.
The police charged the teacher with possession of child pornography and unauthorized use of a computer. The teacher argued that the evidence on the computer was obtained in violation of his right to be free from unreasonable search and seizure as guaranteed by section 8 of the Canadian Charter of Rights and Freedoms and sought to have the evidence excluded.
The Court of Appeal for Ontario
THE SUPREME COURT’S DECISION ON REASONABLE EXPECTATION OF PRIVACY
The Supreme Court of Canada affirmed the Ontario Court of Appeal’s finding that the teacher had a diminished, but reasonable, expectation of privacy in the contents of his employer-issued computer. The majority (6-1) allowed the appeal, holding that the Court of Appeal had improperly excluded evidence under section 24(2) of the Charter.
The Supreme Court’s expectation of privacy finding is principled and broad. There were flaws with the school board’s policy framework that the Court does not treat as significant. To the contrary, it recognizes that the school board’s policy and “technological realities” deprived the teacher of exclusive control, but that privacy protection was still warranted given the teacher’s personal use, which generated information that was “intimate” and revealing of the teacher’s “biographical core.” Promulgating more strict or absolute policy is therefore not a means to eliminate the expectation of privacy recognized in Cole. A reasonable expectation of privacy would not likely subsist in the face of an absolute prohibition on personal use, but the Court itself hinted at the difficulty in enforcing such policy by specifying that an expectation of privacy would prevail when personal use is “reasonably expected.”
Although the Court’s expectation of privacy finding is principled and broad, the Court stressed the competing factors governing the privacy interest at stake and suggested that the expectation is very limited. It said, for example, that the board’s policy and the technological realities of its work system diminished the teacher’s expectation of privacy but “did not eliminate it entirely.” It also took account of the limited nature of the teacher’s expectation of privacy in deciding against the exclusion of evidence obtained through the unlawful police search.
The diminished nature of the privacy expectation is important because it will allow for the eventual recognition of a broader employer right of access. The scope of such a right is an issue that the Court expressly “left for another day,” but the Court did gratuitously affirm the Court of Appeal’s finding that the teacher’s employer had acted reasonably – i.e., within its implicit right to access information in conducting system maintenance and within its implicit right to conduct a reasonable investigation in order to maintain a safe school environment.
Though the Court bases the latter right as corresponding to a principal’s duties under the Ontario
IMPLICATIONS FOR EMPLOYERS
In light of Cole, transparency about employer access to system information should be the new norm. Employers should immediately revisit their acceptable use policies to ensure that they:
· Articulate all the purposes for which they access system information (e.g. to audit, to investigate, to conduct e-discovery, to analyze performance, to foster work continuity and so on)
· Articulate the means by which they will access system information (e.g. through traffic analysis, through content analysis, by restoring deleted information and so on)
· Explain that employees have a choice and tell employees, “If you require a private means of computing and sending communications, please use a personal device unconnected to our network.”
Cole makes clear that such policy will not eliminate the potential for employee privacy claims, but it is now essential in establishing a clear and broad management right to access work system information for legitimate purposes. There is nothing in Cole that suggests employers bound by the Charter or other employers will be fettered in asserting such a right despite the now-recognized employee privacy interest, but having thorough and detailed policy and implementing the policy through periodic communications is now key. The days of resting on a simple “no expectation of privacy” disclaimer are now clearly over.
Canada - Foreign Worker Entitled to Loss of Earnings While Work Permit Extension Pending
By Sergio Karas, karas@karas.ca
In another twist to the lengthy delays that foreign workers must endure when applying for extensions of their status at the Citizenship and Immigration Case Processing Center in Vegreville, Alberta, a recent worker’s compensation decision held that an employee performing modified work duties, acting in good faith in attempting to renew his Work Permit, was entitled to loss of earnings benefits for a period in which he was laid off because the employer thought that his Work Permit was not valid.
In Decision No. 822/11[1], the Ontario Workplace Safety and Insurance Appeal Tribunal allowed an appeal by a foreign worker from a decision of a Case Manager denying loss of earnings benefits on the basis that the worker did not provide the employer with appropriate documentation of his renewed Work Permit during the period of the lay off. The worker was employed as a labourer. He injured his right shoulder when he was pulling a hydro cable. The Worker’s Safety and Insurance Board (WSIB) granted him entitlement for a right shoulder strain. He received the appropriate treatment and then returned to modified work with the accident employer. The employee was a foreign worker in Canada Canada Canada
The tribunal noted that there was no dispute that the worker required modified work due to his injury, and that the employer did in fact provide suitable modified work before and after the period of loss of earnings in dispute. The main question was whether the worker’s legal status prevented him from performing the modified work, which the employer offered him during the period in question, and which he confirmed in his testimony was suitable and was able to do.
The worker claimed that he applied for an extension of his Work Permit on May 28, 2009, before the expiration of his previous permit. He contended that he had “implied status” thereby allowing him to continue working while his application for renewal of the Work Permit was being processed. It must be noted that it is CIC policy that applicants who file a Work Permit extension request prior to the expiry of their permit indeed have “implied status” until a decision is made by the Case Processing Centre. On the other hand, the employer argued that it stopped providing modified work and laid off the worker on August 12, 2009 when it became aware that his Work Permit had expired and the worker had not advised the employer that he had applied for its renewal. The worker agreed that the employer acted in compliance with the law by not employing the worker while its managers understood that his status in Canada
The tribunal found it reasonable and sufficient that the worker would have advised his foreman of his Work Permit renewal application with the expectation that he would have passed on the information to the company administration. Even if he had not advised the employer at the time, the tribunal noted that the employee’s representative who filed the extension request faxed the employer a copy of the application on August 12, 2009. The employer advised that it had no clear protocol for maintaining records for such information at the time and it appears that, therefore, the communication between the worker’s representative and the employer was not handled appropriately. The worker also testified that he had indeed applied for a previous extension without any difficulties, continuing to work while his application was pending on that occasion. The tribunal found that the worker complied with his obligations and took the necessary steps to keep the employer informed of his efforts to maintain his legal status in Canada
The tribunal noted that the employer raised the issue that the worker’s Social Insurance Number had expired together with the Work Permit, and that therefore the worker was not legally able to work and should not be entitled to loss of earnings benefits during the period in question. The tribunal held that the lack of a valid Social Insurance Number was not an issue at the time and that it lacked the capability of verifying whether a person can be paid after a Social Insurance Number has expired.
Based on the evidence, the tribunal held that the worker took all the steps that he could and acted appropriately to keep the employer informed of his efforts to maintain his legal status and was therefore entitled to loss of earnings benefits for the period in question. However, the tribunal also held that the employer acted in good faith in suspending the worker’s employment during that time as this was a novel situation and it appeared that there was some confusion within the company about how to handle it. Then, the employer should not be penalized with the cost of the claim.
This case highlights the importance for employers to have the appropriate protocol in place to track the status of foreign workers in their employ. Had the employer obtained legal counsel from an immigration lawyer and explained the situation thoroughly, it would have been advised that the worker had indeed the ability to continue to work while his application for a Work Permit extension was pending, as the worker indeed had “implied status”. This would have saved the employer considerable time, effort and cost in dealing with the situation. Employers must endeavor to maintain good records and make inquiries of the foreign workers as to the steps they have taken to maintain their status in Canada
France - New Definitions and Increased Sanctions for Sexual and Moral Harassment
By Roselyn Sands and Corinne Bourdelot, Ernst & Young Societe d'Avocats, Paris
Even though the notion of harassment is a recent concept, it has now become a priority for the European Union and all European Member States
According to the definition provided by the European Directive n°2000/78, harassment is an “undesirable behavior the aim or effect of which is to infringe someone’s dignity and to create an intimidating, hostile, degrading, humiliating or offensive environment.” All EU countries have transposed this Directive into their national laws and adopted rules against sexual harassment and moral harassment (“bullying”).
In France
A specific offense regarding moral harassment was created in the Penal Code and the Labor Code in 2002. The definition is very broad and concerns any repeated behavior the aim or effect of which is to degrade someone’s working conditions entailing infringement of his/her rights and dignity, or disturbing his/her physical or mental health or damaging his/her career.
Concerning sexual harassment, both a civil and criminal offence in France, the French Penal Code has been recently amended (Act dated August 6, 2012) to include a new definition (the former definition being considered as unconstitutional as too vague). Sexual harassment now covers:
· Repeated words or behavior with sexual connotations, that either:
o degrade the victim's dignity because they are degrading / humiliating, or
o create for the victim an intimidating, hostile or offensive environment;
· Any serious form of pressure aiming to obtain an act of a sexual nature, for the harasser or a third party, is assimilated to sexual harassment. In this case, repetition is not required: even a single event may constitute a criminal offense.
Moreover, the criminal sanctions for sexual and moral harassment have been harmonized and increased: up to 2 years’ imprisonment for the harasser and/or 30,000 € fine. More severe sanctions and up to 3 years’ imprisonment and/or 45,000 € fine may be imposed in certain circumstances, e.g. abuse of position of authority or harassment against a very young person or a particularly vulnerable person.
Sexual and moral harassment are also civilly prohibited by the French Labor Code. On this basis, the victim may be entitled to civil damages, payable by the harasser AND the employer (be it an individual or a legal entity). Indeed, in France
In addition to the new rules provided by the Penal Code, the Labor Courts clearly tend to recognize more widely the liability of employers in cases of sexual or moral harassment, notably following several suicides in the workplace in major French companies like Renault or France Telecom.
For example, a recent case law has condemned an employer with a double sanction based on (i) moral harassment and (ii) failure to implement preventive measures (Cass. Soc., June 6, 2012, n°10-27694).
In this case, an employee, hired as security agent by the RATP (transportation company in the Paris
The Court of Appeal, approved by the Supreme Court, decided that the employee could be entitled to damages both on the basis of the moral harassment itself (violation by the employer of its strict obligation of security) and on the basis of the failure of the employer to take measures to prevent the harassment, provided that the employee can prove that he suffered harm on both grounds.
Harassment may also be the origin of an occupational accident or disease (for example, if the harassment causes a nervous breakdown). In this case, the employee, who will be indemnified by the national insurance body, may claim additional compensation if he proves that the occupational accident results from the gross fault (“faute inexcusable”) of the employer. This will be the case if it is proved that the employer knew, or should have known, that the situation could become a danger for the employee’s health.
On this topic, a very recent decision of the French Supreme Court dated 8 November 2012 (n° 11-23855) decided that the employer had committed a gross fault towards an employee who had suffered a heart attack due to stress at work. The Court considered that the employee was subject to a very heavy workload in the years preceding his accident (70 hours of work per week) and that he was subject to pressures and to unreachable targets. In addition, the employer did not replace terminated employees, whose workload was borne by the victim. Therefore, the Court judged that the employer knew or should have known of the danger to the health of the employee and had not taken steps to protect him.
In this case, the French Supreme Court does not refer to moral harassment, but decides that methods of management causing excessive stress at work may constitute a violation of the employer’s obligations of security towards its employees. Here the Court opens an even wider area than the area of harassment...
This new legislative and judicial trend shows that the cases of harassment constitute a growing risk area for employers. It is becoming more and more important for all employers to adopt measures of prevention of harassment and protection of the health and safety of their employees.
Indeed, the new Act dated August 6, 2012 has implemented reinforced obligations regarding prevention of harassment (the legal texts prohibiting harassment must be included in the internal rules of the company and also posted in the work premises), but the employer is free to choose the measures it wishes to implement.
A well-advised employer should:
· Assess and identify the risks of harassment in the workplace, by knowing the facts and situations that constitute harassment and being aware of the managers’ and employees’ behavior and language;
· Improve and prevent harassment by bringing back values in companies (through a code of conduct for example), organizing training sessions for employees on the topic of harassment or proposing a “warning” system (through a hotline or mediators);
· Monitor and manage harassment situations by closely investigating in case such a situation appears and taking steps where appropriate to sanction the harasser.
France - Less Working Hours Shall Not Mean Increased Pressure
By Judith Beckhard Cardoso and Noemie Birnbaum
In 2000, legal working time in France
To enter into force, such lump sum in days agreements must be permitted by an industry-wide or collective company agreement, negotiated by the employers' and the employees' unions from time to time and extended to all companies within a specific professional and/or geographical scope by the Labor ministry. These union agreements must also provide the terms and conditions for implementing individual lump sum in days agreements.
Setting a trend of precedents, the French civil Supreme Court (Cour de Cassation) ruled on September 26th, 2012 that a lump sum in days agreement is not valid if no union agreement allows for sufficient protection of the employee's health and safety.
In this case, a management level employee, whose employment contract was governed by the collective bargaining agreement for Wholesale Trade, benefited from a lump sum in days agreement. Upon being retired by the company, the employee sued his employer before the French labor courts claiming payment of damages for unfair computation of overtime hours[1]. He was able to demonstrate that his actual working hours were from 7:15am to 8pm, and included some week-ends and bank holidays due to a staff shortage. His argument was that the lump sum in days agreement did not warrant sufficient protection of his health and safety.
Whilst the facts of the matter do not raise much interest per se, the merits of the case stemming from the health and safety obligations resting on French employers is however interesting for two reasons: it was based both on the French Supreme Court's rationale in a recent similar case, and used the legal trend increasing employers' obligations in connection with health and safety issues.
Indeed, in a precedent dated June 29th, 2011, the Supreme Court, while reviewing a similar lump sum agreement governed by the collective bargaining agreement for the Metallurgical Industries, provided for a test to assess whether such lump sum agreement complied with legal requirements. According to this test, the computation of working time in days should only be deemed legal if the union agreement allowing for the lump sum in days also enabled a monitoring of both working hours and the employee's workload along with sufficient resting periods.
Failure to comply with such ruling may result in severe financial consequences for the company. By cancelling the lump sum agreement, the court ruled that the company had to pay any overtime hours claimed by the employee, with the burden of demonstrating that the employee did not actually work such overtime resting on the employer.
From a practical standpoint, the working time agreement for the Wholesale Trade industry did not enable a control of the employee's daily workload nor did it provide for a breakdown of the workload per day. Indeed, it only verified the number of working days and allowed for an annual assessment of the employee's workload by the employer. The Supreme Court deemed this insufficient as working conditions may vary from one year to the next. Thus, such provisions were not sufficient to effectively protect the employee's health and safety.
Despite the addition of a company collective agreement which provided for a quarterly meeting during which the employee's supervisors were supposed to examine the practical implications of the lump sum in days agreement, the Supreme Court ruled that the combination of both agreements was not sufficient to guarantee a reasonable burden and dispatch of work for the employee concerned.
A second similar ruling had been issued by the Supreme Court on September 19th, 2012 for another lump sum agreement governed by the national collective bargaining agreement for the Clothing Industry. The Court specifically stated that a company collective agreement should include provisions protecting the employee's rights to health and safety guaranteed by the constitution and EU regulations.
The Supreme Court is thus clearly setting a trend one collective bargaining agreement at a time. Companies should therefore remain vigilant and start implementing mechanisms enabling an effective control of the working hours but also of the workload of their employees, without waiting for a new precedent.
Hungary - The New Labor Code
By Orsolya Görgényi and László Pók[1]
Hungarian employment law has gone through significant changes this year since a new Labor Code[2] entered into force on July 1, 2012.
The main purpose of the introduction of the Labor Code was to create a labor law system, which is in line with new market conditions and has a greater acknowledgement of the needs of the service industry and SMEs.
(2) More flexibility for the parties
The new Labor Code offers more flexibility to the parties in negotiating the terms of the employment relationship. The general rule concerning employment agreements remained the same - that deviation from the Labor Code is only allowed in favor of the employees.[3] However, the Labor Code provides more possibilities compared to the Old Labor Code[4] for the parties to deviate from the provisions of the Labor Code, even to the detriment of employees. On the top of this, in collective agreements, the parties are free to agree on the conditions (even if such conditions are not favorable for the employees) except if there is a provision to the contrary. It is important to note that, in each chapter, there is a list of paragraphs where deviation from the main rules is prohibited or, in the case of collective agreements, where the deviation is allowed only in favor of the employees. In the case of executives[5], parties are free to deviate from the Labor Code.
(3) Promotion of atypical forms of employment
There is no general definition of atypical forms of employment in the Labor Code. However, we can speak about atypical employment if some characteristics of the typical forms of employment are missing. The basic characteristics of typical forms of employment are an indefinite term, the full-time working order and that the place of employment is the office of the employer.
The spread of atypical forms of employment (e.g. part-time employment, fixed-term employment etc.) is quite low in Hungary
One of the leading examples is related to the termination of employment relationships governed by fixed-term employment contracts. The Old Labor Code did not provide the possibility of (ordinary) notice for fixed-term employment contracts. However, according to the Labor Code, fixed-term contracts can also be terminated by (ordinary) notice if one of the following reasons exists: (i) the employer is under liquidation or bankruptcy proceedings; (ii) in case of the incapacity of the employee; or (iii) if the employment relationship cannot be maintained due to reasons out of the parties' control.[6]
Employees may also terminate fixed-term employment contracts by (ordinary) notice if the maintenance of the employment becomes impossible or disproportionally difficult with respect to the employee’s circumstances.[7]
Another example of promoting the atypical forms of employment is that the Labor Code now obliges employers to amend employment agreements to a 4-hour per day part time agreement upon the request of employees until the third birthday of the employee’s child.[8] This provision is also intended to help employees to come back to work after maternity leave.
In addition to the above, new forms of atypical employment were introduced, like employment on call[9], job sharing[10] etc.
(4) Consequences of unlawful termination
One of the big achievements of the Labor Code is that it makes the costs of a potential unlawful termination more calculable, therefore it highly reduces the risks for employers in the case of the termination of employment relationships.
One of the new rules is that the employment terminates with the original notice and not with the final and binding judgment. In addition to this, compensation to be paid by the employer to the employee for the arrears of salary will be limited to an amount equal to a 12 months' absence fee.[11]
(5) Conclusion
A more business-friendly employment law environment was introduced in Hungary Hungary
[1] Partner and associate respectively at Szecskay Attorneys at Law, Budapest , Hungary
[2] See Act I of 2012. Hereinafter referred to as the "Labor Code".
[3] See section 43 of the Labor Code.
[4] See Act XXII of 1992. Hereinafter referred to as the "Old Labor Code".
[5] Executive employees are the head of the employer and his/her deputies. In addition to these executives, by law the employment agreement may classify other employees as executives if they are in key positions and their basic salary exceeds the mandatory basic salary sevenfold. (Please see Section 208 of the Labor Code.)
[6] Section 66 (8) of the Labor Code.
[7] See section 67 (2) of the Labor Code.
[8] See section 61 (3) of the Labor Code.
[9] See section 193 of the Labor Code.
[10] See section 194 of the Labor Code.
[11] See section 82 (2) of the Labor Code.
Mexico - Reform to Mexican Labor Law; A First Step
By Ernesto Velarde Danache, Ernesto Velarde Danache, Inc.
In November 2012, the Mexican Federal Congress approved a bill submitted by President Calderon which contains a reform to the Mexican Federal Labor Law. This reform will be enacted within the next few weeks once it is promulgated by the President and published in the Federal Official Gazette.
It is important to mention that the still existing Law was enacted in 1970 and, other than minor, cosmetic, insignificant procedural modifications in the 1980’s it had not undergone any substantial modifications ever since.
Employee and employer groups, unions and politicians from a variety of backgrounds and political beliefs still consider that the reform did not address the most needed changes or additions in order to update the Law and have Mexico compete in a globalized economy, or provide additional protection or better rights and more benefits to employees, or the required certainty, ability to plan and manage controls for the benefit of employers.
The reform is, however, a first step that, despite allegations by many of the parties involved in the process, does represent a substantial modification to existing rules that will necessarily better position the country in this very competitive era.
Herein below I am going to present, and analyze, the highlights of the new legislation.
The concept of “outsourcing” is now being introduced in the Mexican labor system. Indeed, many companies, particularly those in the manufacturing sector with seasonal needs, were using outsourcing companies to provide them, at least partially, with the required labor force. By following this strategy, the outsourcing company remained the employer of record and was responsible for the payment of salaries, fringe benefits and any other social obligations. The reform now imposes a number of obligations on employers with the intention of prohibiting employers from resorting to this strategy in order to avoid compliance with labor rules. If the mandatory requirements on the party contracting the outsourcing services are not met, then that party is to be construed the employer of record with all inherent obligations.
Mexican employers are now going to be able to execute labor agreements for seasonal workers (not permanent employees), for initial training or for trial periods. As to training agreements, the duration may be for up to 90 days for regular employees and up to 180 days for higher management, administrative positions. Trial periods can be used with a duration of up to 30 days or up to 180 days, the latter for employees in management, administrative, professional or technical positions. The reform goes on to allow for termination without liability on the employer if the employee’s performance is not satisfactory. It is important to mention that training or trial agreements cannot be renewed or extended.
On the other hand, there are a number of new rules, requirements and obligations imposed on employers who are transferring Mexican employees to operations abroad.
New language is incorporated to Article 47 of the Law which establishes the causes of termination of employees, with cause and without liability to the employer. As a result, any actions, violence or ill treatment by employees against clients or suppliers of the employer will result in termination with cause. For the first time, the concept of sexual harassment in the work place is introduced and is now a cause of termination.
It is very important to bear in mind that for a termination to be justified it will have to meet all necessary requirements AND be notified directly to the employee or through the labor board.
Labor litigation in Mexico Mexico
Attorneys and labor department officials using dilatory tactics or just willingly delaying the labor process are now going to be penalized. If articles addressing these issues are actually enforced, that by itself will represent substantial savings for the parties in conflict as well as to states and federal governments when litigating labor matters before them since a lot of lawyers, with the tacit complacence of labor authorities, do abuse the many loopholes of the system and the Law, prolonging trials with the sole purpose of forcing the counterparty to settle out of frustration and desperation or just to delay an unavoidable defeat and related expense.
New concepts as to what constitutes discrimination are now incorporated; same rights for women and no discrimination based on ethnicity, health, opinions, sexual preferences, pregnancy.
It is not uncommon in Mexico Mexico
As per the terms of Article 83 of the new labor law, employers will now be able to hire employees by the hour as opposed to by the day as is the case under the 1970 Labor Law. As a result, employers will now have discretion as to the amount of hours an employee is needed to work. This is going to be beneficial for both sides since currently employers are prevented or reluctant to hire people who only wish to work reduced shifts.
There are many articles in the still existing Law that were long overdue for change. But there is one in particular that illustrates how outdated the 1970 Law is. This Law mandates that the payment of salaries to Mexican workers needed to be made during the shift and in cash. Needless to say, this latter obligation causes considerable concerns to Mexican employers, particularly those with large number of employees that needed to have that cash available on pay day with the related risk associated with having large amounts of cash, especially at a time when violence and criminal activity in Mexico
Another novelty implemented by the reform is that male employees will now enjoy five fully paid days off in case of birth or adoption of a child.
As of the time of enforcement of the approved reform, Mexican employers will not have the right to ask female employees for certificates of non-pregnancy. Additionally, the fact that a female employee is pregnant, or changes her marital status or has minor children will not prevent her from being eligible for a promotion and does not give the right to an employer to terminate her.
Employees will no longer have the right to use tools and other equipment provided by the employer for personal or third party use, they will not be allowed to do or perform any type of propaganda in the work place (especially political) and most importantly they are now prohibited from engaging in sexual harassment practices against fellow employees.
As part of the new rights being granted to working mothers, if a physician so supports, they will have the right to transfer and add 4 of the 6 weeks of the maternity leave to the 6 weeks post-delivery leave. Additional time off will be granted if the baby is born with disabilities or a disease.
Employers should review and revise any existing documents they use in their day to day operations such as collective or individual labor agreements, shop rules, termination letters, administrative reports, full and final releases and in general any other documentation that contain any reference to employer/employee relationships to make sure that when they are to be used after the new law goes into effect, they do not violate any of its terms.
Netherlands - New Dutch Government Announces Drastic Changes in Dutch Dismissal Rules
By Els de Wind, VanDoorne
On 5 November 2012 the new Dutch cabinet was formally sworn in by Queen Beatrix. On 29 October 2012, the two party coalition had unfolded their new plans with respect to the Dutch labour market. If the plans are implemented they will have a major impact on employee dismissal protection and an unemployed person’s entitlement to state unemployment benefits. Although the new dismissal system still has to be worked out in detail, some of the proposed amendments of Dutch employment law and social security rules will be highlighted. We will have to wait and see if the announced rules will eventually be implemented. It is not expected that new dismissal or unemployment benefits rules and regulations will be implemented before 2014.
Dismissal: from prior approval to non-binding advice
Currently under Dutch law, if the employer and the employee do not reach a mutual settlement on their separation, someone's employment can be terminated by the court or with prior approval of the Labor Office (UWV WERKbedrijf). An employer who is choosing the Labor Office route needs prior approval of the Labor Office before giving notice of termination. If such approval is not obtained, the employer can ask the court to terminate the employment of the employee. According to the new plans, the employer wanting to unilaterally dismiss an employee will not have a choice and must ask prior advice of the Labor Office before it can give notice of termination to the employee. The Labor Office's advice is non-binding: regardless of what the advice is, the employer will be allowed to terminate the employee’s employment. If the employee does not agree with the termination, he or she may initiate court proceedings in order to be awarded termination compensation or to have the court annul the dismissal (see below). Alternative dismissal procedures can be agreed in collective bargaining agreement provided that the agreed procedure is comparable to the statutory procedure in terms of both duration and outcome
Under the proposed system no major role remains for the court in dismissal procedures. If an employee claims in court that the dismissal is unfair, the court will have to assess the case applying the same criteria as the Labor Office. The court can only award termination compensation if it finds the dismissal wrongful or that the employer is mainly to blame for the circumstances which have led to the dismissal. If the employer disregarded the negative advice of the Labor Office and went ahead with the termination, the court may annul the termination. Further, the court will be involved in cases in which the employer seeks termination of the employment of an employee who is working on the basis of a limited term employment contract without the possibility of termination during the term and in cases in which a legal prohibition to give notice of termination exists, such as for instance cases of sickness, pregnancy and works council membership. There is no appeal against the court´s judgment.
We expect that it will still be possible for the employer and the employee to end their relationship by mutual consent without the employee losing his/her rights to state unemployment benefits.
Transitional budget and termination compensation
An employer unilaterally terminating an employee´s employment or not extending a temporary employment contract with a duration of at least one year, must provide a so-called "transitional budget" to the employee, which is to be used for schooling purposes and for improving the employability of the employee. The transitional budget will amount to one fourth monthly salary for each service year and is capped at four monthly salaries. An employer does not have to pay the transitional budget if the dismissal is due to the employer's poor financial situation and the employer would go bankrupt if it would have to pay the transitional budget.
The severance payment which may be awarded by the court is capped at half a monthly salary per service year up to a maximum of EUR 75.000 gross.
State unemployment benefits
The maximum period during which an unemployed person may receive state unemployment benefits pursuant to the Unemployment Act (Werkloosheidswet) is shortened from maximum 38 to maximum 24 months. During the first 12 months the unemployment benefits will amount to a certain percentage of the last earned salary up to a certain maximum. During following 12 months the unemployment benefits will amount to a certain percentage of the statutory minimum wage.
The period during which an employee is entitled to state unemployment benefits depends on the number of service years (for different employers). For each service year during the first 10 years of service, the employee becomes entitled to one month of unemployment benefits. After the first 10 years of service, half a month of unemployment benefits is granted for each service year. Service years built up prior to the coming into force of the amendments to the Unemployment Act will be respected.
Employees 55 years and over may become eligible for additional benefits. In order for these employees to become entitled to these additional benefits, they will have the obligation to apply for jobs, as is also the case for eligibility for benefits generally under the Unemployment Act.
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