employment & labour law 2017

The International Comparative Legal Guide to:

A practical cross-border insight into employment and labour law

Published by Global Legal Group with contributions from:

A. Lopes Muniz Advogados AssociadosChajec, Don-Siemion & Zyto Legal AdvisorsCLAUDE & MARTZ, S.L.P.Concern Dialog law firmDebarliev, Dameski and Kelesoska, Attorneys at LawDeloitte Albania Sh.p.k.Deloitte Kosova Sh.p.k. DQ Advocates LimitedEmpLaw Advokater ABEMPLaw Attorneys LtdFCB Sociedade de AdvogadosFCLAW – LAWYERS & PRIVATE NOTARIESGün + PartnersGürlich & Co.Hogan Lovells BSTL, S.C.Hogan Lovells International LLP

HomburgerKoushos Korfiotis Papacharalambous L.L.C.Latournerie Wolfrom AvocatsLaw firm Šafar & Partners, LtdMakarim & Taira S. McCann FitzGeraldMette Klingsten Law FirmMori Hamada & MatsumotoPachiu & AssociatesPeople + Culture StrategiesRátkai Law FirmShahid Law FirmShardul Amarchand Mangaldas & Co.Shook, Hardy & Bacon L.L.P.SkrineStikeman Elliott LLPToffoletto De Luca Tamajo e Soci

7th Edition

Employment & Labour Law 2017

ICLG

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DisclaimerThis publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice.Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication.This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional when dealing with specific situations.

General Chapters:

Country Question and Answer Chapters:

3 Albania Deloitte Albania Sh.p.k.: Sabina Lalaj & Ened Topi 9

4 Angola FCB Sociedade de Advogados: Inês Albuquerque e Castro & Susana Bradford Ferreira 19

5 Armenia Concern Dialog law firm: Sedrak Asatryan & Janna Simonyan 27

6 Australia People + Culture Strategies: Joydeep Hor & Therese MacDermott 34

7 Brazil A. Lopes Muniz Advogados Associados: Antônio Lopes Muniz & Zilma Aparecida S. Ribeiro 41

8 Canada Stikeman Elliott LLP: Patrick L. Benaroche & Hélène Bussières 48

9 Cyprus Koushos Korfiotis Papacharalambous L.L.C.: Loizos Papacharalambous & Eleni Korfiotis 56

10 Czech Republic Gürlich & Co.: Richard Gürlich & Kamila Janoušková 65

11 Denmark Mette Klingsten Law Firm: Mette Klingsten & Mette Bjørndal 71

12 Egypt Shahid Law Firm: Rasha Maurice 78

13 Finland EMPLaw Attorneys Ltd: Minna Saarelainen & Annamaria Mattila 86

14 France Latournerie Wolfrom Avocats: Sarah-Jane Mirou 94

15 Hungary Rátkai Law Firm: Dr. Ildikó Rátkai & Dr. Nóra Feith 102

16 India Shardul Amarchand Mangaldas & Co.: Pooja Ramchandani & Vaibhav Bhardwaj 109

17 Indonesia Makarim & Taira S.: Alexandra Gerungan & Candace A. Limbong 116

18 Ireland McCann FitzGerald: Mary Brassil & Stephen Holst 122

19 Isle of Man DQ Advocates Limited: Leanne McKeown & Tara Cubbon 129

20 Italy Toffoletto De Luca Tamajo e Soci: Franco Toffoletto & Valeria Morosini 137

21 Japan Mori Hamada & Matsumoto: Shiho Ono & Yuko Kanamaru 146

22 Kosovo Deloitte Kosova Sh.p.k.: Luljeta Plakolli-Kasumi & Vjosa Misini 155

23 Macau FCLAW – LAWYERS & PRIVATE NOTARIES: Miguel Quental & Paulo Cordeiro De Sousa 161

24 Macedonia Debarliev, Dameski and Kelesoska, Attorneys at Law: Emilija Kelesoska Sholjakovska & Ljupco Cvetkovski 167

25 Malaysia Skrine: Selvamalar Alagaratnam 174

26 Mexico Hogan Lovells BSTL, S.C.: Hugo Hernández-Ojeda Alvírez & Luis Ricardo Ruiz Gutiérrez 181

27 Mozambique FCB Sociedade de Advogados: Inês Albuquerque e Castro & Patrícia Nunes Borges 188

28 Poland Chajec, Don-Siemion & Zyto Legal Advisors: Piotr Kryczek & Weronika Papucewicz 196

29 Portugal FCB Sociedade de Advogados: Inês Albuquerque e Castro & Susana Bradford Ferreira 204

1 Brexit – The Employment Law Implications – Elizabeth Slattery & Jo Broadbent, Hogan Lovells International LLP 1

2 Global Employment Standards & Corporate Social Responsibility – William C. Martucci, Shook, Hardy & Bacon L.L.P. 5

Contributing EditorsElizabeth Slattery & Jo Broadbent, Hogan Lovells International LLP

Sales DirectorFlorjan Osmani

Account DirectorOliver Smith

Sales Support ManagerPaul Mochalski

Senior EditorsSuzie Levy, Rachel Williams

Chief Operating OfficerDror Levy

Group Consulting EditorAlan Falach

PublisherRory Smith

Published byGlobal Legal Group Ltd.59 Tanner StreetLondon SE1 3PL, UKTel: +44 20 7367 0720Fax: +44 20 7407 5255Email: [email protected]: www.glgroup.co.uk

GLG Cover DesignF&F Studio Design

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Printed byAshford Colour Press LtdMarch 2017

Copyright © 2017Global Legal Group Ltd.All rights reservedNo photocopying

ISBN 978-1-911367-41-3ISSN 2045-9653

Strategic Partners

The International Comparative Legal Guide to: Employment & Labour Law 2017

Continued Overleaf

Country Question and Answer Chapters:

EDITORIAL

Welcome to the seventh edition of The International Comparative Legal Guide to: Employment & Labour Law.This guide provides corporate counsel and international practitioners with a comprehensive worldwide legal analysis of labour and employment laws and regulations.It is divided into two main sections:Two general chapters. These chapters discuss the implications of Brexit on UK employment law, as well as global employment standards and corporate social responsibility.Country question and answer chapters. These provide a broad overview of common issues in labour and employment laws and regulations in 35 jurisdictions.All chapters are written by leading labour and employment lawyers and industry specialists and we are extremely grateful for their excellent contributions.Special thanks are reserved for the contributing editors Elizabeth Slattery and Jo Broadbent of Hogan Lovells International LLP for their invaluable assistance.The International Comparative Legal Guide series is also available online at www.iclg.co.uk.

Alan Falach LL.M. Group Consulting Editor Global Legal Group [email protected]

The International Comparative Legal Guide to: Employment & Labour Law 2017

30 Romania Pachiu & Associates: Mihaela Cracea & Iulia Dobre 212

31 Slovenia Law firm Šafar & Partners, Ltd: Martin Šafar 220

32 Spain CLAUDE & MARTZ, S.L.P.: Samuel González 230

33 Sweden EmpLaw Advokater AB: Annika Elmér 238

34 Switzerland Homburger: Balz Gross & Gregor Bühler 244

35 Turkey Gün + Partners: Pelin Baysal & Beril Yayla Sapan 252

36 United Kingdom Hogan Lovells International LLP: Elizabeth Slattery & Jo Broadbent 259

37 USA Shook, Hardy & Bacon L.L.P.: William C. Martucci & Carrie A. McAtee 266

ICLG TO: EMPLOYMENT & LABOUR LAW 2017 1WWW.ICLG.CO.UK© Published and reproduced with kind permission by Global Legal Group Ltd, London

Chapter 1

Hogan Lovells International LLP

Elizabeth Slattery

Jo Broadbent

Brexit – The Employment Law Implications

withdrawal and future relationship with the EU. There are various “models” that could form the basis for an ongoing relationship with the EU. The UK could choose to try to remain within the European Economic Area (EEA). This would allow the UK to continue to have tariff-free access to the EU’s single market. However, continuing EEA membership would require the UK to continue to observe freedom of movement for nationals of other Member States and would also require the UK to continue to apply most EU employment law.Another alternative would be to adopt the “Swiss model”, which allows Switzerland some, although not full, access to the single market through a number of bilateral agreements. In many cases, Switzerland has to introduce EU requirements into its domestic law as a condition of those bilateral agreements. Again, this could limit the UK’s ability to make significant changes to employment law, particularly in relation to freedom of movement, if a Swiss-style arrangement is ultimately agreed.Although the government’s preferred relationship with the EU post-Brexit is not yet clear, at least some government ministers have indicated that it is “very improbable” that the UK would remain a member of the single market post-Brexit. This could mean that the government has greater flexibility to make changes to employment law than under the EEA or Swiss models. Given that EU employment law has been seen in some quarters in the UK as a brake on efficiency and competitiveness, especially for small businesses, it was anticipated that employment law might be one of the areas that would see considerable change following a decision to leave the EU. However, initial statements both from Theresa May, the Prime Minister, and David Davies, the Secretary of State for Exiting the European Union, indicate that workers’ rights may not be a particular target for reform post-Brexit. In her speech to the Conservative Party Conference in October 2016, Theresa May explicitly stated that “existing workers’ legal rights will continue to be guaranteed in law – and they will be guaranteed as long as I am Prime Minister”. In fact, it appears that there may even be a move to extend workers’ rights in some areas.

3.1 Implications of the Great Repeal Bill

The UK government is proposing to give effect to Brexit through a “Great Repeal Bill”. This will repeal the European Communities Act 1972, which incorporates the UK’s obligations under the various EU treaties in national law. It also allows the government to implement EU law through secondary legislation. A significant amount of EU employment legislation has been brought into force in the UK by way of such secondary legislation.

On 23 June 2016, the UK voted to leave the European Union (EU). Although it is clear that the process of withdrawal will not be quick, there are already some hints about what Brexit might mean for employment law in the UK. Initial indications suggest that the implications may not be as significant as originally anticipated. In this article, we explore what changes employers might expect to see in the short, medium and longer term.

1. The Process of Withdrawal From the EU

Under Article 50 of the Treaty on European Union, a Member State can withdraw from the EU by giving notice. That notice obliges the EU and the UK to attempt to negotiate an agreement setting out the arrangements for the UK’s withdrawal. If agreement cannot be reached within two years, the UK would in theory exit the EU without a withdrawal agreement in place, although the two-year negotiation period can be extended by unanimous agreement.The UK government has indicated that it intends to give notice under Article 50 by the end of March 2017, meaning that in theory the UK will have left the EU by March 2019. However, the UK Supreme Court is due to rule on whether the government must obtain Parliamentary approval before giving notice under Article 50. This could delay the process.

2. Short-term Implications

Until the government gives the Article 50 notice and the negotiation period expires, the UK continues to be a member of the EU and bound by EU law and decisions of the Court of Justice of the European Union (CJEU). This means that in the short term there will be no changes to EU-derived employment law. This includes individual rights not to be discriminated against and to take maternity leave, protections for “atypical workers” such as part time workers, fixed term employees and agency workers, and the entitlement to minimum paid holiday, maximum working hours and appropriate rest breaks. Other key protections under EU law include the automatic transfer principle that protects the rights of employees in an asset sale, and the obligation to undertake collective consultation if 20 or more employees are to be dismissed within 90 days.

3. Medium-term Implications

The medium-term implications of Brexit depend significantly on what agreement is reached with the EU about the terms of the UK’s

WWW.ICLG.CO.UK2 ICLG TO: EMPLOYMENT & LABOUR LAW 2017© Published and reproduced with kind permission by Global Legal Group Ltd, London

to retain, amend or remove aspects of EU law. As CJEU decisions form part of the Acquis, CJEU judgments in existence at the point of Brexit should continue to be binding on UK courts post-Brexit. This would considerably reduce the amount of change immediately after Brexit to workers’ rights derived from EU law, given that change could only be made as a result of legislation. It seems relatively unlikely that major changes to employment legislation would be at the top of the government’s list of priorities at that point.

4. Longer Term Implications

Notwithstanding that significant change to UK employment law in the short or medium term looks fairly unlikely, it seems probable that there will be changes in the longer term. However, these are likely to be relatively minor adjustments, rather than a wholesale “liberalisation” of a labour market that is already one of the most lightly regulated in Europe. The areas where we are most likely to see change, in addition to changes to holiday pay, are highlighted below.

4.1 Transfer of Undertakings (Protection of Employment) Regulations (TUPE)

Under TUPE, on an asset sale, employees of the seller transfer to the employment of the buyer automatically, on their existing terms and conditions of employment. Employees have additional protections against dismissal and a right to be informed and consulted about the legal, economic and social implications of the transfer and about any “measures” (such as redundancies) that are proposed by the buyer. It is possible that TUPE could be repealed in its entirety, stemming as it does from the Acquired Rights Directive (ARD). However, businesses are familiar with TUPE and there is no real call for wholesale repeal. One aspect of TUPE that does cause problems for businesses relates to the ability to harmonise terms and conditions of employment after a transfer. As a matter of UK law, terms and conditions of employment can be changed if employees consent to the change. However, a series of CJEU cases indicate that following a transfer, a change to terms and conditions of employment is ineffective, even with consent, if the transfer is the reason for the change. This is because an employee cannot waive his or her rights under TUPE and the ARD. This makes it difficult for an employer to harmonise terms and conditions of employment after a transfer if the transfer is the reason for the change (as it often will be).Post-Brexit, TUPE is likely to be amended to make it clear that the normal rules on changes to terms and conditions apply following a transfer. Employers would welcome the additional flexibility this would offer; employees would still have to consent to any change.

4.2 Discrimination Claims

UK law on discrimination is governed by the Equality Act 2010, which protects employees from discrimination because of a range of different “protected characteristics”, including sex, race, disability, age, religion and belief and sexual orientation. Although protection against discrimination because of sexual orientation, religion and belief and age were introduced in response to EU requirements, the UK had protection against sex, race and disability discrimination before it was required to do so under EU law. It seems unlikely that any future government would seek to repeal the Equality Act as a result of Brexit.

However, the government recognises that simply repealing the European Communities Act would give rise to a great deal of uncertainty if the underlying secondary legislation were to be repealed at the same time. The Great Repeal Bill will therefore incorporate existing EU law, as it stands at the date the Bill comes into force, into national law. This will mean that EU-derived employment law will be incorporated into UK law at the point that Brexit takes effect.So even at the point of Brexit, the existing employment law framework will not change. However, in a number of areas, domestic legislation has been interpreted in a particular way to give effect to the UK’s obligations under EU law, normally to reflect judgments of the CJEU. It remains to be seen whether, after Brexit, the UK courts will still interpret the law in light of those CJEU decisions, or whether there is scope to take a different approach.One area in which the tension between the wording of domestic legislation and decisions of the CJEU has been particularly acute is in relation to holiday pay. Under the Working Time Regulations 1998 (WTR), which give effect to the EU Working Time Directive (WTD), all workers are entitled to four weeks’ paid holiday each year. The WTD does not explain precisely how that right applies in practice, which has meant that the detail has had to be worked out through court decisions. One practical issue is what happens to a worker’s holiday entitlement if they have been off work through illness during a leave year. In the UK, the WTR include a “use it or lose it” principle, so an employee is not entitled to carry accrued but untaken holiday forward into the next leave year. However, the CJEU has held that a worker cannot be deprived of their right to annual leave if they have been unable to take leave in a particular leave year because of sickness absence. To give effect to this principle, the UK courts have “read in” words to the WTR, so that the use it or lose it principle is modified where an employee has been unable to take holiday because of sickness absence.Another area in which the influence of the CJEU has been significant is in relation to the calculation of holiday pay. Under the WTR, an employee is entitled to paid holiday calculated on the basis of a “week’s pay”. A “week’s pay” has been interpreted domestically as meaning a worker’s basic pay, excluding payments such as commission or certain types of overtime. After a series of CJEU decisions, it is clear that this approach does not satisfy the requirements of the WTD. Accordingly, UK courts are now “reading words in” to the WTR to make it clear that holiday pay has to include an element in respect of commission and some types of overtime payment if these are “intrinsically linked” to work the worker is required to carry out. This change has had a significant financial impact on many employers.Depending on the terms of any withdrawal agreement, CJEU decisions that are handed down after Brexit may no longer be binding on the UK, although could still have persuasive value. There could also be a question about whether existing CJEU decisions are binding post-Brexit. If they are not, the courts will presumably give effect to the clear wording of domestic legislation even when giving effect to rights that originally stemmed from EU law. For example, words would presumably no longer be “read in” to the WTR to allow workers to carry holiday forward from one year to another in cases of sickness, and it would be open to the courts to follow existing domestic authority in relation to the calculation of holiday pay, in preference to reading words in to comply with CJEU decisions. The counter argument would be that the intention of the Great Repeal Bill is to preserve the “Acquis” (the accumulated body of EU law) at the point of Brexit, pending a decision by Parliament about whether

Hogan Lovells International LLP Brexit – The Employment Law Implications


5. Change on the Domestic Front?

The current UK government’s emphasis on building “a country that works for everyone”, its calls for improvements in corporate governance and its emphasis on protecting workers’ rights has led to speculation that, quite separately from Brexit, more protection for workers may in fact be introduced in the future.The first area of focus is whether those working in the so-called “gig economy”, who are sometimes categorised as “self-employed”, have adequate protection. There have been high-profile cases arguing that such individuals are really workers as a matter of law and are entitled to the minimum wage and annual leave. A number of claims are proceeding in the courts and tribunals and these may drive change in the way such staff are classified by employers. The government has also commissioned a review to ensure that “no one is left behind in the workplace”. Amongst other things, the review will investigate whether the definition of employment status needs to be updated to reflect new forms of working and emerging business models and whether the growth of new forms of employment is undermining access to workplace rights such as holiday, minimum rates of pay, maternity and pension entitlements.The other area of focus has a more “collective” dimension to it. In a speech in July 2016, Theresa May suggested that boardrooms are made up of a narrow circle of people who do not provide adequate scrutiny of how companies are run. She commented that one way to address that would be to require companies to have representatives of workers and consumers on company boards. More recent comments to the Confederation of British Industry and a Green Paper on corporate governance reform clarify that it is not intended that businesses will be required to have directly appointed worker representatives on boards, but it appears that businesses will be expected to take steps to ensure that all stakeholders in a company, including its workers and customers, have a voice in some way at board level. This would be a less dramatic change.

6. Conclusion

Brexit will inevitably bring some changes to UK employment law. However, these will not take place immediately and in the meantime nothing will change. In the medium- to long-term, there is likely to be more scope to amend the laws that those doing business in the UK have found burdensome, but it appears that the changes will be gradual and are likely to focus on particular aspects of existing law rather than wholesale repeal or reform. At the same time, we may in fact see an extension of employment rights in some respects, to address a concern that existing rights have not kept up with the modern world of work.

However, it is certainly possible that the Equality Act will be made more “business friendly” in some respects. Compensation under the Equality Act is uncapped. Large awards can be made to compensate employees for discrimination, particularly where there is evidence that the employee will never be able to work again as a result of the discrimination. In one case, nearly £4.5m was awarded to reflect injury to feelings, loss of earnings and pensions loss. Although such awards are very rare, they tend to be well publicised, and may lead employers – and sometimes employees – to believe that discrimination awards are typically higher than they in fact are. Median discrimination compensation is in the region of £6,000 to £8,500.Employer organisations such as the Confederation of British Industry have called for caps on discrimination compensation to be introduced. They argue that the risk of significant financial exposure for discrimination claims deters small businesses from hiring employees and therefore acts as a brake on the economy. However, governments have been unwilling to introduce a cap on compensation for fear of breaching EU law.Historically, discrimination claims were subject to the financial cap that applied to unfair dismissal claims. However, the CJEU decided in Marshall v Southampton and South West Hampshire Health Authority (Teaching) (No 2) (Case C-271/91) that imposing a cap on compensation meant that the UK had not given real and effective judicial protection to claimants, who were unable to recover the loss and damage sustained as a result of discrimination. The government removed the cap on discrimination compensation to reflect the CJEU’s decision. It is possible that a cap on compensation will be introduced at some point post-Brexit.

4.3 Agency Workers Regulations

The most significant recent piece of EU legislation is the Agency Workers Directive, implemented in the UK through the Agency Worker Regulations 2010 (AWR). The AWR give agency workers the right to be treated in the same way as a comparable employee of the hirer in respect of basic pay and working hours, once they have been engaged in a role for 12 weeks. They also have a “day one” right to access “collective facilities” offered by the hirer to its staff, such as a work gym or canteen.When the AWR were introduced, there was concern that they would increase the cost of using agency staff and add a layer of bureaucracy to the arrangements. Research commissioned by ACAS in 2014 indicated that there had been an increase in cost in order to comply with the AWR, although the use of agency workers did not seem to have declined as a result. However, agency workers themselves did not have a great deal of knowledge about their entitlements under the AWR. It is difficult to know how many claims have been brought in the employment tribunal under the AWR, as such claims are not recorded separately. However, experience suggests that claims under the AWR are relatively few in number, the AWR remain unpopular with agencies and hirers, and knowledge of the protections offered amongst agency workers remains low. On balance, it appears that the AWR would be a candidate for repeal after Brexit, particularly given that agency workers are already entitled to basic employment protections such as the national minimum wage, maximum working time, annual leave and pensions auto-enrolment.



Elizabeth SlatteryHogan Lovells International LLPAtlantic House, Holborn ViaductLondon EC1A 2FGUnited Kingdom

Tel: +44 20 7296 5294Fax: +44 20 7296 2001Email: [email protected]: www.hoganlovells.com

Jo BroadbentHogan Lovells International LLPAtlantic House, Holborn ViaductLondon EC1A 2FGUnited Kingdom


Today’s market challenges

Employment law frameworks around the world are complex and pose many challenges for global companies. They affect the way business is conducted and have an impact on how strategy is built and rolled out. The ability to work swiftly and effectively across borders – in a variety of languages and cultures – is essential.

How we help

We have the geographic reach and local knowledge our clients need. From this platform, we provide sophisticated, coordinated guidance on the most pressing and difficult employment issues, wherever they arise.

Our work covers the full spectrum of employment matters. We help navigate workplace policies and practices. We develop comprehensive risk avoidance strategies. We advocate in litigation and arbitration. We negotiate with unions and other employee representatives. And we regularly implement strategic domestic and international initiatives.

Our team approaches all of these challenges creatively, strategically and cost-effectively. Over and above being a legal adviser, we aim to be a business partner. And we always put our clients first.

Elizabeth is Head of the London Employment Practice and advises on all aspects of employment and employment relations law. Her practice includes advising on individual employment disputes, unfair and wrongful dismissal, discrimination and equal pay, enforcement of post-termination covenants and protection of confidential information, and employment aspects of regulatory and other investigations. Elizabeth also advises on collective employment law, employee consultation, trade union recognition and industrial action. In addition, Elizabeth has extensive experience advising on employee matters arising in connection with all types of corporate transactions, business transfers and outsourcing agreements.

Elizabeth has been listed as a leading UK employment law practitioner in both UK and International directories.

Jo is PSL Counsel in the Hogan Lovells’ employment team. As well as keeping clients and the team up to date with legal developments, she develops and presents internal and external client training courses and workshops and sits on the Employment Lawyers Association training committee. One of her particular interests relates to maternity and other family friendly policies – she is the main contributor to the “Family friendly” section of the CIPD’s HR-inform tool, and the author of Xpert HR’s shared parental leave section. Jo is also a co-author of the book “Informing and Consulting Employees: the New Law”, and contributed the UK employment law section to a book on European cross-border mergers.



Chapter 2

Shook, Hardy & Bacon L.L.P. William C. Martucci

Global Employment Standards & Corporate Social Responsibility

guidelines and improve safety conditions.11 Some companies have taken an individualised approach in setting up programmes to ensure safety and regulations. For example, GAP released a statement after the Rana Plaza collapse that they intended to hire a fire inspector and provide loans for factory improvements.12 Company-based procedures for worker safety are typically encompassed in corporate social responsibility (CSR) programming. As Christine Bader of The Guardian commented after the Rana Plaza collapse: “Corporate social responsibility is not about writing cheques to museums. It is life and death, and must become a crucial part of how companies do business.”13 CSR programmes must go beyond the typical statement of commitment to the community and human rights. Through an effective CSR programme, a company can monitor developments in their business relations with garment factories more closely and limit unpredictable factors of cost, management, safety, and ultimate liability. As The Economist reported: “Though CSR tends to be seen as a moral matter, it comes down to the hard practicalities of companies’ reputations and risk registers.”14 The good news is that there is substantial leeway in developing these programmes. Currently, there are only international guidelines in promoting health and safety while employing labour internationally. The International Labour Organization (ILO) has established labour conventions for multinational enterprises when employing workers in the global market. The ILO has drafted the Multinational Enterprises Declaration (MNE Declaration), as a benchmark of principles for corporate social policies.15 The MNE Declaration states that companies should “maintain the highest standards of safety and health, in conformity with national requirements, bearing in mind their relevant experience within the enterprise as a whole, including any knowledge of special hazards”.16 The ILO has also provided a “Helpdesk” webpage,17 as a reference for various international labour standards, including occupational safety and health and child labour. The ILO’s Helpdesk provides factsheets and links to principles developed from the MNE Declaration.

Harvard Professor John Ruggie’s Programme

Harvard Professor John Ruggie has also created a great resource for developing an effective CSR programme through his United Nations Human Rights Council Report.18 Professor Ruggie designed guiding principles on how corporations can demonstrate their commitment to international human rights while doing business abroad. According to Professor Ruggie, there are three essential components for a successful CSR programme: (1) corporate policy commitment

Introduction

On a recent “Last Week Tonight” episode about the fashion industry and international workers’ rights, comedian John Oliver expressed amazement that a dress at H&M could cost only $4.95.1 The episode emphasised how garment factory accidents first received attention in the 1990s, but that accidents continue to be a major problem. Oliver stated: “We need to show clothing brands not just that we care, but why they should.”

The Bangladesh Tragedy and the Global Corporate Response – Safety and Health

The focus on garment factory working conditions seems to take an ebb and flow pattern as the news covers a tragic accident and attention focuses on the global corporate community to provide solutions. The most recent major media coverage was in Bangladesh in April 2013, in which an eight-story garment factory, Rana Plaza, collapsed, killing over 1,100 workers and injuring hundreds more.2

The building owner illegally constructed three extra floors that were ill-equipped to support heavy machinery, causing the walls to crack and eventually collapse.3 The garment factory tragedy led to media spotlight, workers’ protests,4 and new commitments by global corporations. The outcry following the tragedy also resulted in 41 murder charges against the factory owner and government officials.5 These were the first murder charges in the history of the garment industry.6 However, questions still loom as to whether this cycle of tragedy and short-term limelight will improve working conditions and whether systematic policies need to originate from global clothing companies themselves.Following the Rana Plaza collapse, some global clothing companies, perhaps most prominently H&M, signed a legally binding agreement with the Bangladeshi government to fund fire and building safety in factories.7 The agreement provided for an independent inspector to oversee factories with the authority to shut down unsafe facilities and require improvements – financed in part by companies that signed the agreement.8 Brands such as H&M, Mango, Primark, and GAP contributed to the Rana Plaza Donors Trust Fund to compensate survivors of the garment factory accident.9 According to Human Rights Watch, only $21 million of the $30 million has been paid or pledged.10

Aside from compensation to the victims, international attention has now focused on how to prevent accidents from occurring again by improving worker safety and workers’ rights. Many major brands have committed to fund factory safety upgrades, and to work with government agencies and non-government organisations to craft


Operational-level grievance mechanisms can provide a good venue for those potentially affected by business activities, as long as the process meets certain core criteria.30 Non-judicial grievance mechanisms must be legitimate, accessible, predictable, equitable, transparent, rights-compatible, and a source of continuous learning.31

CSR Analysed

There is major criticism as to whether CSR programmes can truly prevent more garment factory accidents and whether it is worth the company’s investments on monitoring and oversight. At the heart of the issue is the consumer and what the consumer wants ultimately. Many consumers favour buying dresses for as low as $4.95. As the National Public Radio reported, consumers are less likely to opt for an ethically sourced product when there is a small price difference (even as low as 5%).32 Fortunately, this attitude is shifting as garment factory accidents continue to receive more and more media attention. For example, on the two-year anniversary of the Rana Plaza collapse, Benetton and The Child’s Place were criticised for their late donations to the Rana Plaza victims’ fund, as compared to their counterparts like GAP and H&M.33

The essence of many CSR programmes is the company’s reputation that ensures customer retention. In many ways, CSR programmes cannot be reactive in nature, but companies need to anticipate dangers in their supply chain. Brands cannot rely on government oversight programmes to provide the essential safeguards for the workers they employ internationally. Companies need to ask themselves, “how much will this dress really cost us?” A major brand’s reputation is at stake. And, far more importantly, lives are in jeopardy.

Conclusion

The United Nations’ Universal Declaration of Human Rights34

articulates the aspirational aspects of the goals of global employment as embraced by many multinational corporations. Article 23 remains instructive in its guidance concerning the importance of “just and favourable conditions of work”, just as the Articles generally recognise the inherent dignity of each person to pursue their rights and freedoms without discrimination and that everyone has “the right to life, liberty and security of person” (Article 3). As the world continues to build a vibrant and responsible global corporate community, the recognition and implementation of the Universal Declaration of Human Rights, as first promulgated by the United Nations General Assembly in 1948, continues to be a beacon of light regarding the “recognition of the inherent dignity and of the equal and unalienable rights of all members of the human family”. Unquestionably, such rights serve as “the foundation of freedom, justice and peace in the world” (The Universal Declaration of Human Rights, Preamble). It is this quest for the recognition and application of these rights that remains ever relevant to the twenty-first century global corporate community.The global corporate community is increasingly focused on a balancing of corporate efficiency, worker safety, and marketplace dynamics. The concepts of responsible corporate activity and responsible capitalism are viewed as essential to the dynamic development of an inclusive, global economy. Change is on the way in the global supply chain and leading global corporations engaged in the global economy understand the critical importance of greater vigilance and focus on responsible and effective corporate social responsibility in all parts of the globe and all aspects of global employment.

to respect human rights; (2) a human rights due diligence process to identify, prevent, mitigate and account for how a company addresses its impacts on human rights; and (3) a process to enable the remediation of any adverse human rights impacts the company may have caused or to which it contributed.19 Brands should design their CSR programmes with not only a policy statement, but also with effective mechanisms to implement safety checks. An insightful resource for modelling effective CSR programmes is a United Nations Human Rights Counsel report (HRC report) by Harvard Professor John Ruggie.20 Ruggie designed guiding principles on ways corporations can showcase their commitment to international human rights while doing business in other countries.According to the HRC report, business enterprises have the responsibility to “avoid causing or contributing to adverse human rights impacts through their own activities and address such impacts when they occur”.21

Also, corporations must “seek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships if they have not contributed to those impacts”.22

To fulfil these objectives, Ruggie has developed three essential components for a successful CSR programme.23

Professor Ruggie’s CSR Programme: Three Essential Components

Policy Commitment

The policy commitment should establish the company’s human rights expectations of personnel, business partners and other relevant parties.24 The policy should also be reflected in the company’s operations and procedures to embed the commitment throughout the business structure.25 Ruggie recommends policy approval at the highest level of the business enterprise and public availability to further showcase the company’s true investment in human rights.26

Human Rights Due Diligence

The human rights due diligence process should include:■ Assessing actual and potential human rights due impacts.■ Integrating and acting on the findings.■ Tracking responses.■ Communicating how impacts are addressed.27

Even though a due diligence mechanism will not absolve a corporation of all potential liability, due diligence is an effective tool in avoiding many potential infringements and in showing the company’s commitment to human rights.Ruggie explains: “Conducting appropriate human rights due diligence should help business enterprises address the risk of legal claims against them by showing that they took every reasonable step to avoid involvement with an alleged human rights abuse.”28

Remediation

Typically, governmental organisations or procedures provide redress instruments; however, companies can also provide various remedies. Corporate remedies can include apologies, restitution, rehabilitation, financial or non-financial compensation, and prevention of harm through injunctions or guarantee of non-repetition.29

Shook, Hardy & Bacon L.L.P. Global Employment Standards & CSR


14. Disaster at Rana Plaza, THE ECONOMIST (May 4, 2013), http://www.economist.com/news/leaders/21577067-gruesome-accident-should-make-all-bosses-think-harder-about-what-behaving-responsibly/print.

15. International Labour Organization, Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy (2006), http://www.ilo.org/wcmsp5/groups/public/---ed_emp/---emp_ent/---multi/documents/publication/wcms_094386.pdf.

16. Id.17. ILO Helpdesk for Business on International Labour

Standards, International Labour Organization, http://www.ilo.org/empent/areas/business-helpdesk/lang--en/index.htm.

18. Human Rights Council, Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises, John Ruggie, A/HRC/17/31 (Mar. 21, 2011).

19. Id. at 15. 20. Human Rights Council, Report of the Special Representative

of the Secretary-General on the issue of Human Rights and Transnational Corporations and Other Business Enterprises, John Ruggie, A/HRC/17/31 (Mar. 21, 2011).

21. Id. at 14.22. Id.23. Id. at 15.24. Id.25. Id.26. Id.27. Id. at 16.28. Id. at 17.29. Id. at 22.30. Id. at 29.31. Id. at 26.32. Dan Bobkoff, Would You Pay a Higher Price for

“Ethical” Clothing?, NPR (May 1, 2013), http://www.npr.org/2013/05/01/180154279/would-you-pay-a-higher-price-for-ethical-clothing.

33. Westervelt, supra note 9.34. The Universal Declaration of Human Rights is a declaration

adopted by the United Nations General Assembly on 10 December, 1948 at the Palais de Chailott, Paris.

Endnotes

1. LastWeekTonight, Last Week Tonight with John Oliver: Fashion (HBO), YOUTUBE (Apr. 25, 2015), https://www.youtube.com/watch?v=VdLf4fihP78.

2. Jim Yardley, Report on Deadly Factory Collapse in Bangladesh Finds Widespread Blame, NEW YORK TIMES (May 22, 2013), http://www.nytimes.com/2013/05/23/world/asia/report-on-bangladesh-building-collapse-finds-widespread-blame.html.

3. Yardley, supra note 2; Bangladesh Murder Trial Over Rana Plaza Factory Collapse, BBC NEWS (June 1, 2015), http://www.bbc.com/news/world-asia-32956705.

4. Mohiuddin Kader, Protests Mark Bangladesh Garment Factory Collapse 2 Years Ago, LOS ANGELES TIMES (Apr. 24, 2015), http://touch.latimes.com/#section/-1/article/p2p-83378193.

5. Bangladesh Murder Trial, supra note 3. 6. Id. 7. Accord on Fire and Building Safety in Bangladesh, May

13, 2013, available at https://bangladeshaccord.org/wp-content/uploads/2013/10/the_accord.pdf; Jonathan Fahey & Anne D’Innocenzio, Retailers Face Tough Decisions After Bangladesh Factory Collapse, HUFFPOST BUSINESS (May 12, 2013), http://www.huffingtonpost.com/2013/05/12/retailers-bangladesh-factory_n_3262515.html.

8. Julhas Alam & Farid Hossain, Bangladesh Collapse Search Over; Death Toll 1,127, YAHOO NEWS (May 13, 2013), http://news.yahoo.com/bangladesh-collapse-search-over-death-toll-1-127-122554495.html.

9. Amy Westervelt, Two Years After Rana Plaza, Have Conditions Improved in Bangladesh’s Factories?, THE GUARDIAN (Apr. 24, 2015), http://www.theguardian.com/sustainable-business/2015/apr/24/bangladesh-factories-building-collapse-garment-dhaka-rana-plaza-brands-hm-gap-workers-construction.

10. Kader, supra note 4. 11. Westervelt, supra note 9. 12. Steven Greenhouse, Major Retailers Join Bangladesh Safety

Plan, NEW YORK TIMES (May 13, 2013), http://www.nytimes.com/2013/05/14/business/global/hm-agrees-to-bangladesh-safety-plan.html.

13. Christine Bader, The Bangladesh Factory Collapse: Why CSR is More Important Than Ever, THE GUARDIAN (May 7, 2013), http://www.theguardian.com/sustainable-business/blog/bangladesh-factory-collapse-csr-important.



William C. MartucciShook, Hardy & Bacon L.L.P.1155 F Street, N.W., Suite 200Washington, D.C. 20004-1305USA

Tel: +1 202 783 8400Fax: +1 202 783 4211Email: [email protected]: www.shb.com

The SHB National Employment Litigation & Policy Practice represents corporate employers in complex class action (employment discrimination and wage & hour) and EEOC litigation. Chambers USA: America’s Leading Lawyers for Business describes SHB as: “A Powerhouse. Truly one of the best litigation firms in the nation”. Innovation and collaboration are SHB hallmarks.

Chicago | Denver | Houston | Kansas City | London | Miami | Orange County | Philadelphia | San Francisco | Seattle | Tampa | Washington, D.C.

For more information, contact: William C. Martucci, Partner Shook, Hardy & Bacon L.L.P. 1155 F Street, N.W., Suite 200, Washington, D.C. 20004-1305, USA Tel: +1 202 783 8400 Fax: +1 202 783 4211 Email: [email protected] URL: www.shb.com

Bill serves as the practice group leader of SHB’s National Employment Litigation & Policy Practice, representing corporate employers exclusively. Chambers notes “Bill is worth having on any dream team for employment litigation and policy issues. A preeminent figure in the employment litigation arena”. A graduate of Georgetown Law School and a global strategic policy advisor, he has successfully tried a number of jury cases and resolved a variety of class action cases. His primary practice areas target complex class action (employment discrimination and wage and hour) litigation, EEOC litigation, high-level executive disputes, whistleblowing, and unfair competition litigation. His jury work has been featured in The National Law Journal, while Human Resource Executive/Lawdragon has recognised Bill as one of America’s Most Powerful Employment Lawyers. He teaches Multinational Business Policy and the Global Workplace at Georgetown.



Chapter 3

Deloitte Albania Sh.p.k.

Sabina Lalaj

Ened Topi

Albania

There is no clear-cut division based on the public and private sector criteria, since the Labour Code also governs the employment relationship of certain employees working in the public sector. Under the Labour Code, the following types of employment contracts are regulated:■ full-time and part-time contracts;■ limited and unlimited duration contracts;■ employment agency contracts; ■ individual and collective employment contracts;■ home-based employment contracts;■ commercial agent contracts; and■ apprenticeship/internship contracts.

1.3 Do contracts of employment have to be in writing? If not, do employees have to be provided with specific information in writing?

The employment contract should be concluded in writing. In specific cases, when for justified reasons the contract is not concluded in writing, the employer must, within a period of seven days from the date when the employee is hired, sign the contract in writing. Failure to comply with this requirement may result in a fine for the employer up to 30 times the value of the minimum monthly salary.

1.4 Are any terms implied into contracts of employment?

All of the mandatory provisions of the Labour Code on the non-renounceable rights of the employee are applicable (i.e. right to compensation, time- off, various leaves, safety at work, etc.), despite the lack of regulation in the contract. In addition, the obligation of loyalty, due diligence and care are applicable to the employee without the need to address them specifically in the contractual provisions.

1.5 Are any minimum employment terms and conditions set down by law that employers have to observe?

The employer shall observe the non-discrimination obligation, the right of the employees to be organised in unions, the protection of the employees that denounce corruption, minimum age of employees, health and safety at work, protection of pregnant women, minimal salary, overtime limits, etc.

1 Terms and Conditions of Employment

1.1 What are the main sources of employment law?

The main pieces of legislation governing employment relationships in Albania are the Labour Code and the Law on Civil Servants. Herein below, listed according to hierarchy, are other sources, along with the aforementioned acts:(i) The Albanian Constitution.(ii) Conventions governing employment matters as ratified by the

Republic of Albania. (iii) Law no. 7961, dated 12.07.1995 “The Labour Code of the

Republic of Albania”, as amended (“Labour Code”). (iv) Law no. 152/2013, dated 30.05.2013 “On the Civil Officer”,

as amended (“Law on Civil Servant”).(v) Law no. 10237, dated 18.02.2010 “On Security and Health at

Work”, as amended.(vi) Law no. 9634, dated 30.10.2006 “On Work Inspection”, as

amended.(vii) Law no. 7703, dated 11.05.1993 “On Social Insurance in the

Republic of Albania”, as amended.(viii) Law no. 10383, dated 24.02.2011 “On Obligatory Health

Care Insurance in the Republic of Albania”, as amended.(ix) Law no. 10221, dated 04.02.2010, “On Protection from

Discrimination”. (x) Law no. 9970, dated 24.07.2008, “On Gender Equality”.(xi) Law no. 108/2013, dated 28.3.2013 “On Foreigners”, as

amended.(xii) Secondary legislation (i.e. decisions of the Council of

Ministers and various instructions or orders issued for the implementation of the above).

Another important source are the unifying decisions of the Unified Colleges of the Albanian Supreme Court that serve as mandatory case law for disputes deriving from an employment relationship.

1.2 What types of worker are protected by employment law? How are different types of worker distinguished?

A general distinction can be made among employees engaged in an employment relationship governed by the Labour Code: private sector employees; certain categories of public sector employees; and public sector employees, the latter being civil servants engaged in an employment relationship regulated by the Law on Civil Servants.


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The Labour Code provides protection for the striking employees during the strike period, inclusive of the prohibition of the employer to dismiss or replace the participants in the strike with new employees.

2.4 Are employers required to set up works councils? If so, what are the main rights and responsibilities of such bodies? How are works council representatives chosen/appointed?

The Labour Code does not provide regulations for the establishment of work councils. Law no. 9901, dated 14.04.2008 “On Entrepreneurs and Commercial Companies”, as amended, provides that the council of employees may appoint representatives at board level of the joint stock company, if agreed with the representatives of the company. No other provisions deal with such an issue.The establishment of a safety council and relevant criteria are provided under the Law no. 10237, dated 18.02.2010 “On Safety and Health at Work”. This type of council represents the employees solely in relation to health and security issues at the workplace.

2.5 In what circumstances will a works council have co-determination rights, so that an employer is unable to proceed until it has obtained works council agreement to proposals?

This is not applicable.

2.6 How do the rights of trade unions and works councils interact?


2.7 Are employees entitled to representation at board level?

Please see our answer to question 2.4 above.

3 Discrimination

3.1 Are employees protected against discrimination? If so, on what grounds is discrimination prohibited?

Article 18 of the Constitution of the Republic of Albania provides that we are all equal before the law. No one may be discriminated for reasons such as gender, race, religion, ethnicity, language, political opinions, religious or philosophical beliefs, their economic, educational, social status or parental ethnicity. Exceptions are made in cases where there is a legal and objective reason for such discrimination.Furthermore, article 9 of the Labour Code provides that while exercising the right to employment and exercising their profession, employees are protected against any form of discrimination as provided in the Labour Code or any other sectorial legislation. The same principles for the protection of the employees against any discrimination have also been provided by Law no. 10 221 dated 04.02.2010 “On the protection against discrimination”.The prohibition of discrimination aims to guarantee equal chances in employment to persons who are in objectively similar situations.

1.6 To what extent are terms and conditions of employment agreed through collective bargaining? Does bargaining usually take place at company or industry level?

The collective bargaining agreement contains provisions on employment conditions, on content and termination of the individual employment contracts and on relationships between the contracting parties. The collective contract cannot contain less favourable provisions for the employee than provided for in the applicable legislation. The collective bargaining usually takes place at company level.

2 Employee Representation and Industrial Relations

2.1 What are the rules relating to trade union recognition?

The Labour Code provisions govern the establishment and the rights of the trade unions and professional organisations of employers and employees. It also has to be noted that freedom of association is a right guaranteed by the Albanian Constitution.Trade unions and professional organisations should submit the act of incorporation and the bylaws with the First Instance Court of Tirana, in order to acquire legal personality. The act of incorporation and bylaws of the trade union should be signed by a minimum of 20 founding members, whilst the professional organisation should have a minimum of five founding members. Legal personality is acquired 60 days after the filing, unless the court rules on the rejection of such request.

2.2 What rights do trade unions have?

Trade unions represent their members in negotiations of the collective contracts with the employers, as well as in negotiations regarding the change of terms and conditions of the existing collective employment contracts. Trade unions are further entitled to protect the interests of their members before the courts; in order to oblige, the employer has to observe the provisions of the employment legislation, collective employment contract or individual employment contracts.These organisations may be of a larger level such as federations (i.e. the voluntary union of least two trade unions) and confederations (i.e. voluntary union of least two federations), and may become members of international professional organisations. Based on the Labour Code’s provisions, only the trade unions may organise and announce strikes.

2.3 Are there any rules governing a trade union's right to take industrial action?

The right to strike is also guaranteed by the Albanian Constitution. The Labour Code defines that only trade unions have the right to organise and announce strikes. In practice, such industrial action is used as last a resource by trade unions to enforce the solving of their economic and social requirements. The strike is considered legally compliant when organised by a legally-founded trade union; it aims for either the conclusion of a collective contract or (if it already exists) the fulfilment of those requirements deriving from the employment relationship, not set forth in the collective contract, and the parties (trade union and employer) have made all efforts to solve the issue through mediation and reconciliation.

Deloitte Albania Sh.p.k. Albania


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4 Maternity and Family Leave Rights

4.1 How long does maternity leave last?

The maternity and family leave rights are regulated by the Labour Code, as well as Law no. 7703, dated 11.05.1993 “On social security contributions in the Republic of Albania”, as amended (“Social Security Law”). Pursuant to article 104 of the Labour Code, it is prohibited for pregnant women to work 35 days before and 63 days after birth. When a woman is pregnant with more than one child, the first period becomes 60 days.Furthermore, the Social Security Law, article 27, provides that pregnant women shall benefit from maternity leave payment from the social security contribution scheme for a period of 365 calendar days in total, including a minimum of 35 days before and 63 days after childbirth. In line with article 104 of the Labour Code mentioned above, for a woman who will be pregnant with more than one child, the benefit period shall be a total of 390 calendar days, including a minimum of 60 days before childbirth. Therefore, the maternity leave period is a minimum of 98 days and a maximum of 365 days; or otherwise a minimum of 125 days and a maximum of 390 days if a woman carries more than one child.According to article 105.4 of the Labour Code, after completing the minimum mandatory maternity leave, after the 63-day period following childbirth, a woman may decide by herself if she wants to work or benefit from the social security payment and therefore reach the maximum days of maternity leave, as indicated above.In any case, the right for maternity leave payment is granted to women who have paid social security contributions for at least 12 months. Exception to the requirement of the 12-month insurance period is made in cases where the right for the next maternity leave begins within 24 months from the date of birth of the previous child.Furthermore, with the latest amendments to the Labour Code, as well as the Social Security Law, a special treatment has been introduced for adoptive parents with regards to leave and benefits, similar to those attributed to biological parents. As such, article 106 of the Labour Code stipulates that in case of adoption of a newborn child, the employee has the right to a leave defined by the legislation on social security. The leave for adoption may be used by only one of the adoptive parents.Article 27 of the Social Security Law stipulates the period of the parenting leave in case of adoption. Pursuant to this disposition, the adoptive mother of a child, aged up to one year old, that has paid social security contributions of not less than 12 months, has the right to parenting leave, starting from the day of adoption, not earlier than the 63rd day after childbirth and for a maximum of 330 days after childbirth. In any case, the minimum adoptive leave is 28 days.The biological mother is entitled to maternity leave benefits until the adoption date, in case the child has been adopted during the maternity leave period. In any case, the maternity leave benefits for the biological mother shall be calculated for a period not exceeding 63 days after birth.

4.2 What rights, including rights to pay and benefits, does a woman have during maternity leave?

The Social Security Institute grants to women the following benefits and payments under the social security contributions scheme:

3.2 What types of discrimination are unlawful and in what circumstances?

Discrimination means any kind of distinction, exclusion, restriction or preference, based on race, skin colour, ethnicity, language, gender identity, sexual orientation, political opinions, religious or philosophical beliefs, economic, educational or social status, pregnancy, parentage, parental responsibility, age, marital or family status, residence, health status, genetic predispositions, any kind of disability, HIV/AIDS, joining or belonging to unions, affiliation with a particular group, or in any other case that has the purpose or effect to prevent or make impossible the exercise of the right to employment and occupation, in the same conditions as other employees.

3.3 Are there any defences to a discrimination claim?

The employer against whom the employee has raised a discrimination claim has the burden of proof and should present the relevant evidence to prove that the discriminatory situation does not exist.

3.4 How do employees enforce their discrimination rights? Can employers settle claims before or after they are initiated?

Article 15 of Law no. 10 221 dated 04.02.2010 “On the protection against discrimination” provides that every employee has the right to complain to the employer, the Commissioner for the Protection against Discrimination or to a court if he believes that he has been discriminated against. This provision does not limit the right of appeal to special institutions created in different employment sectors. With such regard, the employee and employer may settle the claims between themselves before starting any administrative or judicial procedure.During the examination of the complaint, the employee has the right to continue working as per the terms of the respective employment contract. The parties may reach an understanding/settlement even after raising the relevant discrimination claims.If the employer does not take action to investigate and resolve a complaint of discrimination, the employee who raised the complaint has the right to stop working, without losing salary, for as long as it is necessary to be protected from such discrimination. The employee must return the salary received as above, if the court through a final decision decides against the existence of the claimed discrimination.

3.5 What remedies are available to employees in successful discrimination claims?

Pursuant to the above-mentioned law, if the claims of the employee for discrimination are based in law, he/she may require to be reinstated in the previous situation or he/she may require indemnification for material or non-material damages or any other appropriate measures.

3.6 Do “atypical” workers (such as those working part-time, on a fixed-term contract or as a temporary agency worker) have any additional protection?

“Atypical” employees are entitled to the same rights for protection against discrimination as any other full-time employee.



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Furthermore, article 108 of the Labour Code stipulates requirements and conditions regarding working night shifts for mothers until the child reaches the age of one. In this regard, it is provided that the employer cannot require from a mother to carry out work during night shifts, in the case a medical report certifies that such work may endanger the health of the mother and child. The same protection and benefits as those attributed to mothers working under hazardous working conditions, as provided in the above paragraph, are also applicable to work during night shifts.

4.4 Do fathers have the right to take paternity leave?

The latest amendments to the Labour Code and Social Security Law introduced additional rights for the father. Article 96.3 of the Labour Code provides that a father, being a spouse or a partner living with the mother, is entitled to three days of paid leave.Furthermore, the Social Security Law, under point 7 of article 27, provides that the right of maternity leave after the period of 63 days after birth, in case the mother does not fulfil the necessary insurance requirements or does not wish to exercise such right, can also be granted to the father or adoptive male parent, if he is insured.

4.5 Are there any other parental leave rights that employers have to observe?

Article 132/1 of the Labour Code determines other parental leave rights. Under such provision, the employee, who has more than a year of continuous employment with the same employer, is entitled to an unpaid leave of no less than four months, until the dependent child reaches the age of six. The right to request parental leave for each parent is individual and not transferable, except when one of the parents dies. The leave may be granted partially, but in any case no less than one week a year. The duration is determined through a written agreement between the employer and employee.In case of adoption, such parental leave is granted within six years from the date of adoption of the child, but no later than when the child reaches the age of 12.In addition, the Labour Code provides for special protection with leave benefits for a mother during pregnancy, such as: 1. In case the job position consists of standing or leaning for a

long period of time, paid breaks of 30 minutes for every three hours of work.

2 In agreement with the employer, the pregnant employee has the right to paid breaks for attending medical examinations during working hours.

4.6 Are employees entitled to work flexibly if they have responsibility for caring for dependants?

With regards to flexibility on working hours because of caring for a child, the Labour Code does not provide any specific provisions. However, under article 132 of the Labour Code, employees that take care of dependents have several benefits, as follows:1. Up to 12 days of paid leave per year. 2. When the dependent children are three years’ old, up to 15

days of paid leave per year, provided that the sickness of the children is proven by a medical report.

3. Additional sick leave for up to 30 days, not paid. The right of sick leave for the dependents is granted to the parent that is effectively involved with the taking care of the child, or otherwise to both parents, one after the other.

1. The right for maternity leave payment for each case of pregnancy, for women who have paid social security contributions for at least 12 months. Exception to the requirement of the 12-month insurance period is made in cases when the right for the next maternity leave begins within 24 months from the date of birth of the previous child (article 27 of the Social Security Law).

The payment for maternity leave for insured women is calculated as below:a) 80 per cent of the daily average net assessment base of the

last 12 months, starting from the date the right of payment before birth has started and 150 calendar days after birth.

b) 50 per cent of the daily average net assessment base of the last 12 months starting from the date the right of payment before birth has started, for the period thereafter.

2. A woman insured for at least 12 months that, pursuant to a decision of the competent medical committee, has changed workplace because of her pregnancy has the right to obtain compensation for the reduction of income incurred because of this change, if any, provided that she has paid social security contributions of not less than 12 months (article 28 of the Social Security Law).

3. A remuneration for childbirth is granted to an insured mother that has paid social security contributions for one year prior to childbirth. This remuneration is a one-time payment, equal to 50 per cent of the minimum monthly wage (article 29 of the Social Security Law).

In addition, a special protection is granted to pregnant or lactating women through articles 104.2 and 108 of the Labour Code, which provide that they cannot be employed to carry out hazardous or dangerous works, or works during night shifts, that can harm their or their child’s health.

4.3 What rights does a woman have upon her return to work from maternity leave?

Article 104.4 of the Labour Code provides that after completing the maternity leave, the employee has the right to return to the same work position or an equivalent one under no less favourable working conditions, and benefit from any improvement of her working conditions that she would have benefitted from during her absence. The same provision is also applicable for the parent who has benefitted from the adoption leave.Specifically, according to article 105 of the Labour Code, in case the decision of the mother is to return to work after the 63-day period following childbirth, in agreement with the employer and for the purpose to feed the child until he/she reaches the age of one year old, she has the right to choose between:a) a paid break, two hours within normal working hours; orb) daily normal working hours reduced by two hours, payable as

if it was a full working day.The Labour Code offers special protection regarding the working conditions for a mother. In this regard, after returning to work from childbirth, the employer shall ensure that the working conditions are suitable and safe, and in accordance with the provisions of the legislation for health and safety at work. In this regard, the employer shall take any necessary measures for the interim adaption of the working conditions and working hours for the purpose to avoid any risk towards the employee and the child. In the case that such adaption is not possible for technical reasons and a possible transfer in a similar job is impossible to be achieved, the employee shall benefit from the protection offered by the legislation on social security contributions (maternity leave and payment as per points 1 and 2 of question 4.2 above).



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period, each party may terminate the employment contract upon a notification delivered to the other party at least five days in advance.Furthermore, pursuant to article 143 of the Labour Code, the following notification periods are applicable for each party (i.e. employer or employee) that intends to terminate the employment contract:i. Two weeks for the first six months of employment.ii. One month for more than six months and up to two years of

employment. iii. Two months for more than two years and up to five years of

employment.iv. Three months for more than five years of employment.Such term is suspended due to disability, maternity leave or during holidays given by the employer and resumes upon expiration of such suspension. Additionally, during the notice period, the employee shall benefit from at least 20 hours paid leave per week, in order to seek another job.

6.2 Can employers require employees to serve a period of "garden leave" during their notice period when the employee remains employed but does not have to attend for work?

The employment relationship terminates at the end of the notice period; however, the parties may agree that the employee, although being ‘formally’ under contract, is released from obligation to discharge his/her duties.

6.3 What protection do employees have against dismissal? In what circumstances is an employee treated as being dismissed? Is consent from a third party required before an employer can dismiss?

There are different levels of protection, spanning from the grounds of termination to the procedure of the termination itself. As for the grounds of termination, article 143 paragraph 3 of the Labour Code stipulates that the decision of the employer on termination should be for grounds related to the employee’s performance, behaviour or operational needs of the company. Moreover, the employee cannot be dismissed for the so-called unreasonable grounds listed under article 146 of the Labour Code. With regard to the procedure to be followed, the employer is bound to follow the termination procedure detailed under question 6.6 below. The employee is considered dismissed in the case the employer has terminated the employment contract (i.e. with the elapsing of the notice period or with immediate effect in case of dismissal for justified grounds). Generally, no third party consent is required for an employee’s dismissal; however, exception is made in case of employees being representatives of trade unions. In the latter case, the employer should request the consent of the trade union, and the latter might withhold its consent should the dismissal heavily impair or make impossible the operation of the trade union, or violate the principle of equal treatment.

6.4 Are there any categories of employees who enjoy special protection against dismissal?

According to the provisions of the Labour Code, an employer cannot terminate the employment contract of: i. employees benefiting from allowances for temporary

disability from the employer or Social Security Institute, for a period of time of up to one year; and

ii. employees on a vacation granted by the employer.

5 Business Sales

5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the buyer?

According to article 138 paragraph 2 of the Labour Code, the partial or the complete business sale (share sale or asset transfer) would not affect the rights and obligations deriving from the employment contract in force up to the moment of transfer. The same paragraph stipulates that the employee is obliged to follow the new employer up to the termination of the notice period, even in the case he/she is against the transfer.

5.2 What employee rights transfer on a business sale? How does a business sale affect collective agreements?

As indicated under questions 5.1, all rights and obligations arising out from employment contracts in force at the moment of transfer will pass to the new employer.

5.3 Are there any information and consultation rights on a business sale? How long does the process typically take and what are the sanctions for failing to inform and consult?

Both the transferor and the transferee have the duty to inform the trade union (recognised as the representative body of the employees), or in its absence the affected employees, on the transfer, especially on the reason of the transfer, legal, economic and social consequences and measures that will be carried out from them. The obligation on information and consultation should be carried out regardless of whether the decision on the transfer is made by the employer or another controlling entity. The notification has to be made at least 30 days from the transfer date (i.e. consultations should be carried out within the same period).

5.4 Can employees be dismissed in connection with a business sale?

Generally, the dismissal of employees based on the business sale grounds is considered null and void. However, there exist some exceptions, such as dismissals based on economic, technological or structural reasons, which do require changes in the employment plan. In the latter case, the procedure and rules as detailed in the following section 6, Termination of Employment, must apply.

5.5 Are employers free to change terms and conditions of employment in connection with a business sale?

The Labour Code stipulates that the transferor and transferee are obliged to observe the obligations deriving from the employment contract until the end of the notice period or the term set out in the employment contract.

6 Termination of Employment

6.1 Do employees have to be given notice of termination of their employment? How is the notice period determined?

During the first three months of employment, considered as a probation



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Moreover, for cases of immediate termination of employment without justifiable cause, the employee is entitled to the salary it should have received during the notice period or until the end of the employment contract (in case of contracts with limited duration). An indemnification, not exceeding one year of salary, plus the relevant seniority bonus (if applicable) will also be included. The same will apply for breaches of the notice period.

6.8 Can employers settle claims before or after they are initiated?

Yes, both options are applicable.

6.9 Does an employer have any additional obligations if it is dismissing a number of employees at the same time?

Based on article 148 of the Labour Code, a collective dismissal of employees occurs when the employer terminates the employment for reasons that are not related to the employees. It is considered as collective employment termination when, within 90 days, the employer dismisses at least 10 employees for enterprises having up to 100 employees, 15 employees for enterprises having from 100 up to 200 employees and 20 employees for enterprises having more than 200 employees.The employer should notify the employees’ trade union, which represents the employees, or in case there is no such union, the employer should publish a notification in the working place. Such notification should indicate, especially: (i) the reason for termination;(ii) the number of employees to be dismissed; (iii) the total number of employees employed; and (iv) the period when the terminations shall occur. Furthermore, such notification should also be delivered to the competent ministry for employment. The employer should meet and consult with the employees’ union, or if there is no such union, with the respective employees. Such consultations are being held for at least 30 days, starting from the notification date, except in the case the employer agrees for a longer duration. Upon conclusion of the consultations with the employees’ union or the employees, the employer should notify the competent ministry. In case the employer and the union or the employees have not reached any agreement, the ministry should assist the parties in reaching an agreement within 30 days from the date the ministry is notified for the conclusion of the consultations with the employees’ union or the employees. The ministry cannot halt the collective dismissal. In case no agreement has been reached, the employer may continue with the collective dismissal procedures. The notice period indicated under question 6.5 above will apply.The employer failing to respect the procedure of the collective dismissal from work is obliged to pay the employee a damage, which is equal to six months’ salary (other damages compensation of up to one year of salary are due in case the employer fails to respect the notice period).It is to be noted that the employer should give priority to the re-employment of the employees dismissed from work for reasons that have nothing to do with the employees, if the employer employs employees of comparable qualification.

6.5 When will an employer be entitled to dismiss for: 1) reasons related to the individual employee; or 2) business related reasons? Are employees entitled to compensation on dismissal and if so how is compensation calculated?

The employer is entitled to dismiss for reasons related to performance, behaviour or for the operational needs of the company. In this case, an employee is entitled to the following: i. Notice period.

a. two weeks for the first six months of employment; b. one month for more than six months and up to two years

of employment; c. two months for more than two years and up to five years

of employment; andd. three months for more than five years of employment.

ii. Seniority bonus, in the case the employee has served at least three years. The seniority bonus is not less than the employee’s salary for 15 days for each employment year calculated on the salary at the moment of the termination of the employment contract.

iii. Accrued annual leave.On the other hand, in the case an employee has been dismissed with immediate effect for justified causes, which do not allow the continuation of the employment on a good faith basis, the latter will be entitled to receive only the accrued leave. In any case, the grounds leading to the termination with immediate effect will be checked by the judge, should the employee bring the case in front of the courts.

6.6 Are there any specific procedures that an employer has to follow in relation to individual dismissals?

Article 144 of the Labour Code establishes that before termination of the contract, the employer should deliver a prior notification to the employee, requiring a meeting to discuss its intentions to terminate the employment. At least 72 hours from the delivery of the notice, a meeting must take place in order to discuss the intention of terminating the employment. In the meeting, the employee presents its counterarguments (if any). Should the employer fail to comply with such procedure of termination, he might be liable to pay to the employee a penalty equal to two monthly salaries. The decision for termination of the employment is notified in writing to the employee starting from 48 hours and up to one week after the date of the meeting.

6.7 What claims can an employee bring if he or she is dismissed? What are the remedies for a successful claim?

The employee can address the court and challenge the dismissal for procedural breaches and/or material breaches. Should the employer fail to comply with the termination procedure, the employee must be indemnified with two monthly salaries. On top of that, in case of termination without reasonable cause, the employee can be indemnified with up to one year of salary, the salary that the employee should have received during the notice period, plus the accrued annual leave, and the relevant seniority bonus (if applicable).



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no. 9887, dated 10.03.2008 “On Personal Data Protection and Freedom of Information” as amended (“Law on Personal Data Protection”) and respective secondary legislation (jointly, the “Legislation on Personal Data Protection”).To this effect, article 35 of the Albanian Constitution sets out, inter alia, that the collection and public disclosure of personal data is allowed only upon approval of the data subject (i.e. employee), unless provided for otherwise by letter of law. Furthermore, according to article 35 of the Labour Code, the employer, during the employment relationship, has, inter alia, the following obligations with regards to the protection of employees’ personal data and/or information:(i) The employer should not process employees’ information

(i.e. data), except when such information is related to the professional capabilities of the employee or is necessary for the applicability of the employment contract.

(ii) The employer should take the relevant security measures to protect employees’ personal data, especially the sensitive data (i.e. employees’ data concerning provenience, race, ethnicity, political opinions, adherence in trade unions, religious or philosophic beliefs, criminal conviction, health and sexual life), in accordance with the legislation on personal data protection.

(iii) The employer must protect the confidentiality and credibility of employees’ personal data. Such data should not be divulged, unless otherwise provided for by letter of law. Such obligation survives the duration of the employment relationship and is not limited in time.

(iv) The employer should retain the personal data processed in an employee’s file up to the termination of the employment relationship. Personal data processed in excess of this term is allowed only upon consent of the employee.

Additionally, the legislation on personal data protection reinforces the obligation of the employer (i.e. in the quality of the data controller) for obtaining an employee’s consent prior to processing the personal data of the latter.In addition, such legislation sets out through several acts of the Commissioner for Freedom of Information and Personal Data Protection (“Commissioner”) the obligation of the employer to take precautionary measures regarding the safety of personal data of their employees. Regarding the cross-border transfer of an employee’s personal data, the Labour Code does not contain any specific provision dealing therewith. However, paragraph 3 of article 35 of the Labour Code stipulates that the employer is not entitled to disclose the information (including the personal data) of an employee to any third party (inside and/or outside the country), unless consented by the employee him/herself or as provided for otherwise by the letter of law. To such an end, the general rules on personal data cross-border transfer, as per the legislation on personal data protection, shall apply in the ambit of employment relationships as well.According to articles 8 and 9 of the Law on Personal Data Protection, the cross-border transfer of personal data (to countries with and/or without adequate level of personal data protection – as determined in virtue of Commissioner’s decision) is allowed, inter alia, in the following cases:a) If consented to by the employee.b) Is necessary for the purpose of realisation of the relevant

contract in place between the data controller and the data subject or for purpose of implementation of the pre-contractual measures, taken upon request of the data subject, or if the transfer is necessary for the fulfilment or realisation

6.10 How do employees enforce their rights in relation to mass dismissals and what are the consequences if an employer fails to comply with its obligations?

Employees may address the competent court and ask for damage relief.

7 Protecting Business Interests Following Termination

7.1 What types of restrictive covenants are recognised?

Based on the provisions of the Labour Code, during the period of employment, the employee cannot perform paid work for third parties, which harms or competes with that of the employer. Additionally, the employee, during and after conclusion of his/her employment, is bound by secrecy with regard to the manufacturing and business secrets of the employer. Article 28 of the Labour Code stipulates for the possibility to enter into a non-to-compete agreement by which the employee undertakes, following conclusion of the relationship with the employer, not to compete and especially not to establish a competitive enterprise, work for, or gain an interest from it.

7.2 When are restrictive covenants enforceable and for what period?

As indicated in the first paragraph of question 7.1 above, the employee is prohibited to work for third parties, or undertake work that harms or competes with that of the employer, during the entire period that they are under contract with the employer.As for the non-to-compete agreement, in order for it to be enforced, the following conditions should apply:i. The employee is at least 18 years old.ii. The employee has knowledge of the manufacturing/business

secrets.iii. The employee should receive a remuneration of at least 75

per cent of the salary he/she would have received in case of continuation of the employment.

The agreement is only valid for one year.

7.3 Do employees have to be provided with financial compensation in return for covenants?

Please refer to the answer to question 7.2.

7.4 How are restrictive covenants enforced?

Restrictive covenants are enforceable before the courts. Employees found in breach will be liable for damage relief.

8 Data Protection and Employee Privacy

8.1 How do employee data protection rights affect the employment relationship? Can an employer transfer employee data freely to other countries?

The protection of employees’ personal data and privacy is guaranteed by the Albanian Constitution, the Labour Code, Law



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limited to, the criminal records) might take place, inter alia, upon consent of the data subject. Save for the above, the processing of criminal records should be also assessed in view of the legislation on the protection against discrimination. To this effect, article 12 of Law no. 10 221, dated 04.02.2010 “On Protection Against Discrimination”, in harmony with article 5 of the Labour Code, prohibits any form of discrimination (i.e. any distinction, exclusion, restriction or preference based on, inter alia, gender, race, ethnicity, economic, educational or social state, political opinions, or any other cause (i.e. criminal background), which has the purpose of causing the hindering of or making impossible the exercising of the employment right) in relation to the recruitment of employees.Such distinctions, exclusions, restrictions or preferences shall not be considered as discrimination if, due to the nature of the professional activities, or the conditions under which the profession or the activity (of the employer) is being performed, such characteristic (i.e. criminal background) forms a true and professionally necessary requirement for employment, upon the condition that the different treatment is lawful and in accordance with the principle of proportionality.In light of the above, the criminal background check, in the pre-hiring phase, might be conducted in accordance with the mandatory provisions of all of the above-mentioned legal acts, and, especially, if this is justified by the scope of the recruitment.

8.4 Are employers entitled to monitor an employee's emails, telephone calls or use of an employer's computer system?

Albanian legislation does not deal explicitly with such subject matter. Moreover, to the best of our knowledge, such issue has not been tested before any public authority and/or court.However, this might be assessed on the basis of the rights and obligations that the employer and the employee have in virtue of the applicable legislation (including, but not limited to, the Labour Code).The Labour Code sets out several obligations that the employee should accomplish during the employment relationship, what the accomplishment might be, subject to the monitoring actions on the part of the employer.In this view, according to article 23 of the Labour Code, the employee must perform his/her tasks as per the orders and/or instructions of the employer and to the best interest of the latter. The employee should carry out diligently his/her job and use with due care, and in accordance with the rules set out by the employer, the equipment, devices and other means made available by the employer (article 24).Moreover, the employee is obliged to protect the best interest of the employer and, especially, preserve the secrecy of the fact and/or information received by the employer, as requested by the latter (article 26). Additionally, as mentioned in question 8.1 hereinabove, the employer is allowed to collect, during the employment relationship, any information about the employee that relates to the professional capabilities or to the applicability of the employment contract.Therefore, it might be considered a lawful and reasonable right of the employer to monitor, supervise, and become aware of (including through the communication means made available to the employee by the employer itself) the compliance of the employee with the

of a contract in place between the data controller and a third party, which is in the interest of the data subject.

c) Is necessary for the protection of the vital interests of the data subject.

d) Is necessary or constitutes a legal requirement for an important public interest or for the exercising and protection of a legal right.

e) Is done through a public register.f) Is authorised by the Commissioner (as per the procedure set

out through the acts of the latter).As per the above, the cross-border transfer of personal data of the employee should take place in compliance with the applicable legislation.

8.2 Do employees have a right to obtain copies of any personal information that is held by their employer?

Yes. According to article 35 of the Constitution, everybody is entitled to be informed about the his/her personal data that is processed by any third party, and request the correction or deletion of untrue or incomplete or unlawfully processed personal data.Furthermore, according to article 12 of the Law on Personal Data Protection, any data subject is entitled to receive from the data controller, free of charge, upon written request addressed to the latter, inter alia, the following information:(i) Confirmation of whether their personal data is being

processed or not, information regarding the scope of the processing, the categories of processed data, as well as the data receivers and categories thereof.

(ii) The personal data and the available information about the source thereof.

Additionally, any data subject is entitled to request the blocking, correction or deletion of his/her data, free of charge, whenever becoming aware that his/her data is incorrect, untrue, incomplete or have been processed in violation of the provisions of the law (article 13 of the Law on Personal Data Protection).

8.3 Are employers entitled to carry out pre-employment checks on prospective employees (such as criminal record checks)?

According to Commissioner’s instruction no. 42, dated 22.07.2014 “On Processing of Personal Data of Employment Candidates”, the employer is entitled to process the personal data of employment candidates, inter alia, only if their use is lawful and to the extent that such data is necessary for the scope of recruitment (article 2).When processing the personal data of (or performing pre-employment checks on) a candidate, the employer is obliged to inform the latter, through the written declaration on recruitment privacy policies, about the requirements of the applicable legislation regarding the protection of personal data (articles 2 and 7). This means that the employer might perform the pre-employment checks, personally, on the relevant candidates, and in compliance with the provisions of the legislation on personal data protection (including, but not limited to, through obtaining the consent of the candidates).The employer is not entitled to process personal data of individuals, if there is no vacancy at all (at the moment of publication of the relevant announcement), or by having the scope of data processing solely for the testing of the labour market (article 4).In addition, article 7 of the Law on Personal Data Protection stipulates that the processing of sensitive data (including, but not



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The court may comprise a panel of three judges should the dispute amount be higher than ALL 20 million (approx. EUR 147,000) and the creation of the panel is required from one of the disputing parties. During the appeal, the court panel comprises three judges. In the Supreme Court, the case is examined by a panel of three judges for cases judged by a single judge in the first instance and five judges in other cases.Any dispute to an employment relationship, when the employee is part of the public administration, shall be subject to the jurisdiction of the Administrative Courts of the Republic of Albania. In relation to employment disputes, the cases are judged by a single judge in the first instance, three judges in the Administrative Appeal Court and five judges in the Administrative Panel of the Supreme Court.

9.2 What procedure applies to employment-related complaints? Is conciliation mandatory before a complaint can proceed? Does an employee have to pay a fee to submit a claim?

Employment-related complaints may be filed with the competent court within 180 days from the termination of the employment/damage suffered. There is not any mandatory conciliation procedure to be followed prior to the filing of the lawsuit. The official fees applicable to employment-related complaints actually vary from ALL 0 up to ALL 3,000 (approximately EUR 22).A new draft law is being prepared in relation to court-related fees, and such amounts are expected to change.

9.3 How long do employment-related complaints typically take to be decided?

Employment-related complaints typically take up to six months to be decided in the civil court and approximately three months in the administrative court.

9.4 Is it possible to appeal against a first instance decision and if so how long do such appeals usually take?

First instance court decisions are challengeable before the competent civil or administrative court of appeal. The decision may take approximately one year.

employment contract and the abovementioned provisions of the Labour Code. In any case, it is crucial for the lawfulness of the monitoring process that the employee is aware of such activity.On the other hand, article 36 of the Constitution stipulates that the freedom and confidentiality of the correspondence and of any other communication means is guaranteed. To such an end, article 123 of the Criminal Code sets out, inter alia, that the intentional monitoring (placement under control) or interception of telephone calls or any other communication means constitutes criminal contravention and is punishable with a fine or up to two years of imprisonment. In light of the above, the employer is entitled to exercise its monitoring rights (inter alia, through the communication means and/or equipment that the latter has made available to the employee) without violating the privacy rights of the employee. Otherwise, the monitoring process would be unlawful.

8.5 Can an employer control an employee's use of social media in or outside the workplace?

This subject matter, as mentioned in question 8.4, is not explicitly regulated by labour legislation and has not been tested, to the best of our knowledge, before any public authority and/or court. Social media represents a fully private domain of an employee’s life and it is exclusively his/her right to use such communication means as the latter might consider appropriate. The use of communication means is, in general, related to the freedom of speech, which constitutes a constitutional right of any citizen (article 22 of the Constitution) and the freedom and confidentiality of the correspondence of the communication means (article 36 of the Constitution).Based on the above, the employer cannot control how the employee uses his/her social media, both inside or outside of the workplace. Notwithstanding the foregoing, the employer would be entitled to restrict the use of such media through the equipment and/or devices that are property of the latter, and which have been made available to the employee, by the employer, for the purpose of the performance of his/her contractual tasks.Additionally, the employer might set out specific rules in connection with the use of social media, emphasising the various obligations of the employee (duty of care, protecting the interest of the employer, etc.) in the ambit of the employment relationship.

9 Court Practice and Procedure

9.1 Which courts or tribunals have jurisdiction to hear employment-related complaints and what is their composition?

Any dispute related to employment relationships involving private parties shall be subject to the jurisdictions of the District Civil Courts of the Republic of Albania. As a rule at the First Instance Court, the cases are judged by a single judge.



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Sabina Lalaj Deloitte Albania Sh.p.k.Rr. ElbasanitPallati Poshte F. Gjeologji- MinieraTirana, 1001Albania

Tel: +355 4 45 17 927 Email: [email protected] URL: www2.deloitte.com/al/en

Ened TopiDeloitte Albania Sh.p.k.Rr. ElbasanitPallati Poshte F. Gjeologji -MinieraTirana, 1001Albania

Tel: +355 4 45 17 906Email: [email protected] URL: www2.deloitte.com/al/en

Deloitte Albania Sh.p.k. is an affiliate of Deloitte Central Europe Holdings Limited, the member firm in Central Europe of Deloitte Touche Tohmatsu Limited. Deloitte Albania Sh.p.k., founded in 1996, has extensive knowledge of the local market and of best practices from around the world. With more than 20 years of operations in Albania, Deloitte Albania Sh.p.k. is a reputable firm and enjoys the distinction of being the leading professional services organisation in the country, delivering world-class assurance, tax, legal, consulting, financial advisory and technology services. The practice serves many of the country’s largest companies, public institutions and successful fast-growing companies.

In 2011, Deloitte Albania and Deloitte Kosovo agreed on a closer cooperation by forming the Deloitte Albania & Kosovo cluster. Comprising over 300 people across the two offices, this collaboration enables Deloitte Albania & Kosovo professionals to use their combined size, scale and expertise to offer a greater breadth and depth of service to our clients where and when they are needed.

Sabina is the Senior Legal Manager in the Tax & Legal Department of Deloitte Albania. She joined our practice in 2015 from a leading law firm in Albania. She specialises in employment law, corporate law, project finance, real estate, public procurement, mergers and acquisitions, concessions, privatisations, energy, banking and construction law. Sabina is continuously involved in providing legal advice both in Albania and Kosovo. She is an author of several papers and chapters in international legal publications such as The International Comparative Legal Guides and International Law Office. Sabina graduated in Law from Tirana University in Albania (2000), and obtained a Master’s of Arts degree in South East European Studies at the National & Kapodistrian University of Athens, Greece (2001). Sabina has been a member of the Albanian Bar Association since 2003.

Ened is a Manager in the Tax & Legal Department of Deloitte Albania. He joined our practice in 2015 from a leading law firm in Albania. Ened has more than eight years of experience in employment, corporate law, project and corporate finance, mergers and acquisitions, competition, construction, concessions, intellectual property, consumer and data protection law, etc. He is an author of several papers and chapters in international legal publications such as The International Comparative Legal Guides and International Law Office. Ened graduated in Law from the University of Macerata, Italy (2006), and holds a Master’s degree in Euro-Mediterranean Studies in Commerce and Social-cultural Cooperation from the University of Macerata, Italy (2007). He is a member of the Albanian Bar Association and an authorised Trademark & Industrial Design Representative.



Chapter 4

FCB Sociedade de Advogados

Inês Albuquerque e Castro

Susana Bradford Ferreira

Angola

agreement is required, such as employment agreements entered into with foreign employees, internship agreements, employees hired to render work on vessels or domestic employees.The employment relationship may be governed by specific clauses set forth in the employment agreement, provided that they do not undermine any statutory obligations and do not offer less protection to the employee than the General Labour Law. Additionally, employment agreements must contain the following information: (i) full names and addresses of the parties; (ii) the employee’s professional classification and professional occupational category; (iii) place of work; (iv) weekly duration of regular work; (v) amount, means and period of salary payment, and details of additional payments; (vi) hiring date; (vii) place and date of the agreement; and (viii) signatures.


Yes, all employment relationships implicitly include the employer’s obligation to provide work, to pay for the work and to provide a safe working environment for its employees. As for the employee, every employment agreement implies that the employee will carry out the work and be loyal to his employer. Additionally, employment agreements are always subject to an implied probation period, unless the parties choose to reduce or exclude it, in writing.


The General Labour Law sets forth minimum mandatory employment conditions, which the employment agreements have to comply with, such as minimum wages, holidays, termination of employment agreements and maximum working hours.


Collective bargaining may take place both at company and industry level, and cannot establish employment conditions that may breach mandatory provisions of the law. However, in practical terms, there are very few collective bargaining agreements in force.



The Angolan Constitution establishes in its Chapter III (Economic, Social and Cultural Rights, and Duties) a number of fundamental rights and principles, such as the right to work, freedom of association (trade unions) and the right to strike. Additionally, the General Labour Law (Law No. 7/15, of 15 June 2015) is the main statute that governs all aspects of employment relationships in Angola. The recruitment and hiring of foreign non-resident employees are mainly regulated by Decree No. 5/1995, of 7 April 1995, and Decree No. 6/2001, of 19 January 2001.Collective Labour Law is governed by the Law on the Right to Collective Bargaining (Law No. 20-A/92, of 14 August 1992), the Trade Union Law (Law No. 21-D/92, of 28 August 1992) and the Strike Law (Law No. 23/91, of 15 June 1991).Furthermore, collective bargaining instruments, individual agreements and labour customs of each profession, sector or company are also sources of employment law.There are also international conventions that apply to Angola, which affect employment relationships.


All employees are protected by Angolan Labour Law. Nevertheless, there are specific regulations applicable to certain types of employees, such as domestic employees.The main factor of distinction between employees in Angola, besides the type of agreement entered into with the employer, is nationality, as there are specific legal provisions applicable to foreign employees. In fact, Angolan labour law sets out two categories of employee:■ national and foreign resident employees; and■ foreign non-resident or expatriate employees, who are subject

to complex immigration restrictions and specific recruitment and hiring rules.


As a rule, an employment agreement does not have to be in writing. Nevertheless, there are some cases where a written employment


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The law does not set forth a minimum or maximum percentage of employee representation. The election of governing bodies or representatives of a works council must be made according to the rules set forth in the respective by-laws, freely approved by its members.Works council members are also entitled to time off amounting to four or five hours per month (depending on the size of the company) to proceed with their rights or responsibilities as employee representatives.


The Angolan legal framework only provides for rights of trade unions and not for works councils. Therefore, there are no circumstances that may prevent employers from proceeding without obtaining a works council agreement.


Works councils and trade unions operate by different principles and objectives, with different frameworks. Specifically, trade unions have a specific set of rights, which does not happen with works councils.


No, they are not.

3 Discrimination


Yes. The Angolan Constitution establishes that all citizens have the same social dignity and are equal before the law and that no-one shall be privileged, benefited, harmed, deprived of any right or exempted from any duty because of descendancy, sex, race, language, territory of origin, religion, political or ideological convictions, education, economic situation or social status. Moreover, the General Labour Law also foresees the same general prohibition of discrimination, including protection against discrimination based on marital status and union representatives.


Discrimination based on the situations mentioned in question 3.1, either direct or indirect, is unlawful. Direct discrimination occurs whenever an employee is treated less favourably than another employee in a comparable situation, and due to one of the reasons set out above. Indirect discrimination takes place when, in an apparently neutral provision, criterion or practice, an employee is put at a particular disadvantage.


Facing a discrimination claim, the employer may claim before the



The Angolan Constitution recognises the freedom of association (liberdade sindical) in order to defend individual and collective interests of employees. However, the Trade Union Law (Law No. 21-D/92, of 28 August 1992) does not set down any rules or procedures for union recognition by employers. As soon as a union is incorporated and registered with the Ministry of Justice and has affiliated employees, it may represent employees. The law sets out no minimum or maximum percentage of employee representation.


Trade unions have the right to: (a) conclude collective bargaining agreements under the law; (b) exercise the right to collective bargaining in accordance with the provisions of law; (c) conduct within the framework of current legislation all forms of struggle to seize the interests of employees; (d) issue preliminary opinion on legislative measures relating to the employees’ interests; (e) ensure compliance with labour legislation and collective bargaining agreements and report violations of employees’ rights; (f) promote the defence of employees’ individual and collective rights; (g) provide economic, social, cultural and professional services to their members, or establish institutions for this purpose; (h) promote trade union meetings; (i) request information necessary to proceed with the trade union’s interests; (j) issue opinion on internal regulations ruling on management of human resources, particularly when related to working hours, wage policy and protection of employees regarding health and social security; and (k) post information within the company’s premises that may be important for the employees.Additionally, employees are entitled to four paid working days per month to perform duties of a trade union’s executive body. Union delegates are also entitled to time off amounting to four or five hours per month (depending on the company’s size) to proceed with trade union-related matters.

2.3 Are there any rules governing a trade union’s right to take industrial action?

Yes. The right to strike is set forth in Angolan Law. Law No. 23/91 of 15 June 1991 sets forth the provisions that govern the necessary proceedings to implement a lawful strike.


The Trade Union Law sets down no rules or procedures for setting up works councils. Nonetheless, pursuant to the freedom of association, the employees are free to create works councils (hereby taken as representative committees at company level). Therefore, employees have the right to create, in each company, works councils to promote the defence of individual and collective interests and rights of employees. As soon as the works council is incorporated and has affiliated employees, it may represent employees before the employers.

AngolaFCB Sociedade de Advogados


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have the same rights as before the maternity leave. Moreover, during pregnancy and until one year after resuming work, the employee is entitled to protection against termination, unless she commits a serious disciplinary offence that determines the immediate impossibility of maintaining the employment relationship.Pregnant employees and new mothers, until 15 months after childbirth, may terminate the employment agreement for duly proven health reasons with a notice period of one week. Until 15 months after childbirth, employees are also entitled to be absent from work for one day per month to take care of their child and accompany her health status.


No, only women are entitled to parental leave. Fathers are only entitled to one day of absence for the birth of each child.


While breastfeeding, the mother is entitled to daily leave, in two distinct periods of 30 minutes each, in the case that the child is kept on the premises of the company or work centre. In the case that the child is not kept on the company’s premises, the employee may extend her lunch hour by one hour or, alternatively, she may reduce her normal work hours (at the beginning or at the end of the working day), without loss of remuneration or any benefits, during the whole period of feeding, up to one year.Furthermore, female employees may enjoy one additional vacation day for each child under 14 in their care.


Yes, the employee is entitled to time off from work, for up to one day a month, during pregnancy and until 15 months after childbirth, to provide child care.On the other hand, the General Labour Law establishes that employees have the right to eight paid days per year of justified absence in case of illness or accident of a member of the respective family aggregate, within which children under 18 years old are included. The duration of absence may be extended upon the employee’s request. However, absences resulting from such extension shall not be remunerated.Furthermore, female employees may also request to work part-time (in the case that she has family responsibilities), with a respective salary reduction, and are also entitled to special conditions on working hours.

5 Business Sales


As a rule, on a business sale, by asset transfer, the position of the employer on the employment agreements is automatically transferred to the buyer.Nevertheless, the business sale may determine the termination of the employment agreement provided that the employee gives notice of

competent authorities that the different treatment is justified, and, therefore, does not constitute an unlawful form of discrimination.Defence against discrimination claims may differ depending on whether the employee sued over direct or indirect discrimination. Against direct discrimination claims, the employer may argue, for instance, that the nature of the activity or the context of its performance requires a different treatment. This argument invokes the principle that what is different ought to be treated differently. Against indirect discrimination claims, defence is possible when the employer argues the pursuit of a certain justifiable goal – this may be deemed successful, provided that the given different treatment is necessary, adequate and proportional to the pursued objective.


Employees may enforce their discrimination rights before the competent authorities. However, employers may always settle both before and after the procedure is initiated.


Successful discrimination claims entitle employees to: (i) compensation for both material and non-material damage; (ii) reinstatement (in the case of termination of an employment agreement); or (iii) compensation for the termination of their employment agreements (should it be the case).


Besides special protection given to pregnant employees and new mothers (until one year after childbirth), all employees are granted the same protection regarding discrimination, regardless of the type of employment agreement.



The employee is entitled to three consecutive months of paid maternity leave equal to 100% of the employee’s salary, with an additional period of four weeks in the case of a multiple birth. In case the company does not have daycare on its premises, maternity leave may be extended up to four weeks, upon communication to the employer, without payment of salary.


Employees on maternity leave shall be entitled to remuneration, paid by the employer, which shall be reimbursed by Social Security afterwards.


Upon her return to work from maternity leave, the employee shall

FCB Sociedade de Advogados Angola


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In general, termination by serving notice to the employee is not allowed. However, for fixed-term employment agreements (with a term greater than three months), the employer must serve the employee with 15 working days’ notice before the agreement expires. Moreover, all cases of redundancy give the employee the right to be given a notice period of 30 or 60 days, depending on whether the dismissal impacts less than 20 employees or 20 or more employees, respectively.Termination during the trial period is not required to comply with a notice period.

6.2 Can employers require employees to serve a period of “garden leave” during their notice period when the employee remains employed but does not have to attend for work?

Although the Angolan Labour Law does not expressly and formally recognise the concept of “garden leave” during an employee’s notice period, the employer may release the employee from the performance of work, provided that he/she agrees so, without loss of pay.


The employer may only dismiss an employee when there are objective or subjective reasons related to the company or to the employee, respectively. In both cases, a formal procedure must be followed, otherwise, the termination of the agreement shall be deemed unlawful. The employees may challenge the dismissal by filing a claim with the competent authorities. An employee is treated as being dismissed if the employer unilaterally terminates the employment relationship.Except for cases of employees under special protection, no consent from third parties may prevent the termination of an employment agreement.


Yes, some categories of employees have special protection against dismissal, namely, pregnant employees, new mothers until one year after childbirth, union representatives or former union representatives, miners, former combatants and employees with reduced capacity equal or superior to 20%. In some of these cases, the General Labour Inspectorate’s approval may be required.


1. The employer can dismiss an employee for reasons related to the individual employee when there is cause for dismissal, i.e., fault in the

his/her intention to terminate the employment agreement within the period of 22 days following the transfer.The sale of shares does not have any direct impact on the employment agreement.


In the event of a business sale, the buyer takes the position of the seller in the employment agreements and is legally assigned to the rights and obligations arising from the employment relationship. As such, the conditions resulting from the collective bargaining agreement applicable to the seller (former employer) shall be maintained by the new employer.


The new employer must serve a written notice to the relevant employees’ representative body (i.e. a union committee) or, in its absence, directly to the employees, 22 business days prior to the transfer, informing the employees that they must claim their credits up to the second day prior to the date scheduled for the transfer. No additional consultation or information is required before the employees’ representatives.If the abovementioned procedure is complied with, the buyer (new employer) will only be liable for the credits matured during the 12 months prior to the transfer of business, and the seller shall be jointly liable during 12 months for the non-claimed credits as well as for those that are outstanding prior to transfer. If the buyer fails to comply with the aforesaid procedure, no limitation shall apply and it is liable for all outstanding credits. In any case, the seller shall be joint and severally liable with the new employer for the obligations incurred by the latter towards the employees within the 12 months following the transfer.Within the period of 15 days following the transfer, the buyer shall inform and consult with the General Labour Inspectorate in respect of the date and reasons for the business sale, as well as its predictable consequences regarding the employees.


In principle, a business sale cannot determine the dismissal of the employees covered by the transfer. However, the business sale may provide the employer (either the seller or the buyer) with structural, economic or technological grounds for a redundancy.


In general, the new employer is required to provide the same terms and conditions of employment to the relevant employees, as established in the respective employment agreements. However, employers may amend existing employment agreements by mutual agreement, provided that such agreement does not breach the general rules. Other changes in terms and conditions of employment may be possible under the general provisions of the law.



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considered a company hiring between 100 and 200 employees and/or with an annual gross turnover between USD 3,000,000 and USD 10,000,000 USD; (iii) a small-sized company should be considered a company hiring between 10 and 100 employees and/or with an annual gross turnover between USD 250,000 and USD 3,000,000; and (iv) a micro company should be considered a company hiring a maximum of 10 employees and/or with an annual gross turnover that does not exceed USD 250,000.


In order to dismiss an employee with cause, the company has to follow a disciplinary procedure (comprising a call for an interview, the interview and a final decision), with grounds in the employee’s culpable behaviour which, due to its seriousness and consequences, makes it immediately impossible for the employment relationship to subsist.


In the case of an unlawful dismissal, employees may claim:(a) damage caused by the dismissal;(b) reinstatement in the company; (c) salaries accrued between the termination date and the date on

which the ruling became res judicata, or the date on which the employee was hired by another company, capped by: (i) six months of basic salaries for large-sized companies; (ii) four months of basic salaries for medium-sized companies; and (iii) two months of basic salaries for small-sized and micro companies; or

(d) if the reinstatement is not possible or the employee refuses to be reinstated, a compensation which depends on the size of the company and the employee’s length of service, as follows: (i) 50% of the employee’s basic salary multiplied by the number of years of seniority for large-sized companies; (ii) 30% of the employee's basic salary multiplied by the number of years of seniority for medium-sized companies; (iii) 20% of the employee's basic salary multiplied by the number of years of seniority for small-sized companies; and (iv) 10% of the employee's basic salary multiplied by the number of years of seniority for micro-sized companies. The compensation above cannot be less than three months’ salary for large and medium-sized companies, two months’ salaries for small-sized companies and one month’s salary for micro-sized companies.


Yes, employers may settle claims before and after the claims are initiated.


Where an employer dismisses less than 20 employees at the same time, the dismissal is still an individual redundancy. Collective redundancies (dismissals of more than 20 employees, grounded on market, structural or technological reasons) follow a procedure almost identical to the individual ones. One main

conduct of the employee, which due to its seriousness precludes the possibility of maintaining the employment relationship. The General Labour Law allows dismissal with cause in the following cases: (a) unjustified absences from work that directly determine

damage or serious risks to the company, or where the number reaches 12 days in each year, or three days in a month, regardless of damage or risk;

(b) failure to comply with the work schedule more than five times in a month;

(c) illegitimate disobedience to orders given by hierarchical superiors;

(d) repeated uninterest in diligently complying with the obligations inherent to his/her functions;

(e) physical violence, insults or other offences, within the company over a co-worker, employers and respective representatives or superiors;

(f) serious and disturbing indiscipline at work;(g) theft, robbery, embezzlement, deception and other frauds in

the company or during the work;(h) breach of professional secrecy or trade secrets and other cases

of disloyalty leading to a serious loss for the company; (i) intentional or neglectful damage to the premises, equipment

and instruments, or to production, that cause reduction or interruption of the production process or involve serious damage to the company;

(j) abnormal reductions of productivity or quality in the work performance, considering the objectives pre-established and the usual performance;

(k) active or passive bribery and corruption related to work or to the property or interests of the company;

(l) inebriation or drug addiction with a negative impact on work; or

(m) lack of observance, with fault, of the rules of safety and health at work.

In this case, the employee is only entitled to the credits arising from the termination of the employment agreement.2. The employer will be entitled to dismiss for business-related reasons based on market, structural or technological reasons (redundancies).Upon redundancy procedures, the employee is entitled to a compensation which depends on both the employee’s length of service and the company’s size, as follows: (i) for large-sized companies, the compensation corresponds

to the basic salary at the termination date, multiplied by the number of years of seniority with the limit of five, increased by 50% of the said basic salary multiplied by the number of years of seniority in excess of the said limit;

(ii) for medium-sized companies, the compensation corresponds to the basic salary at the termination date, multiplied by the number of years of seniority with a limit of three, increased by 40% of the said basic salary multiplied by the number of years of seniority in excess of the said limit;

(iii) for small-sized companies, the compensation corresponds to two basic salaries at the termination date, increased by 30% of the said basic salary multiplied by the number of years of seniority in excess of the two-year limit; and

(iv) for micro-sized companies, the compensation corresponds to two basic salaries at the termination date, increased by 20% of the said basic salary multiplied by the number of years of seniority in excess of the two-year limit.

For such purpose: (i) a large-sized company should be considered a company hiring more than 200 employees and/or an annual turnover above USD 10,000,000; (ii) a medium-sized company should be



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Upon violation of restrictive covenants, legal action may be taken, and the party that failed to comply with the covenant may be sentenced to pay damages.



Data protection affects the employment relationship, since management powers of the employer are limited by the rights and guarantees of the employees; in particular, the right to privacy and the relevant personal data-related rights.As per the above, it is paramount to assess whether a collection of personal data or certain restrictions to the employee’s privacy are suitable, adequate and justified to achieve legitimate and specific purposes and do not breach any legal rule.Pursuant to the General Labour Law, the employee has the right to be treated with consideration and respect. It is commonly accepted that this includes respect for his or her private life and personal communications. Law No. 22/11, of 17 June 2011, which approved Personal Data Protection Law, is applicable to the private sector.On the other hand, the Constitution provides that “private means of communications” cannot be breached without a judicial order to that effect. With regard to the transfer of data, please be advised that any international transfer of data to an adequate country is subject to notification to Data Protection National Agency. On the other hand, the data transfer to a non-adequate country is subject to authorisation of said agency, in case such transfer complies with certain requirements.A country is deemed adequate by a decision issued by the Data Protection National Agency.


The employee shall have the right to obtain from the employer, without constraint and without excessive delay or expense, confirmation as to whether or not data relating to the same is being processed and information as to the purposes of the processing, the categories of concerned data and the recipients or categories of recipients to whom the data are disclosed, as well as the communication of the data undergoing processing and of any available information regarding their source. Also, employees must be informed of the existence and conditions of their right of access and right to rectify. Therefore, employees do have the right to obtain copies of personal information that is being held by the employer, under the conditions above described.


Pre-employment checks must be carried out with extreme caution. From a personal data standpoint, criminal records, privileged relationships, conflicts of interest by job applicants and medical examinations cannot be processed without job applicants’ consent.

difference is the fact that the General Labour Inspectorate has 22 working days to perform any due diligence or investigation, as opposed to the 15 working days set forth for individual redundancies.Another difference is the notice period that has to be given to the employee: in collective redundancies, the notice period is 60 days, as opposed to the 30 days’ notice period given within individual redundancies.


Only the courts are competent to declare a dismissal unlawful. In the event that the court finds the dismissal unlawful, the employee will be entitled to compensation, and/or reinstated in the company.



The Angolan Law recognises both non-competition agreements and permanence covenants.


With the employee’s consent, it is possible to establish a non-compete obligation for a period of up to three years following termination, provided that the following requirements are met:(i) The non-compete clause is included in a written employment

agreement or an addendum thereto.(ii) The activity in question may cause real damage to the

employer and is deemed unfair competition.(iii) The employee is paid compensation during the restricted

period, and the amount of compensation is stated in the agreement or an addendum thereto.

As per the permanence covenant, the employee shall be obliged not to terminate his agreement, for a period not exceeding one year for professional development training and three years for higher educational training, as compensation for expenses made by the employer in connection with his vocational training. The employee may be released from such obligation by paying the expenses made by the employer.


As per the above, non-competition agreements depend on the payment of a compensation during the restricted period. The amount of compensation is stated in the agreement or an addendum thereto. The compensation should be determined taking into account the costs incurred by the employer with training.


A restrictive covenant must be set forth in writing and its enforceability depends on the content of the clause. Permanence covenants are automatically applicable. Non-compete clauses may be automatically enforced after the termination of the employment agreement.



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Labour disputes fall under the jurisdiction of the competent provincial labour courts.


Before filing a lawsuit in court, employment disputes must pass through:■ a conciliation before the Public Attorney’s Office with the

competent provincial labour court;■ a mediation before the General Labour Inspectorate; or■ a voluntary arbitration.As soon as the claim is filed with the court, the employee and the employer are given notice to attend a conciliatory hearing with the purpose of reaching an agreement. The judicial phase begins only if no agreement is reached. Court fees must be paid by the employee in order for a claim to be submitted. Nevertheless, in certain situations, the employee may be exempted from this payment, for example, when represented by the public prosecutor’s office. A trade union’s legal department may also represent employees, the latter paying court fees instead of the employee.


The timescale for completion of the procedure varies on a case-by-case basis and also depends on the court’s workload. The average timescale for first-instance proceedings is two years.


Yes, an appeal may be filed with the Court of Appeals by either the employer or the employee. An additional appeal to the Supreme Court is possible, but is subject to complex requirements. The timescale for these procedures varies on a case-by-case basis, depending on the court’s workload.

Other background checks and enquiries must be based on the need of the employer to confirm an employee’s suitability for the job. The employer must adhere to non-discriminatory principles and ensure that the employee’s personal information is processed under the applicable data protection laws.

8.4 Are employers entitled to monitor an employee’s emails, telephone calls or use of an employer’s computer system?

The General Labour Law is virtually silent on this matter. However, it can be argued that the employer may set forth rules for the use of the company’s equipment, including IT equipment and tools. On the other hand, the employee must act in accordance with the instructions and orders of the employer, preserve and make proper use of work tools, and execute tasks, taking into account productivity improvements. Nonetheless, taking into account the employees’ right of privacy, dignity and integrity, the monitoring of employees’ emails, telephone calls and use of the employer’s computer system may be deemed unlawful when related to private purposes. Additionally, control of movements of the employees during their free and personal time may also be deemed inadmissible.As a result, the implementation of such type of monitoring must be carefully analysed and assessed on a case-by-case basis. In certain cases, said monitoring may require the prior notification to the Data Protection Agency.

8.5 Can an employer control an employee’s use of social media in or outside the workplace?

There are no rules that specifically address the protection of employees’ social media or the monitoring of employees’ social media accounts. Nevertheless, general principles such as the constitutional right to privacy, dignity and integrity do not allow the employer to intrude into employees’ social media accounts without authorisation.On the other hand, taking into account some duties of the employee (notably the duty of loyalty), employers may regulate off-duty conduct to the extent that it has a detrimental impact on the employment relationship, including in the cases where the employee may disclose confidential company information or other content which might harm the reputation or interests of the company or respective co-workers.



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Inês Albuquerque e CastroFCB Sociedade de AdvogadosAvenida da Liberdade n.º 249, 1.º1250-143 LisbonPortugal

Tel: +351 21 358 75 00Email: [email protected]: www.fcblegal.com/en

Susana Bradford FerreiraFCB Sociedade de AdvogadosAvenida da Liberdade n.º 249, 1.º1250-143 LisbonPortugal


F. Castelo Branco & Associados, Sociedade de Advogados RL (FCB) is a full-service law firm with a number of specialist departments.

FCB is first and foremost a client-driven firm committed to the effective management of the delivery of its services, maintaining high standards of technical quality, delivering an integrated, quick and effective service, benefitting from the experience and know-how in the different legal areas of all of its over 80 staff.

Currently, FCB has offices in Lisbon, Oporto and Faro (Portugal), Luanda (Angola) and Maputo (Mozambique), as well as a representation office in Madrid (Spain).

Our services include legal assistance services in the following practice areas covered by our firm:

a) Corporate, Commercial and M&A;

b) Public /Administrative Law & Public Tenders / Environmental Law;

c) Real Estate / Property / Construction;

d) Dispute Resolution;

e) Employment, Benefits and Pensions;

f) Tax;

g) Banking and Capital Markets;

h) Intellectual Property;

i) Criminal Law; and

j) Energy and Natural Resources.

■ Degree in Law in 1998 from the University of Lisbon School of Law. Joined FCB in 2015 to coordinate the Employment, Benefits and Pensions Department.

■ In 2001, attended a postgraduate course in Labour Law at the University of Lisbon School of Law, and also a Post-Graduate course in European Criminal Law at Faculdade de Direito da Universidade de Coimbra.

■ In 2008, also attended a postgraduate course in Public Law and Employment at the Faculdade de Direito da Universidade de Coimbra.

■ Has written several articles on Labour Law for Portuguese publications and is the author of a chapter in the 3rd Volume of the book compilation entitled “Estudos do Instituto de Direito Laboral”.

■ Is a regular speaker at conferences, seminars and workshops about Labour Law. Inês’ work is recommended by the most important international directories (i.e. Chambers & Partners).

■ Degree in Law from the Faculdade de Direito da Universidade de Lisboa.

■ Joined FCB in 2015 as a Trainee Lawyer.

■ Integrates the Employment, Benefits and Pensions Department.

■ Susana holds a Master’s Degree in Forensic Law from the Faculdade de Direito – Catholic University of Lisbon, concluded in 2016.

■ Between 2015 and 2016, Susana collaborated, as a junior research assistant, in the publication of books and other academic papers in the field of tax litigation and arbitration.



Chapter 5

Concern Dialog law firm

Sedrak Asatryan

Janna Simonyan

Armenia

■ duration and terms of the probation period if applicable;■ working hours;■ normal duration of the working hours or incomplete working

hours, or shorter working hours, or a summarised calculation of working hours; and

■ the type and duration of annual leave (minimum, extended and additional).

Actual employees hired without a written contract are considered to be employees as well if they are in actual employment relations with the employer and it can be proved. Moreover, the employer can be fined with an administrative order for keeping an employee without a written contract (including for evading taxes, as the employer is responsible for withholding and paying income tax on behalf of the employee).


If the terms defined in question 1.5 are not mentioned (and regulated otherwise where allowed) in the contract, then they are implied.


The employer shall be obliged to follow the conditions of employment laid down by the legislation, which are:■ payment of a salary not less than the minimum salary

established by law; ■ safe workplace conditions;■ working hours shall include: working hours of not more than

eight hours daily and 40 hours weekly; daily (inter-shift) and weekly uninterrupted rest; and additional payment defined for overtime work or work on rest days;

■ additional payment for performing heavy, harmful, or especially heavy and especially harmful work; and

■ time limits established for the payment of salary (not later than the 15th day of the subsequent month), etc.

Also, if no time is defined, the work contract is implied to be signed for an indefinite period.


After making an agreement because of collective bargaining, the employee and employer can define certain additional conditions



The major sources of employment law are the Labour Code of the Republic of Armenia (RA), the Civil Code of RA, to the extent not covered by the Labour Code, the Law on Civil Service, the Law on Public Service of the Republic of Armenia, and other RA laws regulating labour relations, sectoral collective labour agreements, and Decrees of Government regulating different technical issues, including work security standards. In addition, Armenia is party to several ILO Conventions regulating employment law issues (for a complete list see http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:11200:0::NO::P11200_COUNTRY_ID:102540).


The Labour Code protects all workers in the RA, including employees, civil officers and public officers.RA legislation also protects the rights of actual workers, hired without a written contract, who work factually, as well as workers working under a civil contract, if the latter can prove that they have in fact been in an employment relationship with the employer.


Employment contracts or the Order for employment are concluded in writing, and must contain the following mandatory conditions:■ the date;■ place of conclusion of contract;■ name of employee;■ name of the organisation or name of the natural person

employer;■ the structural subdivision (if applicable) of employment;■ the year, month and date of the commencement of work;■ the name of position and/or official duties;■ the salary and/or the form of determining it;■ supplements, additional payments, premiums, etc., granted to

employees in the prescribed manner;■ validity period of the employment contract (upon necessity);


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A union of employers is a legal entity considered to be a non-commercial organisation which unifies organisations/employers and citizens/employers. The member organisations/employers of the union are represented in the union by authorised representatives.The union of employers is entitled to: form an agreed position with the members of the union of employers on issues concerning labour and associated socio-economic relations; defend that position in relations with trade unions and governmental bodies; coordinate its positions regarding those issues with other unions of employers; protect the rights and legal interests of its members in relations with trade unions and governmental bodies; initiate collective bargaining negotiations on preparation, conclusion, and amendment of collective agreements; authorise its representatives to conduct collective bargaining negotiations on preparation, conclusion, and amendment of the drafts of collective agreements; participate in establishment and activities of corresponding commissions on settlement of labour relations, conciliation commissions and commissions for the settlement of collective labour disputes; participate in consultations with trade unions and governmental bodies concerning principal directions associated with socio-economic policy; obtain information about labour issues from trade unions and governmental bodies which is necessary to prepare, conclude, amend and control collective agreements; take part in the development and discussion of laws and other legal acts concerning settlement of labour and associated socio-economic relations which refer to the rights and legal interests of employers; create economic companies or be their member; and have other rights.The union of employers shall undertake to: conduct collective bargaining negotiations and conclude collective agreements with trade unions on the basis of the agreement; fulfil the obligations undertaken under the agreements concluded; inform its members about the agreements concluded and provide them with their texts; provide information about working issues of trade unions and governmental bodies which is necessary to conduct collective bargaining negotiations on the preparation, conclusion, amendment, and control of collective agreements; control the implementation of covenants and collective agreements concluded by it; support the members of the union of employers in the fulfilment of the obligations provided under the covenants and collective agreements concluded by them; report to its members about the activities of the union of employers within the terms and in compliance with the procedure provided under its Charter; help its members in the field of application of the legislation regulating labour and other associated socio-economic relations; develop by-laws containing norms of labour law; conclude contracts and agreements as well as settle individual and collective labour disputes; and fulfil other obligations provided by its Charter.


The employer is obliged to consult with the representatives of employees (if any) when taking decisions affecting the employees’ legal status as well as engage the representatives of the employees in discussions on safety and health control issues.

within the contract too; such conditions will not be less favourable for the employee than those defined in the Labour Code of RA. In the RA, collective bargaining is not applied and such practice has not yet been established.



In the RA, trade unions are regulated by the international treaties of the Republic of Armenia, the Labour Code, the Trade Unions Law and other legal acts.


Trade unions are entitled to: draft their statutes and regulations; freely elect their representatives; arrange their administrative staff and their activities; draw up their programmes; acquire information from the employer in the manner prescribed by the Labour Code; submit proposals to the employer on work organisation; conduct collective bargaining within the organisation; conclude collective agreements and exercise supervision over their execution; exercise non-state supervision within an organisation over implementation of labour legislation and other regulatory legal acts containing rules of labour law; appeal through judicial procedure the decisions and activities of an employer and the authorised persons thereof contradicting the legislation of the Republic of Armenia, as well as collective agreements and employment contracts or violating rights of the representatives of employees within the organisation; ensure the coordination of employees’ and employers’ interests in collective employment relations at different levels of social partnership; submit proposals to state and local self-government bodies; organise and lead strikes; participate in the development of production plans and their implementation within the organisation; submit proposals to the employer on improvement of working and leisure conditions of employees, introduction of new technical equipment, reduction of the amount of manual labour, revision of the production norms, as well as the amount of and procedure for the remuneration of work; and other additional powers not contradicting the legislation.


Trade unions are entitled to organise, hold and lead strikes and public events and conduct bargaining on the issue with State bodies, local self-government bodies, other organisations and their officials. Trade unions are entitled to organise a strike if: 1) because of conciliation processes, the dispute related to the conclusion of a collective employment agreement has not been settled; 2) the employer avoids carrying out a conciliation process; and 3) the employer fails to execute a decision of the Conciliation Commission that satisfies the employees, or fails to perform his or her obligations assumed by the collective employment agreement having been concluded beforehand.A strike shall be called in case the decision thereon has been approved by secret ballot by two thirds of the total number of employees of an organisation, or employees of a separate (structural) subdivision (that will separately strike) of an organisation when calling a strike in an organisation.

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the employee can be re-employed and paid for the period from dissolution of the contract to the moment of re-employment.


The “atypical conditions” labour contracts are concluded by consent of the parties and additional warranties and “atypical” working mode may be defined thereunder by consent of the parties.



Pursuant to the legislation of the RA, the duration of maternity leave in the RA lasts until the child attains the age of three years.


During pregnancy and delivery leave, which, pursuant to the legislation of the RA, is 140 days (in the case of complicated delivery, 155 days, and in the case of multiple births, 180 days), the employee is entitled to special leave, during which she receives a temporary disability benefit in the amount of her average salary.After completion of pregnancy and delivery leave, the employee who is on unpaid maternity leave is paid, at her will, child attendance allowance in the amount of AMD18,000 (about US$37) until the child attains the age of two years. Unpaid maternity leave is provided until the child attains the age of three years.


An employee who returns to her job after maternity leave is entitled to all the contractual rights she had before taking leave, and if the employee returns to work before the child attains the age of one year, she also enjoys some additional warranties. For example, she can only be sent on a business trip or engaged in overtime or work on a day off following her consent, and her engagement in hard and detrimental, or especially hard and especially detrimental, works is prohibited. Additional breast-feeding breaks are provided until the child attains the age of one-and-a-half years.


Yes, pursuant to the legislation of the RA, the father (or stepfather) who takes care of the child may decide to take paternity leave until the child attains the age of three years. Additionally, the husband of a woman on pregnancy and delivery leave or on maternity leave is entitled to an unpaid two-month leave before the child attains the age of one year.


Yes, the same child care leave as defined under question 4.4 can be provided at the will of the judicially appointed trustee of the child who takes care of the child.


Pursuant to the legislation of the RA, trade unions and unions of employers can cooperate through labour information exchange, and conduct collective bargaining negotiations on the preparation, conclusion, amendment, and control of collective agreements. Wide practice of cooperation between any two of such unions has not yet formed in the RA.


There is no mandatory rule per which employees or representatives of employees are entitled to have automatic representation at board level. This can be regulated by collective agreement; however, as mentioned above, these are not extensively used in Armenia, and to the best of our knowledge there is no such rule.

3 Discrimination


Discrimination against employees is prohibited pursuant to the national legislation, as well as international treaties ratified by the RA. Discrimination on the grounds of sex, race, nationality, language, origin, citizenship, social status, religion, marital and family status, age, beliefs and opinions, membership to parties, trade unions or non-governmental organisations, and other circumstances not connected with the working skills of any employee, is prohibited.


Any form of discrimination against any employee on all grounds specified under question 3.1 is prohibited during working relations.


Any employee who is a victim of discrimination can judicially enforce his/her violated rights. Corresponding court practice has not yet formed in the RA; the formation of such practice is in process.


The employees can enforce their violated rights both through negotiations with the employer and judicially. The negotiations can be conducted both before the initiation of claim in court and during the proceedings. Thus, the parties can resolve disagreements amicably.


Judicial enforcement of their rights violated due to discrimination. If the labour contract has been dissolved due to discrimination,



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or organisational terms of work, he/she/it can change the material conditions of the contract subject to the observance of the defined procedure.However, the fact that there is a business sale is not enough to entitle the employer to terminate or materially alter the employment contracts/work conditions.



In the case of dissolution of the labour contracts initiated by the employer, with exception for cases of dissolution of the contract for any breach of labour discipline, the employer should give notice of termination of employment within the defined term. In case of dissolution of the contract for the reason of reduction of staff, the employee shall be given two months’ notice. In other cases, the term of the notice depends on the employee’s length of service, and constitutes 14–60 days.


The legislation of the RA does not define such a provision, but if the employer fails to observe the terms of the notice and dissolves the labour contract earlier, it will be subject to the payment of a fine for each day the notice was not made, which shall be calculated based on the average daily salary of the employee.


The labour contract may not be dissolved by the employer in cases provided under question 6.4 below. The employer is not obliged to inform/obtain the consent of anybody before the dissolution of the contract, with exception for cases where there is a the reduction of staff. In this case, the state employment service shall be given two months’ notice.


The labour contract may not be dissolved during the temporary disability period of any employee (with exception of long-term disability) or during the leave of: pregnant women – during the period lasting from submission of the pregnancy certificate to the employer to the completion of one month after the end of the pregnancy and delivery leave; persons who take care of a child but are not on leave – during the whole period of care for the child until it attains the age of one, with several exceptions; after taking the decision to strike and during the strike, persons who take part in a strike in compliance with the procedure defined by legislation; and for persons who have duties imposed on him/her by governmental or local self-management bodies, save for cases of conscription for military service.


There is no such right/guarantee. Different working hours may be defined for the employee by consent of the parties (by labour contract).

5 Business Sales


If the shareholders, but not the employer, changes in case of sale of the employer’s business, from the legislative point of view, this is not a ground for dissolution or change of labour contracts. However, if instead of share purchase assets a sale agreement is signed, there is no guarantee of transfer of labour contracts to the new company.


In the case of a business sale (share/stock sale), the labour relations continue and the existing contracts, including collective agreements, are not changed because of the conclusion of the corresponding contract; however, if the new shareholders decide to change the terms of work organisation as the previous shareholder might also do, the terms of the contract may be changed.In the case of an assets transfer, no rights survive, and the employees and all labour relations remain with the seller company, which will be entitled to resolve the labour agreements based on the closing of the business (there are no assets to run the business). In this case, employees are to be notified beforehand (usually two months), or a penalty which is equal to the salary due for each month will be applicable.


Pursuant to RA legislation, the employer is not obliged to inform the employees in the case of a business sale or consult them in connection thereof.


Unless other grounds defined by legislation are available, the business sale from one shareholder to another is itself not a ground for dissolution of the labour contracts, but in the case of a change of the organisational conditions of work, the new shareholder may reduce wages and the number of people employed.In the case of an assets sale, the employees may be dismissed based on a change of business conditions.


If the new shareholder as a new employer intends to change the production volumes and/or economic and/or technological and/



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employed, be paid for the whole period of forced leave or receive compensation in the amount of one to 12 times his/her average monthly salary if re-employment is impossible.



The employer can restrict disclosure of confidential information provided to the employee during his/her work for the employer. Also, intellectual property rights can be regulated. However, most common conventions (non-compete, minimum time working obligation, etc.) are in general not recognised by law and are not commonly used (in any case, there is practically no judicial practice regarding such).


No confidentiality term is available; it can be defined by the party in the contract.


No, there is no such special requirement under Armenian law; however, similarly, nothing prevents the parties from agreeing on financial compensation.


There are none, and none are applied. As mentioned above in question 7.3, there is practically no court practice in this regard.



The general rule is that the personal data of an employee may not be provided to other persons regardless of their position. The personal data of an employee may be obtained, processed, and kept by the employer only in compliance with the procedure defined under the legislation of the RA. The personal data of an employee may be provided to third persons without the employee’s consent only in exceptional cases defined by law, international treaties or court decision, save cases where it is necessary to prevent danger or threat to his/her life and health.If the transfer of data is to be within the same company (e.g. the person is employed in the Armenian branch of a foreign company) then there are no limitations. Cross-border transfer entails no additional limitations.


Yes, the employees are entitled to freely and at no cost see their personal data and be issued a copy of any record containing personal data.


The legislation of the RA provides that an employee may be dismissed for inefficiency in his/her position, and the labour contract may be dissolved subject to the work organisation conditions, production volume or other business factors. In case of dissolution of the labour contracts due to staff reduction or re-employment of a former employee, the employer shall pay to the employee’s dismissal pay in the amount of one average monthly salary. In other cases (inefficiency of the employee in his/her position or in performance of his/her work, conscription for military service, long-term disability, retirement, and material changes of the terms of the contract), the dismissal pay shall be defined, depending on the length of service of the employee to that employer, as 10 to 40 times their average daily salary.


There are certain procedures that an employer should follow in case of dissolution of a labour contract, e.g. notification, final settlement and dismissal pay.


In the case of any dissolution of the labour contract without legal grounds or in defiance of the defined procedures, the employee can be re-employed judicially, be paid for the whole period of forced leave or receive compensation in the amount of one to 12 times his/her average monthly salary if re-employment is impossible.


Before reference to the court, labour conflicts can be settled through negotiations with the employer. Disputes already referred to the court can also be settled by agreement reached through negotiations.


If more than 10% of the total number of employees is envisaged to be dismissed within two months, or in case of the winding up or reduction of staff in any organisation with not less than 10 employees, the employer shall submit data about the number of the employees to be dismissed to the state managing body authorised by the Government of the RA in the field of employment (the Ministry of Labour and Social Welfare) and to the employees’ representative not later than two months before the dissolution of the labour contracts.


If the legal grounds or procedures were not observed at the dissolution of the contract, the employee can be judicially re-



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If the employee does not agree with a change of working conditions or dissolution of the labour contract initiated by the employer, the employee is entitled to appeal to the court within two months upon receiving the corresponding individual legal act. Employees are exempted from payment of state duty in case of any reference to the court for labour disputes.


The first instance courts consider disputes within a period of two months to one year. In complicated cases, the time may be longer.


The decision of the first instance court may be appealed within one month of proclamation of the court’s decision. Appeals are considered within a period of about two to four months. The decision of the Court of Appeal may be appealed to the High Court of Cassation within one month after the proclamation of the decision. Hearings in the Court of Cassation take another two to four months. The decision of the Court of Cassation is final and not subject to appeal.


Save the cases and positions defined by law, all personal data shall be obtained from the employee. If the personal data of an employee can be obtained only from a third person, the consent of the employee shall be obtained. The employer shall inform the employee about the purpose, facilities and sources available for receipt of the personal data as well, as their nature and consequences of refusal to give written consent for their receipt.However, there is no major practice regarding this either and, in practice, employers obtain data on employees from any legal source (including social media, etc.).


There is no general prohibition of such monitoring (unless it is the monitoring of personal e-mail and personal calls), which means that it should be considered allowed. There is no practice regarding this.


If the work of the employee is not directly connected with social media, the employer may limit its use in the workplace. The use of social media outside the workplace may be limited if the employee publishes information concerning the employer.



In the RA, labour disputes are considered in the courts of general jurisdiction within the framework of civil proceedings as well as in the Administrative Court if the employer is an administrative body.



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Sedrak AsatryanConcern Dialog law firm1 Charents Str., Office 207Yerevan, 0025Armenia

Tel: +374 77 262 226Email: [email protected]: www.dialog.am

Janna SimonyanConcern Dialog law firm1 Charents Str., Office 207Yerevan, 0025Armenia

Tel: +374 91 211 050Email: [email protected]: www.dialog.am

Sedrak Asatryan has been the Managing Partner of Concern Dialog law firm since 2003. He practises in the areas of Labour Law, General Administrative Law and issues regarding Real Estate. Mr. Asatryan has wide experience in representing clients in courts and various administrative bodies. In 2010, Mr. Asatryan participated in an exchange with the USA on the handbook Law Firm Management, and since then has been engaged in research and lecturing on law firm management topics in Armenia.

In addition to his attorney practice, Mr. Asatryan lectures at the School of Advocates. Since 2014, he has led the employment law clinic for students, run jointly with the French University in Armenia.

Mr. Asatryan has authored several articles and publications on employment law issues (including handbooks: “The New Labor Code of the RA: Employment Contracts”; “The New Labor Code of the RA: Employer’s Internal and Individual Legal Acts”; and “Law Firm Management”), and now leads a working group in the development of a Labour Law handbook for attorneys and judges.

Concern Dialog was established in 1998 as a company specialised in civil and administrative litigation services. The company’s qualified and professional team provides high-quality legal services in a wide variety of fields to its individual and corporate clients in Yerevan and in all the regions of Armenia, as well as on the international level. Concern Dialog is one of the largest and most highly appreciated law firms in Armenia. The firm has four partners and more than 25 associates and paralegals.

Concern Dialog is a member of TagLaw - the worldwide alliance of independent law firms, American Chamber of Commerce in Armenia (AmCham), German Business Association in Armenia (DWV). The firm and it’s Partners are ranked by The Legal 500 and Chambers and Partners.

The firm is highly appreciated for its work in complex case litigation practice, labour and employment law, corporate and M&A, regulatory issues in mining, energy and telecommunications, taxes and support for trans-boundary transactions.

Janna Simonyan has been a Partner at Concern Dialog law firm since 2010. She is specialised in Labour Law consulting, as well as Employment Law litigation issues.

Ms. Simonyan has represented corporate clients of Concern-Dialog as well as individuals in numerous cases since 2009.

Ms. Janna Simonyan regularly organises individual and group courses on the Labour law and developments, seminars on issues related to Labour Law for HR department managers and employees of organisations, and discussions on Labour Law with law clinic students from universities in Armenia. Ms. Simonyan periodically trains teams of students for moot court competitions in Armenia.



Chapter 6

People + Culture Strategies

Joydeep Hor

Therese MacDermott

Australia


Terms may be implied into a contract by fact, custom or law. Terms implied by law are the most significant and include the employee’s duties of good faith and fidelity, to work with skill and diligence, and to obey lawful and reasonable orders. Most implied terms can be excluded by the express terms of the contract. In the absence of an entire agreement clause, terms included in policies may be incorporated into a contract of employment if expressed in promissory language.


The National Employment Standards (the “NES”) set minimum standards of employment across 10 areas:■ maximum weekly hours;■ requests for flexible working arrangements;■ parental leave and related entitlements;■ annual leave;■ personal carers’ leave and compassionate leave;■ community service leave;■ long service leave;■ public holidays;■ notice of termination and redundancy pay; and■ Fair Work Information Statement.


The determination of modern awards by the FWC involves submissions from interested parties, rather than through collective bargaining. At the workplace or enterprise level, agreements are bargained between employers and employees (often through bargaining representatives), or between employers and unions directly in the case of genuinely new enterprises. The terms and conditions of enterprise agreements must cover certain mandated terms, but otherwise can deal with any matters pertaining to the employment relationship.



Legislation, industrial instruments, and the common law are the main sources of employment law. The Fair Work Act 2009 (Cth) (the “FW Act”) governs the employment of the majority of Australian employees, supplemented by other federal, state and territory legislative schemes pertaining to areas such as work, health and safety and non-discrimination. Relevant industrial instruments include modern awards, which are determined by the Fair Work Commission (the “FWC”), and enterprise agreements. Awards provide a safety net of minimum pay rates and employment conditions, and are used as the benchmark for assessing whether employees are ‘better off overall’ under a proposed enterprise agreement. Each year the FWC conducts an annual wage review and decides on a national minimum wage. The contract of employment and common law principles are important sources of the terms and conditions of employees, particularly for those who are not covered by an award or enterprise agreement.


Employment law generally protects those who work pursuant to a contract of service rather than a contract for services. At common law this distinction between employees and independent contractors is determined by applying a multi-indicia test, which looks at the totality of the employment relationship. This dichotomy may be altered by specific legislative schemes, such as in the context of work, health and safety legislation, which uses an expanded definition of “worker”, or the FW Act, which provides some protections for independent contractors. The distinction between permanent and casual employees can be important when determining whether an employee is entitled to certain benefits. Certain specific protections apply to ‘long-term’ casuals and outworkers.


Contracts of employment do not have to be in writing. It is not uncommon for a contract to be partly written, partly oral. Upon commencing employment, all employees must be provided with a copy of the Fair Work Information Statement, advising them of their rights under the NES.


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The schemes for employee representation at board level in some European countries do not exist in Australia.

3 Discrimination


Employees are protected by a range of federal, state and territory anti-discrimination legislation. Employees are further protected by the FW Act ‘general protections’ provisions that prohibit an employer taking adverse action against an employee or prospective employee because of a protected attribute. While the attributes covered in each legislative scheme vary, the specific protected attributes in the FW Act include:■ race;■ colour;■ sex;■ sexual preference;■ age;■ physical or mental disability;■ marital status;■ family or carer’s responsibilities;■ pregnancy;■ religion;■ political opinion;■ national extraction; and■ social origin.


In Australia, there are two commonly used formulations of what constitutes unlawful discrimination – direct discrimination and indirect discrimination. Direct discrimination occurs when the complainant is treated less favourably than a person without the protected attribute in the same or similar circumstances, where



The Fair Work (Registered Organisations) Act 2009 provides for the registration of employee and employer associations and enterprise associations. Registration entails responsibilities with respect to the Rules of an organisation, governance standards, and financial management. The legislation also sets out processes by which an organisation’s registration may be cancelled, organisations amalgamated, and demarcation disputes resolved. Amendments to this legislative scheme were passed in November 2016, but are not yet in force. Once they come into effect, oversight in this area will be split between the Fair Work Commission and a new body, the Registered Organisations Commission. New obligations regarding auditing arrangements and financial disclosures by officers and related persons will also apply.


Through registration, unions acquire rights in relation to standing in proceedings to represent the interest of members and potential members. The FW Act also allows registered unions the right to act as bargaining representatives and the capacity to enforce standards on behalf of members. In addition, the FW Act and the Work Health and Safety Act 2011 (Cth) enable trade union officials to enter workplaces for specified purposes. Representatives who hold a valid permit may enter an employer’s premises for the purposes of investigating a suspected contravention of the Act or an industrial instrument; exercising rights under health and safety laws, investigating breaches relating to outworkers, or meeting with employees. Where entry is for the purpose of investigating a suspected breach, the permit holder may: ■ inspect any relevant work, process or object; ■ interview willing participants; and ■ require the employer or occupier to provide any directly

relevant records or documents. Entry for the purpose of discussions with employees requires written notice of no less than 24 hours, unless an exemption applies.


To qualify as protected industrial action under the FW Act, any industrial action must be organised for the purpose of supporting or advancing claims in relation to a proposed enterprise agreement. It cannot be part of pattern bargaining, nor can it relate to a demarcation dispute. To be protected it must meet the following requirements:■ it relates to a single-enterprise agreement;■ representatives are genuinely trying to reach an agreement;■ all relevant orders are complied with by representatives;■ cannot commence prior to the expiry date of an existing

enterprise agreement;■ three days’ notice is given; and■ a protected action ballot was undertaken authorising the

action.

People + Culture Strategies Australia


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All employees in Australia are entitled to unpaid parental leave if they have worked for their employer for at least 12 months. Under the NES, employees are entitled to 12 months of unpaid parental leave following the birth or adoption of a child, and a request can be made for an additional 12 months of leave.


Employees may be entitled to paid parental leave from the Australian Government or from their employer under an enterprise agreement, contract or policy. Under the Australian Government Paid Parental Leave Scheme, eligible employees who are the primary carer of a newborn or adopted child can receive 18 weeks’ payment at the national minimum wage. In its current formulation, payment under this scheme does not affect the entitlement to unpaid leave or affect parental leave paid by the employer. However, legislative changes are proposed that would reduce entitlements paid under the Paid Parental Leave Scheme where a claimant is also entitled to paid leave from his or her employer. Changes are also under consideration to extend the period of payment from 18 to 20 weeks.


Employees have the right to return to the same job they had before going on leave. If an employee was transferred to a safe job before they took parental leave or they reduced their hours due to pregnancy, they are entitled to return to the job they had before the transfer or reduction. If an employee’s job no longer exists or has significantly changed, they must be offered a suitable alternative job. If the employee’s job no longer exists, a redundancy may arise.


Eligible fathers and partners (including same-sex partners) are entitled to two weeks’ paid leave under the Australian Government Paid Parental Leave Scheme. Fathers who are the primary carer of a child may also be entitled to unpaid parental leave under the NES.


Parental leave entitlements in Australia extend beyond maternity leave to include paternity and partner leave, adoption leave, and special maternity leave (where an employee has a pregnancy-related illness or her pregnancy ends after 12 weeks because of a miscarriage, termination or stillbirth).


Employees, such as parents returning to work after taking parental leave, and those with other caring responsibilities, have the right to request flexible working arrangements. Employers can only refuse such a request on reasonable business grounds.

this treatment is causally related to the protected attribute. Indirect discrimination occurs when an unreasonable requirement or condition is imposed upon a complainant which operates as an unfair barrier for the complainant with a protected attribute.


Each piece of Australian anti-discrimination legislation contains its own specific exceptions or exemptions, which are often tailored to a specific attribute. In the employment context, common exceptions are genuine occupational qualifications, inherent requirements of the job and unjustifiable hardship (disability specific), acts done under statutory authority, and employment in a private household or private educational institution. In addition, it is possible under most statutory schemes to obtain a temporary exemption.


Generally, a complaint must first be lodged with the relevant statutory authority for investigation and attempted resolution through conciliation. The second stage involves escalating the complaints to a court or tribunal to enforce legal rights and obligations. Employees and prospective employees can also enforce their discrimination rights under the FW Act by making a general protections claim, with the process varying depending on whether a dismissal is involved. Most discrimination claims are resolved through conciliation or negotiation.


Remedies available under anti-discrimination legislation include:■ declarations;■ compensatory damages;■ injunctions;■ variations of contract; ■ apologies; and■ retractions. If a general protections claim is successful, the FWC may order reinstatement, payment of compensation or lost remuneration, and continuity of service.


A wide range of workers are covered under anti-discrimination legislation, including apprentices or trainees, workers on probation, part-time and full-time workers, casual workers, labour hire workers, contract workers and workers on a work visa. While there are no specific provisions that provide additional protection against discrimination for atypical workers, there are some protections, such as those relating to carer and parental responsibilities, which may arise incidentally.



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To end employment, an employer must give the employee written notice of the last date of employment, or payment in lieu of notice. Minimum notice periods are based on length of service. Longer notice requirements may apply under an industrial instrument, contract or policy.


Employees may be put on “garden leave” while they are serving out a period of notice relying on an express or implied term in the contract of employment.


Employees are protected against terminations of their employment that are harsh, unjust or unreasonable, that are discriminatory, or that arise as a consequence of the exercise of a workplace right or engaging in industrial activities. An employee is treated as being dismissed where their employment has been terminated at the employer’s initiative, or they have resigned in circumstances constituting constructive dismissal. Consent is not required from a third party.




An employer is entitled to dismiss for reasons related to an individual employee’s unsatisfactory performance or misconduct, subject to giving the appropriate notice or payment in lieu. Serious misconduct can warrant summary dismissal without notice. An employer is entitled to dismiss for business-related reasons where it no longer requires a job to be done by anyone, subject to meeting the minimum entitlement to redundancy pay based on continuous service or a more generous entitlement under an industrial instrument, contract or policy.


Procedural factors are relevant in determining whether a dismissal is unfair, including whether the employee was notified of the reason for termination and given an opportunity to respond, and in the

5 Business Sales


At common law, contracts of employment do not automatically transfer. Under the FW Act, there may be a transfer of employment between two employers where the transferring employee commences work within three months of termination from the old employer, the work performed is substantially the same, and one of the following connections is established:■ they are associated entities; ■ there is an outsourcing or insourcing of business between

them; or ■ there is an arrangement concerning the ownership or the

assets to which the transferring work relates.


If there is a transfer of employment, the employee’s period of service with their first employer counts as service. This means that an employee retains his or her entitlement to accrued annual leave (unless paid out on termination of employment with the first employer), and that the period of service relevant to redundancies is not interrupted, unless the second employer (not being an associated entity) decides not to recognise the employee’s period of service with the first employer. Continuity of long service leave entitlements is dependent on the applicable state legislation.


The FW Act places no obligation on employers to notify employees of a transfer of business, although consultation obligations regarding redundancies may consequentially arise. The consultation obligations regarding redundancies may be enforced by the FWC. An applicable award or agreement may dictate specific consultation processes.


Employees can be dismissed in connection with a business sale if their position is genuinely redundant (discussed below at questions 6.5 and 6.6).


An enterprise agreement will continue to apply to a transferring employee while they are performing transferring work until it is terminated or replaced. However, the new employer may apply to the FWC for an order varying the application of the transferring instrument.



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“Non-compete” covenants place the most onerous obligations on employees, prohibiting employees from approaching clients, working for a competitor or establishing their own business in competition with their former employer during the restraint period.


Restrictive covenants are generally unenforceable on the grounds of being contrary to public policy. However they will be enforced where an employer can show that they have a legitimate interest to protect, and the restraint imposed is no more than reasonably necessary to protect that interest. A legitimate interest includes goodwill, protection against soliciting employees or the release of confidential information and trade secrets. Under the common law, covenants that are unreasonable will not be enforced. The exception is under the Restraint of Trade Act 1976 (NSW), which provides that a reasonable restraint will be enforced and allows courts to read down the restraint period to what is reasonable. The non-enforceability of unreasonable restraints has encouraged the drafting of cascading clauses that allow any restraint determined to be too wide to be severed, and the remaining more limited but valid restraint to be enforced.


Courts will consider whether consideration for a restrictive covenant has been given to an employee. Where the covenant was part of the employee’s original offer of employment, it can be seen as part of the exchange for the employer’s promise to employ the individual. Where the covenant is introduced after the employment has commenced, it can be linked to a bonus or salary increase in order to gain the employee’s agreement to the terms, particularly if a more onerous restraint is proposed.


Commonly restrictive covenants are enforced by way of an injunction. An employer may also seek compensatory damages and, less commonly, an account of profits.



In Australia, there is no common law right to privacy. However the collection, use and disclosure of personal information is regulated by the Privacy Act 1988 (Cth) (the “Privacy Act”), The Privacy Act contains an “employee records” exemption that relieves employers from compliance obligations. As such, employers are free to collect, use and disclose employee records and outsource employment-related functions without obtaining prior consent, provided these acts are directly related to the employment relationship. Records pertaining to unsuccessful job applicants and contractors are not covered by the exemption, and must be managed in accordance with the requirements of the Privacy Act.Because of the employee records exemption, an employer can freely transmit an employee’s records overseas without prior notification.

case of unsatisfactory performance, whether the employee was made aware of performance concerns and given an opportunity to improve. For a redundancy to be genuine, an employer must follow the consultation requirements and have considered reasonable redeployment opportunities.


An employee can potentially bring one of the following claims: unfair dismissal; general protections; unlawful termination; discrimination; reasonable notice; or breach of contract. Remedies vary in accordance with the particular claim, although employees often seek reinstatement or compensation in FWC proceedings. An income threshold applies to such proceedings, as well as a cap on compensation.


Settlement of termination claims either before or after claims are initiated is common, and is generally formalised in the form of a deed of release (which is akin to a compromise agreement).


Where an employer proposes to dismiss 15 or more employees, for economic, technological, structural or similar reasons, notice must be given to the trade union representing employees affected by this decision and to a federal government agency (Centrelink). Specific consultation obligations regarding the opportunity for trade unions to advocate measures to mitigate the impact of proposed dismissals also apply.


Employees can enforce their rights regarding consultation by application to the FWC. It can make orders seeking to enforce compliance by putting the employees and the trade union in the same or similar position as if the employer had complied with the obligations (excluding reinstatement and compensation).



Non-solicitation, non-dealing and non-compete covenants are the three main restrictive covenants recognised within employment contracts. A “non-solicitation” covenant prevents the employee from pursuing clients, customers or suppliers they had dealings with during their employment. A “non-dealing” covenant prevents dealing with or doing business with anyone who has a business connection with the employer (such as customers, clients or employees) and does not differentiate between the employee soliciting clients or the client approaching the employee for services.



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Australian case law supports an employer’s right to direct employees not to use social media in a manner which could compromise its business interests, reputation or security. This right extends beyond social media activity at work to include outside activities where a connection can be drawn to the person’s employment. Misuse of social media may be in breach of an employee’s contractual obligations and can result in termination of employment.



Most complaints are dealt with by the FWC, which consists of a President, two Vice-Presidents, Deputy Presidents, and Commissioners. In some circumstances, complaints may be dealt with by the Federal Court of Australia or the Fair Work Division of the Federal Circuit Court, either following an unsuccessful attempt to resolve the matter at the FWC or as part of the court’s original jurisdiction. Where an employment-related complaint raises discrimination issues, employees also have the option to pursue a claim under federal anti-discrimination laws or the coexisting state and territory laws, with a determination of the complaint undertaken by the relevant Court or Tribunal vested with jurisdiction under the statutory scheme.


When an employee lodges an unfair dismissal application with the FWC, conciliation is made available on a voluntary basis, although most parties avail themselves of this process. If the parties are unable to resolve the complaint or a jurisdictional objection is raised, the matter goes before the FWC for hearing. “General protection” claims under the FW Act that involve a dismissal must first be heard in a private conference and, if a resolution cannot be reached, the FWC must issue a certificate to this effect. Parties may then apply for consent arbitration, or if the respondent is unwilling, the applicant may bring a claim in either the Federal Court or the Federal Circuit Court. Where there is no dismissal but a general protections breach is alleged, the applicant may bring the matter directly to the Federal Court or Federal Circuit Court if the respondent refuses to participate in a private conference with the FWC. To lodge an application with the FWC, employees must pay a modest fee, subject to a waiver of the fee on the basis of financial hardship.


A significant proportion of all complaints to the FWC are unfair dismissal claims (more than 40% of all applications made to the FWC) and the vast majority of these are finalised either at conciliation or prior to a hearing. In the 2015–2016 reporting year, 34 days was the mean time from the lodging of an application to conciliation, and within the range of approximately one month to four months to reach finalisation.

However, the overseas entity in receipt of such records does not have the benefit of the exemption, and is obliged to handle them in accordance with the privacy laws in its own jurisdiction. Personal information of employees that does not directly relate to their employment relationship and records of unsuccessful job applicants and contractors that are transferred overseas are subject to the requirements of the Privacy Act. In these circumstances, the employer will have a positive obligation to take reasonable steps to ensure that the overseas entity complies with the Privacy Act. Including compliance with those requirements as a contractual term in an agreement between the employer and the overseas entity may be regarded as a “reasonable step”.


There are limited circumstances in which access to employee records may be granted by an employer. Because the records of unsuccessful job applicants and contractors are not captured by the employee records exemption, they have the right to request access to their personal information, while current and past employees do not. Permit holders, such as union officials, may also be permitted to inspect or copy employee records on behalf of an employee, where there is a suspected breach of industrial laws.


Pre-employment checks such as medical examinations, substance abuse testing and criminal record checks on prospective employees are permissible to the extent that such checks are necessary to ascertain a candidate’s ability to fulfil the inherent requirements of a role. For example, pre-employment police record checks will usually be permissible in circumstances where an employee will be working with children or vulnerable individuals, will be responsible for handling significant assets or where a particular security clearance is required. If testing does not relate to a specific legislative requirement (e.g. for the mining industry), the inherent requirements of a role, or a work health and safety issue, it risks being challenged as discriminatory conduct or an infringement of the individual’s privacy.


The employer’s right to undertake surveillance of computer usage or by way of listening, tracking and optical devices in the workplace differs amongst the various states and territories. The most comprehensive legislative schemes exist in New South Wales and the Australian Capital Territory, which prohibit workplace surveillance unless there is compliance with prescribed notice requirements. The extent to which computer surveillance in the workplace is regulated depends, in other States and Territories, on whether a computer can fall within the definition of a “listening device”, and in the case of Victoria and Western Australia, whether it falls within the definition of an “optical surveillance device”. Tracking surveillance is regulated in New South Wales, the Australian Capital Territory, the Northern Territory, Victoria and Western Australia.



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Joydeep HorPeople + Culture StrategiesLevel 9, NAB House255 George StreetSydney NSW 2000Australia

Tel: +612 8094 3101Fax: +612 8094 3149Email: [email protected]: www.peopleculture.com.au

Therese MacDermottPeople + Culture StrategiesLevel 9, NAB House255 George StreetSydney NSW 2000Australia

Tel: +612 8094 3120Fax: +612 8094 3149Email: therese.macdermott@ peopleculture.com.auURL: www.peopleculture.com.au

People + Culture Strategies (PCS) is a diverse and strategic provider of solutions in labour and employment law in Australia.

Founded in 2010, PCS has established itself as one of Australia’s most innovative and value-creating professional services firms. PCS works with employers, many of whom are global brand names, to service their legal and strategic needs in people management in Australia.

PCS has a unique approach to partnering with clients to ensure it is ready to respond strategically to any crisis in the most appropriate way across areas and activities such as contract disputes, discrimination, bullying and harassment investigations, unfair dismissal and adverse action claims.

Joydeep Hor is People + Culture Strategies Founder and Managing Principal. He is one of Australia’s most well-known workplace relations lawyers due to his high media profile (both as a sought-after media commentator and prolific keynote speaker) and his representation of several high-profile clients throughout his career.

While an expert in all areas of workplace relations, Joydeep is one of Australia’s “go to” lawyers for complex and sensitive terminations of employment and also for addressing all aspects of workplace behaviour and culture.

Joydeep graduated from Harvard Business School in 2016 where he completed the Harvard’s Owner President Management Program. He already has professional qualifications as a Fellow of the Australian Human Resources Institute, Chartered Fellow of the United Kingdom’s Institute of Personnel and Development, a Master of Laws from University of Sydney (where he previously completed a Bachelor of Laws degree with Honours and a Bachelor of Arts majoring in English literature).

Therese MacDermott is a consultant at People + Culture Strategies and an Associate Professor at Macquarie Law School, where she is teaches Discrimination and the Law, Dispute Management and Resolution and Labour Law.

Therese has a diverse legal background that includes a number of years in private legal practice, an appointment as a part-time Tribunal member hearing discrimination cases and experience in legal consulting in the Pacific. Her particular expertise lies in the areas of dispute resolution, labour law and anti-discrimination law. Therese has published extensively in these areas and is a regular presenter at conferences and a commentator on discrimination and employment law issues.



Decisions made by the FWC may be appealed with the Commission’s permission. The primary consideration is whether it is in the public interest to grant permission. Questions of law may be referred by the FWC to the Federal Court which must then be determined by a Full Bench of that court. The 2015–2016 FWC Annual Report states that 98% of appeals were listed within 16 weeks.


Chapter 7

A. Lopes Muniz Advogados Associados

Antônio Lopes Muniz

Zilma Aparecida S. Ribeiro

Brazil


The workers that are protected under the law are, as a general rule:■ pregnant employees;■ workers suffering from labour-related illnesses and some

specific diseases not labour-related;■ workers who are directors of Workers Unions;■ workers that are elected as representatives of the group of

workers in the internal Cooperative of Credit of the company, if any; and

■ workers that are elected as representatives of the group of workers in the Labour Accident Prevention Committee.

Please note that Collective Bargaining Agreements can add other types of workers that would also be protected. For example, some agreements protect workers that are close to retirement (12/36 months) and one year before male workers have to enlist for military service.Basically, the Labour Code distinguishes workers subject to a work journey control from those not subject to such control (high level workers, e.g., directors, heads of department, mid-level management and field workers). Even though high level workers are under more flexible regulation all workers are equally protected under the labour legislation, taking into account the particulars of their respective agreements as follows are:■ workers paid on a monthly salary;■ workers paid by the hour;■ workers hired for an undetermined term; and ■ workers hired for a determined term.Determined term labour contracts are an exception and only valid for:■ a period of experience up to 90 days; or■ up to two years if the services to be rendered or the activities

of the company are of transitory nature that could justify the fixed term.

Determined term labour contracts for less than two years may be renewed once, provided that the total duration does not extend for more than two years.


No. In Brazil, facts will prevail over form. Oral agreements, however, are very rare. It is always highly recommended that written agreements are executed.



The main source of employment law in Brazil is the “Consolidation of Labour Laws” known as the “Labour Code”. The Labour Code was enacted on 1 May 1943 and has been subject to many changes, amendments and adaptations since then, including amendments provided by the Federal Constitution enacted on 5 October 1988.That said, employment relations in Brazil are regulated, mainly, by the following sources:■ Law-Decree 5.452/1943 – Labour Code;■ Articles 6, 7 and 8 of the Federal Constitution;■ Law 605/1949 – regulates weekend pay;■ Law 3.207/1957 – regulates payment of commissions to

salesmen;■ Law 4.090/1962 – regulates the payment of the 13th salary

(Christmas bonus);■ Law 5.811/1972 – regulates employment contracts of workers

in the area of oil (offshore);■ Law 5.889/1973 – regulates employment contracts of workers

in rural areas; ■ Law 6.019/1974 – regulates the hiring of temporary workers;■ Law 6.919/1981 – regulates the Severance Fund (FGTS), to

be paid to members of the Executive Board of the company; ■ Law 7.064/1982 – regulates expatriation and repatriation of

residents in Brazil and hiring of any foreign workers;■ Law 7.418/1985 – regulates payment of workers’

transportation costs, residence-workplace-residence;■ Law 7.783/1989 – regulates workers’ rights to strike;■ Law 8.036/1990 – regulates the Severance Fund (FGTS) to

be paid to terminated workers;■ Law 9.029/1995 – prohibits discrimination in the work place;■ Law 9.279/1996 – regulates workers’ invention rights;■ Law 10.101/2000 – regulates Profit/Results sharing schemes; ■ Law 11.770/2008 – regulates maternity leave;■ Ordinance MT 03.214/1978 – sets forth norms related

to labour health and safety issues that are regulated by 36 different Ordinances issued by the Ministry of Labour;

■ there are several other laws regulating certain regulated professions as physicians, engineers, etc.; and

■ the content of Collective Bargaining Agreements.


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A. Lopes Muniz Advogados Associados Brazil

Note that, independent from the existence of a written contract, employees must have the employment registered in the official Labour Booklet (Carteira de Trabalho) which is an official document. This document will indicate the employer, date of hiring, job, salary and date of termination. Employers that do not observe this are subject to fines by the Ministry of Labour.


Labour rights in Brazil are extensively regulated in the law and any contract of employment, whether in writing or not, imply all the labour rights provided for in the law. Contracts of employment include not only the labour contract itself but also any and all regulations, policies and plans applicable to workers and issued by the company, and collective agreements. (Please see also the answer to question 1.5 below.)


Yes. The following minimum terms and conditions must be observed:■ Legal minimum wage or the minimum as negotiated in

Collective Bargaining Agreements;■ 30-day vacation with payment of vacation additional pay (⅓

of the salary);■ maximum work hours – eight per day, up to 44 per week;■ Severance Fund (FGTS);■ 13th salary;■ overtime limited to two hours per day (only for workers

subject to a work journey control). Overtime is paid with an addition of 50%; and

■ pre-notice for termination (30 to 90 days) (please see the answer to question 6.1 below).


Collective bargaining agreements in Brazil (executed between Workers Unions and Employers Unions), as a general rule, take place at industry level, and refer in general to wages, tenure, overtime, outsourcing, social benefits and procedures for election of members of the Labour Accident Prevention Committee. There may be agreements applicable to one specific employer (executed between Workers Unions on one side and one or more specific companies on the other side) usually they will relate to specific issues related to the companies involved and their norms can only change the rules of the collective bargaining executed between Unions, if more favourable to the workers.



There are Trade Unions that represent workers and Trade Unions that represent employers of the same industry. Trade Unions’ rights and responsibilities in Brazil are regulated by article 8 of the Federal Constitution and by article 511 to 539 of the Labour Code.

Trade Union recognition requires:■ the association of 1/3 of the companies of the same industry

(employers) or 1/3 of the workers of the same industry;■ mandate of three years for the respective Board of Directors;■ the president must be a Brazilian citizen, born in Brazil.

Other representatives need to be Brazilian citizens but can be a naturalised foreigner;

■ mandatory registration of the Union before the Ministry of Labour; and

■ the territory covered by any given Union may be Municipal, State, Regional or Federal. However, only one Union can be recognised in one specific territory for a specific industry.

Note that, as summarised above, the general rule is that the Union represents an industry and the exceptions are the Regulated Professions (there are close to 60 – for example, engineers, nurses, chemists, lawyers, accountants, etc.) these professionals are represented by their specific Unions.


Unions have the following rights:■ represent employers or workers of a specific industry before

the executive, the judiciary and the legislative;■ negotiate and execute Collective Bargaining Agreements;

and■ collect fees from the employers or from the workers they

represent.It is important to point out that Collective Bargaining Agreements will impact all employers and all employees of each industry or each regulated profession, as the case may be, in each specific territory, whether or not they are unionised.


Yes, Law 7.783/1989 regulates workers’ rights to take industrial action and imposes some formal requirements to be complied with by the Workers Unions before they take action.


No. As mentioned above employees and employers are represented by their respective Unions. Works Councils may be negotiated in the collective bargaining, and their scope, rights and obligations will vary from case-to-case. The closest bodies to Works Councils as provided by the law are for instance: Labour Accident Prevention Committees; and Employee Committees that may be elected from time to time to negotiate profit sharing agreements. Representatives of employees are elected by the employees.


Works council will only have co-determination rights if they are created or recognised by the company with such powers.


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Please see the answer to question 2.5 above.


Although not mandatory, Bylaws of Corporations may provide for participation of employees in the Board of Directors (Administrative Council) in which case the members will be chosen in a direct election by the group of employees together with their respective Workers Union.

3 Discrimination


Yes. Brazilian Law strictly prohibits discrimination in relation to salaries, exercise of any function and/or hiring/termination criteria based on gender, age, race, civil status, sexual orientation or disability.


Please see the answer to question 3.1 above.


Employers and the alleged offender have the right of defence in any discrimination claim.


Discrimination rights (as well as any other rights) will be enforced in a Court of Law. Employer and employees may settle claims at any time before or during the processing of the claim.


■ Reintegration to the job with payment of all salaries since the unfair termination or payment in double of all salaries since the unfair termination.

■ Granting of equal conditions of employment if related to unequal treatment.

■ Moral Damages (pain and suffering).


No, atypical workers in Brazil have the same protection as regular workers.



Maternity leave lasts for 120 days and it may start, at employees’ choice, on any day during the last month of pregnancy. This period may be extended for an additional 60 days, under the terms of Law 11.170/2008, if employee and employer agree and, in case the extension is agreed, the employer will have the right to a tax benefit equal to the amount of the salary of the employee during this extension period.It is important to keep in mind that the maternity leave term may also be extended by Collective Bargaining Agreements.


It is important to point out that employees in Brazil have job tenure from the date of conception until five (5) months after the delivery of the child. That is, assuming that the employee started her leave 28 days before the birth and returned to work 120 after that (90 days after the birth) she will still have two (2) months of job tenure.It is important to keep in mind that this period may be extended by Collective Bargaining Agreements.


A female employee has the right to the remainder of the job tenure period. She may also have the right to breaks for breastfeeding (please see the answer to question 4.6 below).


Yes. Fathers are entitled to paternity leave of five (5) days.It is important to keep in mind that the paternity leave term may also be extended by Collective Bargaining Agreements.


The same rights of maternity leave apply for cases of adoption. Other rights will only apply if they are included in Collective Bargaining Agreements.


Not under the law, except in the case of breastfeeding. Until a child reaches six (6) months of age, the mother shall have two half-hour intermissions during the day to breastfeed. Under doctors’ recommendation, this period of six (6) months may be extended. Other rights will only apply if they are included in Collective Bargaining Agreements.


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5 Business Sales


In general, in the case of a share sale, labour contracts remain linked to the employer’s business. In the case of a sale of assets, related employees may be transferred if the purchaser desires and the employees agree. In this case, the purchaser will assume all past labour liabilities.


Sales of businesses have no effect on Collective Bargaining Agreements. All employees will maintain all their rights, including time of service to that company that will continue counting without interruption in connection to any benefits that may be based on time of service.


No. Labour legislation does not provide for any information and/or consultation rights on a business sale.


Yes. Labour Law, as a general rule, does not impose any restriction on the termination of employees with no need to justify the decision, except those with rights of temporary job tenure mentioned in question 1.2 above, and if a collective dismissal is characterised (see the answer to question 6.9 below).


No. Any change to labour agreements need to have the consent of the employee. Any change that is considered unfavourable to the employee, even with the employee’s consent will be deemed null and void by the labour courts.



Termination of employment in Brazil, in general, requires a pre-notice of 30 days during the first year of the contract. After the first year the pre-notice period is increased by three days per year, up to the limit of 90 days. In some cases, depending on Collective Bargaining Agreements, pre-notice for some employees (after a determined age for instance) may require longer pre-notices.

Pre-notice period, however, can be either worked or indemnified. If the employee is required to work during the pre-notice period, he/she will have their daily work journey reduced by two hours.Note that if the employee resigns, he/she is required to give pre-notice of 30 days to the employer or in lieu of the pre-notice, the employee should pay the employer an amount equal to the monthly salary.


No. Labour Courts have ruled against this practice.


In general, employees have no protection against dismissal. (Please see the response to question 6.4.) A dismissed employee is one that has been notified that he/she has been dismissed with cause or without cause.No consent from any third party is required for dismissing an employee.


The only protection against dismissal applies to the cases of employees that have temporary job tenure. The protection is usually related to:■ pregnant employees;■ workers suffering from labour-related illnesses and some

specific diseases not labour-related;■ workers who are directors of Workers’ Unions;■ workers that are elected as representatives of the group of

workers in the internal Cooperative of Credit of the company, if any; and

■ workers that are elected as representatives of the group of workers in the Labour Accident Prevention Committee.

(Please also see the answer to question 1.2 above.)


Outside of the mentioned exceptions (see the answer to question 6.4 above), and provided that a “mass dismissal” is not characterised (see the answer to question 6.9 below), there are no limits on any private employer to dismiss employees, be it for individual reasons or business-related reasons.A dismissed employee, without cause, in general, has the right to receive the following compensation:■ pre-notice (30 to 90 days’ salary);■ proportional salary for the days worked after last payment;■ proportional 13th salary (1/12 per month from January to

December);


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■ proportional vacation pay (1/12 per month counting from his last vacation);

■ proportional vacation bonus (1/12 per month counting from his last vacation);

■ authorisation to withdraw the Severance Fund (8% of the salary deposited every month during the life of the labour agreement); and

■ penalty equal to 40% of the total amount deposited in the mentioned Severance Fund.

Please note that the pre-notice term is counted as the work period for all effects of the law and included in the calculation basis for all labour rights.A dismissed employee for just cause will only be entitled to receive proportional 13th salary and vacation and will not have the right to withdraw the Severance Fund and to receive the 40% penalty.


Specific procedures for individual dismissals are:■ without cause:

■ employer gives notice of the termination and pays the termination rights within 10 calendar days from the delivery of the notice; and

■ employer and employee must submit the termination forms to the Ministry of Labour or to the Workers Union for homologation if the employee has worked for a period greater than one year; and

■ with just cause:■ the same as above, plus a detailed description in writing of

the reasons for the just cause dismissal, and in most cases, Workers Unions refuse to homologate the termination.

Note that, in the case of employees that are directors of the workers union, the dismissal for a just cause must be preceded by a judiciary investigation of the facts.


A dismissed employee can file claims related to any and all labour rights before a Labour Justice Court. It is important to point out that the claims must observe the statute of limitation as follows:■ claims have to be filed up to five (5) years after the labour

right was allegedly breached; and■ up to two (2) years after the termination of the labour

agreement whatever the reason, whichever comes first.As labour claims are usually based on facts arising from the day to day relationship between the parties, remedies for a successful claim will vary from case to case.


Yes. However, this needs to be carefully studied, on a case-by-case basis, as out of court settlements in labour-related complaints can always be re-discussed in court.


No, unless it is a “mass dismissal”. If this is the case, although the legislation does not require any formality, the Superior Labour Court has consistently required that “mass dismissal” be negotiated with the Workers Union. It is important to note, also, that there is no firm indication from any decision (or from the doctrine) of what would be considered a “mass dismissal” (5, 10, 20% or more of the labour force).


The Labour Court precedents require that the Workers Union participate of the mass dismissals procedures in order to seek, by means of negotiation, additional benefits to the targeted employees. If the employer fails to comply with this requirement, the Workers Union may file a specific complaint before the local Labour Court aiming at annulling the dismissals and the reinstatement of the employees’ labour contracts, plus indemnification.



The most common restrictive covenants are related to non-compete and confidentiality clauses.


They would be considered enforceable, in principle, in relation to employees whose functions give them access to proprietary information. There is no specific period defined in the law. For confidentiality the usual term is five (5) years after the termination. For non-compete, in general terms, the courts consider that it would be reasonable if restricted to a specific market segment (competitive products) and if enforceable for up to two (2) years.


Yes. If the non-compete covenant restricts the former employee from finding a suitable job, the company must pay him/her at least an amount equal to his/her monthly salary for every month the restriction applies. A confidentiality covenant does not generate compensation by law.


As violations of restrictive covenants may configure a criminal offence and/or a civil illicit, companies may submit the case to a Criminal or a Civil Court including requests for injunctions, if necessary. In some specific cases the Labour Courts may be considered concurrently competent for judging the complaint.


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Employment-related complaints are under the jurisdiction of the Labour Justice.The Labour Justice is a sub-set of the Federal Court System and it is composed of:■ First Instance Courts composed by a singular judge.■ Regional Courts of Appeal composed of several chambers

(the number of judges and chambers may vary from region to region), each one with three (3) judges for ordinary appeals and special composition chambers for collective labour claims, writs of mandamus, rescissory action, etc.

■ The Superior Labour Court composed of 27 justices and eight chambers, each one with three (3) judges for special appeals, and special composition chambers with a higher number of justices for specific appeals from collective labour claims, individual labour claims, and for writs of mandamus, rescissory action, etc.

Cases that involve Constitutional Issues can be appealed to the Supreme Court.


There is no mandatory previous conciliation out of Court. In the labour system, however, the Courts must try to lead the parties to conciliation before the presentation of the defence and at the beginning of any other hearing in the first instance.Employees do not have to pay any fees to submit a claim. However, if the employee loses the case he or she may be required to pay Court fees.


About one year in the first instance.


Yes. All decisions may be subject to appeal. Appeals to the Regional Court of Appeals will take about one year to be judged. Appeals to the Superior Labour Court may take another 18 months.



Due to restrictions on prospective employees’ background checks, data protection rights may affect employment relationships, as Item X of Article 5 of the Federal Constitution, in general terms, protects people’s privacy and intimacy.


Yes, in principle, all documents and information held by the employer related to the employee are considered data belonging to both parties. As a consequence, the employee can file an injunction to request the exhibition of such data from the employer, demonstrating that it is necessary for him or her to exercise labour rights. The employer cannot refuse to provide data containing in any legal registry forms or other information if the employee proves its existence.


Although there is no express reference to this type of pre-employment check, Brazilian Labor Courts have consistently decided that it would only be acceptable in cases where the law requires it (e.g. police force) or in cases where the performance of the function would reasonably require such check (e.g. treasury positions, workers involved in the transportation of valuables or providing private security services).


Yes. However, for the employer to exercise their right to do so, it is absolutely mandatory that the employers make it absolutely clear in writing to the employees the company policies on the use of the company’s means of communication and its legal nature of work tools, and that employee communications through these means will be monitored by the employer.


Employers can control (block) the use of social media in the workplace. The employer cannot control the use of social media outside of the workplace. However, employees will always be responsible for any damages that their use of social media can cause to their employers.



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Antônio Lopes MunizA. Lopes Muniz Advogados AssociadosAv. Brigadeiro Faria Lima 1656 – 5o andarSão PauloBrazil

Tel: +55 11 3038 0702Email: [email protected]: www.almlaw.com.br

Zilma Aparecida S. RibeiroA. Lopes Muniz Advogados AssociadosAv. Brigadeiro Faria Lima1656 – 5o andarSão PauloBrazil

Tel: +55 11 3038 1608Email: [email protected]: www.almlaw.com.br

Since the firm’s foundation in 1975, we have guided ourselves for the rendering of comprehensive legal services with credibility, ethics and high standards of excellence to local and multinational clients.

We are recognised as a multi-field action firm, known for solutions that grant security for our clients to face their legal challenges.

Our work model is based in specialised teams, led by one or more partners that participate in the finding of solutions and strategies for each case, assuring the high level of quality for which we are recognised.

We constantly invest in training and improvement and in the careers of our collaborators who have at their disposal modern office facilities and up-to-date technological resources for promptly and fully attending to the needs of clients and their projects.

Antônio Lopes Muniz is the founding partner of the firm. He has over 40 years of experience working as a lawyer, both in-house and as a legal consultant. Mr. Muniz was as a member of the Board of Examination of new lawyers for the São Paulo Bar Association. He also served as the Secretary for the São Paulo Bar Association Court of Ethics and a member of the Court of Ethics. He has been recognised since 2012 by the publication “Análise Advocacia 500”, the most prestigious publication on the Analysis of Legal Services, as one of the Brazil’s most admired Lawyers in the field of Labour Law.

Zilma Aparecida S. Ribeiro is the partner responsible for the labour area of the firm, both in the field of litigation and in advisory. She specialised in Labour Law at the University of São Paulo from which she holds a Master’s Degree. Ms. Ribeiro has over 30 years of experience working as a lawyer, both in-house and as a legal consultant.



Chapter 8

Stikeman Elliott LLP

Patrick L. Benaroche

Hélène Bussières

Canada

employment contract, assuming that it can be proven. In practice, the great majority of employment contracts in Canada are not made in writing. Nor is there any requirement that employees be provided with any specific information in writing at the time of hiring. As such, it is common for employees to have either a simple verbal agreement or an informal letter of hire when they are employed. More senior executives may have a more formal written agreement which will contain detailed terms and conditions of employment.


Yes. Regardless of what form the employment contract takes, all employment relationships implicitly include the employer’s obligation to provide work, to pay for the work and to provide a safe working environment for its employees. As for the employee, every contract of employment implies that the employee will carry out the work and be loyal to his employer, not only during the term of employment but also for a reasonable period of time after termination of employment.


Yes. Minimum terms and conditions of employment are contained in the various employment standards and legislation of each Canadian province and in the Canada Labour Code for federally regulated businesses. Thus, for example, there are minimum standards established for wages, vacation pay, overtime pay, statutory holidays, hours of work, leaves of absence, and termination of employment.


The freedom to associate and to bargain collectively is a fundamental freedom under Canadian law. Approximately 30 per cent of the workforce, including public sector employees, have their terms and conditions of employment agreed through collective bargaining. This rate rises to close to 40 per cent in Québec and British Columbia. Collective bargaining can take place either at company level or, in certain circumstances (e.g., the construction industry), at industry level.



Several sources of employment law exist in Canada; firstly, there are a host of federal and provincial statutes specifically designed to deal with employment issues including employment standards, workers’ compensation and workplace discrimination. There is also the common law in each province (the Civil Code in the province of Québec), as well as jurisprudence by Canadian courts. In Québec, various texts by legal scholars, called “doctrine”, can also inspire employment law and finally, the contract of employment between the parties can be a source of law between them.


Only workers who are considered “employees” are protected by employment law. Workers are distinguished on the basis of whether they are employees or independent contractors. Most employment laws will have specific definitions of who constitutes an employee within the meaning of that law. In general, an employee will be a person who works for remuneration according to the instructions and under the supervision or control of another person. Many protective measures benefit employees including, for example, the right not to be dismissed without just and sufficient cause if an employee has given more than two years of continuous service (Québec), protection against reprisals for employees who are pregnant, or who are required to be absent for the purposes of child or family care, etc. All employees are protected against the right to be dismissed with a prior reasonable notice if there is no cause for dismissal.Employees can also be distinguished on the basis of whether they are ordinary employees or management personnel. Employees are distinguished from managers on a number of factors, including hours of work, mode of remuneration and whether they have the ability to hire and dismiss other workers in the course of exercising their work. The distinction is relevant as certain legal treatments may differ for employees and managers, as well as for senior managers.


No. The employment contract is not subject to any particular formality in Canada. Even a verbal agreement can constitute an


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No. There are no requirements to set up works councils in Canada. Unions are the form through which employee representation occurs.


This is not applicable. (See question 2.4, above.)


This is not applicable. (See question 2.4, above.)


No, they are not.

3 Discrimination


Yes. All jurisdictions in Canada have legislation designed to protect employees from unlawful discrimination. Several categories of employees are protected such as pregnant workers, disabled workers and those that are the subject of retaliation for having exercised their legal rights. All jurisdictions in Canada prohibit discrimination based on race, national, ethnic or place of origin, colour, creed, marital status, physical or mental disability or sex. Certain jurisdictions also prohibit discrimination on the basis of ancestry, criminal conviction and political beliefs. All jurisdictions prohibit discrimination on the basis of age, although the definition of age differs in each jurisdiction. In most jurisdictions, mandatory retirement has been abolished and an employee cannot be dismissed purely by virtue of the fact that he or she has reached the normal age of retirement.


Employers are prohibited from discriminating in respect of hiring, apprenticeship, duration of probationary period, vocational training, promotion, transfer, displacement, layoff, suspension, dismissal or conditions of employment of an employee or the establishment of categories or classes of employment. Similarly, an employer cannot require a person to give information on a job application regarding any of the prohibited grounds of discrimination mentioned in question 3.1 above.


Yes. The principal defence raised against a charge of discrimination in employment is that the adverse action was taken for a legitimate,



In all jurisdictions, employees have the right and freedom to join or form a union of their choice. In order to be recognised or certified as the bargaining agent for a group of employees, a union must secure the support of a majority of the workers who form the bargaining unit. A “majority” is defined as 50 per cent of the workers plus one. Typically, employees will be approached to sign union membership cards; these cards will be compiled. Once a sufficient number of cards have been obtained, a petition will be filed before the appropriate labour board who will certify the union as a bargaining agent for the group of employees targeted. In certain circumstances, if the union obtains support of less than 50 per cent plus one but more than 35 per cent (or 40 per cent in certain provinces), a vote can be ordered by the labour board to determine whether the union will be recognised. If the employer does not agree with the bargaining unit as defined by the union, there is a procedure for contestation, and a hearing before the labour board will be held prior to certifying the union until such time as the bargaining unit has been properly defined. In certain jurisdictions in Canada, voluntary recognition by an employer of a union as a bargaining agent for employees is permitted.


Canadians believe that it is in the public interest to resolve industrial disputes quickly and efficiently. The primary rights of a trade union are firstly to bargain collectively with an employer. Certification gives a union the exclusive authority to bargain collectively with an employer on behalf of all employees in the bargaining unit. Both parties have the legal duty to bargain in good faith. In the event that the parties are unable to reach an agreement, the employees, through their union, have the right to strike, and employers have the right to lock out employees. In Québec, there exists legislation which expressly prohibits the use of replacement workers during a strike or lockout.A union also has the right to have disputes or grievances arising during the life of a collective agreement decided by arbitration. All disputes between a union and an employer concerning the interpretation, application, administration or alleged violation of a collective agreement must be settled by arbitration. Also, the union can, at any time during the collective bargaining process, request the intervention of a Government-appointed conciliator to facilitate the bargaining process. In the case of a first collective agreement, either party can also ask for binding arbitration if the collective bargaining or conciliation process is unsuccessful.


Yes. A union’s right to take industrial action such as a strike or picketing is regulated by law; strikes can be conducted lawfully once majority support by the employees in the bargaining unit has been secured. Picketing actions (including secondary picketing) are permitted as a form of free expression but must be conducted in such a way as not to interfere with the flow of business on the employer’s premises.

Stikeman Elliott LLP Canada


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The human rights tribunal has the power to order a person to cease any discriminatory practice and to take measures to prevent similar practices from happening again. The tribunal can also restore such rights, opportunity or privileges to the victim as were denied to him as a result of the discriminatory practice and to compensate the victim for any lost wages and expenses and other damages incurred as a result of the discriminatory practice, including moral and exemplary (punitive) damages where appropriate.


No. So-called atypical workers (i.e., part-time, fixed-term, contract or temporary agency workers) do not have additional protection but they do benefit from the same protections which prohibit discrimination in employment as are applicable to other categories of workers.



The length of maternity leave can vary from one province to another as well as under federal jurisdiction. Each jurisdiction will generally state that a pregnant employee who has worked for the same employer for a specified period of time is entitled to unpaid maternity leave of approximately 16 or 18 weeks, depending on the jurisdiction.


A woman on maternity leave is entitled to obtain employment insurance (EI) maternity benefits. In order to be eligible for these payments, an employee must have accumulated at least 600 hours of insurable employment during the qualifying period prior to the maternity leave. These benefits are payable during the period that commences eight weeks prior to the week in which delivery is expected or the week in which delivery occurs, whichever is the earlier. The maximum number of weeks for which benefits may be obtained during the maternity leave period is 15 (17 weeks minus a mandatory two-week waiting period).As a general rule, the basic rate for calculating employment benefits is 55 per cent of the employee’s average insurable weekly earnings, up to a maximum amount. Since 1 January 2012, the maximum yearly insurable earnings amount is $45,900, which means that, regardless of an employee’s income, the maximum that a pregnant worker can receive from EI benefits during maternity leave is $485 per week.It is not uncommon for employees to “top up” these amounts through a group plan.


While on maternity leave, a woman continues to be an employee. At the end of her leave, the employer is required to reinstate her to the

non-discriminatory reason. There are also defences on the basis that discrimination on a prohibited ground is a bona fide occupational requirement. Thus, for example, if a certain level of physical fitness is an absolute requirement for a particular job, it may be permissible to refuse the position to a person who is handicapped and unable to meet the physical requirements of the job. However, no practice will be considered to be a bona fide occupational requirement unless it has first been established that the employer has tried to accommodate the needs of the employee affected, up to the point of undue hardship, taking into account health, safety and cost. In order to determine whether accommodating for the employee has reached the point of undue hardship, courts will look at various factors including the context of the situation, such as whether prior steps to accommodate the employee were taken, the impact on the organisational structure, any applicable collective agreement, provisions in force and any adverse impact on other employees in addition to the cost to the company. A workplace does not have to be entirely reorganised and employers are not expected to have to bear excessive financial costs or expose other workers or members of the public (or even the disabled employee himself) to unacceptable levels of risk to health, safety and general well-being.In order to establish a bona fide occupational requirement, the employer must show three things:1. that the employer adopted the requirement for a purpose

rationally connected to the performance of the job;2. that the requirement was adopted in an honest and good faith

belief that it was necessary to the fulfilment of a legitimate work-related purpose; and

3. that the requirement is reasonably necessary to accomplish the legitimate work-related purpose.


All Canadian jurisdictions have human rights commissions whose purpose is to promote the understanding, acceptance and compliance with legislation designed to prevent discrimination in the workplace. If an employee has reasonable grounds to believe that he has been the victim of a discriminatory practice, he may file a complaint with the appropriate human rights commission. Once a complaint is filed, the commission will typically designate a person to investigate the complaint. During the investigation, both parties are invited to provide their versions of events. At the conclusion of the investigation, the investigator submits a report of his findings to the commission. Upon receipt of the report, the commission decides whether to dismiss the complaint or refer the matter for a hearing before the human rights tribunal.Employers are able to settle claims after they have been initiated by participating in a mediation exercise. At any time after a complaint has been filed, the human rights commission may appoint a conciliator to facilitate mediation between the parties. If the matter goes to a hearing, all parties are given the opportunity to appear in person or through legal counsel and to present evidence and make representations. These hearings are public unless confidentiality is essential to protect public security, the fairness of the hearing, undue hardship to the persons involved or the life, liberty or security of a person. In Ontario, claimants are able to address the human rights tribunal directly rather than having complaints first assessed and then forwarded by the commission.



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The successor employer is bound by the collective agreement entered into between the union and the vendor. The purchaser steps into the shoes of the seller and assumes all rights, powers, duties and liabilities in connection with the collective agreement and becomes a party to any proceeding relating to the said collective agreement.In all Canadian provinces other than Québec, the purchaser who chooses to offer employment to non-unionised employees can determine the terms and conditions of employment that it offers to the employees of the vendor. However, the purchaser who employs the seller’s employees has to recognise the past service of these employees with the seller for certain purposes set forth in employment standards legislation such as vacation entitlements and statutory notice of termination of employment. The purchaser is not obliged to assume the past years of service of the employees with the seller for the purposes of calculating the reasonable notice of termination of employment at common law. In practice, however, it is common for a purchaser to recognise the past years of service of the employees so as not to demotivate the employees from joining the purchaser’s organisation.In the province of Québec, the purchaser must recognise the employee’s previous years of service for all purposes.


There are no mandatory consultation rights on a business sale. However, collective agreements may contain provisions requiring the employer to inform the union in advance of a transaction affecting the business.If the sale of a business results in a mass layoff, the employer will typically need to inform the Minister of Employment of the province in advance of the effective date of the collective dismissal.


In Canadian provinces other than Québec, the purchaser has the option to employ or not to employ the seller’s non-unionised employees. Employees who do not receive or do not accept an offer of employment from the purchaser will be terminated as a result of the business sale. All obligations and liabilities towards the employees remain with the seller, including responsibility for notice, severance or other termination entitlements.In the province of Québec, all employees have a right to be transferred to the purchaser’s business. If a purchaser fails to continue to employ one non-unionised employee after the sale of the business, such an employee, if he accumulated two years of service or more, has the right to challenge the termination of his employment and may seek to be reinstated in the purchaser’s business if his dismissal is deemed to have been made without just and sufficient cause.


In all Canadian provinces other than Québec, the purchaser who chooses to offer employment to employees of the seller can

position that she held prior to the leave, or to an alternative position of comparable nature. Also, the employer may have to continue making payments to any applicable group benefit or insurance plans, or provide the employee with an option to maintain these benefits at her own expense. Finally, some jurisdictions prohibit any loss of seniority in respect of an employee who was on maternity leave.


Yes. All jurisdictions provide for parental leave in their employment standards legislation. This means that leave is available for fathers as well as mothers. Parents are entitled to an unpaid parental leave of between 35 and 52 weeks, depending on the jurisdiction. Parental leave may be taken by both parents in some jurisdictions and must be shared between the parents in other jurisdictions.


The rights of adoptive parents are usually the same as those provided for natural parents. Moreover, all parents are protected against any form of discrimination or reprisal as a result of having taken maternity or parental leave.


No. Employees are not entitled to work flexibly if they have dependent care responsibilities. However, an employee is entitled to unpaid leave ranging between three and 10 days, depending on the jurisdiction, in any given year, in order to meet the responsibilities related to the health, care or education of a family member. We are not aware of any law that would impose a general duty on employers to accommodate employees with respect to any responsibilities that they might have caring for dependants.

5 Business Sales


Upon the sale of shares by a vendor, the identity of the employer does not change but merely that of the shareholders. The employment contracts and collective agreements that are in force between the employer and its employees remain in full force and effect, and the employer simply retains all of its obligations and liabilities towards its employees.In a sale of assets, the unionised employees are automatically transferred to the purchaser by operation of law. In all Canadian provinces other than Québec, the non-unionised employees are not automatically transferred to the purchaser upon the sale of a business. The purchaser has the option to employ or not to employ the seller’s employees. The vendor retains liability relating to all employees who do not receive or who do not accept offers of employment from the purchaser.In the province of Québec, all non-unionised employees are automatically transferred to the purchaser upon the sale of a business, on the same terms and conditions of employment as those which apply immediately prior to the closing of the sale.



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Dismissals based on prohibited grounds of discrimination are illegal. Employees can file complaints before human rights tribunals or labour boards in order to contest the termination of their employment if it was based on a prohibited ground of discrimination. Moreover, in the province of Québec, employees who have accumulated two years of continuous service or more are protected against dismissal made without just and sufficient cause. The same protection applies to employees of federal undertakings who have accumulated 12 months of continuous service or more and to employees in the province of Nova Scotia who have accumulated 10 years of service or more.Consent from a third party is not required before a dismissal takes place.


Yes. Several categories of employees are protected, such as pregnant workers, disabled workers and those that are the subject of retaliation for having exercised their legal rights. All jurisdictions in Canada prohibit discrimination based on race, national, ethnic or place of origin, colour, creed, marital status, physical or mental disability, sex and family status (in certain provinces).Employees of the province of Québec who have accumulated two years of continuous service or more, employees of the province of Nova Scotia with 10 years of service or more, and employees of federal undertakings with 12 months of service or more are also protected against dismissal made without just and sufficient cause.In addition, employees subject to a collective bargaining agreement or to an employment contract may enjoy special protection against dismissal depending on the terms of the contract.


Employers are entitled to dismiss employees for reasons related to the individual employee or for business-related reasons, so long as those reasons do not violate an applicable employment agreement or laws prohibiting discrimination or retaliation. In the province of Québec, employers must show that they have just and sufficient cause for dismissing employees who have accumulated two years of service or more. The same applies to employees with 10 years of service or more in the province of Nova Scotia, and to employees of federal undertakings with 12 months of service or more.Employees who are laid off due to business-related reasons or who are dismissed without just cause are entitled to receive notice, or pay in lieu of notice, of the termination of their employment. In addition, in Ontario and in the federal jurisdiction, severance pay obligations may apply.


With respect to unionised employees, employees with two years of service or more in the province of Québec, employees with 10 years

determine the terms and conditions of employment that will apply effective as of the closing of the sale. In the province of Québec, the employment agreements of non-unionised employees are automatically transferred to, and binding on, the purchaser of the business. This means that the employees have a right to continue to be employed on the same terms and conditions of employment as those that applied immediately prior to the sale of the business.In practice, in all Canadian provinces, it is customary for the purchaser to offer the seller’s employees terms and conditions of employment substantially similar to those that applied immediately prior to the sale of the business.



In Canada, the concept of “at will” employment does not exist. If the employer does not have just cause to terminate the employee’s employment, the employee is entitled to receive prior notice of the termination of his employment. All Canadian provinces have enacted employment standards legislation which sets forth the statutory minimum notice of termination (and severance pay in the case of Ontario and federal jurisdiction) which must be given to employees in the event of the termination of their employment without just cause. Notice of termination can be given either in time (working notice), in money (pay in lieu of notice) or a combination of both. The duration of the notice of termination or the indemnity in replacement thereof that is required to be given to each employee varies with the length of the employee’s service.In Canada, employees are also entitled to receive a reasonable notice of the termination of their employment. What is “reasonable” is determined on a case-by-case basis after consideration of all relevant factors in each particular case, including: the nature of employment; the length of service; the age of the employee; the level of responsibility of the employee; the employee’s salary and other remuneration; the availability of alternative employment; and the circumstances surrounding the hiring of the employee at the commencement of employment.As a “rule of thumb”, reasonable notice can be calculated by multiplying one, two, three, four or five weeks per each year of service, up to a maximum of 24 months, in the absence of extraordinary circumstances.


Not if this possibility is not included in the employee’s employment contract. “Garden leave” arrangements are not common in Canada. This type of arrangement could be challenged by the employees on the basis that the employer is not fulfilling its obligation to provide work to its employees. This means that an employee could allege that the termination of his employment is effective as of the beginning of the “garden leave” and that the employee would therefore be entitled to receive all notice, pay in lieu of notice or severance pay flowing from the termination of his employment as of that date. Similarly, the starting point of the duration of post-employment restrictive covenants would be the date on which the “garden leave” begins.



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In certain provinces, employers who fail to provide advanced notice of mass termination to the Minister of Employment may have to pay to their employees an indemnity equal to the employee’s wages for a period equal to the time period or remainder of the time period within which the employer was required to give notice to the Minister. Furthermore, an employer who does not give notice of the collective dismissal to the Minister of Employment within the delay provided in the applicable employment standards legislation may be guilty of a penal offence and liable to pay a fine of an amount which is set forth in the applicable employment standards legislation.



Restrictive covenants usually include provisions protecting the confidentiality of information pertaining to the employer’s business, non-solicitation clauses prohibiting the solicitation of the employer’s customers, suppliers and personnel as well as non-competition clauses.


In order to be enforceable, restrictive covenants must be limited to the protection of the legitimate interests of the employer. Restrictive covenants, such as non-competition clauses, must be reasonable in their duration, in their geographical scope and in the scope of the activities that are prohibited. Generally, non-competition clauses will not be enforceable if the duration is longer than 9–12 months in common law provinces or 18–24 months in the province of Québec. Courts will not “read down” or modify a covenant that they find to be unreasonable; the clause will simply be declared to be entirely unenforceable.


When restrictive covenants are given at the time of an employee’s hiring, the employment of the employee constitutes sufficient consideration for the restrictive covenant. In common law provinces, additional consideration is necessary if the restrictive covenant is entered into during employment.


An employer can enforce a restrictive covenant by seeking an injunction to prevent the employee from violating the covenant or by instituting a lawsuit claiming from the employee (and sometimes from his new employer) the damages suffered by the former employer as a result of the breach, by the employee, of the restrictive covenant.



Certain provinces such as Québec, Alberta, Manitoba and British

of service or more in Nova Scotia, and employees with 12 months of service or more in federal undertakings, employers should follow a fair procedure to avoid a finding of unjust dismissal. What amounts to a fair procedure depends on the reason for the dismissal, but will generally involve respecting the rule of progressive discipline and imposing a sanction that is proportional to the offence committed by the employee. With respect to the termination of employment based on the employee’s poor performance, the employee must have been given a reasonable opportunity to meet the required standards of performance and must have been warned that he was at risk of dismissal.


A unionised employee who was dismissed may bring a grievance contesting his dismissal under the collective agreement. This grievance will be heard by an arbitrator or a board of arbitration. If the dismissal is found not to be for just cause, then the employer will have to reinstate the employee in his employment, normally with full back pay.A non-unionised employee who is dismissed may bring an action at common law or civil courts alleging that the cause relied on by the employer was not such as to warrant dismissal without notice.In the provinces of Québec and Nova Scotia, as well as under federal jurisdiction, employees can seek to be reinstated in their employment with full back pay if they have accumulated the required number of years of service. If reinstatement is deemed to be inappropriate or unpractical, employees can receive, in addition to the compensation for the wages that they lost since the date of their dismissal, an indemnity to compensate them for the loss of their employment.


Employers can settle employment claims either before or after they are initiated. Such a settlement must, however, comply with the employment standards legislation applicable to each province. In addition, in the province of Québec, employees cannot validly renounce in advance their right to receive a reasonable notice of termination of their employment.


Yes. Most Canadian provinces have requirements that are specific for group terminations. These typically include an obligation to give written notice to the Minister of Employment of the province. Employers may also be required to establish or participate in a reclassification assistance committee or an adjustment committee whose role is to assist employees in order to minimise the impact of the dismissal and to facilitate the maintenance or re-entry into the labour market.


Employees can file a complaint with the applicable employment standards commission.



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that the employee is competing with its business). The employer shall only collect information relating to this purpose and shall use the least intrusive means possible to achieve this purpose.


Since the use of social media by employees is largely unregulated in Canada, employer policies and code of conducts may prove to be necessary.Employees do not have a general “right” to use social media in the workplace. An employee’s right to use social media is thus a function of the nature of the position held and the corresponding duty of loyalty owed to the employer as well as the employer policies in this regard. That being said, employers generally permit a reasonable use by employees of social media in the workplace, as long as this does not interfere with the performance of their duties.Employees have a duty of loyalty towards their employer which includes an obligation not to disclose confidential information pertaining to their employer and an obligation to protect the reputation of their employer. An employer could adopt a policy on the use of social media which would include some rules to ensure that employees do not damage the employer’s reputation or divulge confidential information pertaining to the employer, in social media, whether used at work or outside the workplace.



Each province has its labour standards board or commission that hears employment-related complaints. Employees of federally regulated businesses must file their employment-related complaint with the Canada Industrial Relations Board.Claims for reasonable notices of termination are brought before the civil law or common law courts.


The applicable procedure depends on the forum in which the employment claim is brought. Conciliation is usually offered on a voluntary basis by the various labour standards commissions and is generally not mandatory for employment-related complaints.There are no fees to pay by an employee wishing to file a claim before one of the many administrative boards. If an employee wishes to launch a civil suit, there are minor amounts due for judicial stamps upon filing, but these amounts are recoverable from the employer if the employee prevails in his action.


Employment-related complaints will typically be heard by administrative boards within 12–18 months following the filing of said complaint. The delay increases before civil law and common law courts to 24–36 months.

Columbia have adopted private-sector legislation pertaining to the protection of personal information. The Personal Information Protection and Electronic Documents Act (PIPEDA), in turn, applies to federally regulated organisations across Canada. This law governs the collection, use, transfer and disclosure of personal information as well as record retention requirements and privacy rights. Generally, an employer can transfer employee data with notice to the employee or, in some provinces, employee consent. In the case of transfer of personal information to other countries, some additional requirements may apply, such as the obligation for the employer to take reasonable steps: (i) to ensure that the information will not be used for purposes not relevant to the object of the file; (ii) to notify employees explicitly that personal information will be stored or processed outside of Canada, where it will be subject to the laws of the destination country; and (iii) in the case of nominative lists in Québec, to ensure that the persons concerned have a valid opportunity to refuse that personal information concerning them be used for purposes of commercial or philanthropic prospection.


Yes. As a general rule, employees have a right to access personal information held by their employer. Exceptions to this rule do exist and include: information protected by legal privilege; information which would reveal confidential information regarding a third party; and information which would affect judicial proceedings in which either party has an interest.


Yes. Employers are entitled to carry out pre-employment checks on prospective employees, with the employee’s written consent, provided that the pre-employment background checks are aimed at determining if the job candidate will be able to fulfil the requirements of the position for which he applies. For example, gathering extensive information about the financial situation of a candidate is not always necessary to determine a person’s suitability for a position. Since background checks can reveal a broad range of information pertaining to a person, it is important to note that an employer is not entitled to discriminate against a candidate on the basis of one of the prohibited grounds of discrimination such as ethnic origin, physical or mental disability or religion. In addition, generally, no one may refuse to hire a person owing to the mere fact that that person was convicted of a penal or criminal offence, if the offence is in no way connected with the employment or if the person has obtained a pardon for the offence.


Employers are entitled to monitor an employee’s emails or use of an employer’s computer system, subject to certain conditions. Employers should have a policy governing the use of their information systems so as to minimise the employees’ reasonable expectation of privacy when using the hardware and software belonging to their employer. An employer that monitors an employee must be acting on the basis of a legitimate concern or for a legitimate purpose (for example, to verify its reasonable suspicions



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Generally, it is possible to request that a decision of a labour standards board be reviewed on a point of law. Such motions for review must generally be filed within 30–90 days of the initial decision.


Patrick L. BenarocheStikeman Elliott LLP1155 René-Lévesque Blvd. West, 41st FloorMontréalQuébec H3B 3V2Canada

Tel: +1 514 397 3006Fax: +1 514 397 3437Email: [email protected]: www.stikeman.com

Hélène BussièresStikeman Elliott LLP1155 René-Lévesque Blvd. West, 41st FloorMontréalQuébec H3B 3V2Canada

Tel: +1 514 397 3376Fax: +1 514 397 3440Email: [email protected]: www.stikeman.com

Stikeman Elliott LLP is one of Canada’s leading business law firms, with offices in Montréal, Toronto, Ottawa, Calgary and Vancouver as well as in London, New York and Sydney. The firm is recognised as a Canadian leader in each of its core practice areas – corporate finance, M&A, corporate-commercial law, banking, structured finance, real estate, tax, insolvency, competition and foreign investments, employment and business litigation – and is regularly retained by domestic and international companies in a wide range of industries including communications, financial services, insurance, technology, transportation, manufacturing, mining, energy, infrastructure and retail.

Our 500 lawyers include many of Canada’s most prominent business practitioners and leading litigators, and our depth across practice areas enables clients to benefit from efficient, expert teams of lawyers at all levels. The firm has also invested heavily in cutting-edge knowledge management and project management systems in order to assure our clients of advice of the highest quality. Our offices frequently work together on major transactions and litigation files, and regularly collaborate with prominent U.S. and international law firms on cross-border transactions of global significance.

Patrick L. Benaroche is a senior partner and former chair of the Employment Practice Group in the Montréal office of Stikeman Elliott. With a background in Industrial Psychology, Patrick provides advice to major corporations on all aspects of Canadian employment and labour law, with an emphasis on cross-border issues affecting a mobile workforce. Patrick appears regularly before civil and administrative tribunals on matters relating to wrongful dismissal, workplace harassment and discrimination, non-competition clauses and protection of trade secrets. He is often called upon by employers to advise on executive employment contracts, termination packages, workplace policies, employment standards, privacy compliance, including matters related to plant closures, restructuring and mass terminations.

Patrick is also extremely experienced in management-labour relations, including union certification and decertification proceedings, collective bargaining, grievance arbitration, management of strikes and lockouts.

Patrick is an officer of the Employment and Industrial Relations Law Committee of the International Bar Association and is often called upon to participate in conferences and lectures on Canadian employment law. He is a member of the Québec Bar, the Canadian Bar Association and the American Bar Association.

For more information, please visit Mr. Benaroche’s full profile at:

http://www.stikeman.com/cps/rde/xchg/se-en/hs.xsl/Profi le.htm?ProfileID=32371.

Hélène Bussières is a partner and head of the Employment and Labour Group in the Montréal office of Stikeman Elliott. Ms. Bussières has extensive experience representing employers in the context of both individual employment relationships and matters relating to unionised environments. Her diverse practice includes appearances before the courts, negotiation of collective agreements, drafting of executive employment agreements and providing advice on incentive plans, termination packages and employment standards.

Ms. Bussières has also acquired considerable experience in the coordination of all employee-related matters in the context of commercial transactions such as acquisitions of assets, and she has developed a strong expertise in strategic human resources planning and executive compensation for her clients across Canada.

Ms. Bussières is a member of the Québec Bar and the Canadian Bar Association. Ms. Bussières also teaches employment and labour law at the Quebec Bar School.

For more information, please visit Ms. Bussières’ full profile at:

http://www.stikeman.com/cps/rde/xchg/se-en/hs.xsl/Profi le.htm?ProfileID=32337.


Chapter 9

Koushos Korfiotis Papacharalambous L.L.C.

Loizos Papacharalambous

Eleni Korfiotis

Cyprus

Nevertheless, the Provision of Information to the Employee by the Employer Regarding the Terms of Employment Law 2000 obliges an employer, within one month from the commencement of the employment, to provide the employee with the substantive conditions governing the employment relationship. The minimum information which must be provided include details about the parties’ respective identities, the commencement date of the employment contract, duration of annual leave and all the types of emoluments to which the employee is entitled. This information must be in writing and signed by the employer. The employer’s failure to fulfil its above obligation, although it does not affect the employment relationship, may subject the employer to financial sanctions.


All statutory rights and obligations are generally implied into employment contracts and any clause purporting to waive them is void. The parties, however, may agree to more favourable terms for the employee than those prescribed by statute, but not less favourable. Further, the employee’s duty of fidelity to the employer is always implied into employment contracts, requiring the employee to abstain from acting in a manner inconsistent and prejudicial to his/her employer’s interests.


Employers must observe specific statutory minimum employment terms in relation to maximum hours of work per week (not more than 48 with a few exceptions for specific occupations), statutory minimum salary for certain occupations, annual and other leave (e.g., maternity and parental leave) and serving a valid (statutory) notice of termination.


Terms and conditions of employment can be agreed through collective bargaining where employers have entered into collective agreements with trade unions. Collective bargaining usually takes place at industry level and is particularly prevalent in the tourist industry where most employment terms are agreed through collective agreements.



Employment law in Cyprus is a mixture of statutes and case law, based on Article 25 of the Cypriot Constitution which guarantees the right to work. The main statutory instruments are the Termination of Employment Law 1967, the Annual Paid Leave Law 1967, and the Social Insurance Law 1980. Specific matters arising from the employment relationship are governed by specific statutes such as the Protection of Maternity Law 1997, the Equal Treatment at Work and Employment Law 2004 and the Safety and Health at Work Law 1996. General contractual principles governing the employment relationship are derived from the Contract Law, Cap. 149.


Cyprus employment law distinguishes between a contract of service and a contract for services. The former refers to the employment relationship and is protected by the various applicable employment laws. In accordance with the Termination of Employment Law 1967, an employee is a person who works for another physical or legal person (either a private or a public legal entity) under a contract of employment or apprenticeship or under conditions from which an employment relationship can be inferred. Within the latter definition, persons employed by the State and the shareholders of a private company employed by the latter are also included. A contract for services refers to the services of independent contractors and is regulated by the principles of Contract Law. The issue of whether a worker is to be considered as an employee or an independent contractor is examined ad hoc, taking into consideration amongst others the degree of control, chance of profit and responsibility of investment/management. The Cyprus Employment Law also distinguishes between full-time and part-time workers and between workers with fixed-term contract and unlimited-term contract. Furthermore, special protective rules apply with regard to the employment of workers who are under 18.


No, employment contracts need not be in writing.


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and based on genuine disputes which cannot be resolved through the mechanisms of the IRC and the applicable collective agreements.


Employers are required to set up work councils solely in relation to Community-scale businesses and Community-scale groups of businesses situated in Cyprus. In accordance with the Establishment of European Works Councils Law 2011, a Community-scale business must employ:■ at least 1,000 employees within the EU Member States; and■ at least 300 employees in two different Member States (at

least 150 employees in each state).A Community-scale group of businesses must employ:■ at least 1,000 employees within the EU Member States; ■ at least two group businesses in different EU Member States;

or■ at least one group business with at least 150 employees in one

EU Member State and at least one other group business with at least 150 employees in another Member State.

The employer’s central management, on its own initiative or following a written request by at least 100 employees (or their representatives) from at least two businesses or establishments located in two different Member States, must initiate negotiations for the establishment of a European Works Council or any other procedure for information and consultation. A special negotiation team, composed of the trade union members or, in the absence of trade unions, of the employees, must also be instituted. The latter, together with the central management, will be responsible for determining the duties and duration of service of the European Works Council as well as the procedure for provision of information to the employees during consultation with them. European Works Councils have the right to meet once a year with the employer’s central management and be informed and consulted about the development and the prospects of the business.


The applicable law does not attribute the European Works Councils with co-determination rights. The European Works Councils merely have a reciprocal statutory obligation to work together with the central management in a spirit of co-operation and mutual respect for their respective rights and obligations.


Trade union representatives may act as employee representatives in the special negotiation team and participate in the European Works Councils.


No, but the absence of a right to such representation may be compensated by the employee’s right to information and consultation when restructuring or transferring a business.



The Trade Unions Law 1965 (as amended) provides for extensive protection and freedom for the registration of trade unions. The trade union’s protection is supplemented by the Law on the Recognition of Trade Unions and the Trade Union Right to Provide Facilities for Recognition Purposes 2012, regulating the procedure to be followed in the event of the employer’s refusal to recognise a trade union and the Industrial Relations Code (‘IRC’), as established in 1977, laying out in detail the procedures to be followed for the settlement of employment disputes.


The employees’ right to join any union of their choice or incorporate their own union with a view to protecting their collective rights is guaranteed by Article 21 of the Cypriot Constitution.In accordance with the Trade Unions Law 1965, a legally registered trade union within the framework of accomplishing its purposes may possess property, appear before the courts either as a plaintiff or a defendant and is also equipped with the legal capacity to conclude contracts.Additionally, the rights of trade unions are specified in collective agreements, the IRC through which collective agreements can be concluded and statutes which refer to trade unions as “employees’ representatives”. Although lacking any legal foundation, the IRC is highly respected and followed by all sides. Its mechanisms for dispute resolution include direct negotiations between the trade unions and the employer and its representatives. In the event of a large-scale redundancy, the employer must notify the union as early as possible and initiate consultations. The right to consultation and information of the local union committees has been strengthened by the Law Establishing a General Framework for Informing and Consulting Employees which requires management and the unions to negotiate practical arrangements for informing and consulting employees in undertakings that employ at least 30 employees.The IRC allows categorisation of issues in a collective agreement as bargainable, consultative and management prerogatives. Where an issue is categorised as appropriate for consultation the employer must consult the trade union and, although the final decision rests with the employer, he/she is bound to pay due regard to the union’s views and give reasons for his/her decision. Both sides have the right to request the advice and/or assistance of the Ministry of Labour and Social Insurance in the event of deadlock.


The right to strike is founded on Article 21(1) of the Constitution of Cyprus. No rules specifically regulating a trade union’s right to strike exist, other than the relevant provisions of the IRC. According to the latter, if an employer flagrantly violates the provisions of an existing collective agreement, the trade union may resort to any lawful action, including a strike in defence of its interests. Nevertheless, the right to take industrial action must not be exercised when agreement cannot be reached on issues appropriate for joint consultation. Essentially, the reasons for a strike must be reasonable

Koushos Korfiotis Papacharalambous L.L.C. Cyprus


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Part-time and fixed-time workers enjoy additional protection in order to guarantee that they receive the same rights and/or treatment as the full-time and unlimited contract workers through the Part-Time Employees (Prohibition of Discrimination) Law and the Employees with Fixed-Term Contracts (Prohibition of Discrimination) Law. The relevant rules highlight the necessity of observing the principle of non-discrimination and establish the principle of proportionality of employment terms of part-time employees in relation to comparable full-time employees and fixed-term contract employees in relation to unlimited-term contract employees, respectively. Amongst others, proportional salary and benefits, termination of employment, protection of maternity, annual leave, parental and sick leave are attributed to the above categories of atypical workers. Moreover, fixed-term contract employees have the right to be informed about unlimited-term posts.



Maternity rights are secured through the “Maternity Protection Law” (No 100(1)/1997, as last amended by Law No 64(I)/2002).An employed woman who presents a certificate from a registered medical practitioner stating the expected week of her confinement is entitled to maternity leave. Maternity leave is provided for 18 weeks, of which 11 weeks must compulsorily be taken during the period beginning the second week before the expected week of confinement. An employed woman who adopts or takes in to her care a child less than 12 years of age for the purpose of adoption is allowed maternity leave of 14 weeks.


Once the employee presents to her employer the relevant doctor’s certificate it is unlawful for the employer to dismiss the employee, unless the business activity is discontinued or the employee is guilty of a serious disciplinary offence or such conduct which justifies the breakdown of the employment relationship.Women who gave birth and are breastfeeding or have increased responsibilities for the care/raising of the child, can, for a six-month period commencing on the date of birth or maternity leave, interrupt their employment for one hour or go to work one hour later or leave work one hour earlier. The one-hour excuse period is considered working time.During the period of maternity leave, the employee receives pay and maternity benefits to such extent and under such conditions as the Social Insurance Law provides from time to time.


Upon her return to work, the employee has the right to return to her position and enjoys the same rights in seniority, promotion or other benefits which relate to employment as she would have had if she remained at work. Additional statutory rights are also attributed to

3 Discrimination


Equal treatment at work is a specific statutory obligation imposed upon every employer, in accordance with the Constitution of Cyprus, the Community acquis and the various International Human Rights Conventions which Cyprus has ratified. Employees are protected both against direct and indirect discrimination, as well as any other conduct in relation to employment which discriminates on the grounds of racial or ethnic origin, religion, beliefs, age and sexual orientation (Equal Treatment at Work and Employment Law 2004). Indirect discrimination ensures proportional (not merely equal) treatment of employees by prohibiting prima facie neutral criteria or practices which are less favourable to an employee.


Apart from direct and indirect discrimination on the grounds referred to in question 3.1, Cypriot law prohibits specific types of discrimination. More specifically, the unequal payment of employees on grounds of sex, the disproportionate treatment of part-time workers in relation to full-time workers, the disproportionate treatment of fixed-term contract employees in relation to unlimited-term contract employees and sexual harassment at work are all treated as unlawfully discriminatory.


Yes. In accordance with the laws implementing the relevant EU Directive, discrimination, exception or preference of a characteristic related to any of the grounds referred above (question 3.1) may be considered as lawful with regard to the different treatment on grounds of sex and the different treatment of persons with disabilities under the condition that the required characteristic:■ is justified by the peculiarities of the profession concerned;■ constitutes a genuine and determining occupational

requirement;■ is proportionate; and■ serves a legitimate objective.


Employees can enforce their discrimination rights via the complaint procedure of the Office of the Commissioner for Administration (Ombudsman) which is the designated National Equality Body dealing with all forms of discrimination, or by taking legal action for compensation if the employee incurs damage e.g., through loss of office. Employers may settle claims at any time, before or after they are initiated.


Employees are entitled to claim compensation for damages or reinstatement.



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The transferee must preserve the employment terms articulated in the applicable collective agreement, as they would apply to the transferor in accordance to the latter, up to the date of termination or expiration of the collective agreement, and in any case for a period of at least one year from the transfer.


The transferor and the transferee must promptly inform the employees or their representatives who are affected by the transfer of the following:■ The date or proposed date of transfer.■ The reasons for the transfer.■ The legal, financial and social consequences of the transfer

for the employees.■ The proposed measures to be taken in relation to the

employees.Further, when the transferee or transferor intends to vary the employees’ regime, they must engage in consultations with the employees or their representatives for the purpose of reaching settlement. The transferor and transferee must serve the above information to, and engage in consultations with, the employees promptly and, in any event, before their employment terms and conditions are directly affected by the transfer. The duration of the process depends on the complexity of the case and is typically concluded between several weeks and several months. The sanctions of an employer who fails to inform or consult with the employees is a fine on conviction which does not exceed €854, whereas the employee is entitled to seek compensation by way of damages.


Employees can be dismissed in connection with a business sale on financial or organisational grounds, necessitating changes in the workforce. The latter would fall within the category of lawful dismissals, on the basis of redundancies, entitling the employee to damages from the Redundancies Fund.


No, any changes must be agreed with the employees.



According to the Termination of Employment Law 1967 (as amended), the employer is obliged to serve the employees a written notice of termination of their employment. The minimum notice period, depending upon the weeks of continuous employment, is specified by the 1967 Law as follows:

her in order to facilitate breastfeeding as well as the increased needs of the child. Specifically, she has the right to arrive later or leave earlier and to discontinue her work for one hour per day for a period of nine months from the childbirth or, in the case of adoption, from the date the maternity leave commences, without loss of income.


No, they do not.


Employees of either sex who have completed at least six months of employment with the same employer may claim unpaid parental leave for a period of up to 18 weeks for caring and raising a child, under the condition that a prior written notice is provided to the employer (Parental Leave and Leave for Reasons of Force Majeure Law 2012). Parental leave may be taken by natural parents following the expiration of maternity leave and prior to their child’s eighth birthday, and by adoptive parents following the expiration of maternity leave and prior to the eighth anniversary of adoption, provided that the child is under 12 years of age at the time the parental leave is taken.


Generally there is no such statutory entitlement, except for the rights attributed to the woman returning from maternity leave with regard to breastfeeding and childcare (see question 4.2) and the employee’s (either female or male) right to unpaid leave for seven days annually for reasons of force majeure such as illness or accident of his dependants.

5 Business Sales


As a general rule, on a business sale, employees automatically transfer to the buyer subject to the statutory exceptions mentioned under question 5.4. In accordance with the Preservation and Safeguard of Employee Rights during Transfer of Businesses, Facilities or Business Departments Law 2003 the transfer of a business, establishment or a business department does not itself afford grounds for dismissal by the transferor or transferee. The 2003 Law applies to both public and private undertakings which engage in economic activities; however, vessels and ships, transfers by share takeovers, transfers of insolvent businesses and restructuring of instruments between public bodies fall outside its scope.


On the date of the transfer, all rights and obligations of the transferor, including rights to benefits for old age, disability and supplementary occupation retirement are transferred to the transferee.



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Trade union members, pregnant women and employees on sick leave enjoy special protection against dismissal. Further, the employment terms and rights on dismissal of public servants, employees in the armed forces and the police are governed by special provisions and not by the general rules on dismissal.


An employer is entitled to dismiss for reasons related to the individual employee, relying on the grounds exhaustively listed in the statutory provisions of Termination of Employment Law, which are:■ Failure to execute work at a reasonably satisfactory level,

excluding temporary disability for employment caused by illness, injury and childbirth.

■ Redundancy.■ Force majeure, act of war, civil commotion or act of God.■ Termination at the end of a fixed period of employment.■ Display of such conduct rendering the employee subject to

summary dismissal, that is, when:■ His/her conduct renders it clear that the relationship of

the employee and the employer cannot reasonably be expected to continue.

■ He/she commits a serious disciplinary offence or criminal offence or displays inappropriate or indecent conduct during the execution of her duties.

■ He/she repeatedly violates or ignores the employment rules.

Otherwise, any dismissal is unlawful and entitles the employee to damages which are calculated according to the:■ minimum compensation which the employee would be

entitled to had she been made redundant;■ maximum of two annual salaries; and■ circumstances of the case including the employees’ daily

wage, the length of service, career prospects, circumstances of dismissal and the employee’s age.

An employer is entitled to dismiss an employee for business-related reasons when:■ The employer discontinues the business or the business in the

location the employee is employed.■ Where the number of necessary posts is reduced through

business mechanisation or reorganisation, there is a lack of production means, restriction of the volume of business or credit difficulties.

On such dismissal the employee is paid an appropriate amount by the Redundancy Fund if he/she completed an employment period of 104 weeks or more with the same employer. Redundancy payments are calculated according to Table 4 of the Termination of Employment Law 1967, as follows:

Years of Employment

Cumulative Compensation Total Compensation

First 4 years 2 weeks’ wages per year employed 8 weeks

Next 5 years (5–10) 2.5 weeks’ wages per year employed 15 weeks

Term of Continuous Employment (weeks) Minimum Notice (weeks)

26–51 152–103 2104–155 4156–207 5208–259 6260–311 7312 and above 8

An employee may be summarily dismissed if any of the circumstances mentioned in question 6.5 apply (commission of a serious disciplinary or criminal offence, etc.).Further, the parties may agree to extend the notice period but any contractual provision for the reduction or restriction of the minimum statutory notice period is void ab initio.No minimum notice of termination is required during a probation period, which is 26 weeks (or up to 104 weeks if the parties so agree) from the commencement of the employment.The article 9 of the Termination of Employment Law 1967–2016 (as amended) provides the following:(6)(a) Subject to paragraphs (e) and (f) of Article 5, the warning

providing employee who is absent from work for incapacity for work for up to twelve (12) months prohibited for the time starting from the first day of absence and ending on the last day of the time calculated by adding the period of absence and the length of time equal to one quarter (¼) thereof.

(6)(b) During the period absent employee as provided in paragraph (a), the employer may temporarily replace the absent employee, under the provisions of the Employees with fixed-term work (Prohibition of Unfavourable Treatment) Law.


Instead of serving a notice of termination, the employer may demand that the employee accepts payment which corresponds to the length of the minimum notice period in lieu of notice of termination and to serve the period of notice as “garden leave”. Further, the employee, having received a notice of termination, may not attend for work in the case of his/her recruitment in another business, without further notification to the previous employer required.


The 1967 Law exhaustively articulates the grounds for a lawful dismissal (see question 6.5). Consequently, the invocation of any other reason renders the dismissal to be unlawful and attributes the dismissed employee with the right to claim damages.An employee is treated as being dismissed, once he/she is served the minimum statutory notice of termination of his/her employment or once he/she resigns by reason of the employer’s conduct (“constructive dismissal”). There is a rebuttable presumption that any dismissal is unlawful and the employer bears the burden of proving that the dismissal is lawful. No consent from a third party is required before an employer can dismiss.



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provide to the employees’ representatives the relevant information and disclose in writing the reasons, number and categories of the planned dismissals and the employees to remain employed, the time of the planned dismissals, the factors for selecting the employees to be dismissed and the estimation method for any payment in relation to the dismissals (excluding payment deriving from the 1967 and 1994 Termination of Employment Laws). The employer must also serve notice to the Ministry of any proposed redundancy dismissal at least one month prior to the proposed date of termination. The notice must include the same particulars as provided to the employees and the employees’ representatives have the right to submit to the Ministry their observations. Planned mass dismissals may not be effected earlier than 30 days from the notification.


Employees can enforce their rights by applying to the Industrial Disputes Court with a claim for unlawful dismissal. If the employer breaches his/her statutory duties of consultation, information and notification is liable upon conviction to a fine not exceeding €1,708. If the employer dismisses employees before the end of the 30-day period, the employer is liable upon conviction to a fine not exceeding €3,417.



Drawing on the constitutional principle that every person is entitled to exercise any lawful profession, the Contract Law establishes that any agreement restraining the exercise of a lawful profession, trade, or business of any kind is void. The Contract Law provides for three statutory exemptions. Firstly, a person selling the goodwill of its business may agree with the buyer to abstain from exercising similar business within reasonable borders. Secondly, with the dissolution of a partnership, the partners may agree that some or all of them will abstain from exercising any similar business within reasonable borders. Thirdly, the partners of an existing partnership may agree that some or all of them will abstain from exercising any business, other than that which is exercised by the partnership.


Restrictive covenants are enforceable given that they are reasonable. In examining whether a restrictive covenant is reasonable or not, the competent court will take into consideration the type of activity that is restricted and geographical extent. The tendency of Cyprus case law is to recognise restrictive covenants of a maximum of six months duration and within very limited geographical borders. Further, the employees’ duty of fidelity entitles an employer to prevent his/her employees from working for a competing business during the employment term (but not thereafter) whereas he/she can protect their business’s confidential information through non-disclosure contracts. These are available only in relation to information which is classified as a trade secret or is confidential to the extent that equivalent protection is required.

Years of Employment

Cumulative Compensation Total Compensation

Next 5 years (11–15) 3 weeks’ wages per year employed 15 weeks

Next 5 years (16–20) 3.5 weeks’ wages per year employed 17.5 weeks

Next 5 years (21–25) 4 weeks’ wages per year employed 20 weeks

The upper limit for redundancy compensation is 75.5 weeks’ wages.


Apart from the employer’s notice obligations as described in question 6.1, in the case of a redundancy dismissal the employer must notify accordingly the Ministry of Labour and Social Insurance at least one month before the proposed date of termination, stating the redundancy’s reasons, the affected business sector as well as the number and personal details of the affected employees. The employer is further obliged to give priority to redundant employees during the recruitment process of a post which became available within eight months from the redundancy, considering, however, its business’s operational needs.


A dismissed employee can bring a claim for damages for unlawful dismissal before the Industrial Disputes Tribunal or a claim for breach of contract before the District Court. The remedy for a successful claim is usually damages. Reinstatement is generally available against employers employing 20 persons or more but is in practice rarely granted.


Claims can be settled before or after initiation of legal proceedings.


Mass dismissals are governed by the provisions of the Mass Dismissals Law 2001, according to which a mass dismissal is considered as such when: ■ it is made by the employer;■ for reasons not related to the individual employees; and■ the number of dismissals within a period of 30 days concern:

■ at least 10 employees in establishments which ordinarily employ between 21 and 99 employees;

■ at least 10 per cent of the employees in establishments which ordinarily employ between 100 and 299 employees; or

■ at least 30 employees in establishments which ordinarily employ at least 300 employees.

The employer must engage promptly in consultations with the employees’ representatives, aiming to reach settlement upon potential ways to avoid or restrict the number of dismissals and reduce their consequences on employees. The employer must also



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■ any third countries for which the European Commission has ruled that they ensure an adequate level of protection of personal data.


Yes, employees have a right to obtain copies of their personal data held by the employer, and the latter is obliged to provide them.


The personal data of prospective employees enjoy the same protection as the personal data of employees. As such, the employer must collect the personal data necessary and relevant to the nature of the position for which the candidate has applied, with the consent of the candidate.Criminal record checks are considered as sensitive personal data, which cover, amongst others, the employee’s participation in a trade union and his/her political or religious beliefs. Their collection and processing is explicitly prohibited by the applicable law and may exceptionally be lawfully collected and processed under certain conditions such as, if the employee has been informed in advance and has provided its consent explicitly and/or the sensitive data collection is absolutely necessary for purposes directly linked with the needs of the employment relationship.Additional safeguards are also provided by other laws such as the Police Law according to which access to a person’s criminal records requires the listing of an application by the person concerned or by a duly authorised (by the latter) person.


If the conditions for a lawful collection and processing (see question 8.1) are fulfilled, the employer should inform in advance its employees for any means of monitoring that he/she will employ. With regard to emails, the employee’s personal email, to which the employee has access by using his/her own username and password, is considered and protected as personal data even if it was purely provided for use within the framework of the employee’s duties. The employer may only exceptionally have access to the employee’s personal email (e.g. under the condition that the employee is present).Regarding the employee’s telephone calls, the employer may have access only to detailed telephone bills, from which the last three digits of the listed telephone numbers should be missing.Lastly, the employer may monitor an employee’s computer system provided that the employee is informed in advance and in an explicit manner.


The employer may monitor and even prohibit the use of social media; however, only in and not outside the workplace.


No, they do not.


Restrictive covenants are enforced by applying to the court for an injunction restraining a former employee who is acting inconsistently with the restrictive covenant or for damages.



The Processing of Personal Data (Protection of the Individual) Law imposes upon the employer who, with the explicit consent of its employees, maintains records of their personal data with various duties aiming to secure the employee’s personal data. The employer is under the obligation to inform accordingly the Office of the Commissioner for the Protection of Personal Data and maintain and process the records:■ fairly and lawfully; ■ in accordance with the proportionality principle;■ for specified and legitimate purposes;■ only for the period necessary for the attainment of the purpose

of their collection; ■ in an accurate manner and proceeding to their update when

necessary; and■ to preserve their confidential treatment through the

appropriate technical and organisational measures.The employer must also ensure that all the above conditions are fulfilled by the various departments of its business which have access to the employees’ personal data.In regards to the transmission of such data to other countries, the applicable law provides that transmission of data which have undergone processing or are intended for processing after their transmission to any country shall be permitted after a licence by the Commissioner. The Commissioner shall issue the licence only if he is satisfied that the said country ensures an adequate level of protection of personal data, taking into consideration, amongst other things, the nature of the data, the purpose and duration of the processing and the security measures for the protection of personal data provided by the law of the said country. The Commissioner is permitted to issue such a licence even if the country in issue does not ensure an adequate level of protection under exceptional circumstances, which are defined in an exclusive manner in The Processing of Personal Data (Protection of the Individual) Law. Such cases include the transmission to be justified and necessary for the protection of the vital interests of the data object or in order to safeguard the superior public interest. Finally, notwithstanding the abovementioned, the transmission of personal data is free to:■ the Member States of the European Union; ■ the Member States of the European Economic Area; and



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Where a petition is filed before the Industrial Disputes Court, the procedure may take between several months and a couple of years depending on the complexity of the issues raised. Typically, a simple claim can be concluded within six to twelve months.


Decisions of the Industrial Disputes Court are subject to appeal to the Supreme Court. Appeals typically take one to three years to conclude.



The Industrial Disputes Tribunal has exclusive competence in respect to matters arising from the termination of employment and the employment relationship. The Industrial Disputes Tribunal is composed of a President or a Judge, who is a member of the judiciary, and two lay members with a consultative role appointed on the recommendation of the employer’s and employees’ respective organisations. Alternatively, a person may apply to the competent District Court for the breach of the employment contract, provided that his/her claim exceeds the maximum amount which can be ordered by the Industrial Disputes Court (namely, the equivalent of two years’ salary). The District Court is composed of a President or a Judge who is a member of the judiciary.


An employee can apply to the Industrial Disputes Court by filing a petition and paying the required official fees. The employer must then file a reply dealing with the employee’s allegations and the case is then heard. Conciliation is not mandatory unless it has been agreed between the parties in the employment contract.



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Loizos PapacharalambousKoushos Korfiotis Papacharalambous L.L.C.20 Costi Palama Street‘Aspelia Court’, 2nd–4th FloorsNicosia 1096Cyprus

Tel: +357 2266 4555Fax: +357 2267 7485Email: [email protected]: www.kkplaw.com

Eleni KorfiotisKoushos Korfiotis Papacharalambous L.L.C.20 Costi Palama Street‘Aspelia Court’, 2nd–4th FloorsNicosia 1096Cyprus

Tel: +357 2266 4555Fax: +357 2267 7485Email: [email protected]: www.kkplaw.com

Loizos has been a member of the Cyprus Bar Association since 2004. He graduated from the University of Bristol before going on to successfully complete the Bar Vocational Course, becoming a member of Gray’s Inn. In 2006, Loizos successfully completed the International and Comparative Commercial Arbitration Diploma with the Queen Mary College of the University of London. In 2011, Loizos was admitted as a Member of The Chartered Institute of Arbitrators. Loizos is currently attending courses to obtain an M.Sc. in Finance and Banking. His main areas of practice are commercial and corporate litigation, representation of banks, investment and insurance companies.

Loizos has been the Vice-Chairman of the Cyprus Telecommunications Authority (CYTA), the Vice-President of the Nicosia Bar Association and the Chairman of the Housing Finance Corporation.

KKP LLC comprises more than 20 lawyers based in our offices in Nicosia. KKP is a full-service law firm with an industry focus on financial services including financial, insurance and banking institutions, intellectual property, real estate and construction, corporate and securities. The firm operates in multi-disciplinary teams, which allow us to provide the client with individualised and expert advice. Our team of lawyers counts more than 30 years of experience, combining an extensive knowledge of the Cyprus legal system with an in-depth understanding of international and European law. Partners of the firm are members of professional legal organisations such as the International Trade Mark Association, MARQUES, the International Tax Planning Association, and the Chartered Institute of Arbitrators while a number of them are endorsed and highly rated by the world’s leading international legal directories, including The Legal 500.

Eleni Korfiotis studied law at the Aristotle University of Thessaloniki, Greece and was called to the Cyprus Bar Association in 2011. Subsequently, she obtained an LL.M. in European Commercial Law with distinction from the University of Leicester.


Chapter 10

Gürlich & Co.

Richard Gürlich

Kamila Janoušková

Czech Republic


Terms stemming from the Labour Code will apply even though the contract does not specify them.


Minimal conditions are stipulated by the Labour Code; such conditions include all aspects of the employment relationship and the minimal level of employee protection.


Collective bargaining may take place at both levels; however, the company level is more popular. Collective agreements may only include rights of individual employees; they shall not impose any obligations on the individual employees.



A trade union must be established and registered with the public register first. The establishment is governed by Act no. 89/2012 Sb., the Civil Code, as amended. A trade union is entitled to represent employees and act on their behalf if it is included in its Articles of Association and if at least three employees who are being employed by the employer become members. The trade union is obliged to announce the fulfilment of the conditions to the employer and, from the day following such an announcement, it is entitled to participate in collective bargaining.


The main rights of trade unions include the right to participate in collective bargaining, and the right to enter into a collective agreement and to be informed and consulted if the Labour Code stipulates an obligation for the employer to do so. The trade union may also discuss and issue its opinions on forthcoming legislative amendments and oversee safety in the workplace.



The main sources of employment law are:■ Act no. 262/2006 Sb., Labour Code, as amended; and■ Act no. 435/2004 Sb., on Employment, as amended.


Czech employment law does not differ between employees; every employee is protected by employment law.


Section 34 (2) of the Labour Code expressly stipulates that employment contracts need to be made in writing. An employment contract must include the type of work to be performed by the employee, the place or places of performance of work and the date of commencement of work. If an employment contract does not include the details of the rights and obligations of an employer and an employee, the employer shall, within one month of the commencement of employment, provide the employee with information in writing, including: a) the name and the surname of the employee and the name and

registered office of the employer if the employer is a legal person, or the name and surname and address of the employer if the employer is a natural person;

b) a detailed specification of the type and place of performance of work;

c) information on the duration of annual leave;d) information on notice periods;e) information on the weekly working hours and their

distribution;f) information on the salary and the manner of remuneration;

andg) information on collective agreements influencing the

employee’s working conditions and specification of the parties to these collective agreements.


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A difference in treatment shall not be classed as discrimination if it follows the character of the work to such an extent that a difference in treatment is necessary for the performance of the work; the aim pursued by such an exception must be genuine and the requirement must be proportionate. Furthermore, measures aiming to prevent or compensate disadvantages stemming from membership of a person in a group (defined on the grounds of discrimination) shall not be deemed as discrimination.


Employees may enforce their rights before courts. They may also fill in an application to seek help from the Public Defender of Rights; however, the Defender may only provide them with directions and advice as to how to proceed before the courts. The claim may be settled by mutual agreement either before the proceedings are initiated or after; however, such settlement must be before the judgment is being delivered.


The victim may demand that the defendant cease the behaviour resulting in discrimination, remedy the consequences of discrimination and claim reasonable compensation of the incurred harm. If these claims are not sufficient to remedy the situation (for example, because the victim’s dignity or reputation suffered), compensation of non-pecuniary loss may be granted by the court. The amount of such compensation will be determined based on the particular circumstances.


Each employee enjoys the same kind of protection, as explained above.



The Labour Code grants female employees the right to maternity leave for a period of 28 weeks; if the employee gives birth to two or more children at the same time, she is entitled to prolong the period to 37 weeks. Maternity leave differs from parental leave, which usually follows the maternity leave and can be enjoyed by both parents until the child reaches three years of age.


Woman employees have the right to receive payments from the social security system and the right to return to work. Woman employees are also protected from termination of employment by notice (exceptions apply, for example, if the employer completely shuts down its business).


The right to take industrial action is safeguarded by art. 27 (4) of the Charter of Fundamental Rights and Freedoms. The procedure is stipulated by Act no. 2/1991 Sb., on Collective Bargaining, as amended. Generally speaking, a trade union may initiate the industrial action if 2/3 of the affected employees vote for the action, provided at least half of all employees participated in the voting. The industrial action must be set out in writing to the employer.


Employers are not required to set up work councils; however, the employees may create such a council of between three and 15 members, chosen by vote. The Labour Code includes the right for such councils to be informed and consulted over stipulated facts. The councils are not commonly established, as trade unions are more popular in the Czech Republic and they also have more rights stipulated in the Labour Code.


There is no such case included in the Labour Code.


Usually, the employer is obliged to inform and consult both trade unions and works councils provided that both have been established; the applicable law does not provide for any mutual rights between a trade union and works council.


Employment law does not stipulate such an obligation; however, the employer is free to organise the board and include employees in its structure.

3 Discrimination


The Labour Code prohibits any kind of discrimination against employees and ensures equal treatment in relation to working conditions, remuneration and provision of other payments, vocational preparation and the opportunity to gain promotions.


The Labour Code expressly prohibits any discrimination, i.e. both direct and indirect discrimination are prohibited.

Gürlich & Co. Czech Republic


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30 days before it takes place; further time requirements are not stipulated and therefore depend on the particular situation), the former employer and the new employer shall inform the trade union and council of employees and consult them, aiming to come to an agreement, about the following:a) the date of the transfer;b) the reasons for the transfer;c) the legal, economic and social consequences of the transfer

for employees; andd) the intended measures related to employees.If there is no active trade union or council of employees, the former and the new employer shall be obliged to inform the employees directly affected by the transfer and consult them. Failing to do so may result in a fine of up to CZK 200,000.


A business sale is not a reason stipulated by the Labour Code for an employer to be allowed to give notice to an employee. However, the employee may terminate their employment due to the sale. If he/she does so, the employment shall expire on the day foregoing the date when the transfer takes place. If notice is given by an employee within two months following the transfer, the employee may claim that the reason for the notice is a substantial deterioration of working conditions under the new employer. In such cases, the new employer is obliged to pay severance payment to the employee.


No, all rights and obligations of the employer are transferred unchanged. Any modification may follow the transfer; however, it shall not be linked to it.



Yes; provided that the employer wishes to terminate the employment relationship by notice, the written notice of termination needs to be given. The Labour Code expressly stipulates that the length of the notice period is two months; however, it may be prolonged.


Yes, the employer may request that an employee serves garden leave. However, it is not very common in the Czech Republic.


An employer may dismiss an employee only on the grounds expressly stipulated by the Labour Code. Employment may be


The Labour Code expressly stipulates that if a female employee decides to return to work straight after maternity leave, she has the right to return to the same position at the same workplace. If coming back from parental leave, the employee has a right to be assigned to perform the type of work according to the employment contract.


Fathers may enjoy so-called parental leave from the day the child is born until he or she reaches three years of age.


The father may be released for parental leave straight after the child is born; the mother usually takes parental leave after her maternity leave ends. A social security system payment is also granted.


The Labour Code includes some benefits for working parents; for example, the obligation of the employer to take into account that an employee takes care of a child when scheduling shifts, the obligation to allow the mother to have breastfeeding breaks or the right to ask for flexible working hours (which the employer is obliged to satisfy if the operating needs allow for it).

5 Business Sales


According to Section 338 (2) of the Labour Code, if the activities of an employer are being transferred to another employer or if the tasks of an employer are being transferred to another employer, the rights and obligations stemming from the employment of every employee affected by the change shall transfer in the full extent to the new employer.


Rights, as well as obligations, are transferred in the full extent to the new employer; please see questions 5.3 and 5.4 for further details on employee rights. Those included in the collective agreement remain unchanged only for a limited period of time (as long as the collective agreement is effective or until the end of the following calendar year).


Prior to the transfer of the rights and obligations (a maximum of



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b) if the employee is unfit to perform the current work in the long term due to his/her state of health;

c) if the employee fails to fulfil the conditions stipulated by law for the performance of the work or if the employee fails to fulfil the requirements on proper performance of this work without the employer’s fault; in cases where the insufficient performance is caused by unsatisfactory work results, the employee may be given notice only if the employee has been called upon by the employer in writing to improve his or her performance during the last 12 months and the employee has failed to do so;

d) if there are reasons on the part of the employee based on which the employer could terminate the employment by immediate termination or which give rise to a gross breach of duty arising out of the legal regulations applicable to the work performed by the employee; in cases of consecutive small breaches, the employee may be given notice only if the employee has been informed in writing about the possibility of notice with regards to the breach of the duty by the employer during the last six months; and

e) if the employee grossly fails to comply with the regime of an employee temporary unfit to work.

If the employment is being terminated due to the fact that the employee may not continue to perform the current work due to an accident at work, occupational disease or threat of such a disease (no matter whether by means of agreement or notice), the employer is obliged to pay severance payment to the employee in the amount of at least 12x the average income.


The notice has to be made in writing and delivered to the employee. The notice period needs to be followed and severance payment, if applicable, has to be reimbursed. The employer must also issue and hand over the confirmation of employment to the employee.


The employee may claim before the court that the termination of employment by means of notice or immediate termination (or termination during trial period) was invalid. Such a claim has to be raised within two months of the termination. In such cases, the employee has to notify the employer without undue delay in writing that he or she insists on being further employed by the employer.If the termination is declared not valid by the court, the employment relationship is deemed as still existing and the employee shall be provided with compensation for his/her salary from the date of the notification, until the employer allows the employee to continue his/her work or terminates the employment correctly.


Employers may settle the claims either before or after their initiation, the option of settlement is available until the court delivers its judgment.


Provided there are organisational grounds for the dismissals, the

terminated by means of agreement, notice (please see question 6.5 for further details) or immediate termination of employment. Furthermore, employment for a fixed period of time may be terminated by the expiration of time, and the Labour Code also includes a special option to terminate employment during a trial period. Generally speaking, an employer may unilaterally decide to dismiss an employee on the grounds stipulated by the Labour Code and if the employer wishes to do so. The trade union must give its consent with regards to the dismissal of a member or a former member (in this case, within a one-year protection period following the end of the member’s activities). For further details on protection against notice, please see question 6.4.


The employer is prohibited from giving notice to an employee when:a) the employee is found temporarily unfit to work, unless he/

she has intentionally caused such health issues or unless the issues represent a direct consequence of the employee’s drunkenness or abuse of drugs, and also when the employee goes through a treatment in a special medical facility;

b) the employee performs military practice;c) the employee is fully released from work due to performance

of a public office for the long term;d) a female employee is pregnant or when a female employee is

on maternity leave or when a female or male employee is on parental leave; or

e) an employee working night shifts is temporarily unfit to perform night work.

Exceptions apply, for example, if the employer completely shuts down its business, the protection is not granted.


The employer may give notice to an employee only on grounds stipulated by the Labour Code. Business-related grounds are:a) if the employer or its part is being dissolved;b) if the employer or its part is being relocated; orc) if the employee becomes redundant due to a decision of the

employer or a competent body on organisational change, such as change in tasks, technical equipment, reduction of the personnel for the purpose of increasing work effectiveness, etc.

If the employment is being terminated due to the above-mentioned reasons (no matter whether by means of agreement or notice), the employer is obliged to pay severance payment to the employee in the amount of at least:■ 1x the average income if the employment lasted less than one

year;■ 2x the average income if the employment lasted at least one

year but less than two years; and■ 3x the average income if the employment lasted at least two

years.Grounds related to an individual employee are:a) if the employee cannot further perform the current work due

to an accident at work, occupational disease or threat of such a disease;



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Usually, the contractual penalty is agreed together with the non-competition covenant; by paying the contractual penalty, the obligation stemming from the covenant ceases to exist. The covenants may also be enforced before courts.



Employers are entitled to keep personnel files on employees. A personnel file may include only those documents that are necessary for the performance of work. The personal data of all employees is protected by Act no. 101/2000 Sb., on the Protection of Personal Data, as amended; the transfer of data within European Union is not limited. The data may be transferred outside its borders provided that an international agreement secures such a transfer.


Yes, according to Section 312 (3) of the Labour Code, an employee has the right to view his personnel file and make excerpts and copies of the documents included in it, all at the employer’s expense.


The employer may request, from an applicant or from other persons, all necessary information that directly relates to the conclusion of the employment contract.


According to Section 316 of the Labour Code, the employer is not allowed, without having serious reasons due to the special nature of the employer’s activities, to disturb the privacy of an employee at the employer’s workplaces and common premises by insisting that the employee opens emails, or secretly monitor their emails. If there is such a serious reason with respect to the employer, the employer is obliged to inform the employee directly of the scope and the manner of the control.


The employer is not allowed, without having serious reasons, to disturb the privacy of an employee at his workplace and common premises by subjecting the employee to secret monitoring, tapping and recording of his telephone calls, or have control of emails or letters addressed to the employee. Any monitoring of social media outside of the workplace shall also not be conducted.

employer is obliged to inform the trade union or the council of employees (or the individual employees directly affected) about: a) the grounds for collective redundancy;b) the number and professional qualifications of the employees

who are made redundant; c) the number and professional qualifications of all employees

employed by the employer;d) the time when the collective redundancy will take place;e) the proposed criteria for the selection of the employees who

are made redundant; andf) the severance payments and other rights of the employees

made redundant,at least 30 days prior to the collective dismissal. The employer is also obliged to inform the Labour Office in writing about the collective dismissal and related measures which will be taken with regards to the dismissals. The employer is also obliged to inform the employees about the date when the written announcement was delivered to the Labour Office.


Employees are entitled to severance payments; the claim may be exercised before court. Employees are also entitled to be informed that the announcement of the collective dismissal has been delivered to the Labour Office, as their employment cannot be terminated within 30 days following the delivery of such an announcement. The employer must observe the right to inform the employees (please see question 6.9 for further details), failure to do so may result in a fine up to CZK 200,000.



The Labour Code includes the possibility to enter into a non-competition agreement or to include a non-competition clause in the employment agreement. Non-competition covenants need to be made in writing and they shall only bind an employee from whom the observance of the covenants may reasonably be required.


The non-competition covenants may be enforced for a maximum of one year and only after employment is terminated.


Yes. For the period in which the non-competition covenant is effective and observed by the employee, he/she is entitled to receive remuneration amounting to at least half of the average income per month.



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employment law cases is standard as in any other cases; there are no procedural exceptions. The trial period for conciliation may be ordered by the court before the hearing; however, it is not mandatory.


As well as in other branches of law, it depends on the case. The length of such proceedings cannot be predicted.


Yes, the appeal may be filed to regional courts. The length of the proceedings cannot be predicted, it always depends on the particular case.



There are no special tribunals for employment law. District courts have jurisdiction to preside over the case, the senate consists of one judge and two laymen.


The court fee has to be paid by the employee provided he/she is the plaintiff; however, exceptions apply (for example, the fee does not apply in cases related to a work injury). The procedure in


Richard GürlichGürlich & Co. Politickych veznu 19 110 00 Prague 1 Czech Republic

Tel: +420 222 101 591Email: [email protected]: www.akrg.cz

Kamila JanouškováGürlich & Co. Politickych veznu 19 110 00 Prague 1 Czech Republic

Tel: +420 222 101 591Email: [email protected]: www.akrg.cz

GÜRLICH & Co. is a relatively young but quickly developing law firm with expertise in various branches of law. The firm’s main specialties include public procurement in European Union, intellectual property, real estate, corporate and business law.

Our law firm also organises seminars and lectures on the issues of intellectual property, public procurement and on the Civil Code.

Our law firm is a member of the Association of European Lawyers (AEL) and as such we are part of an extensive network of independent law firms who work together on cross-border transactions and multi-jurisdictional casework.

We have been the winners of many prestigious awards in various areas of law since 2010. In 2016, we were awarded “The Best Law Firm” of the year by Intercontinental Finance Magazine and LegalComprehensive. Richard Gürlich was awarded as “Best Lawyer” of the year by Lawyers World – Lawyers World Premier and as a “Leading Lawyer” by Intercontinental Finance Magazine.

We provide legal services in both Czech and English.

Richard Gürlich is the managing partner and founder of Gürlich & Co. He is a graduate of the Law Faculty of Charles University in Prague and a member of the Czech Bar Association and The International Association for Contract & Commercial Management (IACCM).

Richard has extensive experience in public procurement in the European Union, corporate law and business transactions, and his expertise also includes legal matters relating to real estate (i.e. the arrangement of developer projects, property transfers, lease and sublease agreements, etc.) and labour law.

Kamila Janoušková is an associate at Gürlich & Co. She graduated from the Law Faculty of Charles University in Prague. She is the member of the Czech Bar Association. Her expertise includes commercial law and business corporations, bankruptcy, civil law, civil procedure and real estate law.


Chapter 11

Mette Klingsten Law Firm

Mette Klingsten

Mette Bjørndal

Denmark


A duty of loyalty is implied in all employment relations. The employee must be loyal and is not allowed to perform any acts which could potentially be harmful to the employer’s business or compete with the employer. This also applies during the notice period even if the employee is placed on garden leave. This rule applies regardless of whether any post-employment restrictive covenants are applicable.


White collar employees are entitled to severance pay for long service, in the event that the employment is terminated by the employer, and the employee has been continuously employed in the company for 12 years or more. The compensation amounts to one months’ salary if the employee has 12 years of seniority or more and three months’ salary if the employee has 17 years of seniority or more.If the white collar employee has been employed for more than one year, the employee is entitled to compensation for unjust dismissal, if the dismissal is not duly justified by circumstances relating to the employee or the company. According to the Holiday Act, all employees accrue 2.08 days of paid holiday for each month of employment during the qualifying year (the calendar year).


To some extent, Danish legislation leaves space for opting out of provisions in the relevant Danish acts, making room for the social partners to derogate from rules that would otherwise apply to the employment relation or supplement that rules. Consequently, to a great extent, the Danish labour market is regulated by collective bargaining agreements rather than mandatory legislation. Collective bargaining agreements cover wage levels, pension obligations, additional paid holiday, maternity leave etc., number of working hours, as well as a number of other conditions for the employees.



The main sources of Danish employment law are legislation, collective bargaining agreements, individual employment contracts and case law.


Different types of workers are usually distinguished by the type of work they perform. A rough distinction can be made between white collar employees (salaried employees), blue collar employees and managing directors. White collar employees are covered by the Salaried Employees Act, which is a specific legislation that only covers this type of employee. A white collar employee can, for example, be a person who works in trade, is engaged in buying or selling, office work or persons whose jobs consist of technical or clinical assistance. In many cases, white collar employees are also covered by a collective bargaining agreement. There are no acts governing only blue collar employees. The terms and conditions of the blue collar employment relationship are therefore covered by mandatory legislation applying to all types of employees, collective bargaining agreements and individual employment contracts. Typically, managing directors are not subject to mandatory legislation or collective bargaining agreements. The terms and conditions of their employment relation are set out in the individual employment contract.


All employers are obliged to provide employees with a contract describing 10 specific conditions of the employment, as well as all “material terms”. The employee is entitled to compensation if the employment contract does not contain the required information.


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employees are heard and that they have the opportunity to make a statement regarding such issues of major importance to the company’s management. If no works council is established, the employer must arrange for an election of employee representatives. Collective bargaining agreements may also oblige the employer to set up works councils. Works councils will typically discuss all aspects relevant to the work place. Shop stewards are usually members of the council, but also employee representatives elected through ballots can be members.


Mass redundancies are a significant step to take, which is why, in such cases, the works councils must be informed before the employer can proceed with his proposals. Information shall be given to the works council at an early stage, thus giving the employees the opportunity to participate with suggestions and ideas to the final decision-making with the view to reach a negotiated agreement. However, a works council’s co-determination right cannot block the management’s right to implement a decision.It also follows from the Act on Transfer of Undertakings that the transferor must inform the employee representatives in due time before the transfer and negotiate with the employee representative if any measures are anticipated as a result of the transfer.


A works council exists to ensure proper co-operation between the management and the employees. In Denmark, a works council consists of employee representatives and representatives of the employer. If the employees ask for expert assistance in the works council, trade union representatives can be present at the work place. In some collective bargaining agreements, the trade unions are allowed inspection rights.


According to companies of a certain size, the employees may request representation at board level. If the employees make such a request, the company is obliged to accept this.

3 Discrimination


The Council Directive 2000/78/EC of 27 November 2000, establishing a general framework for equal treatment in employment and occupation, is implemented in Denmark by the Danish Act on Anti-Discrimination.In general, it is prohibited for employers to discriminate against employees or applicants directly or indirectly on the grounds of age, disability, race, colour of skin, religious belief, political orientation, or national, social or ethnic origin.



Trade unions do not have any particular rights protected by legislation apart from more general rules on the right to establish and participate in the trade union. Trade unions form an important integrated part of the Danish labour market. The employees’ right to organise can be traced back to the so-called September Agreement in 1889, resulting in the employer association’s acceptance of employees’ right to organise in trade unions, and the trade unions’ recognition of the employer association’s right to lead and distribute work.The recognition of trade unions is also seen from the references made in legislation, such as the Work Environment Act, to collective bargaining agreements, in which the social partners can derogate from the act, if the collective bargaining agreements confer the same rights to the employee as the act or better rights than the act.


Trade unions obtain their rights from the labour market’s main agreements and collective bargaining agreements. Among other things, the trade unions have the right to negotiate collective bargaining agreements, reprimand breaches of the CBA and represent their members at arbitration or court cases.


The rules governing trade unions’ right to take industrial action are laid down through case law from the Industrial Court in Denmark and in the collective bargaining agreements.According to case law from the Industrial Court, it is a prerequisite for a union that wishes to take industrial action to obtain or renew a collective bargaining agreement, and that the area of work which is sought to be covered by a collective bargaining agreement falls within the organisation’s “natural professional field”. Furthermore, the request must have “the necessary strength and timeliness”, and there must be proportionality between the union’s goals with the industrial action and the steps taken to achieve the goal.Rules on industrial actions are also laid down in the labour market’s main agreement. Amongst other things, it follows from the main agreement that even if a collective bargaining agreement is terminated or expires, the parties are bound to comply with its provisions, until another collective bargaining agreement replaces the former collective bargaining agreement, or industrial actions are initiated in accordance with the rules laid down in the main agreement.


The Danish Act on Information and Consultation of Employees applies to companies with more than 35 employees. It follows from the act that employers are required to establish a procedure for the information of employees regarding issues of major importance for the employment. The employer shall also make sure that the

Mette Klingsten Law Firm Denmark


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According to the Act on Maternity and Paternity Leave, women have the right to a period of four weeks of maternity leave prior to the expected date of giving birth. After delivery, the mother is entitled and obliged to two weeks of maternity leave. The mother is afterwards entitled to 12 consecutive weeks of leave, giving the mother a total amount of 14 weeks of maternity leave.After the expiry of the 14 weeks of leave, the mother (and/or the father) is entitled to 32 weeks of parental leave.


If the mother is covered by the Salaried Employees Act, as a minimum, the mother will be entitled to 50% of the ordinary salary in the four-week period prior to the expected date of giving birth and 14 weeks after delivery.Collective bargaining agreements often provide better rights regarding payment during maternity leave than the rights which derive from legislation. Employees covered by a collective bargaining agreement usually have the right to full pay during maternity leave and an additional period compared to the above which is fixed in individual collective bargaining agreements.If the employee is not entitled to paid maternity leave, the employee will usually be covered by the social security system and will be entitled to maternity allowance from the government.


A mother has the right to return to the same or a similar position. Parents may ask for flexible working hours upon their return – which the employer must consider, but is not obliged to accept.Furthermore, the mother (or the father) has the right to postpone between eight and 13 weeks of the 32 weeks of parental leave. The postponed parental leave must be taken as one consecutive period of parental leave before the child is nine years old.


The father is entitled to two weeks of parental leave within the first 14 weeks after delivery.The father is also entitled to 32 weeks of parental leave after the child is born. The leave is typically taken after the mother has used her maternity leave, but the father and mother may also take leave at the same time.


Both the mother and the father have the right to extend the 32 weeks of parental leave by an additional 14 weeks. The Act on Maternity and Paternity Leave, as well as a significant number of collective bargaining agreements, give rights to “rainbow families” that correspond to the rights that a mother and father


The Danish Act on Anti-discrimination forbids employers to discriminate against employees on the grounds mentioned under question 3.1 above. The employer may not discriminate against employees or applicants for vacant posts when recruiting, or when dismissing, transferring, or promoting a person for a new position or regarding pay and working conditions.Both indirect and direct discrimination, as well as harassment on the mentioned grounds, are forbidden.


The burden of proof is shared between the employee and the employer. Initially, the employee must demonstrate actual circumstances which imply that the employee has been subject to discrimination. If they do so successfully, the burden of proof shifts to the employer.


The Danish Board for Equal Treatment can handle complaints about discrimination on the labour market. Complaining about discrimination to the board is free of charge. Employees can bring discrimination cases before the Danish Board for Equal Treatment or any ordinary court. If the employment relation comprises collective bargaining agreements and the matter is handled by the union, discrimination cases may also be brought before industrial arbitration. Additional detailed rules apply. A claim can be settled at any time before or after a case has been initiated.


A person who has been discriminated on the grounds prohibited in the Anti-discrimination Act is entitled to compensation for the non-pecuniary damage suffered.


Fixed-term employees are protected by the Fixed-term Employment Act (Act no. 907 of 11 September 2008), which contains rules on non-discrimination of employees on temporary contracts. According to the act, successive renewal of fixed-term employment can only take place if the renewal is justified on objective grounds. Part-time employees must have similar employment conditions as full-time employees on a pro rata basis. Temporary agency workers are protected to at least the same level as those employed directly by the employer.



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If the transferee does not renounce the collective bargaining agreement, the transferee will be bound as if he had entered into the collective bargaining agreement himself.


According to the Business Transfer Act, both the transferor and the transferee have an obligation to inform the employees of the transfer and the consequences and implications connected with the transfer. Furthermore, if the transferor and the transferee envisage measures in relation to the employees, the employee representatives (or the employees, if no representatives have been elected) must be consulted on such measures with the aim to reaching an agreement. Normally, one or two meetings will be held with the employee representatives. In case there are no employee representatives in the company, the meeting shall be held with the employees instead. There is no obligation to involve the unions, but in practice, the unions will often be involved. The company has a duty to consult employee representatives by giving them the opportunity to exchange views and establish a dialogue with the company management based on the information received.The information must be provided in good time before the transfer is carried out. The time limit is not specified in the Act on Information and Consultation of Employees, but this must be done in “reasonable time before the transfer”. Typically, two to four weeks are sufficient. The company can be fined for failing to inform the employees however, in practice it is seldom used. If the company fails to comply with a consultation obligation deriving from a collective bargaining agreement, the company can receive a penalty of up to Euro 33,000.


According to the Business Transfer Act, an employment cannot be terminated solely on the grounds of the business transfer. However, an employee can be dismissed in connection with a business transfer if the employer can demonstrate that there are financial, technical or organisational reasons for the dismissal.


The employer can change the terms and conditions of the employment relation in connection with a business sale. If the changes are substantial, the employer shall observe the ordinary notice periods in order to implement the changes. If the employee refuses to accept the changes, the employee can consider himself made redundant.



Normally the notice period depends on the employee’s length of service. The notice period is normally determined by the Salaried

would normally have, meaning that a co-mother enters into the right of a father, if the family consists of two mothers.


Employees have the right to be absent from work, in case of a family member’s urgent sickness or accident that makes the employee’s immediate presence indispensable.If the employee is hired to take care of a close relative with a permanent decreased functionality, the employee is also entitled to be absent from work.The right to be absent from work under these circumstances follows from the Danish Act on Employees’ Right to Time off for Special Family Reasons.

5 Business Sales


In the case of a share sale, the employee will continue the employment on unchanged conditions. The employer does not change its identity, and consequently no transfer takes place.In case of an asset sale, the Danish Business Transfer Act is often applicable. It follows from the Business Transfer Act that the employees automatically transfer to the buyer (transferee) on unchanged terms and therefore no consent from the employee is needed. If terms are to be changed, other rules are applicable.


The Danish Business Transfer Act provides for automatic transfer of all rights and obligations in relation to the employment relationship to the transferee. The employee’s seniority will be transferred and the employee has the same rights in terms of salary, working hours, holidays, etc. as before the transfer. If, in connection with the transfer, the employee’s working conditions are changed to the detriment of the employee, the employee may choose to consider himself made redundant.If the transferred entity is covered by a collective bargaining agreement, the transferee takes over the transferor’s obligations in relation to the collective bargaining agreement, unless the transferee renounces the collective bargaining agreement. If the transferee does not wish to accede to the collective bargaining agreement, the transferee must inform the relevant trade union no later than five weeks after the date when the transferee knew or should have known that the employees were covered by a collective bargaining agreement. However, the transferee always has until three weeks after closing to decide whether he wants to renounce the collective bargaining agreement. If the transferee renounces the collective bargaining agreement, the employees will maintain their wage and employment conditions deriving from the transferor’s collective bargaining agreement as individual terms. The rights will last until the expiry of the collective bargaining agreement.



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Employers may dismiss due to:1. reasons related to an individual employee’s unsatisfactory

performance or misconduct; or2. business-related reasons, such as financial reasons,

reorganisations, etc. For salaried employees or employees covered by a collective bargaining agreement, the employer must provide a justified reason in order to terminate the employment contract. To avoid unjustified termination in cases where the termination is due to the employee’s performance, the employer should normally give one or more written warnings before dismissing. Serious misconduct by the employee entitles the employer to terminate the employment relationship without further notice.


A warning is often required prior to a dismissal, particularly in the case of unsatisfactory performance or lack of co-operation, as the employer hereby should be given the opportunity to improve.


Employees can seek compensation of an amount equal to the length of the notice period. Employees also have the opportunity to claim reestablishment of the employment relation before the Industrial Tribunals, if protected by a collective bargaining agreement. In most cases, the parties can bring their claims before the ordinary courts as well.


Settlement of termination claims, either before or after the claims are initiated, is also possible during court proceedings before the oral hearing.


In case of mass redundancies, notice must be given to the employees or their representatives. The employer is obliged to consult the employees to avoid or decrease the amount of redundancies and shall provide the works councils with the required information about the employees affected by the mass redundancies.


If an employer fails to inform and consult on a mass redundancy, trade unions can assist employees with claims. If the claim is successful, the employer can be subject to paying a fine or compensation of up to 30 days’ salary per affected employee.

Employees Act, collective bargaining agreement or the individual employment contract. According to the Danish Salaried Employees Act, employees are entitled to a notice period of one to six months. In some cases, the statutory notice period has been prolonged by individual agreement. The notice periods contained in the collective bargaining agreements vary a great deal, but are typically shorter than those of the Salaried Employees Act. The notice period will usually cease at the end of a month.

6.2 Can employers require employees to serve a period of “garden leave” during their notice period when the employee remains employed but does not have to attend at work?

Employers may be put on garden leave during the notice period, at the employer’s discretion.


Salaried employees with more than one year’s seniority who are unfairly dismissed may be entitled to compensation. Employees not covered by the Salaried Employees Act, but covered by a collective bargaining agreement, are typically entitled to compensation according to the collective bargaining agreement or “main agreement” connected to the collective bargaining agreement. However, provided the employee has nine months’ seniority. The compensation is calculated taking the length of employment, as well as the surrounding facts, into account. The employee is treated as being dismissed when the employment has been terminated at the employer’s initiative or if the employee refuses to accept a material change in the employment relation. Consent is not required from a third party.


Certain groups of employees enjoy special protection. In connection with a termination, it is very important to check whether the employee in question may belong to one of these groups:1. Pregnant employees.2. Employees on pregnancy, maternity or parental leave.3. Senior employees (depending on their age).4. Employees who enjoy protection against discrimination, cf.

question 3.1 above.5. Employees who are members of the company boards or safety

committee or who are elected as employee representatives.6. Part time employees/fixed term employees.7. Trainees.Generally, it is more difficult for employers to justify dismissal of protected employees, and the employer risks having to pay compensation, which for some of the groups mentioned above may amount to six to 12 months’ salary. Compelling reasons are required to terminate employment of these certain categories of employees.



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hours can normally be registered by the company to the extent that the company should need the information. When transferring data to third countries (countries other than the EEA countries), a sufficient level of protection is required, and transfer is only allowed if the third country is able to meet certain requirements, or if the registered employee has given prior consent to the transfer.


The employees have the right to access information stored or held by their employer at any time.


To the extent that the employee has published personal information on the internet, the employer can freely obtain the information as long as the information is objective and relevant for the recruitment process. All other information requires the employee’s consent. In either case, the employer is obliged to inform the employee about the contained information at the employee’s request. Criminal records should only be requested if they are of relevance to the position in question.


According to the Data Protection Regulation, the access to monitoring data shall be objective, which is why the employer needs to justify why monitoring is necessary in the specific case. The employer has the responsibility to ensure that the monitoring is operated in compliance with the Data Protection Regulation.


The employer may regulate the employees’ access to social media inside the workplace, for example, by blocking access to certain websites. Negative statements relating to an employee’s specific position, or if the statement could be considered harmful for the company, may be a breach of the employee’s duty to act loyally, and may therefore rightfully be limited in the employment contract.



Breach of an individual contract or the Salaried Employees Act may be brought before the ordinary courts. Cases deriving from collective agreements must be solved at industrial arbitration, whereas a general breach or the interpretation of a collective agreement must be solved at the Industrial Tribunal.



Effective from 1 January 2016, the rules concerning employment clauses have been compiled in a new act on employment clauses (“Employment Clause Act”). The act comprises non-competition clauses, non-solicitation of customer’s clauses and combined clauses (a combination of non-competition clauses and non-solicitation of customers). Furthermore, the act contains a ban on non-solicitation of employees’ clauses, though with certain transition regulations.


Non-competition and non-solicitation clauses are typically enforced by the employee or employer after the termination of the employment. Non-solicitation and non-competition clauses can have a maximum of 12 months after the effective date of termination. For combined clauses, the maximum duration is six months. If the employee is made redundant on unfair grounds or if termination of the employment is due to reasons attributable to the employer, a non-competition clause will become null and void.


The first two months are payable as a one-off amount, which is paid regardless of the employee taking up new employment.Restrictions lasting up to six months:■ The employee is entitled to 40% of the salary, reduced to 16%

in the event that the former employee takes up employment elsewhere during the period in which the restriction is in place.

Restrictions lasting up to 12 months:■ The employee is entitled to 60% of the salary, reduced to 24%

in the event that the former employee takes up employment elsewhere during the period in which the restriction is in place.

■ Note that for combined clauses which are limited to six months’ duration and also subject to the one-off payment, the employee is entitled to compensation amounting to 60% of the salary, reducing to 24% in the event that the former employee secures employment elsewhere during the applicable period.


Restrictive covenants are enforced through injunction, by agreed on liquidated damages and payment of damages for any financial loss suffered.



Personal data, such as the employee’s name, address and telephone number, date of birth, education, current position, tasks and working



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Mette Klingsten Mette Klingsten Law FirmAugust Bournonvilles Passage 1 1055 Copenhagen Denmark

Tel: +45 3144 0100Email: [email protected]: http://mklaw.dk

Mette BjørndalMette Klingsten Law FirmAugust Bournonvilles Passage 11055 CopenhagenDenmark

Tel: +45 3144 0103Email: [email protected]: http://mklaw.dk

Mette Klingsten Law Firm offers legal services in all aspects of Danish labour and employment law and related areas of law. Our many years of advising private companies and institutions gives us the knowledge and experience to provide specific services where a deep understanding of the law goes hand in hand with value-based, practical advice.

Mette Klingsten has provided advice and council on labour and employment law for many years. As a specialist in the field, she advises on all aspects of labour and employment law. Mette has an eye for effective and solution-oriented advice. Mette assists Danish and foreign companies, institutions as well as managers and executives. Mette litigates in both industrial arbitration and private arbitration, as well as the labour court and the ordinary courts, including the Supreme Court.

Mette Bjørndal provides advice in all aspects of employment law and adjacent company law.

Mette advises on employment terms and conditions for blue and white collar employees, consultants and temporary workers. Mette has considerable expertise in all areas related to the relationship between employer and employees and can assist in connection with significant changes to the terms and conditions, terminations and negotiation of severance agreements. Mette mainly advises employers but can also assist directors and other executives.


In cases deriving from e.g. discrimination or termination of a student, special boards exist to hear such cases. City court cases will be heard by one judge, whereas the High Court consists of three judges. Supreme Court cases will be heard by at least five judges. At the Industrial Tribunal, a justice from the Supreme Court, and two or three expert assessors from the trade union and the employer’s organisation will be present at the hearing.


Regarding cases which can be brought before the ordinary courts, conciliation is not mandatory but mediation can be offered before an actual lawsuit. In case of a lawsuit, the fee is calculated on the basis of the claim raised and is payable by the claimant. Local conciliation must be tried to solve disagreements deriving from collective bargaining agreements. Usually, the parties will negotiate locally at the company. If the case needs to be brought before the Board of Dismissal or the Industrial Tribunal, and the union is represented as the employee’s trustee, all expenses are covered by the trade union.


Cases brought before the ordinary courts have a processing time similar to other types of cases. In principle, the trial hearing can be done within 12–20 weeks from the time that the court received the case but in practice, the decision of the case will usually take longer. Cases brought before the Industrial Tribunals or arbitration are more expedient and vary from three to 12 months and, in some cases, even longer.


At the ordinary courts, the plaintiff can appeal once, as the case can be appealed from a city court to High Court. If the case is of principal character, the case can be appealed to the Supreme Court. This, however, requires that the Appeals Permission Board grants permission to appeal. Cases brought before the Industrial Tribunal or arbitration cannot be appealed.


Chapter 12

Shahid Law Firm Rasha Maurice

Egypt

each keeping a copy of the employment contract. However, in the absence of a written contract, and in case of dispute, the employee is permitted to prove the existence of an employment relationship by any form of evidence.


The ELL has set minimum terms and conditions that have to be implied in an employment contract. Yet, it is always recommended to include other terms, such as the contract duration, a confidentiality clause, non-compete and non-solicitation provisions, and employee data management, especially for senior staff.


Pursuant to the provisions of the ELL, the employment contract must include the following minimum information: 1. Name of the employer and the address of the place of work. 2. The worker’s name, qualifications and profession or craft,

social insurance number and home address. 3. Information regarding the nature and type of work. 4. Agreed wage and method and time of its payment, as well as

any other benefits in cash or in kind as agreed between the employer and employee.

5. A probationary period of no more than three months must be stated in the employment contract.


Collective labour agreements are those made between one or more trade union organisation and the employer(s), or one or more of their organisations.Collective negotiations may be held at the level of the establishment, the branch of the establishment, the profession, or the industry, whichever the parties deem more appropriate.



The rules regulating the employer-employee relationship in Egypt are set forth in the Egyptian Labour Law No. 12/2003 (the “ELL”), its executive regulations and ministerial decrees, Articles 674 to 698 of Law No. 131/1948 (Egyptian Civil Code), the Child Law No. 12/1996, the Law Regarding the Rehabilitation of the Disabled No. 39/1975 and the Labour Unions Law No. 35/1976. Further provisions are also found in the Social Insurance Law No. 79/1979.


The provisions of the ELL do not apply to public officials of state agencies, domestic service workers or the employer’s family members, whom he supports. With exception to the above, the ELL only distinguishes between workers receiving monthly wages, and the ones receiving their wages based on production. Another distinction set forth by the ELL and Companies’ Law is the restriction imposed on foreign labour, which should not exceed ten percent (10%) of the total labour force of an Egyptian company. Hence, all foreign employees must obtain a valid work permit, which requires the submission of specific documents by both the employer and the expatriate employee, as well as the fulfilment of certain requirements.A final distinction is also set forth by the Companies’ Law, which entitles employees working for commercial entities with a capital exceeding two-hundred-and-fifty-thousand Egyptian pounds (EGP 250,000) to the right to claim dividends, provided that the shareholders/quota-holders come to an agreement on the distribution of the company’s dividends by virtue of a resolution taken in an ordinary general assembly. In this case, the share of the employees shall not be less than ten percent (10%) of the declared dividends and shall not exceed the total annual wages of the employees working inside the company.


Employment contracts are required to be in writing, in Arabic, and in triplicate, with the employer, employee and social insurance office


Egyp

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There is no legal requirement for employers to set up works councils.


Work councils have no co-determination rights in Egypt.




Pursuant to the Companies’ Law and its Executive Regulations, employees are entitled to be represented on the board of directors of Egyptian joint stock companies. The Executive Regulations set forth three different methods by virtue of which the employees can participate in the management of the said company: (i) by electing two representatives on the company’s board of directors; (ii) by participating in the company’s management based on their ownership of staff shares; or (iii) by means of an auxiliary administrative committee.

3 Discrimination


The Egyptian Constitution provides for the equal treatment of all citizens regardless of their race, religion, gender, age or national origin.In spite of the fact that no specific employment directives or regulations specifically tackle the issue of discrimination, the principle of equality is, however, emphasised in various laws, such as the ELL, and is further protected as a constitutional right. Although there are no official whistle-blower policies in place in Egypt, the inclusion of workers’ complaint rights as part of the work place anti-discrimination policy is imperative and ensures that the employee is protected in these circumstances.


The ELL provides for the principles of non-discrimination and equal treatment of employees under its section on termination. The ELL prohibits termination based on discrimination on the grounds of race, gender, social status, religion, pregnancy or family obligations, the employee’s activity or affiliation with a syndicate or union, whether the employee has filed any complaint or lawsuit



Labour unions in Egypt are governed by the Labour Unions Law No. 35/1976 (the “LUL”), as amended. The law sets out a pyramidal system, with the independent labour unions at its base, followed by the public unions, and the Egyptian Trade Union Federation (the “ETUF”) at its summit. It applies to the employees employed in the public sector, as well as to those working in the private sector. The ELL also contains several provisions governing labour unions, particularly in relation to the procedures of investigation with employees and the settlement of their disputes with employers.


Labour unions aim to protect employees’ rights and optimise their working environment and conditions. In particular, they work on raising union awareness, increasing employees’ skills, protecting the tools of production, enhancing the economic, social and health conditions of the employees and their families, discussing social and economic development plans and mobilising the employees to realise the targets of such plans, and cooperating with other labour unions on regional and international levels.Labour unions may, for the purpose of achieving their goals, create investment or solidarity funds to finance their cultural and social activities, and provide compensation to employees as needed. The funds are invested according to specific rules set out in the Labour Unions’ Financial Regulations issued by a ministerial decree.


In principle, employees have the right to stage a peaceful strike, organised by their respective unions. In order to stage a peaceful strike, employees in an establishment with a trade union should first seek a majority approval of two thirds of the board of the union. The union committee shall then proceed by notifying the employer and the concerned administrative authority at least ten (10) days before the set date of the strike, by registered letter against acknowledgment of receipt. If employees without a union committee wish to stage a peaceful strike, they must notify the concerned general trade union, which must abide by the procedures outlined above.The notification letter to the employer and concerned administrative authority must outline the reasons for the strike and the time limit set for it. The duration of the strike shall be considered as a period of leave from work, for which the employees receive no salary.However, it should be noted that strikes are prohibited in vital or strategic establishments, whereby interrupting the work may result in compromising national security. Such establishments are determined by virtue of a ministerial decree.

Shahid Law Firm Egypt


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(90) days, including the period before and after delivery. In any case, a female employee should not be required to work during the forty-five (45) days following childbirth. Nevertheless, a female employee is not entitled to maternity leave more than three (3) times throughout her term of employment. As a measure of protection of female employees, the ELL prohibits the discharge or termination of a female employee during the term of her maternity leave. Further, a female employee working in an establishment employing fifty (50) employees or more has the right to a period of leave without pay for childcare for a period not exceeding two (2) years. However, she is not entitled to such leave more than twice throughout the term of her employment.


According to the law, the competent social insurance office pays seventy-five percent (75%) of the insured salary of the employee (basic and variable social insurance salaries). The employer is under the obligation to pay the remaining twenty-five percent (25%) in addition to the rest of her actual salary. However, in practice, most employers do not make their employees obtain their payment from the social insurance office. Most employers fully pay the ninety (90) days to their employees.


A female employee has the right, during the twenty-four (24) months following the date of childbirth, to two (2) breaks for breastfeeding, each of not less than half an hour in addition to the regular break(s). The two additional breastfeeding breaks will be counted as working hours and will not result in any salary deductions.


There are no provisions covering paternity leave under the ELL.


There are none.


The ELL is silent with respect to the regulation of flexible working hours. However, the Egyptian jurisprudence and earlier court judgments entitle the employer, by virtue of his authority to manage and supervise the work, to regulate the daily working hours in accordance with the work needs and production conditions. The employee, on the other hand, shall carry out her work in accordance with such regulations, as long as they comply with the provisions of the ELL. Accordingly, the employer may apply a flexible working hours’ scheme, if it deems necessary and provided that it does not violate the generic provisions of the ELL with respect to working hours or the terms of the employee’s employment contract.

against the employer who has refused to grant the entitlements of the employee, and, finally, the use of periods of leave and vacations which the employee is entitled to. Furthermore, the ELL prohibits discrimination with respect to the payment of salary based on sex, origin, language, religion or creed.Moreover, Law No. 39 of 1975 regarding the rehabilitation of disabled individuals (“Law of Rehabilitation of Disabled Individuals”) prohibits discrimination on grounds of disability. Accordingly, the said law ensures the fair rehabilitation and integration of disabled individuals into the working environment through institutions and authorities established by the Ministry of Social Affairs, which aim to provide rehabilitation services to these individuals.


Claims of discrimination are often based on the perception that different legal situations may result in a different treatment by the employer of employees holding the same job title or within the same position. However, in defence to such claim, a distinction has to be made between the treatment by the employer in light of a different status/position of its employees and discrimination on any other given basis.


An employee claiming that they have been discriminated against can file a claim before the competent labour office, stating the circumstances he/she believes are discriminatory. If an amicable settlement with the employer does not ensue, the employee’s claim will be transferred to the competent court. Employers and employees can settle any claim at any stage of the judicial process.


In the event of a successful discrimination claim, a final court order may be issued in favour of the employee. In this case, the employer must abide by the court order and may be ordered to pay legal costs.


There are no additional protections for atypical workers. The provisions of the ELL apply to all types of workers.



Provided that the female employee has spent ten (10) months or more in the employer’s service, and upon a medical certificate indicating the date on which the delivery will most likely occur, a female employee is entitled to a paid maternity leave of ninety



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for the satisfaction of all obligations arising from the transferred contracts. Accordingly, this needs to be observed at the sale agreement to avoid any joint liability after the sale.


From a legal perspective, there are no consultation or information rights to the benefit of employees. However, in practice, the sale of a business can be concluded either by (i) the transfer of shares, or (ii) the transfer of assets (machinery, equipment, land, building, movable and immovable assets). Regarding the first option, the employees will remain on the payroll of the company (current employer) and the new shareholders will be liable for all of their benefits.However, for the second option, it is important to assess whether (from a contractual perspective) the buyer shall maintain the current employees. Should the buyer choose to maintain the current employees, in this case, the employees have to be transferred under the payroll of the buyer (new employer) via a resignation and rehiring process. If the employer opts to terminate the employees’ contracts, the employer may need to consider pursuing an amicable settlement with the affected employees by offering a settlement package, which is equivalent to the compensation for unjustified termination in exchange for their resignations.


No. The ELL only confirms the right of the employer to request the full or partial closure of the business, or to downsize it, for economic reasons which necessitate the termination of employment of some or all of its employees. However, the employer is required to obtain the prior approval of a special committee with respect to the closure of business or its downsizing. The request for closure must indicate the cause for such closure or reduction in size, as well as the number and job classification of the employees to be terminated.Other than the above, the termination of employment agreements under ELL is restricted to the below grounds set forth under section 6, Termination of Employees.


There is no specific legislation preventing the employer(s) from changing the terms and conditions of the employees’ contracts after the conclusion of a business sale. Whilst the change is not expressly prohibited, it is subject to whether the change will be beneficial or detrimental to the employees, which will be considered on an individual case-by-case basis. If the change will be beneficial, the employer can unilaterally change terms and conditions/working practices which:a) have been contractually agreed; or b) exist by custom and practice (“acquired rights”),

5 Business Sales


It is worth noting that a mere transfer of shares does not trigger any transfer of employees. In fact, the employees are registered on the payroll of the legal entity itself (the employer). Accordingly, in the case of a transfer of shares or assets to another entity, the employees will remain under the umbrella of the current employer. However, if such transfer of assets will explicitly include a transfer of employees to another legal entity, such transfer of employees will need to be done on a resignation and rehiring basis, which shall trigger, in return, the affected employees’ approval. In the event of an acquisition of the business by another entity, the acquiring entity will be bound to carry on the employment obligations under their previous employer including their previous years of service. Furthermore, the ELL states that in the event of multiple employers, the employers shall be jointly responsible for fulfilling all obligations set forth in the Labour Law.


If the transfer of the business does not trigger any transfer of shares and results in the transfer of assets (including employees) to another separate entity (the new employer), the current employer will need to assess the following: a) the types of employment contracts of the affected employees

(i.e. whether they are employed under definite or indefinite term employment contracts);

b) the obligations arising from the current employment contracts (i.e. salaries, unused annual leave, years of experience, or any other financial benefits); and

c) whether the employees will accept to submit their resignations with the current employer while obtaining compensation, or if they will submit their resignation without obtaining compensation. It is important to clarify if the new employer will or will not recognise their years of experience and will certainly be an essential element to determine the price of the sale of the business.

However, as stated above, the merger, assignment or sale of an establishment does not in itself trigger the termination of employment contracts since the entity (employer) still exists. It is also important to note that collective agreements (if any) are concluded for a definite period of three (3) years at the most, or for a period necessary to perform a specific project. If the collective agreement is for the performance of a specific project, which lasts more than three (3) years, this agreement will have to be renewed every three (3) years in light of the new economic and social conditions. Accordingly, the collective agreement shall remain valid until the end of its term. As a conclusion, in the case of a transfer of business, the successor entity shall be jointly responsible along with the former employers



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investigation, the employer may suspend the employee for a period not exceeding sixty (60) days with full pay, if it is believed that such action is in the interest of the investigation, or if the employer has requested the Labour Court to dismiss the employee. Moreover, the decision of dismissal is to be taken exclusively by the Labour Court (not by the employer). Therefore, even if the employee committed one of the aforementioned grounds for termination, the employer must follow the aforementioned procedures and report this to court in order to issue the dismissal decision.


The only case where the ELL voids the termination of the employment contract and orders the employee to return to his job is in the case where termination is due to the employee’s union-related activities. In this case, and if the employee requests so in the relevant lawsuit, the court will order the company to take the employee back and grant him his salary for the suspended period, unless the employer can prove that the dismissal is not related to the employee’s union-related activities.


The employer’s right to justifiably dismiss any of its employees is restricted to the aforementioned grounds under question 6.3. In the event that the employer does not have a justified reason to terminate the employment agreement, the employee shall be entitled to compensation, which shall not be less than two (2) months’ gross salary for each year the employee remained in service, or in the case of a definite term employment contract, the salary for the remainder of the contract period, in addition to other statutory entitlements.


The employer must follow certain procedures prior to the dismissal of the employee, which includes carrying out an investigation on the reason for the dismissal; the decision of dismissal is then to be taken exclusively by the Labour Court. Therefore, even if the employee committed one of the aforementioned grounds for termination, the employer must follow the aforementioned procedures and report this to court in order to issue the dismissal decision.


The employee can claim that they have been unjustifiably terminated. In the case of a successful claim, the employee shall be entitled to compensation, which shall not be less than two (2) months’ gross salary for each year the employee remained in service, or in the case of a definite term employment contract, the salary for the remainder of the contract period, in addition to other statutory entitlements.

provided that the required change does not reduce or minimise the rights of the employees under their old employment contracts, including any acquired rights, it is compliant with the provisions of the ELL and the consent of the employee is obtained. In any event, any beneficial change is unlikely to be challenged by an employee. In relation to changing policies, consent from the relevant labour office is required.



Pursuant to the ELL, notice periods differ from one type of employment contract to another. In case of indefinite term employment contracts, the notice period provided for in the ELL is two (2) months if the uninterrupted employment period with the same employer is less than (10) ten years. If this period exceeds ten (10) years, the notice period must be three (3) months. Alternatively, no notice period is required by the ELL to ensure that a definite term employment contract ends upon expiry of its term. However, we recommend that a written notice is sent by registered mail or hand delivered against acknowledgment of receipt prior to the expiry of its term.


The ELL is silent with respect to the term “garden leave”. Yet, an employee’s attendance to work during the notice period is at the employer’s discretion. It should be noted, however, that irrespective of whether or not the employer requires the terminated employee to attend and pursue his work during the notice period, the employer must pay the employee a full wage during such period. Moreover, it is not permissible to decrease the notice period; however, the employer and employee may agree to extend it. In practice, however, the notice period does not extend beyond three months.


The employer’s right to justifiably dismiss any of its employees is restricted to specific grounds, which are limited to: (i) if the employee becomes fully incapacitated; (ii) if the employee is finally sentenced for an honour crime or one against honesty or public moral; (iii) if the employee is proven to be incompetent; (iv) if the employee commits an act of gross misconduct, which is listed in the ELL; or (v) if the employee reaches the retirement age of 60 in the case of an indefinite employment contract. The employer must follow certain procedures prior to the dismissal of the employee, which includes carrying out an investigation on the reason for the dismissal. It is worth noting that during the



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Restrictive covenants are enforced through the traditional judicial route. The employer must file a claim before the competent court district, within which the breach is taking place. As in most other jurisdictions, the employer must provide solid evidence on how the former employee breached his obligations and to what extent such a breach caused damages to the employer. Remedies for a successful claim can result in an injunctive order (specific performance) against the employee to cease and desist from pursuing an activity in breach of the covenant in question, and where applicable, damages/compensation in favour of the employer could be decided.



There are no explicit provisions for data protection rights in Egyptian legislation except for the protection provided to the sanctity of a citizen’s private life stipulated in the Egyptian constitution, as well as specific legislation dealing with issues such as banking and civil affairs. That said, the employer is not entitled to transfer/disclose such information except to legally authorised persons/entities. If any disclosure by the employer occurs without the employee’s prior consent and causes damage to the employee, the employer shall be liable to compensate the employee.


Yes, as long as this is limited to the normal course of business.


Yes. Pursuant to Article (2) of the Minister of Manpower and Immigration’s Decree No. 185/2003 issuing the Model Internal Regulations of the Work Place, the employer typically verifies the employee’s data by requesting several employment documents (including a criminal record) prior to commencement of employment.


Yes, they are.


Yes, they can.


Yes, a settlement can be reached between the employer and the employee after initiating or while reviewing the employee’s claim before the Labour Office or Egyptian courts.


No, they do not.


The ELL does not differentiate between individual and mass dismissals. Employees suffering from mass dismissals enjoy the same rights as individual dismissals. In the event that the employer fails to comply with his obligations towards one or more of its employees and the Labour Court concludes that the employee(s) has been unjustifiably terminated, such employee(s) shall be entitled to the statutory compensation as prescribed by the ELL.



Egyptian law recognises three main restrictive covenants, which are: a) Confidentiality: the employee or former employee must

maintain work and trade secrets so as to protect the employer’s (or former employer’s) interests.

b) Not to compete: the employee must abstain from engaging, whether directly or indirectly, in any business competing with the business of his employer or former employer. Such a restriction nonetheless is more relevant and applicable to the managerial level of an institution.

c) Work inventions and product: the employer is the sole legal owner of all work products and inventions.


Post-termination restriction clauses survive upon the termination of the employment contract. It is possible for these clauses to be enforceable for an unlimited period; however, the law does not limit the enforceability thereof to a certain scope of work or geographically.


No, they do not.



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both the employer and employee must submit the dispute to the committee within ten (10) days from the date of the dispute to attempt to resolve the situation amicably. If within twenty one (21) days from the date of the submission of the application no settlement is reached, each of the parties may resort to the Labour Tribunal within forty-five (45) days from the end of the twenty-one (21)-day period, even if the dispute has not been previously submitted to the committee. Such right shall be forfeited after the said period has elapsed. During the aforementioned process, the employee is exempted from any fees or judicial expenses.


Employment-related complaints typically take seventy-six (76) days to be either reviewed or resolved by the competent Labour Office. However, in the event that either party chooses to transfer the said complaint to the Labour Tribunal, the Court of First Instance can take up to three years to issue its verdict.


Yes, an appeal of a verdict issued by the Court of First Instance can be reviewed before Egyptian courts. Such review can take between two and three years.



The labour circuit of the court of first instance is the competent forum of jurisdiction with respect to employment-related complaints and disputes. The court comprises three judges and the representation of both employer and employee is mandatory.


The Labour Office is the administrative institution before which all labour-related disputes begin. In the event that there is an unresolved dispute as to the application of the ELL between the employer and an employee, a committee may be formed to resolve this dispute, comprising (i) the representative of the competent administrative authority (usually a public official from the Ministry of Manpower), (ii) a representative of the trade union organisation, and (iii) a representative of the employers’ organisation. A non-compulsory conciliation procedure is offered. If a dispute arises concerning the application of the provisions of the ELL,



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Rasha Maurice Shahid Law Firm20B Adly Street, Downtown Cairo 11511 Egypt

Tel: +20 2 2393 3593 Email: [email protected]: www.shahidlaw.com

Rasha Maurice has been a member of the Employment Regulatory Group at Shahid Law Firm since 2007. She specialises in Egyptian labour and social insurance legislation in relation to commercial entities operating in Egypt.

Rasha’s experience includes advising corporates on various Egyptian labour matters in relation to their employees, drafting employment contracts, reviewing and advising on work policies and procedures, heading the negotiation team with the clients’ employees with respect to lay off(s), responding to day-to-day HR legal queries and obtaining exceptional approvals from the Ministry of Manpower regarding expats’ work permits. She is in constant communication with the governmental authorities in relation to various labour-related matters and also settles commercial entities’ past dues for the Social Insurance Authority.

Rasha holds an LL.B. from Ain Shams University.

Shahid Law Firm was established in 1987 by Counselor Sarwat Abd El-Shahid, after serving as judge and State Counselor for nearly two decades. Since its inception, the Firm has rapidly grown to include over 70 lawyers, and has become one of the leading international law firms operating in Egypt and the region. Such credit, undoubtedly, is largely due to its lawyers’ vast experience, industry insight, and ability to combine their understanding of complex legal matters with a practical solution-oriented approach.

The Firm has a team of Egyptian and Western-trained attorneys and legal consultants, with experience in multiple jurisdictions. Our lawyers’ rich and diverse educational backgrounds and language skills have enabled our team to communicate with clients from all over the world. Our Firm is placed among the few firms in Egypt and the region that are able to provide services in English, French, Italian, German, Spanish Portuguese, and, of course, Arabic.

Our clients include medium-sized to large international corporations, industrial conglomerates, banks, insurance companies, high-net-worth individuals and families, diplomatic representations and governments; and our experience spans various sectors, including pharmaceuticals, energy and power, oil and gas, mining, manufacturing, leisure and hotels, consumer products, foodstuffs, banking and finance, information technology and telecommunications.

Over the past three decades, the employment and labour law practice group of Shahid Law Firm has drawn upon the Firm’s longstanding experience in all areas of the Egyptian Labour Law, including litigation and arbitration.

We have a reputation for successfully assisting our clients in obtaining Egyptian work permits and visas for foreign nationals, which is a service underpinned by our firm’s tradition of maintaining an excellent professional relationship with the Egyptian Ministry of Manpower, in addition to our deep understanding of the immigration authorities’ focus and concerns. We also assist our clients in obtaining certain exemptions with respect to recruiting expatriates, whenever possible.

Due to our profound knowledge of the Egyptian social security system, our employment and labour law practice’s multi-disciplinary approach can handle all aspects of regulatory labour law and social insurance for our clients, from the registration and maintaining of files with the authorities, to providing advice on how to settle disputes in the most effective manner including dealings with labour unions.



Chapter 13

EMPLaw Attorneys Ltd

Minna Saarelainen

Annamaria Mattila

Finland

and working hours. Collective agreements also include minimum terms that can become binding to the employer due to the nature of the collective agreement (generally applicable collective agreement) or due to employer’s membership of the applicable employer union.There is no general minimum salary set in the employment legislation, but collective agreements usually include a minimum salary level for a specific position or profession.


Collective bargaining has a significant role in Finland. Collective agreements are typically concluded between nationwide employer and employee unions setting the minimum terms of employment for specific industry or profession. If the collective agreement is deemed as generally applicable, non-unionised employers in the applicable industry/trade are also required to follow the collective agreement as minimum terms of employment. In addition to industry level, collective bargaining may also take place at the company level, e.g. by concluding local collective agreements.



The right to establish and join a trade union has been confirmed in the Finnish constitution and supplementary legislation.


Trade unions aim to safeguard and improve the benefits and rights of their members. Trade unions essentially conclude collective agreements with the employers/employer unions and take part in the drafting of the employment legislation on a tripartite basis with the government and the employer unions.


Once concluded, collective agreements are in force for a certain period. During this period, both parties are prohibited from taking industrial action directed against any provision of the collective



The main sources of employment law are legislation, collective agreements and individual employment contracts.


Employment legislation applies to all individuals deemed to have an employment relationship with an employer. The Employment Contracts Act includes the definition of an employment relationship distinguishing employees from, e.g., self-employed individuals. Based on case law, managing directors of limited liability companies are not regarded as employees and, thus, are not in the scope of the employment legislation.Employment legislation provides protection to all employees regardless of their type of contract (permanent/fixed-term/full-time/part-time, etc.).


Employment contracts can be concluded in writing, orally or via electronic means. Even though a written employment contract is not mandatory (although recommended), the employer is obliged to provide the employee at least with a written statement on the main terms of employment by the end of the first salary period.


Any binding terms of employment deriving from the legislation or collective agreements are implied into employment contracts. In addition, the requirement of mutual trust and confidence between the parties can be deemed as an implied term of contract.


The employment legislation is binding to a large degree and sets the minimum terms in favour of the employee, e.g. regarding holidays


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state of health, disability, sexual orientation or other personal characteristics is prohibited. Discrimination is prohibited regardless of whether it is based on a fact or an assumption concerning the individual or another person such as a family member of the employee.


Direct and indirect discrimination are both prohibited. In addition, harassment, denial of reasonable accommodation (with respect to individuals with disabilities), as well as an instruction or order to discriminate, constitute unlawful discrimination.Direct discrimination means that an employee is treated less favourably than another employee in a comparable situation due to his/her personal characteristic (e.g. gender). Indirect discrimination means that an apparently neutral rule, criterion or practice puts an employee at a disadvantage compared with others on the grounds of his/her personal characteristic, unless the rule, criterion or practice has a legitimate aim and the means for achieving the aim are appropriate and necessary.


The employer must be able to prove that the reasons for possible differential treatment are justified. Proportionate positive actions taken to promote de facto equality or to prevent disadvantages in favour of certain disadvantaged groups do not constitute discrimination.


Employees can bring a claim against the employer in court. The claim may be settled between the parties before or after they are initiated.In addition, employees may file a report to the occupational health and safety administration or police. Such report is subject to formal process and may not be settled by the employer.


Employees can claim compensation for discrimination from the employer. The legislation includes certain threshold minimum/maximum amounts for the compensation which are revised on a regular basis. In addition to specific compensation for discrimination, the employee may also claim damages from the employer or compensation for unjustified termination of employment.


Employers may not apply less favourable terms to employees working part-time or on a fixed-term merely based on the employee’s type of employment contract or working hours. The employment legislation also includes specific provisions providing protection to employees working on part-time, fixed-term or as temporary agency workers.

agreement or the agreement as a whole. However, certain industrial actions, e.g. political strikes or sympathy strikes, are permissible.Even though industrial action during the validity of the collective agreement is generally prohibited, the consequences of such breach are relatively mild. According to the legislation and case law, the primary consequence of an illegal strike is fixed-level fines imposed on the trade union.


Employers are not required to set up works councils. Employee representation is arranged by the employees, who elect among themselves a shop steward(s) or other elected representative(s) to the workplace.Employee representation is governed by collective agreements and legislation. The employee representative has certain information rights and primarily represents the employees in, e.g., co-operation negotiations with the employer regarding plans affecting the employees.In addition, there is specific legislation regarding co-operation at European level and group level.


Employee representatives do not have co-determination rights. However, according to the co-operation legislation applicable to employers regularly employing at least 20 employees, the employer has prior information/negotiation obligations on certain matters affecting personnel. Only after the negotiation obligation has been fulfilled does the employer have the right to make its final decision.


In principle, the rights of trade unions and employee representatives are separate from each other.


Specific legislation exists regarding employees’ representation rights at the employer’s executive, supervisory or advisory bodies. The legislation applies to companies and other specified entities regularly employing 150 employees or more. Primarily, the personnel and the employer should mutually agree how the personnel representation is arranged. If such agreement cannot be reached, the legislation stipulates the applicable process.

3 Discrimination


Employees are protected against discrimination. Discrimination based on gender, age, origin, nationality, language, religion, belief, opinion, political activity, trade union activity, family relationships,

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After maternity leave, either parent may take parental leave for 158 working days (approx. six months), during which Kela will pay earnings-related parental allowance.After the parental leave, either parent is entitled to take full-time childcare leave until the child is three years old, during which time Kela will pay child-care allowance. Employees are entitled to take temporary childcare leave if their child under 10 years old falls ill suddenly. Temporary childcare leave may last a maximum of four working days. Collective agreements often include an obligation for the employer to pay employees their salary for a certain period during the temporary childcare leave.Employees are also entitled to temporary unpaid absence from work if their immediate presence is necessary because of an unforeseeable and compelling reason related to an illness or accident suffered by a family member.


Employees have the right to take partial childcare leave and reduce their working hours correspondingly until the end of the child’s second year at school. The right to partial childcare leave and the details of the leave are agreed between the employer and the employee, although in practice the employer’s possibilities to deny or restrict the leave are limited.

5 Business Sales


Asset transfer is usually regarded as a transfer of business if the business remains the same or similar after the transfer. Employees transfer automatically to the new employer with existing rights, obligations and employment benefits. Merely a share sale where only the ownership and not the identity of the employer entity changes is not generally considered as a transfer of business.


In connection to the transfer of business, all binding terms of employment and employment benefits transfer automatically to the transferee.The transferee is obliged to follow the collective agreement applicable to the transferring employees until the end of the validity period of the collective agreement.


The Act on Co-operation within undertakings is applicable to entities regularly employing 20 employees or more. According to

The employer has the primary obligation to offer additional work to its part-time employees if it has new suitable work available before, e.g., recruiting new employees.The minimum terms of temporary agency workers are protected. If the employer of the temporary agency worker is not bound by any collective agreement, the collective agreement binding the user company will apply as minimum terms of employment. In case there is no collective agreement binding the user company either, at least the terms relating to salary, working hours and holiday generally applied at the user company shall apply as minimum terms of the temporary agency worker. Temporary agency workers are also entitled to use general services and arrangements offered by the user company to its own employees (e.g. cafeteria services, transportation arrangements), unless differential treatment can be justified on objective grounds. The employer must also provide information on available vacancies at the company in a way that ensures that fixed-term, part-time and temporary agency workers have the same opportunity to apply for these vacancies as permanent/full-time employees.



Maternity leave is 105 working days (approx. four months). Sundays and official holidays are not regarded as working days. During maternity leave, the mother is entitled to earnings-related maternity allowance from Kela (the Finnish social security institution).


Employment legislation does not include an obligation for the employer to pay an employee’s salary during maternity leave. However, usually collective agreements require employers to pay an employee’s salary for the first three months of maternity leave.During maternity leave, the employee is specially protected against termination of employment (see question 6.4).During maternity leave, the employee accrues full holiday entitlements.


The employee is entitled to return to the same position as she worked prior to maternity leave. If this is not possible, the employee shall be offered equivalent work in accordance with her employment contract, and if this is not possible either, other work in accordance with her employment contract.


Fathers are entitled to take paternity leave for a maximum of 54 working days (approx. nine weeks). During paternity leave, the father receives earnings-related paternity allowance from Kela. Employment legislation does not include an obligation for the employer to pay an employee’s salary during paternity leave. However, many collective agreements include such requirement (usually up to six working days).



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The employer can unilaterally require the employee to take garden leave. During the garden leave, the employee continues to receive normal salary and benefits.


An employment relationship may be terminated by the employer only if it has valid termination grounds pursuant to the Employment Contracts Act, i.e., proper and weighty reason related either to the employee or the employer’s business.There is no requirement to obtain a third-party consent for the dismissal.


Employees on family leave enjoy special protection against dismissal. Employers may not terminate an employee due to pregnancy or because the employee is exercising his/her right to family leave. Consequently, if the employer terminates the employment of a pregnant employee or an employee on family leave, the termination is automatically deemed to be related to the employee’s pregnancy or family leave unless the employer can prove otherwise. Employees on family leave are also specially protected against dismissal based on financial, production or re-organisation grounds. The employer is entitled to terminate the employment during such leave only if its operations cease completely.In addition, shop stewards, elected representatives and industrial safety delegates enjoy enhanced dismissal protection.


Justified termination grounds based on individual reasons may exist if the employee has seriously breached or neglected his/her employment obligations. In addition, essential changes in the employee’s ability to perform his/her work duties (e.g. due to long-lasting illness in certain cases) may constitute justified grounds for termination. The overall circumstances must also be considered in the assessment.The employer generally has justified business reasons for termination of employment if the available work by the employer has diminished substantially and permanently for financial, production-related reasons or for reasons arising from reorganisation of the employer’s operations. In addition, it is required that the employee cannot be placed in or trained for other duties within the company (or within a group of companies in certain cases). See also question 6.9 regarding co-operation obligations.Employees are entitled to their normal salary and benefits during the notice period. There is no statutory severance in Finland.

the Act, both the transferor and the transferee have an obligation to inform the affected personnel of a business transfer. In general, the affected personnel shall be informed about the time/intended time of transfer, reasons for transfer, legal, economic and social consequences of such transfer and the planned measures regarding the employees. The transferor is obliged to provide the information in good time before the completion of the transfer whereas the transferee is obliged to fulfil its information duties within a week of the completion of the transfer. It is also possible that the transferor and transferee fulfil their obligations simultaneously.The possible sanction for the breach of the obligations is a fine.If the transferee is planning, e.g., operational changes in connection to the business transfer that may lead to redundancies or otherwise affect the working conditions of the employees, separate consultation in accordance with the Act is required before any final decisions on such matters are made.Merely a share sale does not impose information and consultation obligations by law.


Employees cannot be dismissed merely based on the reason of a business sale. The employees on the other hand have a special right to resign due to the business transfer as from the date of the transfer or at the latest within a month of having been informed of the transfer.


The transferee is not free to unilaterally change binding terms of employment due to the business transfer. Thus, the transferee has the same rights and obligations towards the employees that the transferor had prior to the transfer. In general, binding terms of employment may be amended either via agreement or if the employer has grounds for termination of employment.



Notice of termination should be given to the employee. According to the Employment Contracts Act, the notice period is from 14 days to a maximum of six months, depending on the length of employment. However, the general notice periods set out in the Act are not binding, thus, the parties may agree otherwise in the employment agreement provided that the employer’s notice period cannot be shorter than the employee’s notice period and that the maximum length of the notice period is six months. Collective agreements may also include binding provisions on the notice period limiting the parties’ right to agree on the matter.In cases of gross misconduct, the employer is entitled to cancel the employment relationship with immediate effect without notice period, as well as in termination of employment during a trial period.



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are commenced by providing the employee representatives with a written notice at least five calendar days prior to the first meeting. Collective agreements may also include provisions regarding co-operation negotiations which must be observed. In the co-operation negotiations, the parties will essentially discuss the grounds and effects of the employer’s plan, alternatives to limit the number of employees affected by reductions considering, e.g., possible re-placement and re-training opportunities, possibilities to alleviate the consequences of reductions to the employees and plans/principles regarding employees’ re-employment.As of 2017, employers are obliged to offer training or education to employees dismissed based on business reasons. The training or education services offered by the employer aim to increase the employee’s re-employment possibilities and principles of the services are discussed in cooperation with the employee representatives. The value of the training should equal one month of the employee’s salary or the average monthly salary at the workplace, whichever is higher. The obligation applies only to employers regularly employing at least 30 employees and to such dismissed employees with at least five years’ employment history with the employer. The employee representatives’ consent for the employer’s plan is not required in the consultation process even though mutual consensus is the aspired objective of the Act. Once the minimum consultation period has been fulfilled and the issues required by the Act have been discussed, the employer is free to make its decision.


See question 6.7 for applicable remedies in individual and mass dismissals.



Restrictive covenants typically used are non-competition, non-solicitation and confidentiality clauses.


During the employment relationship, including the notice period, employees are prohibited from engaging in competing activity with the employer. The employer and the employee may also agree upon a separate, non-competition obligation applicable after the end of employment. Such non-competition agreement can be concluded only if there is a particularly weighty reason related to the employer’s business and operations. Several factors are considered when determining whether a particularly weighty reason exists. These include the nature of the employer’s business, the need to protect business or trade secrets, possible special training provided to the employee and the employee’s status and duties.Non-competition restriction may be in force for a maximum of six months after the end of employment. However, if the employee receives reasonable compensation for the non-competition restriction, the length may be extended to a maximum period of one year after the end of employment.

As of 2017, dismissed employees are entitled to use the employer’s occupational healthcare services until six months have elapsed from the end of the employee’s working obligation. This extension of the occupational healthcare services applies only to employers regularly employing at least 30 employees and to such dismissed employees with at least five years’ employment history with the employer.


Before terminating an employee’s employment based on individual reasons, the employer is generally obliged to issue a prior warning to the employee. The purpose of the warning is to inform and provide the employee with the possibility to amend his/her conduct. However, such a warning is not required in severe cases of misconduct.In addition, the employee has the right to be heard prior to the dismissal. The employer must also consider whether it is possible to avoid termination by placing the employee in other work considering the reason for the termination.


An employee can bring a claim for unjustified termination. The claim must be filed within two years from the end of the employment. The maximum compensation awarded to the employee equals the employee’s salary for 24 months. Several factors are considered by the court when determining the amount of compensation, such as the length of the employment, amount of lost income and whether the employee has given a reason for the dismissal. A claim for reinstatement is not possible in the private sector.Employees may also claim for separate compensation for discrimination (see also question 3.5).In dismissals related to business reasons, employees may also claim for separate compensation for the employer’s breach of its co-operation obligations. If it can be shown that the employer has made its final decision prior to its co-operation obligation being fulfilled, the current maximum compensation per dismissed employee is EUR 34,519.


Claims can be settled by the parties before and after they are initiated.


The Act on Co-operation within undertakings is applicable to entities regularly employing at least 20 employees. According to the Act, when the employer is considering actions that could lead to redundancies based on business reasons the employer has a prior consultation obligation. The minimum consultation period is 14 calendar days if the amount of planned redundancies is less than 10 employees. If the planned redundancies equal 10 employees or more, the minimum consultation period is six weeks. However, the negotiation period is always 14 days for entities normally employing fewer than 30 employees. The co-operation negotiations



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the same rules that apply to processing and transferring personal data in Finland. The main rule regarding data transfers outside of the EU/EEA area is that such transfer is possible if the recipient country guarantees an adequate level of data protection. In addition, the legislation includes certain exemptions when data transfer is allowed even though the country in question would not meet the required level of data protection (e.g. the employee’s consent or using the EU Commission’s standard contractual clauses). Depending on the circumstances, also a prior notification to the Data Protection Ombudsman may be required.


The employee has the right to access personal data concerning him/her in a personal data file held by the employer. It is required that the employee personally submits a request of access to the employer with sufficient search criteria. The employee is entitled to request such information free of charge once a year. The main rule is that the employer cannot refuse the employee’s right of access and the information should be provided without undue delay. However, if such access is denied, the employer is obliged to provide a written certificate explaining the grounds for the refusal. Also, failure to provide the information within three months of the employee’s request is regarded as a refusal. In case of refusal, the employee has the right to escalate the matter to the attention of the Data Protection Ombudsman.


The possibility to carry out pre-employment checks is quite limited. Specific legislation exists concerning security (background) checks that are carried out by the Finnish Security Intelligence Service. These background checks are carried out as basic, limited or extended depending on the applicant’s position and the employer entity (e.g. extended background checks apply only to certain governmental positions). In order to assign a security check, it is for example required that the position in question relates to national security, infrastructure security or very significant private interest of a financial nature (e.g. access to significant business secret). In addition, a prior written consent from the applicant is needed before assigning the Security Intelligence Service for the security check.In general, credit checks may be done only on those employees who are directly financially responsible for the employer’s property or for some other reason require considerable trust from the employer (e.g. executive positions).Access to an employee’s criminal record may be required by the employer only if there is a statutory reason to obtain the record. In practice this means employees who work with minors (teachers, kindergarten staff, etc.) or if the employer has requested the security check carried out by the Finnish Security Intelligence Service where the criminal record is checked as part of the background check.


In principle, employees’ emails, telephone calls or other communication are covered by the constitutional right to privacy. This right is protected even if the employee uses equipment or services provided by the employer.

The parties may include a contractual penalty clause to the agreement which shall not exceed the amount of pay received by the employee for the six months preceding the end of his/her employment. A non-competition obligation does not bind the employee if the employment is terminated based on grounds deriving from the employer (i.e. business reasons).Restrictions regarding the length of the non-competition period and the maximum contractual penalty do not apply to director level employees, i.e. employees who considering their duties and status are engaged in the management of a company or have a similar independent status. Furthermore, the restrictions do not apply to managing directors.Non-solicitation restriction of employees and clients is commonly used in non-competition agreements. However, as there are no provisions in the legislation regarding non-solicitation restrictions, the validity of such clauses is determined based on general contract and employment law principles.Employees are prohibited from utilising and exposing to third parties the employer’s trade or business secrets during the employment relationship. Parties also usually agree on a wider post-termination confidentiality obligation. The validity of such confidentiality obligation is generally determined based on general contract and employment law principles.


Financial compensation needs to be provided for non-competition restrictive covenants exceeding six months (except for director-level employees). There are no provisions regarding financial compensation for other restrictive covenants.


The employer may bring a claim against the employee in court and request for actual damages incurred by the employer. Alternatively, if the parties have agreed on a contractual penalty, the employer may claim for the contractual penalty from the employee.



Employee privacy legislation is quite strict in Finland. Employers are entitled to collect and process only personal employee information that is directly necessary from the perspective of the employment relationship. Such information directly relates to the employment relationship and concerns the rights and obligations of the parties under the employment relationship or the benefits provided to the employees by the employer, or that arise from the special nature of the work concerned. Employers are not allowed to deviate from this requirement even with the employee’s consent.Information regarding the employee should be collected primarily from the employee. Only with the employee’s consent may the information be collected from outside parties or without the employee’s consent if such employer’s collecting right from external parties derives from legislation. Employers have the right to transfer employee data to a recipient in another EU or EEA country based on the same principles and under



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An employment-related claim in the applicable district court is initiated by filing a written claim by the plaintiff. After that the court reserves the right for the defendant to provide a written response to the claim. The process usually continues with an oral preparatory hearing followed by the main oral hearing.Conciliation is not a mandatory requirement for the claim to proceed but settlement possibilities are explored during the process.Employment claims related to collective agreements are first handled at the local level in the workplace and after that escalated to the applicable employer and employee unions in accordance with the provisions of the collective agreement. After that the claim can proceed to the Labour Court.The plaintiff is required to pay a fee when submitting the claim. The fee varies depending, e.g., on the court instance.


The processing time in the district court typically takes approximately one year, depending on the circumstances.The average processing time in the Labour Court is usually from six to 12 months.


Appeal against the decision of the district court requires a leave for continued consideration from the Court of Appeal which must be granted to the claimant if, e.g., there is reason to doubt the correctness of the decision of the district court or it is important to the application of law in other similar cases. The average processing time in the Court of Appeal is approximately one year, depending on the circumstances.Appeal to the Supreme Court is granted only in specific cases. In general, a leave for appeal may be granted if a precedent is needed for the correct application of the law or there has been an error in the lower court. The process regarding the leave for appeal usually takes four to six months and if a leave for appeal is granted, the length of the total process is usually around 16 to 18 months.

The employer’s ability to retrieve and open business-related emails of the employee has been narrowly regulated in the legislation. In practice, this applies to situations where the employee is absent from work, cannot be reached and it is crucial that the employer receives information of certain business-related emails. Also, as a pre-condition it is required that the employer has taken care of its prior duty to protect electronic mail messages, i.e. provided alternatives for the employee to use during his/her absence to make sure that business related emails would be received on time. Employers are not allowed to monitor an individual employee’s use of the internet and the company network, even with the employee’s consent. However, employers can determine general principles/policies regarding the use of company email and company networks, such as whether a business email account can be used for private purposes and possible restrictions regarding web surfing.The Act on Co-operation within undertakings includes a prior obligation for the employer to discuss the principles of use of electronic mail and data networks with the employee representatives.


Employers are not allowed to monitor individual employee’s web surfing including the use of social media in or outside the workplace. However, the employer may electronically block the access to social media sites from the company network and determine in its policies the principles regarding the use of social media, e.g. require that social media sites are not used during working time.Employers’ direction right regarding the use of social media concerns primarily the employee’s working time. However, even though the use of social media during the employee’s spare time is for the employee to decide, the duty of loyalty towards the employer is still applicable. Thus, the employee is generally prohibited from taking actions on social media that cause damage to the employer. The breach in duty of loyalty may entitle the employer to terminate the employment relationship, depending on the circumstances.



Employment-related claims are primarily handled in ordinary courts, with district courts being the first instance. After the district court, the parties may file an appeal to the Court of Appeal and at the final stage to the Supreme Court.Claims regarding the interpretation and application of collective agreements are primarily handled by the Labour Court. The decisions of the Labour Court are final.



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Minna SaarelainenEMPLaw Attorneys LtdKalevankatu 9 A 1000100 HelsinkiFinland

Tel: +358 400 705 770 Email: [email protected]: www.emplaw.fi

Annamaria MattilaEMPLaw Attorneys LtdKalevankatu 9 A 1000100 HelsinkiFinland

Tel: +358 401 585 673 Email: [email protected]: www.emplaw.fi

Minna advises employers on all matters related to employment law, pension and benefits. She has over 23 years of experience on employment law-related dispute resolution, M&A, outsourcing and restructuring work, work safety and discrimination matters, as well as employee liability cases. She also acts as a long-term partner for employers on all daily employment law matters and as an arbitrator.

Minna is the current chairman of the Finnish Bar Association’s Employment Law Committee. She holds a master of business administration degree in addition to her law degree. She is also accredited as an international mediator from the Center of Effective Dispute Resolution.

Chambers Europe has ranked her as one of the leading experts on employment law in Finland.

EMPLaw Attorneys is a boutique law firm specialising in employment, pensions and benefits law for domestic and international employers, executives and employer organisations.

We provide our clients with high-quality, sound and cost-efficient legal advice and support throughout the employment relationship. We advise our clients on all kinds of employment issues including day-to-day advice, employment disputes and restructuring, co-operation and M&A matters.

Annamaria advises employers on all matters related to employment law, pensions and benefits. Prior to joining EMPLaw, Annamaria worked as a HR legal counsel in a multinational corporation. She was responsible for employment law consultation in Finland and supporting internal customers globally with executive agreements, HR policies, change projects and corporate level communication. In addition, she has gained experience in the field of employment law by working as a lawyer in a Finnish law firm and as legal counsel in an employer organisation. In addition to her employment law expertise, Annamaria holds a Master’s Degree in Economics and Business Administration majoring in Tax Law. She has also worked as Tax Consultant specialising in individual taxation and global mobility-related issues at PwC.



Chapter 14

Latournerie Wolfrom Avocats Sarah-Jane Mirou

France


As with any contract, an employment contract must be performed in good faith. Employees are therefore obliged to carry out the work specified in the contract personally and conscientiously and to follow the instructions given by their employer. In addition, they must not act in a manner contrary to the company’s interests and must not, in particular, engage in any act of competition (duty of loyalty). They are also obliged to respect the confidentiality of any information that they learn during the performance of their duties (duty of discretion).Employers are, in turn, obliged to respect their commitments towards employees and, in particular, to assign them the agreed work and pay them the corresponding salary. They must also ensure the adaptation of its employees to the evolution of their position, and, when applicable, ensure that they receive adequate training. Employers are also duty-bound to protect the health and safety of their employees. The employers’ failure to respect their commitments vis-à-vis their employees may allow them to seek for constructive termination of their employment contract and thus to obtain both their end-of-contract payments (payment in lieu of notice period, dismissal indemnity) and damages for unfair termination (cf. question 6.3).


Minimum wage: The wage paid by the employer cannot be less than the national minimum wage (SMIC). In 2016, the gross monthly SMIC, for a 35-hour working week, was €1,466.62. The collective agreement applicable to the contract of employment may also specify a minimum wage depending on the employee’s classification.Working time: The statutory working hours are 35 hours per week. Employees can, however, work more than the statutory working hours either on a one-off basis (overtime) or as part of a specific working time arrangement. Specific rules apply both to overtime and to working time arrangements. Concerning part-time contracts concluded as of 1 July 2014, the working time must be at least either 24 hours per week as provided by law, or a shorter duration provided by a collective agreement, except in specific cases provided by law or collective bargaining agreement (such as an explicit request of an employee for personal reasons or to have several jobs, a student status, etc.).



The sources of employment law are international law, EU law and domestic law. Domestically, the main sources of employment law are the French Labour Code (as interpreted by case law), collective bargaining agreements, employment contracts and companies’ internal regulations.


Any person who carries out paid work in the context of a relationship of subordination is classified as an “employee” and is protected by employment law rules. A person may qualify as an employee notwithstanding any provision to the contrary agreed upon between the company and the concerned individual (provision of services, agency contract, etc.).


There is no legal requirement for an employment relationship to be formalised by means of an employment contract. However, the collective agreement applicable to the contract of employment may require a written form. In any case, an employment contract not in written form is considered to be a full-time and indefinite-term contract. Therefore, fixed-term contracts and part-time contracts need to be formalised in writing with specific information provided by law.Besides, in accordance with EU law, the employer is required, in all circumstances, to inform employees of the employer’s identity, their place of work, their job title (or description of the work), the date of commencement of the contract, the amount of paid leave, the length of the notice period, the component elements of pay and the frequency of payment, their working hours and, where applicable, the collective agreements applicable.In practice, it is strongly recommended to draw up an employment contract. Besides, this employment contract must be drafted in French. If not, the company will not be in a position to take advantage of its terms against its employees.


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enables it to be representative. The union representative is entitled to dedicate four hours of his/her working time to his/her union activities.


Industrial action may be initiated by trade unions or by the employees themselves. The right to strike is enshrined in the French Constitution. A strike is lawful if it is based on work-related claims presented to the employer. Except where public services are concerned, a strike may be called at any time.


A works council must be established in companies with at least 50 employees. Its members are elected by the employees for a four-year term of office. The number of members varies with the company’s headcount. Calling and organising these elections are subject to specific rules and notably includes the negotiation of an agreement on the election procedure.The works council plays an important role within the company by ensuring that employees’ interests are permanently taken into account in the decisions made by the employer. The company is obliged to:■ provide periodic information or information relevant to

certain occasions to the works council; and■ inform or consult the works council before taking decisions

relating, in particular, to the general running of the company, to working conditions, to a change in the economic or legal organisation of the company, etc.

The works council is in charge of the company’s social and cultural activities, for which a budget is assigned by the employer.


In general, where the works council expresses a negative opinion on a project, the company will not be prevented from implementing it.The works council’s favourable opinion, lack of objection or consent is required in certain cases, such as:■ appointment and dismissal of the company doctor;■ introduction of personalised working schedules;■ replacement of overtime pay with time off in lieu;■ determination of number of health, safety and working

conditions committees (CHSCT); and■ refusal of certain absences.


Trade unions have the monopoly of presenting candidates at the first round of the election of the works council members. Thus, generally, trade unions are represented amongst the works council members. Union delegates (cf. question 2.2) also attend works council meetings.

With occasional exceptions, employees must not work more than:■ 48 hours per week;■ an average of 44 hours per week during 12 consecutive

weeks; and■ 10 hours per day.Also, with the occasional exception, employees must rest at least once a week for 24 consecutive hours and must not work on Sundays.Paid leave: Employees are entitled to 25 days’ paid leave per year, as well as public holidays (around 10 days per year).


Terms and conditions provided for by collective bargaining agreements, or collective agreements entered into at company level, will apply to employment contracts, except where the provisions of the employment contract are more favourable to the employees.Collective agreements can be drawn up at all levels: company; group of companies; economic and social unit; establishment; industrial sector; cross-industry sector, etc.Numerous collective agreements are the result of negotiations within industrial sectors (e.g.: metallurgy; chemistry; construction, etc.). They are immediately applicable to companies that are members of the signatory trade unions. They will be applicable to companies falling within their scope of application if, and as soon as, an extending decree is published.



A trade union is representative within a company if it meets the statutory criteria (respect for republican values, independence, financial transparency, minimum two years of existence, influence, members) and if it obtained 10 per cent of the votes cast in the most recent elections for works council members.


Any trade union with more than one member (i.e., at least two members) can form a “union section” (“section syndicale” in French) within the company or the establishment. The union section can communicate freely with employees, has access to premises and can organise meetings with its members.Where this trade union is representative (cf. question 2.1) within a company with at least 50 employees, it may appoint one or more union delegates (“délégué syndical” in French). In addition to the resources made available to the union section, union delegates may dedicate between 10 and 20 hours per month of their working time (depending on the size of the company) to their union activities, they are free to move around within the company and enjoy special protection. In collective bargaining, the employer negotiates, in particular, with the union delegates.Where the trade union is not representative within the company, it may appoint a representative of the union section (“représentant syndical” in French) whose primary role will be to lead this union section so that the trade union’s vote at the next workplace elections

Latournerie Wolfrom Avocats France


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A settlement ending the dispute is possible both before and after the claim is brought before the Labour Court.This settlement does not preclude criminal proceedings, nor does it put an end to the proceedings. Discrimination is punishable by a fine of €45,000 and by a maximum of three years’ imprisonment for the company’s representative or for the author of the offence. The company is punishable by a fine of up to €225,000.


In successful discrimination claims, the discriminatory measure will be invalidated. For example, an employee who is dismissed on discriminatory grounds will be reinstated within the company and will be entitled to payment of the salary that he/she would have received between the date of dismissal and the date of reinstatement.


A typical worker cannot be discriminated against because of the nature of their employment contract. For instance, their remuneration must be equivalent to that of one of the employees holding an indefinite-term employment contract. Also, temporary workers cannot be assigned to particularly dangerous work.



The statutory duration of maternity leave (“congé maternité” in French) varies according to the employee’s family situation:■ 16 weeks for a single birth in a family with two children in

total;■ 26 weeks for a single birth in a family with at least three

children;■ 34 weeks for twins; and■ 46 weeks for triplets and more.Maternity leave begins before, and continues after, birth.


During maternity leave, the employee receives an allowance paid by the French Social Security. She is not paid by her employer unless otherwise specified in the collective agreement applicable to the company.


At the end of the maternity leave, the employee is entitled to return to her previous job or a similar job with at least equivalent pay.An employee with at least one year’s service may ask for parental leave (unpaid) or reduced working hours.

Trade unions negotiate collective agreements. The works council will be consulted prior to the signature of this agreement.


The works council is represented in the meetings of the board of directors or the supervisory board in all companies with such a body.The works council may also participate in general meetings of shareholders.The works council’s representatives are invited in the same way as the other participants to these meetings and receive the same information. They cannot vote but have the right to express their opinion.Employees are also represented at board level by one or two representatives, holding voting rights, in public limited companies (“société anonyme” in French) and in limited partnerships with shares (“société en commandites par actions” in French) when such a company and its direct or indirect subsidiaries employ, at the end of two consecutive financial years, at least 1,000 employees (if the registered office is located in France) or at least 5,000 employees (if the registered offices are located in France and abroad) and when such a company is subject to the implementation of a works council.

3 Discrimination


Discrimination is prohibited both by the Labour Code (section L.1132-1) and by the Criminal Code (sections L.225-1 to L.225-4).


French law prohibits any form of direct or indirect discrimination towards a candidate or employee on the basis of his or her: origin; gender; morals; sexual orientation; age; family situation; pregnancy; genetic characteristics; belonging or not belonging (whether actually or supposedly) to an ethnic group, nation or race; political opinions; union or mutual society activities; normal exercise of a right to strike; religious beliefs; physical appearance; name; state of health; or disability.Besides the damages that the victim may claim, the employee is liable to criminal sanctions.


Different treatments are nevertheless possible where based on objective and relevant criteria unconnected with any discrimination.


Employees can bring a claim before the Labour Court in order to seek the invalidation of the discriminatory measure and, where applicable, compensation for the damage caused. They may also lodge a complaint against the company and/or against the author of the discrimination.



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An autonomous economic entity is defined by French courts as an “organised group of persons, with its own tangible and intangible assets, allowing the exercise of an economic activity which pursues a specific objective”.


Employment contracts are continued with the new employer under the conditions in force at the time of the transfer.Collective agreements continue to apply until the entry into force of “substitution agreements” negotiated during the survival period of the agreements (maximum duration of 15 months). During this period, employees also benefit from the agreements in force with the new employer.At the end of the survival period, the original company’s collective agreements will no longer be applicable. If no substitution agreements have been concluded, employees will retain the same salary they were paid during the last 12 months for the working time provided by their employment contract.


The works council is informed of, and consulted on, changes to the company’s economic or legal organisation, particularly in the event of a merger, transfer or acquisition and sale of subsidiaries.As with any consultation, this must take place before the decision is taken by the company (therefore, at the project stage).The length of the consultation procedure varies according to the nature and complexity of the proposal. The consultation process may not last less than 15 days. Generally, the period of consultation with the works council will take between three and four weeks.There are also specific consultation requirements in the event of a public open bid.Failure to comply with this duty of consultation constitutes the offence of hindering the functioning of the works council. Any employer found guilty of this offence is liable to a fine of €7,500 (increased to €37,500 for a corporation). Companies having less than 250 employees and having an annual turnover of less than €50 million (or the annual total balance sheet does not exceed €43 million) must inform their employees of any project of sale of business (or sale of at least 50 per cent of the shares). The purpose of the information is to allow an employee buyout. The information must be delivered to the employees either at the same time as the works council is informed and consulted or at the latest two months before the contemplated sale when there are no employees’ representatives. Failure to comply with this duty is sanctioned by a penalty corresponding to 2 per cent of the sale price.


Except when the transfer is part of a social plan, employers are obliged to transfer employment contracts automatically to the new employer. Employees cannot, therefore, be dismissed in an attempt to elude the transfer. Any such dismissal would be null and void and would entitle the employee concerned to be reinstated and to claim compensation for the damage suffered.


In addition to three days’ leave at the time of birth, fathers are entitled to 11 consecutive days of paternity leave (“congé paternité” in French), or 18 days in the case of multiple births, which must be taken within four months of the birth.During paternity leave, the employee receives an allowance paid by the French Social Security. He is not paid by his employer unless otherwise specified in the collective agreement applicable to the company.


Besides the three days’ birth leave, employees are entitled to adoption leave:■ 10 weeks for the first two children joining the family;■ 18 weeks where the adoption brings the number of children in

the family to three or more; and■ 22 weeks for multiple adoptions regardless of the number of

children in the family.At any time after the birth of a child, employees – who have worked at least one year within the company before the birth – may seek an additional parental leave (referred to as “congé parental d’éducation” in French) or may move to part-time work of a maximum period of one year (which can be renewed twice, ending on the third birthday of the child). Except in the case of part-time work, employees’ salaries are not maintained by employers.


Employees with specific conditions of seniority, or conditions related to the caring dependant, are entitled to three different schemes of unpaid leave:■ 14 months’ leave maximum (over a three-year period) for

caring for a child suffering from a serious disease, accident or handicap; in that scheme another employee can give rest days to the caring employee;

■ three months’ leave (renewable once) for caring for a family member who suffers from a life-threatening condition; and

■ three months’ leave (renewable, but subject to a maximum of one year) to look after a relative with a disability or loss of independence that is particularly severe.

Also, employees may be absent from work and remain paid at least three days per year, provided that they justify their child’s illness with a medical certificate. Except when provided otherwise by a collective agreement applicable to the company, such leave is unpaid.

5 Business Sales


In the case of a share sale, employees are not affected as they remain employed by the same company.In the case of an asset transfer involving an autonomous economic entity, employees will have their contracts of employment automatically transferred to the buyer.



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Certain employees are entitled to special protection aimed at preventing their dismissal or establishing a specific dismissal procedure. These include pregnant women, employees on maternity or adoption leave, employees on sick leave resulting from a work-related illness or accident, employees’ representatives, employment tribunal judges and Labour doctors.


The employer may dismiss an employee for personal reasons, for example, in the event of: misconduct; professional incompetence or insufficient results; and physical unfitness.The employer may dismiss an employee on economic grounds where the following cumulative conditions are met:■ the termination is the result of the cancellation or alteration

of the employee’s position or change to the employment contract which the employee refuses;

■ the termination is the result of the company’s economic difficulties, technological changes, reorganisation necessary to safeguard the competitiveness of the company or of the business sector of the group to which the company belongs or cessation of business; and

■ the employee cannot be redeployed in another position within the company or group if such redeployment has been refused by the employee.

Dismissed employees who have at least one year’s service are entitled to a legal dismissal indemnity amounting to one-fifth of the monthly salary for each year of service for the first 10 years and two fifteenths of the monthly salary for each subsequent year. The collective agreement usually provides for a conventional dismissal indemnity that will replace the legal dismissal indemnity if it is more favourable to the employee.


A dismissal for personal grounds requires the employer to:■ summon the employee to a preliminary meeting by registered

letter or hand-delivered letter, received five working days prior to such a meeting. This letter must state the time and place of the meeting, as well as the employee’s right to be assisted by an employee of the company or, when applicable, by an outside party;

■ hold the meeting with the employee; and■ send the dismissal letter by registered mail after a cooling

period of two days. The presentation of the letter to the employee’s home will be the starting point of the notice period.

Dismissal based on economic grounds requires the employer to:■ apply selection criteria to all the employees belonging to

the same professional category within which the employer wishes to cancel the position. The criteria for selecting the terminated employee are determined by law: family situation (single parents for example); length of service; difficulties finding a new job (age or disability); and professional skills;

However, after the transfer has taken place, the new employer may dismiss employees (for economic or personal reasons). In most cases, these dismissals will be the result of reorganisation within the host company. In that regard, they must be based on a justified economic reason.


The new employer cannot change the contract of employment without the employee’s prior consent.



An indefinite-term employment contract may be terminated by the employer either as a result of a dismissal (for personal reasons or economic reasons) or as a result of retirement initiated by the company. The employer may also take the initiative for a termination by mutual consent.The notice period is fixed by law, collective agreement and/or by employment contract. The notice period is generally between one and three months. The length of the notice period provided for by collective agreement generally varies according to the employee’s classification, length of service within the company and, sometimes, his or her age.No notice is required in the case of a termination by mutual consent. Besides, employees dismissed for gross misconduct are not entitled to a notice period.


The employer may allow the employee not to serve the notice period. Salary is nevertheless paid. During the notice period, the employee is free to start a new job.


A specific procedure must be followed by an employer who is considering the dismissal of an employee (cf. question 6.6). In principle, the consent from a third party is not required except for the dismissal of protected employees (in particular, employees’ representatives) which requires the prior approval of the Labour inspector.Employees can self-terminate their contract of employment under the mechanism known as “prise d’acte de rupture” if they believe that the employer has breached its contractual obligations (e.g., supply of agreed work, payment of salary, etc.). The Labour Court will then decide whether the termination amounts to a dismissal without cause or to a resignation. In the event that the courts find that the company has indeed breached its contractual obligations vis-à-vis its employee, the employer will be sanctioned to pay all end-of-contracts payments (dismissal indemnity, payment in lieu of notice period) and court-awarded damages.



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Administration) or from a document prepared by the employer (subject to prior approval from the Labour Administration). The duration of the works council consultation process is limited in time. It varies from two to four months depending on the number of projected dismissals.


Employees are involved, through the works council, in the negotiation of the measures contained in the job protection plan.Once the dismissal has been announced, employees may challenge the procedure and grounds for their dismissal. Claims relating to the works council’s consultation procedure, the drafting and the content of the job protection plan, the decision taken by the Labour Administration in the course of the mass dismissal project are heard by Administrative Tribunals (as opposed to the Labour Courts). Employees may still challenge the grounds of their dismissal before the Labour Courts. Such claims may be brought within 12 months as of the date of the termination.Employees will receive damages for dismissal without real and serious cause if (i) the dismissal is not based on a real and serious economic cause, or (ii) if the employer has breached its prior redeployment obligation.



The employment contract may notably specify a duty of exclusivity, a duty of confidentiality and a post-contractual non-compete obligation.


Exclusivity: Even if there is no specific clause in the employment contract, employees are bound by a general duty of loyalty preventing them, inter alia, from carrying out any other activity that may harm their employer. Besides this duty of loyalty, the employer may want its employees to provide their services on an exclusive basis by preventing them, contractually, from carrying out any activity, whether competing or not, other than that described in the employment contract. The exclusivity clause must be specifically mentioned in the employment contract. It must, however, be justified by the nature of the task to be accomplished and must be proportionate to the objective sought.Confidentiality: The duty of confidentiality is an extension of the duty of loyalty. The inclusion of a confidentiality clause in the employment contract may, however, be useful, particularly to define the scope of this obligation and the nature of confidential information.Non-compete: Insofar as it runs contrary to the constitutional principle of freedom of work, the non-compete clause must, in order to be valid, be justified by the company’s legitimate interests (and, therefore, be justified by the position held by the employees), be limited in time and space and contain a financial compensation. By way of illustration, the majority of collective agreements limit the duration of the restriction to between one and two years over an area

■ offer redeployment positions to the employees whose dismissal is contemplated;

■ comply with the rules governing the summon and the holding of a preliminary meeting; and

■ offer either the state subsidiaries redeployment scheme (“contrat de sécurisation professionnelle”) when the company employs less than 1,000 employees in Europe or the redeployment leave (“congé de reclassement”) when the company employs more than 1,000 employees in Europe.


An employee can challenge the procedure and grounds for his or her dismissal. If the dismissal is considered as deprived of a real and serious cause, the employee will be entitled to receive damages amounting to at least six months’ salary if he or she has at least two years’ service and works in a company with at least 11 employees.The amount of the court-awarded damages is set by the courts according to the damage caused to the employee and is not subject to any upper limit.This action may be brought within two years of the termination.


A dispute can be ended before, and after, being brought before the courts. In order to be valid, the settlement must contain mutual concessions. In most cases, the former employee agrees not to take legal action or drops the proceedings that he or she has brought in return for a settlement payment by the company. Besides, the process before the Labour Court begins with a so-called “conciliatory hearing”. This hearing is confidential and aims at finding a settlement solution on the matter. The amount of the settlement indemnity to be paid by the employer to put an end to a lawsuit, when such a settlement solution is found before the conciliatory board of the Labour Court, is provided for by the Labour Code. Its amount varies from two to 14 months’ salary, depending on the employee’s seniority within the company.


Where an employer is considering dismissing a number of employees for non-personal reasons, it must follow the specific procedure applicable to collective dismissals on economic grounds.The employer must, first of all, inform and consult the works council (or, failing that, the employees’ representatives). It may also be required to inform and consult its Health & Safety Committee.Where the employer is considering dismissing at least 10 employees during the same 30-day period in a company employing more than 50 employees, it must also propose a “job protection plan” (“plan de sauvegarde de l’emploi” in French), about which the works council must be informed and consulted. The aim of the job protection plan is to limit the number of dismissals or limit the impact of these dismissals on the professional career of employees. It generally contains measures such as training, outplacement programmes, support in creating a company, relocation allowance, etc.Such a job protection plan may either result from a negotiation with trade unions (subject to a limited review from the Labour



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data. While consent is a theoretical ground for transferring personal data in a non-adequate country, CNIL considers this is not a valid ground for structural or mass transfers.Failure to comply with data protection law may be sanctioned by a fine decided by the CNIL. Staff representative bodies and/or employees may also take advantage of such violation (for instance, to challenge the validity of a dismissal that would rely on information that the company could not validly hold).


Employees are entitled to ask their employer whether and how their personal data is being processed. They can request a copy of such data, in plain language. Theoretically, this right is unconditional, provided that the request is not manifestly unreasonable. However, unexpectedly (but opportunely), the CNIL considers that, under specific circumstances, this access right is not applicable to forecast career-oriented data.


Except for certain particularly sensitive jobs which require ethical conduct, an employer cannot ask for details of a person’s criminal record. Indeed, in general, any request for information concerning prospective employees need to be related to the employment contract and be justified by what is strictly necessary to a proper performance of the contract; otherwise, the information will be considered as part of the employee’s private life. When the request for a criminal record is justified, the employer is not entitled to keep a record of its content, which belongs to a special category of data (data relating to offences), unless authorised by the CNIL.


Employees have a right to privacy, even in the workplace. Therefore, employers are entitled to access and monitor any office equipment which they have made available to their employees, including computer, emails and phone calls, but not where they are unambiguously identified as “personal” or “private” and provided that the conditions set forth in the law are met (see question 8.1). In addition, even if content was not marked as “personal” or “private”, it cannot lead to a disciplinary sanction if it appears that it actually falls within the scope of the employee’s private life.


During work time, only an abusive use of social media may justify disciplinary sanction for serious misconduct. Connection time, frequency or duration may be used as indicators of such abuse, provided that such monitoring has been lawfully implemented (see question 8.1).Outside working hours, insulting or otherwise damaging content may lead to a disciplinary sanction if it proves to be published outside the scope of confidentiality of private correspondence (e.g., if the account settings were not set up to ensure confidentiality of the content).

limited to the surrounding regions and provide for compensation in the amount of 30 per cent of the employee’s monthly pay, paid monthly throughout the period during which the restriction applies.


An employee bound by a post-contractual non-compete obligation must indeed receive financial compensation (cf. question 7.2).


Exclusivity/Confidentiality: Breach of the duty of exclusivity or of confidentiality may lead to a disciplinary sanction (warning, suspension or even dismissal).Non-compete: If this clause is breached, the Labour Court may order any measures necessary to put a stop to the competition. The employee may be ordered, under threat of penalty, to stop any competing activity.An employee who fails to observe the non-compete clause may also be ordered to pay damages as compensation for the harm suffered by his former employer.It should be noted that the new employer who hires the employee concerned in knowledge of the existence of the clause may also be ordered to pay damages.The non-compete clause may be accompanied by a penalty clause, i.e., one which specifies in advance the amount of compensation that will be owed by the employee if the non-compete clause is breached. The sanction will then be applied automatically without the employer having to prove any harm or damage. Note, however, that the judge may always revise the amount of the sanction if it is manifestly excessive or derisory with respect to the harm or damage caused.



Until the European regulation on personal data enters into application on 25 May 2018, data protection rights remain provided for by a law dated 6 January 1978 and are subject to the control of an autonomous data protection authority, entitled “CNIL” (for “Commission Nationale de l’Informatique et des Libertés”). The scope of the legislation is relatively wide as it applies to the processing of information relating to identifiable, whether directly or not, natural persons, and thus to employees.Employers are subject to the obligation to inform employees on how they use their data, and to notify the CNIL of data processing, and even, under specific circumstances, to seek prior approval by the CNIL before implementing such data processing. French-based employers should only transfer personal data into the European Economic Area or into a country offering a level of protection deemed adequate by the European Commission (“adequate countries”). Employers can also transfer the data out of those countries where it has obtained the approval of the CNIL, based on the execution of the European Commission Standard Contractual Clauses or Binding Corporate Rules setting with the importer of the



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hearing chaired by a “departition judge” (who is a professional judge). The case will thus be heard twice at first-instance level.On average, the procedure takes between one year and one year-and-a-half.


An appeal is possible before the Court of Appeal, which is made up of professional judges. The case will be decided within an average period of one year.



Disputes between an employer and employee are, at first instance, referred to the Labour Court. It is composed of elected, non-professional judges with equal representation between employers and employees.The Administrative Tribunal and the Social Security Tribunal also have jurisdiction in specific areas (e.g., protected workers, compensation for a work-related accident, etc.).


With the occasional exception, the procedure before the Labour Court consists of two phases:■ the conciliation phase in which the parties are invited by two

judges (one employees’ representative and one employers’ representative), in a hearing in camera, to find an amicable solution to the dispute; and

■ the judgment phase in which each party presents its arguments and its exhibits to four judges (two employees’ representatives and two employers’ representatives).

Introducing a lawsuit before any jurisdiction in France is no longer subject to a tax.


The duration of the Labour Court procedure varies depending on whether the four judges have reached a decision or not. Where they are unable to do so, the case will be referred to another judgment


Sarah-Jane MirouLatournerie Wolfrom Avocats164, rue du Faubourg Saint-Honoré, 75008France

Tel: +33 1 56 59 74 74Email: [email protected]: www.latournerie-wolfrom.com

Sarah-Jane Mirou heads the Labour and Employment department of Latournerie Wolfrom Avocats. She advises companies and groups acting in various areas of activity, on virtually all aspects of French employment law (individual and collective relationships, remuneration and benefits, collective negotiation and agreements, working time regulation, etc.). She also has extensive experience in guiding companies in restructuring issues and assisting them from the preliminary stages of defining the restructuring plan and preparing the documents to present to the works council, through the consultation process to the implementation of the project. In addition, she often represents companies before Labour courts.

She speaks English fluently and advises French and international groups and businesses on a daily basis.

Founded in 1995, Latournerie Wolfrom Avocats is an independent French law firm specialising in business law that has distinguished itself over the years through its strong Private Equity and M&A practice on the one hand, and public-private relationship practice on the other hand. With a continuous development strategy built firmly on the interests of its clients, Latournerie Wolfrom Avocats has acquired multidisciplinary expertise (Mergers & Acquisitions, Private Equity, Public Corporate Law, Capital Market, Finance/Project Finance, Environment, Tax Law, T.I.M.E.D./Intellectual Property, Economic Law, Employment Law, Commercial Law and Competition Law, and Energy and Natural Resources Law).

Armed with approximately 35 lawyers, Latournerie Wolfrom Avocats assists its clients using a partnership approach supported by profound knowledge of their business. Each lawyer acts as a “personal” partner for the client, providing advice and assistance at every stage of the client’s operations, whether the latter are straightforward, complex or innovative.


Chapter 15

Rátkai Law Firm

Dr. Ildikó Rátkai

Dr. Nóra Feith

Hungary

In the case of working abroad for more than 15 days, in addition to the above, the employer must inform the employee about the basic terms of such employment (place of work, wage and benefits, currency, returning home) at least seven days prior to their departure.


Employment contracts must include at least the base wage and job position. The period of employment (whether fixed-term or for an indefinite period of time), the place of work and the daily working hours are also usual terms of an employment contract. A probation period is only applicable if the parties expressly agree on it.Rights and obligations arising from the employment relationship are also covered by the Labour Code if not otherwise agreed in the employment contract. Employment contracts may derogate from law only to the benefit of the employee, unless a collective bargaining agreement is applicable (which may also derogate from the Labour Code, to the disadvantage of the employee in some aspects). Internal/global policies of the employer can also be implied in the employment contract, but may not deviate from law to the disadvantage of the employee.


Yes, the Labour Code and other legal regulations set out the basic rules, like mandatory minimum wage, protection of pregnant women, rules of termination, maximum working hours, minimum rest periods and vacation entitlement, equal treatment provisions, work safety rules, etc.


Collective bargaining agreements are usually established at company level; some industrial collective bargaining agreements are also applicable. According to statistics, around 2,100 collective bargaining agreements are currently applicable at company level, and 5,000 collective bargaining agreements are applicable within Hungary (including the public sector).



Act I of 2012 on the Labour Code is the main source of employment law in Hungary (only for the private sector; for the public sector, other acts are applicable). There are additional regulations related to employment law: equal treatment; work safety; striking; and data protection rules, etc. The Civil Code is also applicable to some employment-related points; furthermore, decisions of the Hungarian Curia also refine daily practice.


The Labour Code does not specify the term of ‘employee’; ‘employee’ means any natural person who works under an employment contract. Basically, a person may establish employment relationship above 16 years of age; students receiving full-time school education between 15 and 16 years of age may enter into an employment relationship only during school holidays.Besides the ‘normal’ employees and employment relationships, the Labour Code prescribes ‘atypical’ types as well, such as fixed-term employees, part-time employees, teleworkers, outworkers, job-sharing employees, employee-sharing, executives, temporary agency workers and school cooperatives’ employees. In the latter cases, the distinguishing factor is mainly based on the type of the employment contract.


Yes, employment contracts may only be concluded in writing. However, invalidity on the grounds of failure to set the contract in writing may only be alleged by the employee within a period of 30 days from the first day on which he commences work. In addition to the employment contract, within 15 days from the commencement of the employment relationship, the employer must provide the employee with a written information sheet including the basic terms of employment (working time, benefits, vacation rules, rules of termination of employment, etc.), provided that the employment relationship exceeds one month or the weekly working hours exceed eight hours.


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The works council and employer shall collectively decide concerning the appropriation of welfare funds. Furthermore, the employer is required to ask for the opinion of the works council prior to passing a decision with respect of any plans for actions and adopting regulations affecting a large number of employees (like restructuring, introduction of new technologies, yearly vacation plan, training plans, working time arrangement, etc.). In the case of transfer of undertakings, the employer shall inform and consult with the works council; the same is applicable for mass redundancies.


Trade unions having representation rights within the employer may propose candidates for the works council’s election. According to practice, in case of transfer of undertakings/mass redundancies, employers often negotiate with both the works council and the trade unions. Should a collective bargaining agreement concluded by the trade union be applicable to the employer, a works council agreement may not be concluded.


Only in terms of the supervisory board is representation mandatory by an employee, provided that the number of employees on the payroll exceeds 200. A works council may waive the right of participation in the supervisory board.

3 Discrimination


Discrimination is prohibited (the requirement of equal treatment is prescribed) by the Labour Code (especially with regard to remuneration) and by the Equal Treatment Act. Violation of the requirement of equal treatment means if a person or a group is treated less favourably than another person or group in a comparable situation because of his/her sex, racial origin, colour, nationality, national or ethnic origin, mother tongue, disability, medical status, religious or ideological conviction, political or other opinion, family status, motherhood (pregnancy) or fatherhood, sexual orientation, sexual identity, age, social origin, financial status, the part-time nature or definite term of the employment or other employment-related relationship, membership in an organisation representing employees’ interests, or other status, attribute or characteristic.


The violation of the equal treatment principle means direct and indirect discrimination (on the grounds as detailed under question 3.1), as well as harassment (including sexual harassment), unlawful segregation (on the grounds as detailed under question 3.1) and retaliation.



A trade union is defined as every organisation of employees whose primary function is the enhancement and protection of employees’ interests related to their employment relationship. Trade unions’ establishment requires at least 10 members and the election of the managing board/officers. A trade union is a legal entity established by court registration.


Trade unions are entitled to require information from the employer which is related to employee’s interest and to initiate consultations with the employer. Trade unions are authorised to represent their members in lawsuits and to enter into collective bargaining agreement with the employer. Trade union officers may use working time allowance for their activities and they are protected against the employer’s termination by notice (approval of the higher trade union body is needed).


Strikes – as industrial action – are allowed in Hungary (in line with the particular Act on Strikes), but solidarity strikes may only be initiated by trade unions.


A shop steward or a works council shall be elected if the average number of employees at the employer or at the employer’s independent establishment or division is higher than 15 or 50, respectively. Although it would be a ‘must’, no sanction by law is prescribed if no shop steward/works council has been elected. Employers are not obliged by law to enforce the election; however, in case of initiative, they shall not hinder it. Depending on the number of employees on payroll, a works council can comprise three to 13 members. Central works councils and company group level works councils are also allowed by law.Candidates for election are proposed by 10% of the employees/50 employees entitled to vote/the trade union having representation rights within the employer. Members of the works council shall be elected by secret ballot and popular vote; each employee has one vote. Members shall be candidates acquiring the most votes or at least 30% of the votes; deputy members shall be candidates acquiring at least 20% of the votes. A works council is elected for five years.Works councils have the right to information affecting the employees’ interests and to initiate negotiations with the employer. In terms of some employment-related issues, a joint decision or opinion of the works council is required (see question 2.5).

Rátkai Law Firm Hungary


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During the 24 weeks of maternity leave, mothers are entitled to receive confinement or child-care benefits for 168 days (based on previous insurance). The gross amount is 70% of the daily average income from which tax will be deducted (but no health insurance and pension contributions). After receiving the confinement benefit, the mother can apply for childcare allowance until the child has reached two years of age (in the case of twins, three years). This allowance is based on the mother’s previously earned salary, and amounts to 70% of the previous years’ daily income (paid by the social security), but not more than 70% of twice the mandatory minimum wage.From when the child reaches two years of age, mothers/fathers can apply for a child support benefit (lump sum) granted from when the child reaches two years of age until the child turns three (in case of twins, up to the time when the children will be obliged to attend school; in case of a disabled child, until 10 years of age).


The returning employee must be employed in the same position as before their leave, and is entitled to the average yearly wage increase executed at the employer during his/her leave. If the employee requests to return to a part-time job, the company is legally obliged to accept four hours/day part-time work up until the child reaches three years of age; in the case of a returning parent raising three or more children, this extends to until the youngest child reaches five. For employees raising a small child(ren), some working time restrictions are applicable.


Fathers are also eligible to for unpaid child-care leave (see question 4.1). Fathers can apply for five days’ extra vacation, which must be taken within two months after the birth of the child (but not later), and their salary for these days shall be reimbursed by the State upon the employer’s request.


In addition to questions 4.1, 4.2 and 4.4, employees are entitled to take child-care sick leave if the child is sick/receives hospital treatment. Extra vacation days are also granted for all employees with children: two extra days for one child; four days for two children; and seven days in total for three or more children.


In addition to question 4.3, the employer shall apply working time restrictions to mothers from the notification of pregnancy until the child reaches three years of age, and for single parents until the child reaches three years of age. An irregular work schedule may only be given upon the employee’s consent, and weekly rest days may not be allocated irregularly; overtime, night shifts and stand-by duty are not allowed to be scheduled for such employees.


In the field of employment, no discrimination can be established if the differentiation is well-grounded on the basis of the character or nature of the work, or moreover is based on lawful and proportionate conditions or if the differentiation arises directly from the basic characteristic of an organisation established on religious or ideological conviction, or national or ethnic roots, provided that the differentiation is reasonable due to the nature of the work activity and is based on lawful and proportionate conditions.


In the case of discrimination, employees may either turn to the Equal Treatment Authority (ETA) (seated in Budapest) or to the administrative and labour courts (seated regionally). The employer may settle the claims (many procedures before the ETA ends with a settlement between the parties).


The procedure before the ETA is an administrative process in which the ETA may oblige the employer to finish its unlawful practice, may impose fines up to HUF 50,000–6,000,000 (EUR 170–20,000), and furthermore may publish its decision condemning the employer on its website.Before the administrative and labour court – which is a litigation process – the employee may ask for compensation for damages for injuries or for lost wages (in case the remuneration policy of the employer was discriminatory), or furthermore for the reestablishment of the employment (in case the termination of employment was unlawful due to discrimination).


Working on a part-time or a fixed-term contract is express grounds for discrimination according to the Equal Treatment Act. For temporary agency workers, the Labour Code prescribes additional protection, namely: all basic working conditions shall be met for temporary agency workers; and their wages shall be equal to normal workers’ from the 184th day of temporary work if the employee is in an employment relationship for an indefinite period and receives wages between two temporary employments.



Maternity leave can be started 28 days prior to the due date, and lasts for 24 weeks. In addition, both mothers and fathers are entitled to unpaid child-care leave until the child reaches three years of age (in the case of eligibility for child support benefits, unpaid leave is granted until the child reaches 10 years of age).



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The terms set up in employment contracts cannot be unilaterally amended by the employer. Operational working conditions like working time arrangement, day of wage payment, etc., can be amended.



The employment relationship can be terminated (i) by notice, (ii) with immediate effect, and (iii) by mutual agreement.In case of termination of employment by notice, the notice period shall begin at the earliest on the day following the date when the termination letter has been delivered. The notice period shall begin after the last day of sick leave or absence due to caring for a sick child/a close relative. The period of notice is 30 days but shall be extended in accordance with the years of employment at the employer (only if the employer terminates the employment by notice). The notice period may be extended by up to six months upon agreement.


The employer shall exempt the employee from work duties for at least half of the notice period. The exemption from work duty shall be provided in not more than two parts. During the period of garden leave, the employee shall be entitled to absentee pay.


The termination by notice shall be in writing and justified (with some exceptions). The reasons shall be true, reasonable (causal) and clearly defined. In the case of a lawsuit, the burden of proof to verify the authenticity and substantiality of the grounds of the termination is up to the employer. Once the termination letter has been delivered, the employment relationship will cease upon the end of the notice period.Consent of the higher trade union body is required before termination of employment by notice of a trade union officer. Consent of the works council is required before termination of employment by notice of the head of the works council.


Employees may not be given termination by notice during pregnancy and maternity leave, unpaid child-care leave, voluntary military service, or for the first six months of IVF treatment. Since June 2016, if the employer is notified about pregnancy or IVF treatment after the delivery of the termination letter, then the

5 Business Sales


In case of an asset transfer/transfer of an economic entity (organised grouping of material or other resources), rights and obligations arising from employment relationships, existing at the time of transfer, are automatically transferred to the transferee employer. Share sale basically does not affect employment relationships.


Employment relationships do not need to be terminated as the transfer of such relationships is automatic. Employees have the right to terminate the employment relationship by notice (within 30 days after the transfer) if the transfer means a substantial change in working conditions to the detriment of the employee, and, as a consequence, maintaining the employment relationship would entail unreasonable disadvantage or would be impossible (a notice period and severance payment shall be granted in such case). The transferee employer shall maintain the working conditions specified in the collective bargaining agreement covering the employment relationship existing at the time of transfer for a period of one year after the date of transfer, unless the collective agreement expires within one year after the date of transfer, or if the employment relationship is covered by another collective agreement.


The transferring or, upon agreement, the transferee employer shall inform in writing the works council/shop steward – or in the absence of these, the employees affected by the transfer – at least 15 days prior to the transfer about the basic features of the transfer (reason, date, legal, economic and social implications, etc.). If a works council/shop steward exists, the employer shall negotiate with these to reach an agreement (although such agreement is not required by law). The works council may bring an action to the court if the employer violated the rules on information/consultation. This non-contentious proceeding lasts around 40 days. Within 15 days following the transfer, the transferee employer shall inform in writing the employees affected concerning the transfer of employment, the transfer of business, the basic company data of the new employer and on changes in working conditions.


The transfer of employment may not in itself serve as a ground for termination by notice by the employer. However, after the transfer, due to operational or personal reasons, the termination of employment is allowed.



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to execute a mass redundancy, they shall inform the works council about the features of the mass redundancy and shall initiate negotiations with the works council to arrange an agreement. The employer shall also notify the local government employment agency. Furthermore, the employer is required to inform employees about the mass redundancy at least 30 days prior to delivering the termination letters.


A violation of the procedural rules of mass redundancies means that the termination of employment will be considered as unlawful by the court. The works council may also turn to court if the employer violated the procedural rules.



One type of restrictive covenant is a non-competition agreement, which means that the employee shall refrain from conduct – for up to two years following termination – which endangers the economic interests of the employer. The employer is required to pay compensation for honouring the employee.Employees may not breach the duty of confidentiality in relation to business secrets. This is applicable without any special agreement and no compensation shall be paid.


Duty of confidentiality is enforceable during the time of the employment relationship, and after it ends as well. Non-competition agreements are enforceable for up to two years following termination.


Employers are required to pay an adequate compensation for honouring an employee’s non-competition obligation, which may not be less than one third of the base wage due for the non-competition period.


Restrictive covenants may be enforced before the labour courts.



Employees may be obliged to reveal their personal data if it does not violate their personal rights and it is necessary for the establishment, fulfilment and termination of the employment. Employers shall

company is allowed to unilaterally withdraw the termination letter. Such withdrawal is only applicable in these cases; under other circumstances, it cannot be an option.Mothers and single fathers of children up to the age of three years, employees five years before their pension age and disabled persons are protected as well (termination is allowed under the terms as set out by law). In addition, in case of fixed-term employees, termination is only permitted if the employer is undergoing a bankruptcy proceeding, or because of the employee’s ability, or force majeure.


Employees may be dismissed for reasons related to their behaviour or their ability such as low performance, absence of required skills, etc. In general, employers are obliged to justify the termination. Employees may also be dismissed for business-related reasons, such as cease/merger of positions, restructuring, etc. However, transfer of employment may not serve as the only reason for termination. In the case of termination by notice due to business reasons, employees employed for at least three years at the employer are entitled to severance payment. Severance payment is basically one month’s absentee pay which shall be increased in line with the years of employment passed at the employer. Employees under the pension age are entitled to additional severance payment.


Employees have to be given a written termination letter containing the reasons for termination. The employer is obliged to pay the employee’s salary, compensation of unused vacation days and other allowances and to deliver the employee’s exit papers by the deadline as set out by law.


In the case of unlawful termination, the employee may ask for (i) compensation for damages (compensation for lost wages may not exceed 12 months’ absentee pay), (ii) a lump sum payment, or (iii) reestablishment of the employment relationship in some special cases (like termination of employment during pregnancy). In addition, an employee may ask for severance payment.


Yes, employers may settle claims before and after they are initiated.


Employers have additional obligations in the event of mass redundancy (termination by notice due to business for a certain number of employees determined by law). If the employer intends



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According to the recent practice of the Hungarian National Authority for Data Protection and Freedom of Information, the check of the presence of an employee in the social media actually cannot be restricted by legal measures. However, if the employer wishes to use such data (for example: termination of employment due to unethical posts or pictures), they are firstly obliged to provide the right to defence for the employee – the reason is that the authenticity of such data might be questionable.



Special administrative and labour courts seated in each county and in Budapest have jurisdiction at first instance for employment law litigation (competence depends on the place of work or the employer’s seat). The court is composed by a professional judge and two assessors. The appeals are decided by the tribunals (composed by three professional judges) seated in each county and in Budapest at second instance. Extraordinary appeal for review may be submitted to the Hungarian Curia (composed by three professional judges) which is the Supreme Court, seated in Budapest.


Basically, the general civil procedural rules are applicable but special provisions prevail, though in some cases, the claim must be submitted within 30 calendar days (like in case of unlawful termination of employment). Conciliation before the litigation is not mandatory by law but collective bargaining agreements may prescribe it.In employment law, litigation procedural fees (including stamp duty and the attorneys’ fees of the party winning the case – usually 5%) shall be paid at the end of the procedure; the court decides which party shall bear it.


According to current practice, depending on the complexity of the case, the litigation generally takes one to two years at first instance, six months to one year at second instance and six months to one year before the Curia.


An appeal shall be filed within 15 calendar days starting from the delivery of the written judgment. The second instance procedure usually takes six months to one year depending on the complexity of the case.

inform employees about the processing of their personal data. Employers shall be permitted to reveal employees’ personal data to a third person if it is permitted by law or upon the employees’ consent. Employers may disclose employees’ personal information to a data manager; however, employers are required to inform employees before transmitting data. Data service for only statistical purposes shall be permitted without the consent of employees, if the processing of data does not include the identification of employees.Within the EEA, personal data may be transmitted upon the terms and conditions of data process applicable in Hungary.Outside the EEA (third countries), personal data may be transmitted/disclosed upon the unambiguous consent of the employee or on the grounds of an EU/bilateral convention or if the laws of the third country afford an adequate level of protection with respect to the control and processing of the personal data that is transmitted.


Employees may request the employer to provide information about the data processed, may ask for the rectification of his/her personal data, and the erasure or blocking of his personal data. Employees may also ask for copies of their data held by the employer.


Employees may be obliged to reveal their personal data if it does not violate their personal rights and it is necessary for the establishment of the employment. Before employment, an employee may be requested to take a competence test if one is prescribed by employment regulations, or if deemed necessary with respect to exercising rights and discharging obligations.According to the recent practice of the Hungarian National Authority for Data Protection and Freedom of Information, the pre-employment checks of candidates’ social media are allowed.Employees who are responsible for a person in education, under supervision, care, or medical treatment under 18 years of age cannot be hired if they were registered in criminal records for crimes as set out by law.


The employer shall distinguish between the employee’s private email account and business email account. The employee’s business email account may be under control even if the employee uses it for private purposes. The employer is allowed to inspect employees’ personal email accounts only upon the employees’ consent.


Employees’ internet and social media usage may be controlled if the employer permits the use of IT devices for work purposes and has informed the employees about restrictions and the method of inspections. If computer usage for private purposes was allowed by the employer, computer usage for private purposes, such as usage for social media, may not be under the employer’s control, unless the employee has given consent.



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Ildikó RátkaiRátkai Law FirmDamjanich u. 25/C.H-1071 BudapestHungary

Tel: +36 1 792 3904Email: [email protected]: www.ratkai.com

Nóra FeithRátkai Law FirmDamjanich u. 25/C.H-1071 BudapestHungary

Tel: +36 1 792 3904Email: [email protected]: www.ratkai.com

Rátkai Law Firm is an independent Hungarian law firm specialised in employment law, social security and HR law. As a ‘boutique’ law firm, we provide up-to-date employment law and HR law services at a highly professional level, in line with the working routine of the private sector, in Hungarian, English and German. The law firm mainly carries out legal advice related to employment law and HR issues, including cross-border cases (outsourcing, posting, TUPE) and legal representation in employment law litigations before court and authorities. Typically, we offer our services to employers; next to the multinational companies, small- and medium-sized enterprises can also be found among our clients.

Using practical knowledge, we often receive assignments to hold employment law training – in Hungarian, English and German – at the managerial level. We also participate in international professional organisations’ events (European Employment Lawyers Association [EELA], American Chamber of Commerce in Hungary [AmCham], American Bar Association [ABA], UK Employment Lawyers Association [ELA], and Europäische Rechtsakademie [ERA]).

Dr. Rátkai (1977), attorney at law, is the head of the Law Firm. She started her career as a lawyer on the governmental side of the EU harmonisation of employment law, then worked at an international law firm, and later at a Hungarian law firm specialised in labour law as a trainee lawyer. After passing the Bar exam, she established her law firm specialising in employment law (2004). She also graduated as an economist (Manager of International and EU Affairs). She is a member of the European Employment Lawyers Association (EELA) and the American Bar Association (ABA) Labor and Employment Law Group.

During her work, she mainly focuses on cross-border transactions (TUPE, posting) and on multinational companies’ daily HR issues. Having wide practical experience in employment law issues, she regularly gives lectures on employment law conferences and in-house training. She is the author/co-author of numerous professional books and articles related to employment law.

She is fluent in English and German.

Dr. Feith (1991) has been a legal trainee at the firm since 2014 and currently is employed as a legal associate. She graduated as a lawyer in 2016. Her degree thesis’ topic was the domestic and international practice of multiplied discrimination in employment relationships. Besides her legal studies, she has acquired a certificate of business and financial studies (accounting and management, statistics, tax advice and SPSS software management). She has performed professional practice not only at Ratkai Law Firm but also at a local government in Budapest and at the Ministry for National Economics. During her work, she mainly focuses on discrimination cases, EU legislation/practice of the ECJ and litigation.

She is fluent in English.



Chapter 16

Shardul Amarchand Mangaldas & Co.

Pooja Ramchandani

Vaibhav Bhardwaj

India

of employment. The S.O. Act mandates an employer to prescribe “Standing Orders” which are required to be certified. The standing orders provide for matters including classification of workmen, shift working, attendance and late coming, procedure for leave and holidays, termination of workmen, suspension or dismissal for misconduct, etc.

i) Maternity Benefits Act, 1961 (“MB Act”): The MB Act regulates the employment of women in establishments for certain periods before and after childbirth and provides for maternity benefit and certain other benefits.

j) Minimum Wages Act, 1948 (“MW Act”): The MW Act provides for fixing and payment of minimum rates of wages of the employees, work hours and overtime.

k) Payment of Bonus Act, 1965 (“Bonus Act”): The Bonus Act provides for the payment of statutory bonus to eligible employees. This bonus is to be paid regardless of whether the employer has made a profit or loss in the accounting year in which the bonus is payable. However, the bonus is not payable by a new establishment in the first five accounting years if there are no profits.

l) Payment of Gratuity Act, 1972 (“Gratuity Act”): The Gratuity Act is a social welfare legislation which prescribes for payment of retirement benefits to employees upon cessation of employment.

m) Trade Unions Act, 1926 (“TU Act”): The TU Act provides for the registration of trade unions and prescribes the rights and duties of registered trade unions. A trade union can enter into collective bargaining agreements with the employer for better wage and service conditions.

n) Payment of Wages Act, 1936 (“PWA”): The PWA regulates the payment of wages to persons employed in inter alia an industrial or other establishment which may be so notified by the government through a notification in the official gazette. PWA provides for inter alia fixation of wage periods, time of payment of wages and permissible deductions that can be made from the wages.

o) Apprentices Act, 1961 (“Apprentices Act”): The Apprentices Act was enacted with the objective of regulating the training of apprentices in the country and thereby creating a readily available workforces possessing skills relevant to the emerging needs of employers.

p) Industrial Establishments (National and Festival Holidays) Act (“Holidays Acts”): The Holidays Acts are State-specific enactments prevalent in certain States which prescribe for national and festival holidays entitled to employees working in factories and establishments falling under the purview of such Holiday Act.

q) Labour Welfare Fund Acts (“LWF Acts”): The LWF Acts are State-specific legislations governing matters relating to the welfare of labour working in a particular State. The LWF



In India, labour is a subject in the concurrent list of the Indian Constitution empowering both the Central and State governments to frame laws on labour relations and employment matters. The primary source of employment law is the Central and State labour legislation. The key labour legislation in India is:a) Industrial Disputes Act, 1947 (“ID Act”): The ID Act

regulates many aspects of employer-workmen relations, including the manner of settlement of disputes, strikes and lock-outs, unfair labour practices, conditions under which workmen may be laid-off or retrenched, transferred in the case of transfer of an undertaking and the process for closure of an establishment, etc.

b) Contract Labour (Regulation and Abolition) Act, 1970 (“CLR Act”): The CLR Act has been enacted to regulate the employment of contract labour and to provide for its abolition in certain circumstances. The CLR Act prescribes the duties and obligations of the principal employer and the contractor.

c) Employees’ Compensation Act, 1923 (“EC Act”): The EC Act provides for the payment of compensation to the employees in case of any accidental injury or death at the workplace.

d) Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“EPF Act”): The EPF Act is a social welfare legislation and provides for the institution of provident funds, pension fund and deposit-linked insurance fund for the benefit of employees working in factories and notified establishments.

e) Employees’ State Insurance Act, 1948 (“ESI Act”): The ESI Act is a social security legislation and prescribes certain benefits to eligible employees in case of sickness, pregnancy, employment injury and related matters.

f) Equal Remuneration Act, 1976 (“ER Act”): The ER Act provides for the payment of equal remuneration to men and women workers and for the prevention of discrimination, on the ground of sex, against women in the matter of employment.

g) Factories Act, 1948 (“Factories Act”): The Factories Act has been enacted with the purpose of regulating the welfare of labour in factories and provides for the obligation of employers in relation to health, safety and welfare, working hours, annual leave, etc.

h) Industrial Employment (Standing Orders) Act, 1946 (“S.O. Act”): This Act prescribes the framework for industrial establishments to formally define the conditions


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by statute and judicial precedents and those that are based on customary practice.


The labour legislation set out above prescribe minimum employment terms which primarily govern the conditions of employment. These include wages, work hours, notice of termination, leave entitlement, health and safety standards, social security, bonus, etc.


Collective bargaining agreements are common where the number of employees is large and there are trade unions. It is typically prevalent in the manufacturing industry. These collective bargaining agreements provide for terms and conditions of employment which can include wages, hours of work, overtime, leave and holidays, benefits and more. The bargaining can take place at both company and industry level; however, it is usually more common at the company level.



The TU Act is the central legislation relating to trade unions in India. The TU Act provides for: the formation of trade unions; the registration of trade unions; and the rights and liabilities of registered trade unions. The TU Act does not prescribe a particular procedure for the recognition of trade unions. Trade unions are deemed to be recognised by virtue of the settlement agreements entered into by the management and the representative trade union of employees. Certain States have also framed legislation pertaining to the recognition of trade unions such as the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 and the Kerala Recognition of Trade Unions Act, 2010.


As per the TU Act, a registered trade union is considered to be a body corporate with perpetual succession having the power to acquire and hold movable and immovable property, right to contract and sue or get sued, permitted to establish a general fund for trade union activities. A registered trade union attains certain immunities in criminal, civil and contractual proceedings. A trade union can represent a body of workmen and enter into negotiations on their behalf with the employer once recognised.


Trade unions can initiate industrial action on behalf of the body of workers it represents under the ID Act and State-specific legislations governing recognition of trade unions.

Acts provide for the constitution of a fund for the purposes of promoting and financing activities connected with the welfare of the labour in such States.

r) Shops and Establishments Acts (“Shops Acts”): The Shops Acts are State enactments and vary from State to State. They apply to all commercial establishments where any trade or business is carried on. These Acts lay the law relating to the regulation of hours of work, payment of wages, leave, holidays, terms of service and other conditions of work of persons employed in establishments.


There is no one standard labour legislation in India which protects all categories of workers employed in an establishment. Depending upon the nature of the establishment and the type of work being performed by the employee, different legislations provide for the protection of different categories of employees. The workers employed in an establishment are primarily distinguished under two categories, i.e. ‘workman’ and ‘non-workman’ category employees. As per the ID Act, ‘workman’ has been defined to mean a person employed in any ‘industry’ to do any manual, skilled, unskilled, technical, operational, electrical or supervisory work. The definition excludes persons employed in a managerial or administrative capacity, persons performing functions mainly of a managerial nature and supervisors drawing monthly wages exceeding INR 10,000. The ID Act protects the ‘workman’ category of employees, whereas the State-specific Shops and Establishments legislations protects the ‘non-workman’ category of employees. Further, the Maternity Benefit Act, 1961 is the labour welfare legislation which protects woman employees, irrespective of whether such woman employee is a ‘workman’ or ‘non-workman’ category employee. Similarly, the CLR Act protects the welfare of contract workers and the Sales Promotion Employees (Conditions of Service) Act, 1976 protects sales promotion employees in certain specified industries.


The State-specific Shops and Establishments legislation requires employers to furnish letters of appointment in a particular format. In such cases, the prescribed form (which provides for the name and the address of the establishment and the employer, registration number of the establishment, the name and age of the employee appointed, the nature of the appointment, the date from which the appointment is to take effect, the scale of pay, the break-up of the total wages into basic pay, dearness allowance and other allowances, the full address of the employee, the employee’s address and a passport-sized picture of the employee) is to be followed. However, an organisation may use its own appointment letter subject to the particulars specified under the relevant legislations being incorporated therein. In practice, employers execute with its employee such contracts which contain the terms and conditions of employment.


Certain terms and conditions of employment can be implied into contracts of employment. Such terms include the non-disclosure obligations, protection of intellectual property, conditions prescribed

Shardul Amarchand Mangaldas & Co. India


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of women in connection with employment resulting in breach of the provisions of the ER Act are unlawful.


Discrimination in case of payment of wages may be defended with reasons such as the difference in the nature and place of work, etc.


Employees can file complaints concerning unfair practices before the labour courts. Where HR policies recognise discrimination as an ethical issue, complaints can be filed with the grievance committee or works committee, as the case may be. It is possible for employers to settle claims of discrimination.


Depending on the nature of the claim (i.e. payment of wages, termination, promotion, etc.), a successful claim may entitle a relief of injunction or direction to make good the act of discrimination. There are also punishments in the nature of penalties and imprisonment prescribed under the relevant labour legislation.


No additional protection is prescribed for part-time, temporary or fixed-term contract workers.



The MB Act is the relevant legislation in India which regulates the employment of women in establishments for certain periods before and after childbirth and provide for maternity benefits. As per the MB Act, every woman worker who has worked for a continuous period of 80 days in an accounting year is entitled to be paid maternity leave of 12 weeks, of which a maximum of six weeks can be availed prior to the date of the expected delivery. In the event of a miscarriage or medical termination of pregnancy, a female employee is entitled to paid leave for a period of six weeks immediately following the day of her miscarriage. Further, the MB Act also provides for paid leave for a period of two weeks in case of a tubectomy operation and paid leave for a period of one month in case of illness arising from pregnancy, delivery or the premature birth of the child. The Maternity Benefit (Amendment) Bill, 2016 (“Bill”) has been passed by the Rajya Sabha and is pending to be passed by the Lok Sabha. Apart from increasing the duration of the maternity benefit from 12 weeks to 26 weeks, as per the Bill, maternity benefit has been extended to a woman who legally adopts a child below the age of three months and a commissioning mother for a period of 12 weeks.


Industrial establishments engaging 100 or more workmen are required to constitute a works committee. The constitution of such committee comprises the representatives of the employers and the workmen engaged in the establishment such that the workmen’s representative is not less than the employer’s. The workmen’s representative is chosen from amongst the workmen in consultation with the trade union, if any. The main responsibility of the works committee is to promote measures for securing and preserving amity and good relations between the workers and the employers and to that end act as a mediator in case of differences between them.


Works council do not have any co-determination rights. This body is set up to provide for an amicable mediation mechanism for resolving differences of opinion between workers and the employer.


The TU Act can represent the workers before the works committee. The workers’ representation is chosen in consultation with the trade union.


There is no entitlement of employees to be represented at board level.

3 Discrimination


The ER Act provides for the payment of equal amounts of remuneration to both male and female workers for the same or similar kind of work. The said Act also prohibits discrimination against women in recruitment or in any condition of service such as promotions. Further, the Constitution of India also provides that the State shall not deny to any person equality before the law and prohibition of discrimination on grounds of race, religion, sex, caste or place of birth. The term ‘State’ has been defined to include the Government and Parliament of India and the Government and the Legislature of each of the Indian States and all local or other authorities in India or under the control of the Government of India.


Discrimination on grounds of race, religion, sex, caste or place of birth as provided under the Constitution of India and discrimination



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In case of a business transfer, i.e. transfer of the entire business undertaking on a going concern basis, the terms of employment with the buyer are required to be no less favourable than that with the seller, and the buyer should recognise the past service of the employees with the seller. If the terms of employment are less favourable and/or where past service is not recognised, the workmen category employees are entitled to notice and compensation. In the case of prevalent collective agreements, the conditions, if any, on transfer, severance or change in control would need to be complied with. Typically, trade unions are consulted in relation to any potential change to the terms and conditions of the collective agreements.


Only where collective bargaining agreements exist does information and consultation with trade unions become relevant.


It is possible to dismiss employees who will not be transferred as part of the business sale. Any such dismissal will amount to a retrenchment on grounds of redundancy entitling the workman category employees to notice and compensation under the ID Act. Further, there would be a notification or approval requirement depending on whether the unit concerned is a manufacturing unit or not and the number of employees is 100 or more.


While the terms and conditions of employment may be changed in connection with the business sale, if it is less favourable, the workmen category employees would be entitled to notice and compensation under the ID Act and there could be risk of employees not willing to transfer. In any event, any change would need to be preceded by 21 days prior intimation to the workman category before effecting any change.



Yes, the employees are required to give notice of termination of their employment in accordance with the employment contract. Typically, State-specific Shops and Establishments legislations provide for a minimum notice period of one month of salary in lieu thereof. However, the employers are free to prescribe under the employment contract a longer notice period.

The ESI has amended the provisions relating to maternity benefit with effect from January 20, 2017. Therefore, establishments that fall under the purview of the ESI Act are required to increase the maternity benefit from 12 to 26 weeks and provide maternity leave to adopting and commissioning mothers who are eligible to avail benefits under the ESI Act.


As per the MB Act, every woman during maternity leave is entitled to the payment of maternity benefit at the rate of her daily wage for the period of her actual absence, which is the period during which the woman employee is on maternity leave, and also to a medical bonus where no pre- or post-natal care is provided. Further, it is unlawful to discharge or dismiss a woman employee on account of being on maternity leave or to issue a notice of discharge or dismissal expiring during the period of maternity leave. It is also unlawful to vary the terms of employment to her disadvantage during the period of maternity leave.


The MB Act secures the job of women on maternity leave. It entitles the woman employee to a nursing break as prescribed, in addition to the period of rest allowed to her.


Indian labour legislation does not provide for paternity leave. However, organisations at their own discretion can have a policy providing for paternity leave which would extend to the male employees of the organisation.


Apart from the rights provided under the MB Act, there are no other parental leave rights that are required to be observed by the employers.


Presently, the MB Act does not provide for work flexibility. However, once the Bill is enforced, work flexibility will form part of the legislation. Although, as a practice, many organisations provide for flexible work options to working mothers.

5 Business Sales


In case of an asset transfer, i.e. where certain identified assets are purchased by the buyer, the employees do not automatically transfer. Whereas in a typical transfer of a business undertaking, employees are also transferred subject to their consent either express or implied. A share acquisition does not result in a transfer of employment.



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for every completed year or part thereof in excess of six months subject to a limit of INR 1,000,000). Additionally, severance payment calculated at the rate of 15 days average pay for every completed year or part thereof in excess of six months is payable to workman category employees. In certain cases, gratuity can be forfeited. The employer is also entitled to deduct any dues that the employee owes the employer from the wages.


Please see the previous questions in regard to specific procedures.


An employee can raise claims of wrongful termination, unfair labour practice, non-payment or less payment of dues. In the case of a successful claim, the employee may be awarded relief of damages or reinstatement with or without back wages.


Yes, claims can be settled before and after initiating formal legal proceedings.


The obligations are the same irrespective of the number of employees being dismissed. However, parity in terms of severance payments and treatment of employees should be kept in mind.


The workman category employees can raise an industrial dispute, claim unfair labour practice or file a suit for wrongful dismissal. Where there are trade unions, the workers receive tremendous support and resort to collective bargaining. Failure by the employer to comply with obligations can result in litigation, penalties and, in some cases, imprisonment.



Under Indian employment laws, restrictive covenants in the nature of non-disclosure of proprietary information, non-solicitation of employees, customers and vendors, non-disparagement, protection of intellectual property and exclusivity of employment are recognised. While non-compete provisions during the term of employment are enforceable, it cannot be enforced once the employment comes to an end.


Yes, employers can require employees to serve a period of ‘garden leave’ during their notice period when the employee remains employed but does not have to attend work.


Dismissal could be on account of misconduct, non-performance, loss of confidence, redundancy, etc. In the case of a dismissal on account of misconduct or non-performance, the employee has the right to defend his case prior to his dismissal. In the case of loss of confidence, although a fully-fledged domestic enquiry may not be necessary, the employer would need to be able to demonstrate the circumstances that led to the loss of confidence. Redundancy dismissals require compliance with notice, compensation, notification/approval, last-in-first-out principle requirements under the ID Act.


The Maternity Benefit Act, 1961 makes it unlawful for an employer to discharge or dismiss a woman employee who absents herself from work in accordance with the provisions thereof except on grounds of misconduct. The restriction applies on termination which is during or on account of the woman’s absence, or the issuance of notice of discharge or to a dismissal given on such a day that it expires during the woman’s absence. Workman category employees are also protected from dismissal during pendency of proceedings of an industrial dispute. Any dismissal can be effected only with the permission of the adjudicating authority.


An individual employee can be dismissed on account of misconduct, non-performance, loss of confidence, business-related reasons, such as redundancy, closure, excessive work force, etc. As stated above, there is a process to be followed for dismissals. Where the dismissal is for misconduct, etc., it should be preceded by a disciplinary proceeding. Where the reasons are business-related, the workman category can be dismissed as per the process under the ID Act and the non-workman category as per contract and policies. Where there are settlement agreements with the unions in place, any dismissal would need to be in accordance with the terms thereof and may require consultation prior to the implementation of the dismissals. Employees are entitled to be paid all their contractual and statutory dues on their dismissal. The statutory dues include wages, encashment of un-availed and accrued leave, statutory bonus (applicable to employees whose salary is under INR 21,000), provident fund and gratuity (where an employee has completed five years of continuous service. Gratuity is calculated at 15 days wages



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subject to complying with the IT Act in relation to sensitive personal data. Typically, background checks are in relation to publicly available information.


Given that the emails, computer systems and telephones are the property of the employer, employers can monitor an employee’s official emails, official telephone calls or use of an employer’s computer system. Typically, such entitlement is reflected in the HR policies of organisations.


Yes, when it relates to communications regarding the employer’s business, organisations have specific policies in place regulating the dissemination of information of the employer on social media. Such policies restrict the employees from publishing anything disparaging or derogatory relating to the organisation on social media platforms.



Employment-related complaints are heard by labour commissioners, conciliation boards, civil and criminal courts and labour courts and tribunals depending on the nature of the complaint and punishment to be awarded.


Under the ID Act, the workmen can file a complaint to the concerned labour commissioner. Upon receipt of the complaint, the labour commissioner has the option to conduct informal meetings between the parties to the dispute to facilitate the resolution of the issues before initiation of the formal conciliation process. If no resolution is reached, or where no informal meetings are conducted, the labour authority makes a reference of the dispute to a conciliation board, court or tribunal. The workmen can also file an application under the ID Act for reference of the dispute to a conciliation board, court or tribunal. In which case, either the concerned authority will make such reference to the conciliation board, court or tribunal, or where a period of 45 days has passed since such application was made, the workmen can directly submit an application to the labour court or tribunal for adjudication of the dispute. Further, where the matter is referred for conciliation, upon failure of conciliation, the concerned authority can refer the dispute to the labour court or tribunal for adjudication. Non-workmen employees can file a suit before the labour authorities as prescribed under the respective Shops and Establishment legislations, or with civil courts in accordance with the Code of Civil Procedure, 1908.


Confidentiality obligations, protection of intellectual property, non-disparagement can be perpetual. Non-solicitation restriction is typically between two to three years.


There is no legal requirement to provide financial compensation; however, it is not uncommon.


Restrictive covenants are enforced by injunctions and damages awarded by a court of law.



The Information Technology Act, 2000 (“IT Act”) along with the Reasonable Practices and Procedures and Sensitive Personal Data or Information Rules, 2011 is the relevant legislation in India which regulates the possession, dealing and handling of sensitive personal data and/or personal information. Sensitive personal data and/or personal information consists of information relating to: (i) passwords; (ii) financial information, such as bank accounts, credit cards, debit cards or other payment details; (iii) sexual orientation; (iv) medical records and history; and (v) biometric information.The IT Act stipulates that where any body corporate (which includes a foreign company) is collecting, dealing in or handling sensitive personal data or information in India, such body corporate is required to comply with certain conditions, such as having a documented information security program and obtaining a written consent from the provider of the information. The employer requires consent of the employees to transfer sensitive personal data or information to other countries provided that the recipient ensures the same level of data protection. If the employer is negligent in implementing and maintaining reasonable security practices and procedures and thereby causes wrongful loss or wrongful gain to any person, the employer shall be liable to pay damages by way of compensation to the person so affected.


Yes, the employee can obtain copies of any personal information that is held by their employer, where such information held by the employer is of the employee himself.


The Indian employment laws do not restrict the employer from carrying out pre-employment checks on prospective employees



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Pooja RamchandaniShardul Amarchand Mangaldas & Co.216, Okhla Industrial EstatePhase III, New Delhi 110 020India

Tel: +91 11 4159 0700Email: [email protected]: www.amsshardul.com

Vaibhav BhardwajShardul Amarchand Mangaldas & Co.216, Okhla Industrial EstatePhase III, New Delhi 110 020India

Tel: +91 11 4159 0700Email: [email protected]: www.amsshardul.com

Ms. Pooja Ramchandani is a Partner and heads the labour and employment law practice of the Firm. Her area of expertise encompasses a range of matters in the field of employment and labour laws. She has advised on the structuring of a workforce, social security, pensions, benefits and compensation, transition of employees and implications in a corporate restructuring, integration of benefits and compensation, employee welfare benefits, employee stock options and other performance incentive schemes, contract labour analysis, closure of factories and establishments, breach of secrecy, non-compete and non-solicitation obligations, HR policies, key and non-key employment contracts, confidentiality agreements, secondment agreements, consultancy agreements, downsizing of a workforce, disciplinary proceedings, data retention, background checks, hiring, transfer and termination of employees, general compliances under employment and labour law, amongst others.

The Firm’s Employment team provides strategic and legal advice on employment law matters for its clients. It is considered a trusted advisor on employment matters by various domestic and multi-national companies. The team advises on diverse subject matters including hiring of regular and senior level employees, workforce restructuring/rightsizing, closure and winding up of business, employment issues relating to corporate restructuring such as business transfer, slump sale, share acquisitions, etc., compensation structuring of key managerial personnel, intra-group transfers, harmonisation of employee benefits, contract manufacturing, structuring of contract labour arrangements, policymaking, share-based employee benefits, such as employee stock options, phantom stocks, restricted stock units, etc., private employee welfare schemes including gratuity, superannuation, pension, provident funds, education loans, medical insurance, etc., sexual harassment at the workplace, misconduct, enforcement of restrictive employment covenants, managing labour issues involving recognised and unrecognised trade unions, etc. We also assist our clients in the preparation and finalisation of employee-related documentation which inter alia includes employment contracts, background verification, employment transfers, secondment agreements, trust deeds and rules for employee benefits such as gratuity, provident funds, superannuation, pension, employee stock options, phantom stocks, restricted stock units, etc., application for factory closure approval, employment termination, confidentiality and non-solicitation, legal notices, etc.

Mr. Vaibhav Bhardwaj is a Senior Associate and presently works with the Employment Law Team. At the Firm, he works on a plethora of matters pertaining to the field of employment and labour law, which is the area of his expertise. His work ranges from providing advice on hiring, termination and transfer of employees, standardisation of templates for appointment letters, employment agreements, confidentiality and non-disclosure agreements, release letters and full and final settlement letters, to the creation and review of human resource policies, compliance with applicable labour legislations including conduct of compliance audits at establishments and factories, undertaking of investigations relating to employee matters including ethics violations, employee misconduct, fraud and sexual harassment.


Employment-related disputes usually take a long time to resolve as there are no strict timelines prescribed under law; the length of time depends on the facts and circumstances of each case.



It is possible to appeal against a first instance decision. However, as mentioned above, it is difficult to anticipate the time involved in such cases since the same depends on the facts and circumstances of each case.


Chapter 17

Makarim & Taira S.

Alexandra Gerungan

Candace A. Limbong

Indonesia

2. A fixed-term employment agreement may be up to two years, extendable (once for one more year) and/or renewable (once for up to two years with a 30-day break). The agreement must be registered with the local office of the Ministry of Manpower (“MOM”) within seven days of signing; otherwise, it will automatically be deemed a permanent employment contract.

For permanent employees, the probation period may be up to three months.


Under the Manpower Law, the company regulations (“CR”) must take into account considerations and suggestions from the employee representatives (or the trade union, if any) in the company, but the employer does not have to follow all of its employee representative’s or trade union’s suggestions. However, for a collective labour agreement (“CLA”), it must be drawn up and entered into by the trade union(s) and the employer. Therefore, the terms and conditions of employment under the CLA are determined by consensus. We assume industry level means the relevant Industrial Relations Court (“IRC”) in Indonesia. The bargaining of the terms and conditions of employment regulated under the CLA take place at both company and industry level. However, the industry level is reached only if the employer and trade union do not reach a consensus on the content of the CLA.



Indonesia recognises trade unions under Law No. 21 of 2000.


The trade union has, among others, the following rights:a) to enter into a CLA with the employer; b) to represent workers in settling industrial disputes; c) to represent workers in manpower institutions; d) to set up institutions or to engage in activities which are

related to the effort to improve the welfare of workers; and



The main source of Indonesian employment law is Law No. 13 of 2013 on Manpower.


Workers are distinguished primarily according to the length of service, nature and type of job. The Indonesian Manpower Law provides for three categories of workers: permanent employees; fixed-term employees; and foreign employees.


For permanent employees, the employment contract can be either in writing or oral. If oral, assuming that the employer applies a probationary period, the employee must be served with an appointment letter once the employee passes the probationary period.For fixed-term and foreign employees, it must be in writing. Otherwise, the fixed-term employee automatically becomes and has all the rights and entitlements of a permanent employee.


No terms are implied into contracts of employment.


There are several employment minimum terms and conditions regulated under the Manpower Law, as follows: 1. An employment agreement must contain at least (i) the

company’s name, business address and field, (ii) the name, gender, age and address of the employee, (iii) the class or title of the job, (iv) the work location(s), (v) the salary and payment procedure, (vi) the terms and conditions, the employer’s and employee’s rights and obligations, (vii) the commencement date and effective term of the employment agreement, (viii) the place and date of signing, and (ix) the signatures of the parties.


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3 Discrimination


Employees in Indonesia are protected against discrimination by the 1945 Indonesian Constitution, Law No. 39 of 1999 and the Manpower Law, under which everyone must be given equal opportunity without discrimination to obtain a job and are entitled to equal treatment without discrimination by the employer.


The following are the types of discrimination prohibited under the relevant Indonesian regulations:1. According to the elucidation of Article 5 of the Indonesian

Manpower Law, discrimination means when an employee does not have the same rights or chances as others with regard to (i) applying for a job, and (ii) obtaining a viable standard of living regardless of his/her gender, ethnicity, race, religion, skin colour or politics. This includes equal treatment for a disabled employee.

2. Under Law No. 21 of 1999, discrimination in employment and occupation includes discrimination in the provision of training and skills development based on ethnicity, skin colour, gender, religion, politics, nationality or origin.

3. Under Government Regulation No. 8 of 1981, employers may not discriminate between the salaries of male and female employees performing work of equal value.

4. Under Minister of Manpower Decree No. Kep.68/MEN/IV/2004, employers may not discriminate against employees because they have HIV/AIDS or are believed to be infected with the HIV virus.


The Indonesian Manpower Law and other regulations do not regulate defence against a discrimination claim in Indonesia.


Under the Manpower Law, the MOM or appointed authority may impose administrative sanctions on an employer that violates the non-discrimination obligation. No further information on how employees can enforce their rights or how employers can settle the claims is provided.


There are no remedies under the Manpower Law.


No, there is no additional protection for atypical workers in Indonesia.

e) to engage in other manpower-related activities which do not violate the prevailing regulations.


The rights of trade unions to take industrial action under Law No. 2 of 2004 are the following:a) a dispute over rights (arising from a failure to provide

certain rights due to a discrepancy in the implementation or interpretation of the prevailing laws and regulations, employment contract, CR or CLA);

b) a dispute over interests (arising in the employment relationship due to non-agreement over the preparation of, or changes to, the terms and conditions under the employment contract, CR or CLA); or

c) a dispute between trade unions within one company (arising due to membership issues and the provision/performance of the members’ rights and obligations).


Every company employing 50 or more employees must establish a Bipartite Cooperation Body (“BCB”) to function as a communications and consultancy forum concerning manpower matters in the company. The members of the BCB are elements of the company management and employees appointed democratically to represent the employees’ interests. However, in practice, not many companies have established a BCB.


An attempt to settle any industrial relations dispute must first be made through bipartite negotiations with BCB to reach an agreement. If the bipartite negotiations fail, one or both of the parties can register the dispute with the local MOM office and submit evidence of the effort made to settle the dispute through bipartite negotiations. The local MOM official will then offer the parties the option of trying to settle the dispute through conciliation or arbitration.


As a representative of the trade union(s) is a member of the BCB, the trade union representative can defend their rights while performing his/her role as a member of the BCB. The BCB will conduct negotiations with the employer to settle any industrial relations disputes.


No, they are not entitled to representation at board level.

Makarim & Taira S. Indonesia


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Under the Indonesian Limited Liability Law, the company must inform its employees at least 30 days before the sale in order give them and related parties an opportunity to convey complaints if they think that the sale will disadvantage them. There are no sanctions for failing to do so under the prevailing laws.


Employees can be dismissed, but the standard termination procedures apply. A mutual termination agreement (“MTA”) must be entered into and the employee must be provided a certain severance package according to the Manpower Law.


No, they are not. Any change must be agreed to between the employers and the employees.



Under the Indonesian Manpower Law, termination by notice is not possible. In principle, the employer must first obtain approval from the IRC and unilateral termination is not possible.


Garden leave is not recognised under the Manpower Law, but it may be similar to a suspension under Article 155 of the Manpower Law which allows a company to suspend an employee whose termination is being processed while waiting for approval from the IRC. However, during his/her suspension, the employer must continue to pay his/her salary and other usual benefits.


An employee cannot be dismissed unilaterally by the employer under any circumstances. The employer must first obtain approval from the IRC, unless the parties sign a MTA. If the parties do not reach an agreement during the bipartite meetings, the dispute moves on to mediation. If the parties reach an agreement in mediation, they can sign a MTA. Otherwise, the dispute will be submitted to the IRC.



Pregnant employees are entitled to one-and-a-half months’ maternity leave before giving birth and one-and-a-half months after giving birth, as estimated by a midwife or obstetrician. However, in practice, they can usually take three months’ leave after giving birth.


They are entitled to full salary (basic salary and fixed allowance, if any) and other entitlements such as medical reimbursement during maternity leave.


Female employees who are still breast feeding a child must be given sufficient opportunities to breast feed their children, if necessary, during work hours.


Fathers are entitled to two days’ paternity leave with full pay.


Employees are entitled to two days’ leave with full pay on the following occasions: (i) the baptism of the employee’s child; (ii) the circumcision of the employee’s child; (iii) the marriage of the employee’s child; and (iv) the passing away of the employee’s child or in-law.


No work flexibility is provided for if an employee has the responsibility of caring for dependants.

5 Business Sales


Employees do not automatically transfer to the buyer. They must be offered the option to continue to work with the buyer or terminate their employment agreement.


Upon their agreement to continue working with the buyer, all of the employees’ applicable rights will be transferred to the buyer. If so agreed, the employment agreement can still apply as is and the sale of the business does not affect the CLA.



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registered with the local MOM office and appointed by the parties to the dispute. In practice, parties prefer to settle manpower disputes through mediation because mediation is free of charge and the mediator is a civil servant employed by the local MOM office who usually has some experience in settling manpower disputes.

3. Within seven days of mediation being requested, the local MOM office must start the mediated dispute settlement negotiations which must be completed within 30 working days. If mediation fails, the MOM official provides a written recommendation for settling the dispute to the parties and the MOM office. If either party rejects the recommendation, the case is referred to the IRC within the jurisdiction of the local District Court.


Industrial relation disputes cover rights disputes, interest disputes, layoff disputes and disputes among trade unions in one company. In the event of dismissal, it is a rights dispute. The employee may decide not to accept his/her termination and claim that the employment agreement remains valid. The employee may also reject the calculation of his/her entitlements and can claim damages. The employer can counter the claim by providing sufficient evidence that the procedure for termination has been followed or the calculation of the entitlements is correct.


Employers can settle claims both ways.


There are no additional obligations for mass dismissal under the Manpower Law.


Basically, there is no difference between the procedures for an individual or a mass termination (see our explanation in question 6.6 above). The employees can enforce their rights through the industrial dispute settlement procedure, i.e. with bipartite negotiations, which is followed by a mediation session, and failing which it is submitted to the relevant IRC.



In principle, restrictive covenants, which are commonly known as non-competition restriction in Indonesia, are not recognised under Indonesian law; however, it is common in practice. Usually, this is agreed between the parties.


The employer cannot initiate the termination of an employee for any of the following reasons, among others: (i) the employee gets married; (ii) the employee cannot attend work due to illness for less than 12 months consecutively; or (iii) the employee establishes a trade union, or becomes a member of one.


1. The employer can initiate the termination of an individual employee for the following reasons: (i) a violation of the employment agreement, CR or CLA; (ii) the employee has been detained by the authorities and six months later, the employee is still unable to work due to criminal proceedings; (iii) the employee is ill for 12 consecutive months, as certified by a doctor; (iv) the employee has been absent for five days without notifying the employer and has been served proper notice twice; (v) the employee has reached retirement age; and (vi) the demise of the employee.

2. The employer can initiate the termination of employees for the following business-related reasons: (i) a change of status, merger, consolidation or acquisition/change of company ownership; (ii) the employer becoming insolvent; (iii) the employer having suffered continuous losses for two years consecutively as proved by its financial reports for the last two years that have been audited by a public accountant; and (iv) the employer permanently closing down the business in which the employees are employed because the company wishes to improve efficiency.

There are many different circumstances and events which may lead to termination. Similarly, there are a number of combinations of severance pay, a service period recognition payment and compensation depending on the reason for the termination and the length of service which may apply. Therefore, they must be calculated on a case-by-case basis. However, in general, permanent employees’ severance packages will be calculated based on their years of service, amount of monthly salary (basic salary + fixed allowance (if any)), and the applicable severance package calculation.


The following are the termination procedures for individual termination:1. The employer and employee must hold a bipartite meeting to

negotiate the termination. The bipartite negotiations may continue for up to 30 working days. The results of the negotiations should be recorded in minutes and signed by both parties. If the parties reach a consensus, the terms are provided in a MTA, signed by both parties and registered with the IRC with jurisdiction where the parties enter into the MTA.

2. If no consensus is reached within 30 working days, the negotiations are deemed to have failed and the termination dispute must be registered with the local MOM office to be settled through conciliation or mediation.

The difference between mediation and conciliation is that mediation is facilitated by a mediator who is a MOM official assigned to undertake the mediation, while conciliation is facilitated by a conciliator who is an independent third party



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It is common in Indonesia for employers to govern the use of social media, but it is not regulated under the relevant regulations. This can be incorporated in the employment agreement, CR, or CLA.



Employment-related disputes are brought to the IRC. In general, three judges sit on a panel, one of whom acts as the head of the panel of judges.


First, they must be negotiated in a bipartite negotiation. If the bipartite negotiations fail, the parties can try mediation, failing which the dispute can be submitted to the IRC by either side. The IRC will ask for proof of the result of the conciliation effort as a supporting document to accompany the suit. In the court sessions in the IRC, the disputing parties will be exempt from the payment of court fees including execution fees for any claim for less than IDR150,000,000, or approximately USD11,225.


By law, the IRC should issue its ruling within 50 working days of the date of the first hearing, while the Supreme Court should issue its ruling within nine months. However, in practice, the IRC proceeding may take six to eight months, while the Supreme Court usually issues its ruling within one year.


An appeal to the Supreme Court can be submitted against a court of first instance ruling (IRC) only for (i) disputes over rights, and (ii) disputes over terminations. An IRC ruling on a dispute over interests or a dispute amongst labour unions in one company cannot be appealed to the Supreme Court. Please see question 9.3 above for our response related to the time frame for the appeal process.

AcknowledgmentThe authors would like to thank Rizanesia Citrasari, Trainee Associate in the Corporate Commercial and Litigation Group, for her invaluable assistance in the preparation of this chapter.


It depends on the agreement between the parties.


The law is silent on this issue; therefore, it depends on the agreement between the parties.


In general, the validity of restrictive covenants is arguable in Indonesia because they may be challenged under the rights guaranteed under the Manpower Law and the Human Rights Law, i.e. all employees must be given the same opportunities and be free to choose the work they wish to perform. Therefore, such covenants could be difficult to enforce as they infringe those rights. In practice, if a non-competition dispute is brought to court, it will follow the applicable procedural rules.



In principle, the employer cannot transfer employees’ data freely to other countries without their prior consent.


It is not specifically regulated whether employees can obtain copies of any personal information held by their employer. This may require the consent of the owner of the personal information, i.e. another employee.


The regulations are silent on this; however, it is common practice in Indonesia for employers to ask prospective employees to submit a police statement and have a clear track record.


Employers are not entitled to monitor these activities and employees can sue their employer for a breach of data privacy if their employer does so without their consent. Therefore, any monitoring of private communications through electronic media requires their prior consent. The employer can include a clause in the employment agreement regarding the monitoring of their internet activities, etc., through the employer’s internet network or devices.



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Alexandra GerunganMakarim & Taira S. Summitmas I, 16th & 17th FloorsJl. Jend. Sudirman Kav. 61–62 Jakarta 12190Indonesia

Tel: +62 21 252 1272 / 520 0001Email: [email protected]: www.makarim.com

Candace A. LimbongMakarim & Taira S. Summitmas I, 16th & 17th FloorsJl. Jend. Sudirman Kav. 61–62 Jakarta 12190Indonesia

Tel: +62 21 252 1272 / 520 0001Email: [email protected] URL: www.makarim.com

Alexandra is a Partner in the Litigation & Dispute Resolution department of M&T and has extensive experience in handling litigation and dispute resolution cases including civil lawsuits, arbitration and alternative means of resolving disputes, anti-corruption investigations, police investigations into allegations of forestry and environmental crimes, internal/independent investigations and terminations of employment, and has handled liquidation, bankruptcy/suspension of payment cases and due diligence, general corporate and commercial issues, as well as power projects. She is also a registered sworn translator (English-Indonesian and vice versa), a member of the International Chamber of Commerce (ICC) Indonesia and the Chartered Institute of Arbitrators (MCIarb), an author/contributor to various international publication on litigation/dispute resolution, environment, and compliance/rule of law subjects, and a speaker on seminars and conferences on litigation/dispute resolution mechanisms and bankruptcy/suspension of payment.

Established in 1980 by two Harvard graduates, Nono Anwar Makarim and Frank Taira Supit, Makarim & Taira S. is a leading business law firm in Indonesia offering a full range of corporate, banking, litigation and specialist legal services to national and international clients. Our long-standing reputation with policymakers, regulators, state-owned companies and leading industry groups provides us with important insights into the latest government policies and industry positions. The firm has received recognition in a number of leading international legal guides and surveys by advising many clients on innovative deals. We are committed to providing excellent service in a timely and commercially-oriented manner. From the initial foreign investment decision to the establishment and operation of a successful Indonesian business, from dispute resolution to M&A, the firm has long become the favoured, trusted Indonesian counsel in providing practical solutions and advice on every aspect of doing business in Indonesia.

Candace Anastassia Limbong is an Associate in the Firm’s Dispute Resolution group. Her practice focuses on corporate litigation and manpower. She has been involved in several major bankruptcy and delay of payment proceedings, various litigation and dispute resolution cases including civil lawsuits, arbitration, suspension of payment, and terminations of employment. She has also been involved in the termination of employment of various multinational companies in Indonesia.



Chapter 18

McCann FitzGerald

Mary Brassil

Stephen Holst

Ireland

■ date employment started; and■ details of rest periods and breaks as required by law.Details of paid leave and rate of pay or method of calculation of pay must also be communicated to the employee, and an employer may refer an employee to other documents in this regard. However, for ease of reference they are usually included in the contract of employment.


Terms can be implied into an employment contract by legislation, any agreed collective agreements, principles of employment law (such as the implied duty of trust and confidence) or by virtue of longstanding custom and practice in either the employer in which the employee works, or the particular industry.


Yes. Irish employment law regulates numerous areas of employment law including:■ unfair dismissal;■ minimum notice;■ minimum wage rates; ■ redundancy compensation;■ health and safety;■ protection for whistleblowing;■ equality and discrimination;■ maternity and paternity protection;■ adoptive and parental leave; and■ working time.


There is provision for collective bargaining at both company and industry level under Irish law. Collective bargaining is more common at company level, where a trade union is recognised, than at industry level. It is more common in heavily unionised employments, such as the public sector, than the private sector.



While the employment relationship is primarily one governed by contract law and the parties are free to choose the law that applies to their working relationship, there are certain mandatory laws that will apply to employees working in Ireland which set out certain minimum protections. These mandatory laws are set out in primary legislation, much of which derives originally from European Union directives and regulations.Irish common law (judge-made law) also provides employees with significant protections, particularly in requiring employers to apply fair procedures when dealing with employees, including on dismissal.


Irish law distinguishes between an individual who is an employee (that is, working under a contract of service) and an individual who is either self-employed or an independent contractor (that is, working under a contract for services). The majority of statutory employment rights apply to employees only. However, certain employment law rights can apply to others, such as protection on making a protected disclosure (i.e. whistleblowing) which applies to ‘workers’ (a broader concept which includes contractors) and protections for agency workers.


While a written contract of employment is not required, under the Terms of Employment (Information) Acts 1994 to 2012, an employer must provide its employee with a written statement setting out certain particulars of the terms of employment within two months of the commencement of that employment. Such particulars include, among others:■ full name of employer and employee;■ address of employer and place of work;■ title of job or nature of work;■ hours of work;


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Employees in Ireland have a constitutional right to join a trade union but employers in Ireland are not required to recognise or negotiate with trade unions. However, the law on collective bargaining was reformed by the Industrial Relations (Amendment) Act 2015 which provides for an enhanced framework for workers seeking to improve their terms and conditions where collective bargaining is not recognised by their employer. However, importantly, the voluntarist nature of the Irish industrial relations system remains and does not oblige employers to engage in collective bargaining per se or require formal recognition of trade unions.


There is no legal obligation on an employer to negotiate with a union on behalf of an employee member, unless previously agreed. If recognised, however, trade unions may have rights to be consulted with on certain business changes, such as collective redundancies and transfers of undertakings. Trade unions also have certain statutory protections when acting in the interests of their members.


The rules relating to the right to take lawful industrial action are complex and trade unions must carefully follow these to avoid an employer having a right to seek an order preventing industrial action. These include an obligation to arrange a secret ballot and to provide the employer with notice of the industrial action. So long as the statutory rules are complied with, striking employees are granted certain immunities from liability which they might otherwise incur for action in contemplation of, or in furtherance of, a trade dispute.


The Transnational Information and Consultation of Employees Act 1996 applies with regard to European Works Councils, and the Employees (Provision of Information and Consultation) Act 2006 applies with regard to domestic works councils. Works councils are not mandatory and can be established at the initiative of the employer or following an employee request that meets certain criteria (such as, the employer having at least 50 employees and that the request comes from a minimum threshold number of employees). If set up, the role of the works council will be determined by agreement or, otherwise, there are statutory default rules. Works councils are not common in Ireland.


There are no statutory co-determination rights for works councils in Ireland.


There are no statutory provisions which determine the relationship between trade unions and works councils in Ireland. However, in practice, works councils are very rare in Ireland, and if a works council and recognised trade union co-existed in a workplace, it is likely that in the event of a dispute the trade union would take precedence due to its ability to institute industrial action. Furthermore, in collective consultation processes such as on a collective redundancy or transfer of undertaking, the employer would generally consult with the trade union.


The Worker Participation (State Enterprises) Acts 1977 to 2001 provide for employee representation and participation at board and sub-board level in certain State enterprises. However, this is a very limited right and, in general, unless it is agreed, employees are not entitled to management representation.

3 Discrimination


The Employment Equality Acts 1998 to 2015 prohibit direct and indirect discrimination on nine grounds, namely:■ gender;■ civil status;■ family status;■ sexual orientation;■ religious belief;■ age;■ disability;■ race; and■ membership of the Traveller community.


Direct discrimination occurs if an employee is treated less favourably because of a protected characteristic. Specific protections apply in respect of discrimination in relation to:■ access to employment;■ conditions of employment;■ training or experience for or in relation to employment;■ promotion or re-grading;■ classification of posts; and■ equal remuneration for like work.Indirect discrimination occurs where an “apparently neutral provision” puts people who share a protected characteristic at a particular disadvantage. However, indirect discrimination can be objectively justified if the employer can show that it was an appropriate and necessary means of achieving a legitimate aim.


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The Employment Equality Acts also provide employees with protection against harassment and sexual harassment, as well as making it unlawful to victimise an employee who asserts their rights under the Employment Equality Acts. Employees who suffer from a disability have the right to require the employer to put in place reasonable accommodations. Discrimination is also not permitted when advertising for prospective employees.


There are a number of technical defences available, depending on the type of discrimination alleged. In particular, in cases of indirect discrimination or when setting a compulsory retirement age, it may be possible to objectively and reasonably justify such discrimination by a legitimate aim, so long as the means of achieving that aim are appropriate and necessary.In harassment and sexual harassment cases, while the employer may be vicariously liable for the acts of its employees, it is a defence for the employer to show that it took such reasonable practicable steps as it could to prevent the harassment. In a disability claim, it is a defence to show that the “accommodation” required would not be reasonable.


If the matter cannot be resolved with the employer, the employee can take a complaint to the Workplace Relations Commission.Yes, claims can be settled before or after they are initiated.


Depending on the nature of the discrimination, an adjudicator may award one or more of the following:■ an order for equal treatment;■ an order for equal pay and up to three years’ arrears of pay

from the date of the claim;■ an order for compensation of up to two years’ pay or

€40,000, whichever is greater, for acts of discrimination, discriminatory dismissal and/or for acts of victimisation;

■ an order for re-instatement or re-engagement;■ an order for compensation of up to €13,000 for a complainant

who is not an employee of the respondent; and/or ■ an order to a specified person to take a specified course of

action.


Fixed-term employees are entitled to be treated no less favourably than a comparable permanent employee unless such treatment can be justified on objective grounds. There are also some exceptions in relation to pension entitlements. The Protection of Employees (Fixed-Term) Work Act 2003 gives fixed-term workers other rights including, in particular, rights for fixed-term employees to obtain a “contract of indefinite duration” in particular circumstances.

The Protection of Employees (Temporary Agency Work) Act 2012 affords temporary agency workers the right to equal treatment with regular workers as regards basic working and employment conditions as if they had been directly employed by the hirer under a contract of employment. The treatment of part-time employees is governed under the terms of the Protection of Employees (Part-Time Work) Act 2001. A part-time employee has the right not to be treated in a less favourable manner than a comparable full-time employee in respect of his or her conditions of employment (with certain narrow exceptions), unless objectively justified.



Female employees are entitled to take maternity leave of up to 42 weeks (26 weeks “ordinary maternity leave” and 16 weeks “additional maternity leave”) provided the employer is given at least four weeks’ notice of the commencement of that leave. The maternity leave must include at least two weeks’ absence before the birth and at least four weeks’ absence after the birth. Female employees are also entitled to attend ante-natal appointments during their working hours.


An employer is not obliged to pay the employee during maternity leave, but the state provides a maternity benefit of up to €230 per week during the first 26 weeks’ leave. The employee is also entitled to take up to 16 weeks’ additional maternity leave at her own expense.Save for rights to remuneration, women’s employment rights are preserved during periods of maternity leave, i.e. the period of leave is reckonable service for employment rights purposes. If general pay or other conditions have improved while on maternity leave then she is entitled to these benefits on return to work. Dismissals arising from taking maternity leave are deemed automatically unfair and any attempted dismissals during a period of maternity leave are void.


An employee is entitled to return to work to the same job with the same contract of employment. If this is not reasonably practicable, then the employer must provide suitable alternative work on terms not substantially less favourable than those of the previous one.


A father has the right to take two consecutive weeks’ paternity leave under the Paternity Leave and Benefit Act 2016. This Act, applicable to births and adoptions on or after 1 September 2016, permits a “relevant parent” to take two consecutive weeks’ statutory paternity leave from his/her employment on the birth or adoption of a child. This leave must be taken within 26 weeks of the birth or adoption of the child in question. In addition to statutory paternity leave, a relevant parent will be entitled to receive a social welfare payment of €230 per week, the same rate as the maternity benefit.


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The remit of the Paternity Leave and Benefit Act 2016 is not confined to the father of the child and same sex couples are provided for on an equal basis with other couples.


Adoptive leave and parental leave (including force majeure leave) are available. Carers’ leave is also available.


The Parental Leave Acts 1998 and 2006 give parents the right to 18 weeks’ unpaid leave for each child. The leave must be taken before the child is eight years old (subject to extension for an adopted child or a child with a disability or long-term illness) and can be taken as a continuous period, in portions or, with the agreement of the employer, by working reduced hours.Employees who have been employed for a minimum period of 12 months can in limited circumstances take between 13 and 104 weeks’ unpaid carer’s leave to care for an incapacitated dependant. State carer's benefit or carer’s allowance may be payable.An employee can take force majeure leave on full pay for urgent family reasons owing to an injury or illness requiring the employee's immediate presence. The employee can take three days in any 12-month period, with a maximum of five days in any 36-month period.

5 Business Sales


On a share sale, where there is no change in employer, the employees’ employment simply continues with the same employer with no change in terms and conditions. Under the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003, (“TUPE”) on a business transfer (primarily asset sales or changes in service providers), employees automatically transfer to the purchasing entity along with the business and assets.


On a share sale, employees continue on the same terms and conditions with no change.On an asset sale to which TUPE applies, all rights and obligations arising from contracts of employment (with an exception for certain pension rights), as well as any rights under collective agreements, are automatically transferred to the transferee.


There is no legal requirement to consult with employees ahead of a share sale unless there is an agreement to do so (for example, in a collective agreement or in a works council agreement).

The European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 govern transactions involving the sale of businesses or assets. Under these Regulations the transferor and transferee must inform, and in certain circumstances consult with, the representatives of affected employees. This process must commence, in most cases, at least 30 days prior to the date of transfer.An employee or their trade union (or certain others) can make a complaint in respect of a contravention of the TUPE Regulations. Compensation not exceeding four weeks’ remuneration may be awarded for a breach of the information and consultation obligations, and compensation not exceeding two years’ remuneration may be awarded for a breach of any other provision of the TUPE Regulations, as well as reinstatement or re-engagement, if appropriate.


Not unless for “economic, technical or organisational reasons”.


Harmonisation of employment terms can only be implemented post-transfer with the employees’ agreement.



Under the Minimum Notice and Terms of Employment Acts 1973 to 2005, minimum statutory notice periods apply to all employees who have completed 13 weeks of continuous service with the employer. The duration of statutory notice required will depend on the length of service of the employee (between one week and eight weeks). The employment contract can, and frequently does, set out longer periods.


Yes, but only if provided for in the employment contract.


The Unfair Dismissal Acts 1977 to 2015 provide an employee with a means of questioning the fairness of a dismissal. The rights under these Acts generally only apply once the employee has one year’s service (exceptions apply).The Employment Equality Acts 1998 to 2012 protect employees from discriminatory dismissal.Wrongful dismissal is a dismissal in breach of contract where an employee can bring a common law claim in the civil courts. Such a breach may include a breach of an employee’s fair procedure rights.


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Employees may seek an injunction restraining a dismissal if the dismissal would be a wrongful dismissal. Employees can also seek to restrain a dismissal if the dismissal is by reason of the employee having made a ‘protected disclosure’ (i.e. if a whistleblower). The consent of a third party is not required in order to dismiss an employee.


Usually, an employee must have one year's continuous service with an employer in order to rely on the Unfair Dismissals Acts 1977 to 2015. However, in certain circumstances this is not necessary. This includes situations where dismissals are connected with certain specific matters, such as: pregnancy; religion; politics; race; age; having made a protected disclosure; or trade union membership/activity. Dismissal on any of these grounds is deemed automatically unfair.Furthermore, any attempted dismissal while an employee is on a period of protective leave (e.g. maternity leave, adoptive leave, etc.) is void.


It is permissible for an employer to dismiss an employee in accordance with his or her notice entitlement. However, under the Unfair Dismissals Acts 1977 to 2015, a dismissal shall be deemed not to be unfair if it results wholly or mainly from one or more of the following:■ the capability, competence or qualifications of the employee

for performing work of the kind which he or she was employed by the employer to do;

■ the conduct of the employee;■ the redundancy of the employee;■ that the employer was prohibited by statute from continuing

to employ the individual in the job; and■ that there were some other substantial grounds justifying the

dismissal.Where the termination of employment arises by reason of redundancy, the employer is required under the Redundancy Payments Acts 1967 to 2014 to make a statutory redundancy lump sum payment to the employee where the employee has accrued 104 weeks’ continuous service. Employers may also make an ex gratia payment in addition to the statutory lump sum; however there is no legal obligation on employers to do so.


Under the Unfair Dismissals Acts 1977 to 2015, employers must act "reasonably" and afford employees full and fair procedures in relation to any dismissal. Employers should have regard to the Code of Practice on Grievance and Disciplinary Procedures (SI 146 of 2000). In order for an employer to dismiss an employee (even in circumstances of gross misconduct), the employer is required:■ to have a clear and documented procedure in place, which is

fair and reasonable; and■ to follow that procedure.

The general principles of “full and fair” procedures and “natural justice” include, but are not limited to:■ an entitlement to be accompanied to meetings;■ access to documentary evidence;■ compliance with the principle of proportionality;■ confidentiality; and■ allowing employees an opportunity to respond to allegations

against them.


The primary remedy available to employees is under the Unfair Dismissals Acts 1977 to 2015. If the dismissal is found to have been unfair, the employee may be reinstated or re-engaged or, more commonly, may receive compensation for the loss of earnings caused by the dismissal. Generally, the maximum compensation is two years’ pay unless the dismissal followed the making of a protected disclosure within the meaning of the Protected Disclosures Act 2014 where the maximum compensation is five years’ pay. If the dismissal is a discriminatory dismissal, then the employee can bring a claim under the Employment Equality Acts, under which damages of up to two years’ remuneration can also be awarded. If a wrongful dismissal, or if the dismissal is by reason of having made a protected disclosure, the employee can seek to restrain the dismissal.


Yes, claims can be settled at any time.


There are special statutory rules for collective redundancies. Collective redundancies arise where, during any period of 30 consecutive days, the number of employees being made redundant are:■ five employees where 21–49 are employed;■ 10 employees where 50–99 are employed;■ 10 per cent of the employees where 100–299 are employed; or■ 30 employees where 300 or more are employed.The employer is obliged to enter into consultations “with a view to agreement” with employee representatives. These consultations must occur at least 30 days before the notice of redundancy is given and should consider whether there are any alternatives to the redundancies. The employer is required to provide specific information in writing to the employee representatives and the Minister for Jobs, Enterprise and Innovation.


An employee (whether directly or through their representatives) may bring a claim for failure to inform and consult on behalf of the affected employees. If successful, compensation of up to four weeks’ remuneration may be awarded to each affected employee. Breach of collective redundancy consultation is also an offence.


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Employers should not provide employee data to third parties otherwise than in accordance with the principles and processing conditions set out in the Acts. It may be necessary to obtain express consent from the employee to such disclosure in the absence of a legitimate business purpose for the disclosure and depending on the nature of the information and the location of the third party. Where the data is being transferred to a third party within the EEA, a written contract should be entered into whereby the recipient agrees to process the data in accordance with the instructions of the transferor and comply with the security obligations set out in the Acts. Where the third party is based outside the EEA, the Acts prohibit the transfer of data unless that country ensures an adequate level of protection for personal data or one of a series of limited exceptions apply.


Under the Data Protection Acts 1988 and 2003, employees, as data subjects, may make a subject access request which entitles them, subject to certain limited exceptions, to:■ be informed as to what personal data is held about them and

to whom it is disclosed;■ obtain a copy of their personal data; and■ have personal data amended or deleted if incorrect.


Employers must comply with fair collection and processing obligations under the Data Protection Acts. Potential employees should be notified of the nature and extent of background checks. Either their consent should be obtained or the processing must be necessary in the employer’s legitimate interests when balanced against the rights of the potential employee. It is an offence to require an employee to lodge data access requests for the purpose of obtaining a background check.


Employers may only do so where the right to do so is set out and communicated under a policy of which employees are made aware. All such monitoring is subject to compliance with the Data Protection Acts and must therefore be proportionate and in pursuit of the employer’s legitimate interest. Certain types of monitoring may also be subject to restrictions under the Postal and Telecommunications Services Act 1983 and the EC (Electronic Communications Networks and Services) (Privacy and Electronic Communications) Regulations 2011. In order to comply with the Data Protection Acts, employees should be notified of any monitoring that may be carried out, as well as its purpose.


Yes, provided an employer has a relevant and reasonable social media policy which is notified in advance to employees.




Express covenants which protect an employer’s legitimate proprietary interests (such as customer connections or goodwill, trade secrets or confidential information) are recognised.


Post-termination restrictive covenants are presumed unenforceable as a restraint of trade and are contrary to public policy, unless:■ they go no further than is reasonably necessary in scope,

duration and geographical extent to protect an employer’s legitimate proprietary interests; or

■ they do not otherwise offend public policy.If the covenant specifies a period that is longer than necessary to protect the employer's legitimate business interests, then a court may strike down the clause in its entirety as unenforceable. This is very much case specific depending on the facts but the generally recognised maximum is 12 months (and only then for the most senior employees).


No, although the agreement under which these are set out must contain consideration to make these contractually binding.


Where an employer is aware of an actual or potential breach of restrictive covenants and where appropriate undertakings cannot be obtained from the employee, proceedings can be brought to seek an order seeking enforcement of restrictive covenants in the High Court. These proceedings are taken as an interlocutory injunction and will be heard within a number of weeks of an action commencing.Damages may also be awarded for breach of these covenants.



The legal framework for data protection will change when the General Data Protection Regulation (GDPR) enters into force in May 2018.For now, the Data Protection Acts 1988 and 2003 regulate how employers collect, store and use personal data held by them about their employees (past, prospective and current). More onerous obligations are imposed in respect of sensitive personal data. Infringement of the Acts can lead to:■ investigation by the Data Protection Commissioner;■ court levied fines of up to €100,000; and/or■ compensation claims from affected employees.


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Mary BrassilMcCann FitzGeraldRiverside OneSir John Rogerson's QuayDublin 2Ireland

Tel: +353 1 607 1219Email: [email protected]: www.mccannfitzgerald.ie

Stephen HolstMcCann FitzGerald Riverside OneSir John Rogerson's QuayDublin 2Ireland

Tel: +353 1 511 1517Email: [email protected]: www.mccannfitzgerald.ie

Mary advises on all aspects of employment law with particular experience in advising domestic and international clients on the employment, equality and industrial relations law issues arising from mergers and acquisitions, Transfer of Undertakings Regulations issues, corporate restructurings, cross-border mergers, outsourcings and redundancy situations.

She advises on all matters arising out of the employer-employee relationship (such as drafting and negotiating contracts of employment, advising on the implementation of appropriate HR and IR policies and procedures, management of ongoing employee issues, advising on termination of employment and restrictive covenants).

She represents employers in contentious employment law disputes. She has significant experience of advising clients in the financial services sector on executive remuneration.

Mary writes and lectures widely on all topics relating to her practice area and recently contributed the Irish chapter of “Global Legal Insights – Employment and Labour 5th Edition”.

With almost 575 people, including over 350 lawyers and professional staff, McCann FitzGerald is one of Ireland’s premier law firms. We are consistently recognised as being the market leader in many practice areas and our pre-eminence is endorsed by clients and market commentators alike.

Our principal office is located in Dublin and we have overseas offices in London, New York and Brussels. We provide a full range of legal services, primarily to commercial, industrial and financial services companies. Our clients include international corporations, major domestic businesses and emerging Irish companies. We also have many clients in the State and semi-State sector.

We were recently awarded Ireland “Law Firm of the Year 2016” at The Lawyer European Awards 2016. We have been repeatedly acknowledged by FINANCE Dublin as having worked on numerous award-winning transactions in their annual Deals of the Year Awards. Other accolades we have received include “Ireland Law Firm of the Year” from the International Financial Law Review and we were voted “Ireland Law Firm of the Year” and “Ireland Client Service Law Firm of the Year” by Chambers Europe.

Stephen is a Senior Associate in McCann FitzGerald and advises clients in operational, transactional and crisis issues in the workplace; in particular, on senior executive appointments; employee engagement and terminations; and the drafting and negotiation of key employment documentation.

Stephen has significant experience before the various employment law tribunals and the High Court (including the Commercial Court), as well as through mediation. He also assists clients in conducting complex employee investigations. Stephen’s work has a particular focus on whistleblowing (including the Protected Disclosures Act 2014) and executive remuneration; and his dual qualification as a Chartered Tax Adviser provides an additional perspective in employee remuneration matters.

Stephen also regularly advises on the employment and industrial relations aspects of outsourcings, procurement and restructurings; including on redundancy law, union issues, consultation and TUPE.


Up until recently, employment cases took approximately 18 months until a first hearing, with decisions only issuing a few months thereafter. However, since the establishment of the Workplace Relations Commission in October 2015, recent cases have come on for hearing within approximately two months, with decisions issuing one month to six weeks later.


There is an appeal to the Labour Court. Depending on the circumstances of a case, appeals can be heard and decided within six to 12 months.A further appeal on a point of law only then lies to the High Court. These cases can take one to two years to be heard and decided.



Save for claims for wrongful dismissal (which go before the civil courts), an adjudication officer of the Workplace Relations Commission hears most employment law complaints at first instance.


A claim form is submitted to the Workplace Relations Commission. No fee is applicable. Voluntary mediation may be available (if the Workplace Relations Commission deem the case appropriate for mediation).



Chapter 19

DQ Advocates Limited

Leanne McKeown

Tara Cubbon

Isle of Man

obligation to provide within four weeks after the beginning of the employee’s employment written particulars of employment, including: the parties to the contract; job title; employment start date; term and any continuity of service; place of work; pay rates and intervals; hours of work and holiday entitlement; sick pay; pension details; normal retirement age; notice period; and whether the contract is subject to any collective agreements.A written statement need not contain all of the specified particulars provided that it refers the employee to some other document containing the information required.


Implied terms may be derived from various sources. A term can only be implied if:a) it is necessary to give the contract ‘business efficacy’; b) it represents the custom and practice in that employment and

is reasonable, certain and notorious; or c) it is an inherent legal duty central to the relationship between

employer and employee – for example, a woman’s right to equal treatment in employment or the duty to provide a safe system of work or the duty not to undermine trust and confidence.


Employees have certain minimum legal rights, for example: ■ An employer must provide an employee with more than

two years’ continuous employment with one weeks’ notice for each complete year of continuous employment, up to a maximum of 12 weeks.

■ Employers must also observe the appropriate rate of the minimum wage, being, for the majority of workers aged 21 or over, £7.00 per hour.

■ Workers have an annual entitlement to four weeks’ paid leave.A number of family rights are also subject to statutory minimum entitlement, to include periods of maternity, paternity and parental leave.


Generally, on the Isle of Man, it is only the very large employers who use collective bargaining, most commonly in the public sector.



The main source of employment law is found in the legislation set out within various Acts of Tynwald (the Parliament of the Isle of Man), and associated secondary legislation, such as Regulations and Orders.In addition, Codes of Practice will be issued to provide practical guidance to employers, employees and their representatives on Isle of Man employment law. Save that non-compliance with any Code will not give rise to liability, any Code of Practice issued under the Employment Act 2006 (EA 2006) will be admissible in evidence before an Employment Tribunal and any provision of the Code which appears to the Employment Tribunal to be relevant to any question arising in the proceedings is required to be taken into account in determining that question. Other rights will be set out in contracts of employment.


Employees have the most extensive rights under the law. The EA 2006 defines an employee as an individual who has entered into or works under (or where the employment has ceased, worked under) a contract of employment. A contract of employment will exist where: (1) an individual agrees to provide his own work and skill in the performance of some service to his employer (‘mutuality of obligation’); (2) the employer exerts control over the individual in the performance of that service; and (3) there is nothing inconsistent with an employment relationship.An individual will be a worker where he/she is obliged to undertake, personally, work or services and does not carry on a business. The definition of a worker can be extended in limited circumstances. Unlike an employee, a worker is not protected against unfair dismissal and has no entitlement to statutory redundancy pay.Individuals who are self-employed attract limited rights under the EA 2006.


Contracts do not have to be in writing and can be express (whether oral or in writing) or implied, save that employers have a legal


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There is no legislation in the Isle of Man requiring employers to set up works councils; nor are there any statutory provisions governing works councils set up voluntarily.


See question 2.4.


See question 2.4.


The law affords no general statutory right to representation at board level.

3 Discrimination


There exists only limited and piecemeal discrimination legislation at present in the Isle of Man, which prohibits discrimination in specific circumstances on grounds of: ■ sex, marriage or civil partnership; ■ race;■ sexual orientation; ■ religion or belief; and ■ trade union grounds.The Equality Bill 2016 is currently making passage through the legislature and, once enacted, will introduce various ‘protected characteristics’ upon which discrimination and harassment will be unlawful, to include age, disability, gender reassignment, marriage and civil partnership, pregnancy/maternity, race, religion or belief, sex, and sexual orientation.


Unlawful discrimination can be broadly categorised into three categories: direct discrimination; indirect discrimination; and victimisation. Direct discrimination occurs where an employee is treated less favourably as a result of one of the grounds listed at question 3.1. Indirect discrimination occurs where a standard is applied to all employees but which puts certain employees who are affected by one of the grounds at question 3.1 at a particular disadvantage, and which cannot be justified as proportionate to achieving a legitimate aim.



In order for a trade union, or a trade union official or member, to act, it must first be registered by application of seven or more members to the Chief Registrar. The Chief Registrar may refuse registration if, inter alia, the applicants do not have standing, the application is not made in accordance with the legislation or the purposes of the trade union are unlawful. Annual returns must be filed with the Chief Registrar comprising certain financial information and accounts, the trade union rules, a note of changes of offices, any report made by an auditor and any other document required by the Chief Registrar.There is no right for trade unions to be recognised by employers; however, guidance is available detailing the circumstances in which it is considered reasonable for an employer to recognise a trade union, including where a union can demonstrate conclusively that it has at least 50% of employees in membership. If a union cannot conclusively prove membership, but 10% of employees are in membership, a ballot of employees must be held. If the ballot shows that 50% of the employees voting and 40% of those entitled to vote are in favour, it is reasonable for the employer to recognise the union. The procedure for resolving a dispute about recognition exists via the Manx Industrial Relations Service (MIRS) and thereafter a Court of Inquiry.


Notwithstanding that a trade union is unincorporated, it is capable of making contracts; all property is vested in trustees in trust for the union; the union can sue or be sued in its own name; and any judgment against the union shall be enforceable against any property held in trust for the union.Trade unions have no specific rights in relation to their dealings with employers. It will depend upon the terms of the recognition agreement between the trade union and the employer. The Code of Practice on the Recognition of Trade Unions 2001 emphasises voluntary resolution of disputes by way of an employer’s agreement to the recognition of trade unions for the purpose of collective bargaining between the employer, employee and trade union. See also question 2.1 regarding disputes as to recognition.


Where industrial action would normally constitute a breach of contract of employment between the employee and employer, a registered trade union and its officials are immune from civil or criminal liability if the action is in contemplation or furtherance of a trade dispute. However, in order to ensure that immunity is maintained, trade unions must follow a specific procedure. This includes ensuring the rules for lawful ballots are followed, ensuring that the industrial action is supported by a majority of those voting in a ballot and making certain notifications of the intentions to the employer and the MIRS appointed Industrial Relations Officer.

DQ Advocates Limited Isle of Man


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An employee is entitled to 26 weeks of ordinary maternity leave (OML), and thereafter (subject to certain conditions) is entitled to take a further 26 weeks additional maternity leave (AML).An employee must take a minimum of two weeks’ leave after the child is born.


Terms and conditions of employment are protected during OML, save for remuneration.This is to be contrasted with the employee’s position during AML when only certain contractual provisions remain in force, for example the employee’s right to a redundancy payment, the right to receive notice, etc. During AML, there is no entitlement to contractual annual leave in excess of the statutory minimum.Subject to certain conditions in relation to length of employment and minimum earnings, Maternity Allowance is a social security benefit that is paid to pregnant women and to women who have recently given birth, for a maximum of 39 weeks at a maximum of £179.85 a week.


An employee returning after OML is entitled to return to the job in which she was employed before her absence. An employee returning after AML is entitled to return to the job in which she was employed before her absence, unless it is not reasonably practicable, in which case she is entitled to return to another job which is both suitable and appropriate for her to do in the circumstances. It is unlawful for a woman to be subjected to any detriment by any act or deliberate failure to act by her employer by reason of the fact that she is pregnant, has given birth or has tried to take/has taken OML or AML.


Fathers who have been in continuous employment for not less than 26 weeks ending with the week immediately preceding the 14th week before the expected week of the child’s birth are entitled to either one or two weeks’ paternity leave, to be taken within 56 days of the child’s birth. Subject to certain conditions, men will be entitled to Paternity Allowance at a maximum of £179.85 a week.


Employees who adopt a child are entitled to similar rights to ordinary and additional adoption leave as under the maternity provisions.An employee who has been continuously employed for a period of not less than a year and has or expects to have responsibility for a child who is entitled to receive disability living allowance is entitled to be absent from work for the purposes of caring for that child. An employee is entitled to 18 weeks’ leave in respect of any individual

Victimisation occurs where an employee is treated less favourably for asserting their employment rights or for reporting or supporting another’s allegations of discrimination. In respect of discrimination on the grounds of race, sexual orientation, religion or belief and trade union grounds, the protection exists only in circumstances where there is a claim for unfair dismissal. In respect of discrimination on the grounds of sex, marriage or civil partnership, the protection exists throughout the employment relationship, including dismissal.


In claims of sex discrimination, an employer is vicariously liable for the acts of its employees, unless it can show that it took reasonably practicable steps to prevent the employee from doing the discriminatory act.As regards a claim for unfair dismissal by reason of discrimination, employers may have a defence if they can show that the dismissal was justifiable.


Employees can contact MIRS who provide a free and impartial conciliation service for employers and employees to try and resolve disputes in the first instance. If conciliation proves unsuccessful (and in any event), employees can bring a claim in the Employment Tribunal. Claims can be settled at any time before they are initiated, after or during proceedings. Whilst either party can request that an Industrial Relations Officer endeavours to promote settlement of the claim without the involvement of the Employment Tribunal, the process of conciliation via MIRS is, in practice, automatic.


Successful discrimination claims usually attract compensation as a remedy and the award can be unlimited in value. In certain cases, the Employment Tribunal may also make an award for injury to feelings (maximum £5,000). In circumstances where the employee has been dismissed, they may require the Employment Tribunal to make an order for reinstatement or re-engagement. Reinstatement has the effect of putting the employee in the position they would have been had they not been unfairly dismissed, including the imposition of any improved terms they would have benefitted from but for the dismissal. Re-engagement is an order on such terms as the Employment Tribunal sees fit that the employee be engaged by the employer or its successor in employment comparable to that which the employee was employed in prior to dismissal or other suitable employment. Orders for reinstatement or re-engagement are rare in the Isle of Man.


Part-time workers have the right not to be treated less favourably (on a pro rata basis) than comparable full-time workers, unless the difference in treatment can be objectively justified.



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An employer must have a fair reason for any dismissal (see question 6.5) and a fair procedure must be adopted. The Redundancy Payments Act 1990 deals with the situation where there is a change of employer by a transfer of an undertaking and the transferor has terminated the employment immediately prior to the transfer. If the transferee renews the employee’s contract of employment or re-engages the employee under a new contract (under the same terms previously employed), the employee is not regarded as having been dismissed by reason of redundancy and the employee retains their continuous period of employment.


Except for a mere change in the name of the employer, if the provisions of any new contract of employment differ (wholly or in part) from the previous contract, the employee is entitled to a four-week trial period. If, during the trial period, either side reasonably terminates the contract, unless a further renewal or re-engagement is offered, the employee will be treated as having been dismissed by reason of redundancy. During the trial period, the employer can only terminate for a reason connected with or arising out of the change.



Save for where the employee is dismissed for gross misconduct, they must be given notice of termination of their employment as set out in the employment contract or, as a minimum, the statutory entitlement (see question 1.5).


An employee can be required to go on “garden leave” if this right is reserved for the employer in the employment contract. “Garden leave” sees the employment continue during the notice period but the employee is not required to attend work. It is often used to prevent outgoing senior employees competing with the employer.


An employee has the right not to be unfairly dismissed if they have one year’s continuous employment.An employee is treated as dismissed if they are dismissed by the employer subject to the relevant notice being given, if they are dismissed without notice as a result of breaching the employment contract or if they claim constructive dismissal (following a resignation by reason of a fundamental breach of contract by the employer).Third party consent is not required before an employer can dismiss.

child who meets the above criteria, to be taken before the child’s 18th birthday. No more than four weeks’ leave per child may be taken in any one year.


Employees with at least 26 weeks’ continuous service have the right to request changes in their hours or place of work in order to care for dependants. The request must contain specific information and, unless approval is granted by the employer, a meeting must be held to discuss the request. Employers may only refuse such an application on the basis of specified reasons, to include the burden of additional costs, detrimental effect to ability to meet customer demand and inability to reorganise existing staff or recruit additional staff. The employee thereafter has the right to appeal any refusal by the employer.Failure by an employer to follow the proper procedure, or where a refusal is based on incorrect facts, can result in the Employment Tribunal making a declaration ordering the employer to reconsider the decision and can make an award of compensation of up to eight weeks’ pay (maximum £4,320.00) to the employee. A claim for discrimination could also be brought (there being no minimum service requirement).

5 Business Sales


Where a business is transferred from one owner to another, the period of employment of an employee at the time of transfer counts as a period of employment with the transferee (i.e. the buyer). The period of continuous employment is not broken and, save for any intervening act (such as the dismissal of the employee by the transferor by reason of redundancy), employees will automatically transfer upon a change in ownership.


A business transfer does not break the continuity of the period of employment and accordingly all statutory rights acquired by the employee remain. The transferee is not obliged by law to employ the transferring employees on the exact same terms of employment as previously enjoyed; this includes the terms of any collective agreements made. However, any change in terms will be the subject of a trial period by the employee. If the employee rejects the new contract terms, the employee is treated as redundant as of the date the original contract (with the transferor) would have ended. It will often be a matter of agreement between the parties to the business transfer transaction who is liable for the costs arising in this situation.


There are no collective consultation rights in force in the Isle of Man.



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An employee may bring a claim in the Employment Tribunal for unfair dismissal. There are two types of unfair dismissal: (1) automatic unfair dismissal; and (2) actual and constructive unfair dismissal. A claim for automatic unfair dismissal arises where the reason for dismissal is automatically unfair. This is usually where an employee has been dismissed for exercising an employment right (see question 6.4). Otherwise, a dismissal may still be unfair if the dismissal was not for a fair reason and/or the employer did not follow a fair procedure. A claim for constructive dismissal may arise where the employee resigns following a fundamental breach of the employment contract by the employer.Except in the case of automatic unfair dismissal where no qualifying period applies, an employee must have one year’s continuous employment and be under the employer’s normal retirement age in order to bring a claim for unfair dismissal.See question 6.5 for the financial remedies that the employee may be entitled to. The Employment Tribunal may also make an order for reinstatement or re-engagement of the employee.A claim for wrongful dismissal may be brought in the Isle of Man High Court of Justice on the grounds that the dismissal is in breach of the employment contract. There is no qualifying period for a claim in the High Court. Damages recoverable are limited to contractual rights and the notice period, and unlike compensation for unfair dismissal, there is no limit on the damages that the High Court may award.


Claims brought can be settled both prior to and post commencement of those proceedings. (See also question 3.4.)


Isle of Man employment law does not require employers to follow specific collective consultation procedures when undertaking a number of dismissals (to include redundancies). However, to avoid unfair dismissal claims, it is good practice for employers to consult with employees, employee representatives and trade unions where possible, and to adopt fair and reasonable procedures.


Employees may enforce their rights following dismissal by bringing an unfair dismissal claim before the Employment Tribunal.



Post termination covenants preventing dealing with and/or solicitation of the employer’s clients and/or staff, or competition


Dismissal is automatically unfair if it is: for reasons connected with family leave; for taking action in the interests of health and safety; for asserting a right to annual leave; for whistleblowing; for asserting a statutory employment right; for partaking in trade union activities; for seeking to enforce the minimum wage; for seeking flexible working; for seeking the right to be accompanied at a grievance hearing; for taking protected industrial action; on the grounds of racial or religious discrimination; or on the ground of the employee’s sexual orientation. No minimum period of service is required to bring such a claim.Special protections also apply for employees where the dismissal is: in connection with industrial action; for refusing to work on a Sunday or holiday; in respect of temporary replacement employees; or in connection with spent criminal convictions.


The burden is on the employer to show that the dismissal was justified in the circumstances, i.e. fair, unless it was automatically unfair.A dismissal will be potentially fair if it related to the employee’s conduct, capability or qualifications, if their continued employment would be illegal or if there is some other substantial reason justifying the dismissal. If the dismissal is fair, compensation will not be payable. In an unfair dismissal scenario, the employee can claim compensation, which comprises a basic award of one weeks’ pay for each completed year of employment up to termination and a compensatory award based on the employee’s loss suffered, including expenses and other benefits, up to a maximum of £56,000. An employee may also be entitled to an award for injury to feelings. An employee will be made redundant if the employer has ceased or intends to cease the business, or the demand has diminished or is expected to diminish for an employee to do that kind of work. If an employee is dismissed for wholly or mainly this reason, they are entitled to a statutory redundancy payment of one week’s pay up to a maximum amount of £540 for each complete year for which the employee has been continuously employed.


Employers must follow a fair procedure to avoid a finding of unfair dismissal being made. The Code of Practice on Disciplinary and Grievance Procedures 2007 provides guidance on the procedures that ought to be followed by an employer. The Employment Tribunal will take into account the provisions of the Code in establishing whether or not a dismissal was fair; however, what is fair will often depend on the circumstances of the dismissal and the individual facts. Generally speaking, an employer will be required to provide an employee with a warning as to the risk of dismissal and give them an opportunity to respond and/or take steps to improve or deal with the employer’s concerns. Where the employee is dismissed, a right to appeal the decision should be given.



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employee records and ongoing monitoring of employees. Employers must make clear what information they are collecting and what it will be used for and must also allow reasonable access.The eighth data protection principle deals with the transfer of data abroad which, in summary, provides that personal data shall not be transferred outside the Isle of Man unless an adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data exists. If transfers are made to countries within the European Economic Area (EEA), they are presumed to have an adequate level of protection. A number of factors must be taken into account in relation to transfers outside the EEA.


In addition to having the right to find out what information is held about them, employees can make a data subject access request for copies of that information to their employers. A fee of £10 can be charged by the employer who must provide the information sought within 40 calendar days. Employers must supply the details in an intelligible form.


Employers are entitled to carry out pre-employment checks, save that these should usually be limited to checking information provided by a prospective employee and the prospective employee should be told that this will be done and how.Criminal record checks are undertaken by getting a ‘disclosure’ from the Disclosure and Barring Service, Disclosure Scotland, Access Northern Ireland or equivalent organisation. The level of disclosure will depend upon whether the applicant seeks to work with vulnerable people or children.


Prima facie, an employer is entitled to monitor an employee’s emails, telephone calls or use of an employer’s computer system if it relates to the business. It can be done for a number of reasons including, for example: as a way of monitoring the employee’s performance; in order to monitor the type of business being undertaken or clients being serviced; or in order to ensure systems are working correctly. This may, however, fall under data protection law and therefore the employer should be open and transparent about the reasons for monitoring and how it will be done and should continually monitor whether it is justified and/or can be done in a less intrusive way.Employers should not deliberately monitor private communications or use of the computer system. However, excessive or unacceptable use of the employer’s computer system for private matters may go to an employee’s behaviour and work performance.Employers should have a clear policy on monitoring and personal use of its computer systems.


Employers often seek to control an employee’s use of social media both internally and outside the workplace insofar as it may affect the

by the employee, as well as express confidentiality clauses, are commonplace in the contracts of senior employees.


A restrictive covenant will be deemed unenforceable as contrary to public policy, unless it can be justified as being reasonable to the interests of the parties and the public. Thus, a restraint of trade will only be enforceable if:a) it protects a legitimate interest (being an advantage or asset

inherent in the business); andb) it is no greater than reasonably necessary for the protection of

the employer in his business.The duration of the covenant will be key to determining the reasonableness of the same. If the period is longer than that which is reasonably necessary to protect the employer’s business interests then it will fail. In determining the appropriate duration, employers should consider:■ Industry practice.■ Life cycle of the business transaction.■ How much time would the employer properly require to

replace the departing employee?Post termination restrictions usually last between three and 12 months.


No compensation is required in return for an employee agreeing to covenants. In practice, however, where the terms of the employment contract are being changed to include more extensive restrictive covenants, for example following promotion, the employer will include some consideration for the changes, by way of incentive, i.e. an accompanying pay rise.


If an employer is aware or suspects that a former employee is breaching, or is intending to breach, restrictive covenants, they can issue injunctive proceedings in the High Court of Justice of the Isle of Man to prevent the former employee from acting in breach. Depending on the nature of the known or suspected breach, proceedings can either be issued with or without notice, the latter being more appropriate where the ex-employee could do serious damage if given notice of impending proceedings to restrain their actions.A claim for damages may arise where the employer has suffered loss in consequence of the breach.



Employers must comply with the Data Protection Act 2002 (DPA) when recruiting and employing. It applies to computerised information or information held in a structured filing system about employees or potential employees and regulates the way it is collected and processed during the recruitment process, in maintaining



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three months of the dismissal date. Unless an extension is sought, the employer then has 28 days from the date the claim is sent by the Employment Tribunal to respond. The MIRS receives copies of the claim and response forms from the Employment Tribunal and will often seek to facilitate conciliation without request by the parties and with a view to avoiding the need for a hearing.It is the practice of the Employment Tribunal on the Isle of Man to await confirmation from MIRS that a case is unlikely to be resolved at conciliation before then listing the matter for substantive hearing.In advance of any hearing, the parties will exchange relevant documents and witness statements.No fees are payable upon filing a claim before the Employment Tribunal. Claims filed in the High Court will attract a fee (based on the value of the claim).


A 2015 statistical report published indicated that, on average, a claim will take 26 weeks from the date of filing to the first hearing date (including time at conciliation). Using the same statistical report, a decision of the Employment Tribunal will usually take six weeks.


An appeal from a decision of the Employment Tribunal may be made to the High Court, in accordance with the Rules of the High Court. The appeal must be on a point of law and must be filed within 42 days of the first instance decision. The duration of the appeal process will be dependent on a number of factors, including the Court’s availability.A decision or order of the Employment Tribunal may also be the subject of a review, which may see the decision revoked or varied.

AcknowledgmentThe authors would like to acknowledge Jessica McManus, associate at DQ Advocates, for her assistance during the preparation of this chapter.

employee’s behaviour and performance and in an effort to safeguard the employer’s reputation.Whilst an employer would not in ordinary circumstances be justified in deliberately monitoring an employee’s private use of social media, an employee could not reasonably expect privacy in circumstances where use of that social media made it a work issue. For example, an employee should be allowed to use social networking subject to the employee not engaging in any activity on social media that would bring the employer’s reputation into disrepute. Depending upon all the circumstances, it may be that an employer would be justified in disciplining the employee on the basis of their use of social media.In order to minimise issues, employers should have a clear policy on the use of social media in and outside the work place which should balance the employee’s right to privacy with the employer’s own needs.



The Employment Tribunal determines complaints arising under the employment protection legislation, for example, unfair dismissal claims, claims for minimum wage and sex discrimination complaints. The Employment Tribunal usually consists of three members: a legally qualified chairperson; a member drawn from a panel nominated by employers’ organisations; and a member drawn from a panel nominated by employees’ organisations. The chairperson of the Employment Tribunal may sit alone to hear and determine certain prescribed matters. Breach of contract claims, i.e. wrongful dismissal, will often be pursued in the High Court. There is no statutory limit on any award made by the High Court and thus it can represent the more appropriate forum in high value claims. Claims for personal injury suffered during the course of employment will also be determined in the High Court.


Conciliation is not mandatory before a claim can be filed with the Employment Tribunal. Generally, claims must be lodged within



Isle

of M

an

Leanne McKeownDQ Advocates LimitedThe Chambers, 5 Mount Pleasant Douglas, IM1 2PUIsle of Man

Tel: +44 1624 632957Email: [email protected]: www.dq.im

Tara CubbonDQ Advocates LimitedThe Chambers, 5 Mount Pleasant Douglas, IM1 2PUIsle of Man

Tel: +44 1624 632989Email: [email protected]: www.dq.im

Leanne is a director of DQ and heads the firm’s employment team.

Leanne is a well-known and highly-respected employment lawyer, who sits on the Isle of Man’s Chamber of Commerce Employment & Skills Committee, and who regularly advises on all areas of employment law and related litigation, whilst also providing support to DQ’s corporate and commercial team in relation to employment and/or immigration matters arising in corporate transactions.

Leanne is described in The Legal 500 as "a highly skilled lawyer with excellent presentation ability" and a "very savvy and vibrant litigator". In addition, Leanne has been individually ranked by Chambers & Partners Europe Guide 2014, Chambers & Partners UK Guide 2015, 2016 and 2017 as a Star Associate (Employment – Isle of Man). As noted within the 2017 Guide, clients hail Leanne for her "exceptionally clear and practicable" advice, with it being noted that she enjoys a strong reputation in a wide range of contentious and non-contentious employment matters.

DQ is a leading Isle of Man-based law firm with an international reach. We offer a full range of legal, regulatory and compliance services to our local and global clients. We are accessible, responsive and commercial with client-oriented strategies and goals. Our specialist lawyers are recommended as leading lawyers in Chambers and The Legal 500.

Our thriving and dynamic practice has seen phenomenal growth over the past few years. We provide our clients with a cost effective, speedy and tailored approach to their legal and business requirements. Our client base is extensive and global. We advise HNWIs, large corporate entities, institutions and industry leaders to start-up businesses and local service providers.

DQ has one of the largest dedicated employment law teams on the Isle of Man and we are recognised specialists in this area.

Tara is an associate in DQ’s employment team. As part of her varied practice, Tara assists both employers and employees on a variety of matters. Tara is well versed in the legal consequences of the Isle of Man Equality Bill, which is currently making its passage through the legislature.

Tara is noted in The Legal 500 as “innovative and commercially minded” and an “excellent courtroom advocate”.



Chapter 20

Toffoletto De Luca Tamajo e Soci

Franco Toffoletto

Valeria Morosini

Italy

However, there are some specific clauses that must be in writing to be valid (for example, probationary period, fixed-term period, and non-competition clauses).In addition, within 30 days of the beginning of the employment relationship, the employer must inform the employee in writing of the: identity of the parties; place of work; date on which the contract begins; duration of the contract (specifying whether it is fixed-term or permanent); probationary period (if applicable); job title or category; salary; amount of paid holidays; working hours; and length of the notice period due when terminating the contract.


The Civil Code implies certain terms into the employment contract, which apply even if no reference to them is made in the contract itself. They concern, e.g., due diligence and care, loyalty and non-competition during the employment and confidentiality. There are also terms implied into the contract that limit the employer’s management, disciplinary and monitoring powers.


Yes, the law sets down some mandatory terms and conditions regulating working hours and vacation, sick leave, notice period or termination of employment.Further to recent legislation, collective bargaining agreements signed at a company/local level by the most representative unions or by the works councils may, in certain circumstances, override the provisions of the collective bargaining agreement and those of the law in order to achieve some defined goals. Such goals must relate to certain pre-defined matters such as employees’ video monitoring, employees’ duties, fixed-term contracts, part-time work, temporary workers, working hours, and hiring and firing provisions. Such “second level” collective bargaining agreements would apply, under specific conditions, to all the employees of the concerned company.The only remaining requirement is compliance with the Italian Constitutional Charter and with the provisions set by the EU.


Collective bargaining agreements (CBAs) between trade unions and employers’ associations are common in all sectors and, when applicable, they provide further terms and conditions of employment.



The Italian employment law derives mainly from the following sources, in order of priority: European Law; the Constitution of 1948; legislation; administrative regulation; and customs. A large body of specific legislation regulates employment under Italian law.National collective bargaining agreements (NCBAs) that are not statutory sources of law, but private contracts between trade unions and employers’ associations, are not legally binding on all employers. They are only binding on companies that are members of the relevant employers’ associations, or if reference is made to them in individual contracts, or if employers voluntarily apply their terms.


The law distinguishes between “subordinate employees” and “self-employed workers”, to which different rules apply.“Subordinate employees” are hired under employment contracts, according to which they are paid to carry out their working activity under the directions and orders of the employer; they are subject to disciplinary power and are protected against unfair dismissal.On the other hand, “self-employed workers” are individuals who perform their working activity autonomously, without being subject to disciplinary power. They are not covered by the same protections granted to employees.From January 1 2016, no new “project-based collaboration contract” (so-called Co.Co.Pro) may be set up between self-employed workers and companies. Besides, from January 1 2016, workers who carry out work on a personal and continuous basis, where the activity is organised by the employer in respect to time and place, will be subject to the rules on subordinate employment. Exceptions can be set forth by collective agreements, concluded by the most representative national trade unions, and a few other cases.The following will be also phased out: association-participation work contracts; and job sharing.


Generally, a written employment contract is not compulsory.


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The law sets down rules that regulate certain possible interactions between the rights of trade unions and works councils, depending on the situation.


No, they are not.

3 Discrimination


Yes. Several provisions (Legislative Decrees implementing European Directives) and Law no. 300/1970 (known as “Statuto dei Lavoratori”) protect employees against discrimination.


Throughout their employment relationship, employees are protected against direct and indirect discrimination on grounds of sex, race, colour, religion, political opinion, sexual orientation, ethnic origin, membership of a trade union, marital status, pregnancy and maternity, disability, age and personal beliefs.Discrimination is prohibited throughout the whole employment relationship, i.e. before the beginning of an employment contract (for example, during the hiring procedure), during its execution and at its termination.


Whenever an employee argues before a court that a decision taken by his/her employer is discriminatory, they must prove such discrimination.However, it is always up to the employer to prove that the decision taken, for example to dismiss or to transfer the employee, was based on legitimate – not discriminatory – business needs.


Employees may enforce their discrimination rights by suing the employer. However, any kind of dispute can also be settled before or during the course of the judicial proceedings.


Discriminated employees can institute legal proceedings for the removal of the discriminatory situation and for compensation. A dismissal based on discriminatory reasons is void; therefore, it is as if the employment contract had never been terminated.

CBAs are binding only if a company is a member of the relevant employers’ association, if reference is made to it in the employment contract, or if the employer decides to adopt its terms.Company level agreements are also quite common.



According to the Italian Constitution, people are free to set up trade unions.However, as the law has never implemented the specific procedure set out by the Constitution of 1948 for the registration of the unions, they remain private organisations without any powers to represent companies that are not members.


Works councils have certain rights, such as calling strikes or scheduling assemblies.More in general, trade unions and works councils are entitled to be informed and consulted in different cases, such as in the event of the transfer of undertakings, collective redundancies, reorganisations and restructurings.


The Constitution provides for the right to strike. The Law only regulates strikes in essential public services, providing specific conditions/procedures for their exercise in order to always guarantee a minimum level of public service.


The law provides that works councils may be set up by trade unions at the employees’ initiative, in all companies or in each plant of a single company with more than 15 employees, provided that such unions have signed a collective agreement that is in force at the plant.However, under recent case law, works councils can be set up not only by the trade unions which have signed the collective agreement in force in the plant, but also by those who have actively taken part in negotiations.Appointment procedures may vary depending on the kind of works councils created.


The law mainly provides works councils only with information and consultation rights and not with co-determination rights. Based on certain legal provisions or NCBAs, specific regulations can be agreed only with the unions (e.g., specific regulations on working hours).

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another two days, in substitution of the mother, as part of the period of compulsory leave due to the latter.Employees on paternity leave are entitled to the same allowance, have the same rights to return to their job after paternity leave and have the same protection against dismissal as employees on maternity leave.Regarding optional parental leave, please see question 4.1 above.


Italian law allows employees to benefit from paid time off to provide care and support to a family member who suffers from a serious disability and who is not hospitalised. The public health authority must assess the disability. The amount of time off depends on the age of the disabled person and on the closeness of the relationship; it can consist in an extension of the period of parental leave, in two hours’ time off per day, or in up to three days off per month.


Upon the occurrence of certain conditions, employees can benefit from paid leave or a right not to be transferred or a right to ask to be transferred to a location closer to the place of residence of the dependant person.Also, employees whose spouse, children or parents have an oncological pathology or a serious chronic-degenerative disease and employees who assist a cohabiting person with a complete and permanent work inability, who needs constant assistance, have a priority in having their employment relationship transformed from full-time to part-time.

5 Business Sales


Employees do not automatically transfer to the buyer in the case of share sales. If a business transfer occurs, employees are automatically transferred with the business.


In the context of a business transfer, the employment contracts continue under the same terms and conditions in force at the date of the transfer (CBA provisions included), and the transferor and the transferee are jointly liable for any rights held by employees transferred at the moment of the transfer.The CBA applied by the transferee will be in force until its expiry date, unless the transferor applies another CBA of the same level.


In case of a business transfer, if it concerns a company where more


Yes, they do. They benefit from specific provisions.



Female employees must not work for two months before and three months after childbirth. This compulsory period of maternity leave can be changed to one month before and four months after childbirth, if a medical certificate is produced.If the birth is premature, the days of unused leave before childbirth are added to the post-partum maternity leave.A female employee can request to go on early maternity leave in certain circumstances, e.g. if her duties involve lifting or moving heavy objects and/or other strenuous activities. In this case, a medical certificate is required, together with authorisation from the Employment Office. However, the employer’s consent is not needed.Additional parental leave (up to six months) can be used until the child is 12 years old. Both parents can take such parental leave up to a total of 10 months (11 if the father takes at least three months).


During maternity leave, employees receive an allowance from the National Social Security Body equal to 80 per cent of their salary.Collective agreements can provide for the employer’s obligation to supplement such allowance to 100 per cent of their salary.Employers cannot dismiss female employees during pregnancy and until the child is one year old, except in certain circumstances (e.g. definitive shut down of the company employing the mother employee).


A woman returning to work from maternity leave is entitled to:a. return to the job in which she was employed before her

maternity leave (or equivalent job) on the same terms and conditions and to keep it until her child’s first birthday; and

b. have two hours of paid time off per day to feed the child.Additional periods of paid leave before or after the child’s birth are granted upon the occurrence of exceptional events such as pregnancy at risk, the child’s sickness and multiple births.


If the mother does not take maternity leave (due to death, infirmity or the father having exclusive custody), the father is entitled to three months’ paternity leave after the birth of the child. These rules also apply when the mother is self-employed.Under Italian law no. 92/2012, the father has an obligation not to work one day during the five-month period following the birth of the child. Within that same period, the father may not work for



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than 15 employees are employed (regardless of the number of employees in the business branch to be transferred) the transferor and the transferee must follow a preliminary information and consultation procedure with the works councils/trade unions.The procedure must begin at least 25 days before the document giving rise to the transfer is concluded, or before the date on which the parties reach any other binding agreement relating to the transfer, if prior to this date.Failure to inform and consult works councils/trade unions does not affect the validity of the transfer but may result in anti-union behaviour allowing the unions to ask the court to order the employer to stop such “anti-union behaviour” and start a consultation procedure.


No, they cannot. A business sale is not grounds for fair dismissal.


No, they are not free to change the terms and conditions of an employment relationship; however, if the transferee applies a different CBA (of the same level as the one applied by the transferor), the conditions within the employment contract might be different.



Yes, as a general rule they have to give notice. The law and, when applicable, the collective bargaining agreements determine the minimum length of the notice period which varies depending on the employee’s length of service, seniority, qualifications and levels.If a dismissal for gross misconduct occurs, the employee is not entitled to a notice period.


Italian law does not specifically regulate garden leave.However, garden leave may be considered as a form of demotion, so grounds for a claim against the employer.


A dismissal must have grounds (please consider the answer to question 6.7 concerning the remedies in case of unfair dismissal).An employee is considered dismissed whenever the employer unilaterally terminates the employment contract.No consent from third parties is required for dismissals.


Yes; for instance (and in different ways), employees entitled to maternity or paternity rights, female employees during their first year of marriage, disabled employees and members of works councils enjoy special protection.


1. An employer is entitled to dismiss an employee, for reasons relating to the individual, when the employee breaches the employment contract.

When the breach is such that it makes the continuation of the employment relationship impossible (because of a very serious breach of the contract) the dismissal is without notice (and without payment in lieu of it).

2. An employer is entitled to dismiss an employee for business-related reasons based on productivity and the organisation of the work, including a redundancy situation.

The employee is entitled to a notice period (or payment in lieu of it) in this case.

Appropriate procedures must be followed. See question 6.6 below.Upon termination of the employment contract, the employee is entitled to receive TFR and other amounts, already accrued, at the termination of the employment (holiday and leave accrued, and the 13 and/or 14 monthly instalments). In addition, employees are entitled to receive a notice period (provided no gross misconduct occurred). Employees might also be entitled to the remedies mentioned under question 6.7 below.


A dismissal must always be in writing.If the dismissal has grounds on an employee’s breach of contract, a special procedure (disciplinary procedure) must be followed. Under this procedure, the employer must:■ promptly send the employee a letter describing the facts on

which the breach of the contract is based;■ wait for the employee’s reply – if any – which must be

received within five days (or a longer period if provided for in the CBA applied, if any); and

■ send the employee a letter of dismissal, explaining why the employer did not accept her/his justifications.

If the dismissal has grounds on economic reasons inherent to the production, the organisation of work and the proper functioning of the business (redundancy), and the company, before the entry into force of the new rules (see below), had more than 15 employees in the business unit (or more than 60 employees in Italy):■ the intention to dismiss must be communicated in advance to

the employee and to the local Labour Office;■ the Labour Office has a seven-day period to call a meeting

with the employer and employee in order to reach an agreement about the planned dismissal;

■ should the meeting not be called within seven days, the dismissal can be served; and

Toffoletto De Luca Tamajo e Soci


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annual salary (the employer has the choice). In determining the precise amount of damages to award within the range of 2.5 and 6 months’ salary, the judge will take into account the number of employees, the size of the company, the employee’s length of service and the parties’ conduct.

The maximum amount of said indemnity is equal to 10 months’ salary for employees with more than 10 years of service and to 14 months’ salary for employees with more than 20 years of service, if the employer employs more than 15 employees.On the contrary, pursuant to the new provisions, which apply to employees hired from March 7 2015:1. If the employer employs more than 15 employees either in

the plant or within the same municipality, or more than 60 employees in the whole of Italy:■ In all cases in which the court ascertains the unfairness of

a dismissal on redundancy grounds, disciplinary grounds or just cause, the court will declare the termination of the employment contract at the date of dismissal and order the employer to pay compensation, not subject to social security contributions, equal to two months for each year of service, with a minimum of four months and a maximum of 24 months.

■ Only where a dismissal based on a contractual breach is found to be unfair due to the inexistence of the facts is the resulting consequence reinstatement and damages equal to the full salary and social security contributions due from the date of dismissal to the date of reinstatement, capped at 12 months’ salary (any other income earned or potentially earned by the employee in the relevant time span will be deducted from the amount awarded). As an alternative to reinstatement, the employee (not the employer) can opt for the payment of 15 months’ salary as compensation.

■ In the event that the dismissal has grounds but was issued without an explanation of its grounds or in violation of the procedure, the court will declare the contract terminated at the date of dismissal and order the employer to pay compensation (not subject to social security contributions) equal to one months’ salary for each year of service, with a minimum limit of two months’ salary and a maximum cap of 12 months’ salary.

2. If the employer has 15 employees or fewer in the place of employment and 60 employees or fewer in the whole of Italy, the applicable rules are the same, with the following exceptions:■ the remedy of reinstatement applicable in the case of

inexistence of the grounds (point 1, 2nd bullet point above) does not apply.

■ the compensation applicable in the case of unfair dismissals on redundancy grounds, disciplinary grounds and just cause and compensation applicable in the case of violation of procedures (point 1, 1st and 3rd bullet point above) is halved and, in any case, cannot be higher than six months’ salary.

Both under the old and the new provisions, if a dismissal is deemed as having a discriminatory nature and when the law expressly provides for the nullity of the dismissal, the dismissal is declared null and void and the judge will order the employer to reinstate the employee in his or her job. Following the order of reinstatement, the employment relationship is terminated only if the employee does not resume work within 30 days of the employer’s invitation to do so, apart for cases in which the employee requests compensation of 15 months’ salary. With the reinstatement order, the judge will also order the employer to pay compensation for damages suffered by the employee as a result of a null dismissal equal to salary accrued from the date of

■ should the meeting be called, the parties will try to reach an agreement (for a maximum period of 20 days from the date in which the Labour Office has called the meeting between the parties). In case of failure, the dismissal can be served.

If an agreement is not reached, in case of litigation in Court, the content of the communication of the intention to dismiss and the parties’ behaviour during the procedure can be taken into account by the judge in her/his decision. Therefore, the procedure must be managed with care. The law expressly authorises the parties to be assisted during the procedure. The above procedure, provided for by the law in case of dismissals for individual redundancy, will no longer apply to employees hired from March 7 2015.


Before filing a claim for unfair dismissal, an employee must challenge the fairness of the dismissal in writing within 60 days of the dismissal. Such employee must then eventually file the claim before the court within the following 180 days.On March 7 2015, new provisions governing remedies against unfair dismissal entered into force.These provisions only apply to employees hired from March 7 2015; therefore, it is important to be aware of both the old and the new rules governing the remedies for unfair dismissals.Based on the older provisions, which are still applicable to employees employed before March 7 2015, if the court ascertains that there are no grounds for dismissal, it may order the following remedies:1. In case the employer employs more than 15 employees either

in the plant or within the same municipality, or more than 60 employees in the whole of Italy:■ If the dismissal is unfair because the grounds do not

exist or the disciplinary provisions applicable to the contract provide for sanctions less severe than dismissal: the consequence is reinstatement and damages equal to full salary from the date of dismissal to the date of reinstatement, capped at 12 months’ salary (any other income earned or potentially earned by the employee in the relevant time span will be deducted from the amount awarded). As an alternative to reinstatement, the employee (not the employer) can opt for the payment of 15 months’ salary as compensation. This also applies in the event of a dismissal based on the employee not being suitable for the job because of a disability, deemed to be unfair.

■ In any other case in which a Court finds a dismissal on disciplinary or redundancy grounds or just cause to be unfair: the dismissal remains in place (termination of the employment relationship is confirmed) but compensation is awarded to the claimant (ranging from 12 to 24 months’ salary).

■ In the event that the dismissal has grounds but is issued without an explanation of its grounds or in violation of the procedure, the court will declare the contract terminated at the date of dismissal and order the employer to pay compensation ranging from a minimum of six to a maximum of 12 months’ salary.

2. If the employer employs 15 employees or fewer in the place of employment and 60 employees or fewer in the whole of Italy, the employer must either re-hire the employee within three days or pay the employee compensation equal to an amount ranging from 2.5 to 6 months of the employee’s last



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to find solutions alternative to the dismissals or that mitigate the effect of the dismissals. While there is no obligation to reach an agreement, if and when an agreement is reached, the procedure is completed (even before 75 days). In any case, the employer cannot terminate the employment contracts until the end of the consultation procedure (when the agreement is reached or 75 days have expired).The criteria for selecting the employees to be made redundant can also be negotiated with the unions. Italian law sets out mandatory selection criteria, which include length of service in the company, family circumstances or dependants, and technical, production and organisational needs. These criteria will be applied in the absence of alternative criteria drawn up and agreed upon during the consultation process with the unions.After the procedure has been completed, the company can serve the dismissals to the redundant employees by serving notice. When serving the dismissals, the employer must also communicate to the relevant authorities the employees’ specific personal and employment details, together with the description of how the selection criteria were applied. If the dismissal is not served in writing, the consequence is reinstatement plus damages (all salaries from dismissal date to reinstatement, in any case no less than five months’ salary).If the company fails to comply with the information and consultation procedure, it must pay damages ranging from 12 to 24 months’ salary.In case of breach of the criteria for selecting employees, the consequence is reinstatement and compensation (the salary from dismissal to reinstatement is capped at 12 months’ salary).For all employees hired from March 7 2015 by a company with more than 15 employees (or more than 60 in the whole of Italy) (or for all the employees of a company which started to have more than 15 employees after March 6 2015), the new provisions covering dismissal expressly prescribe that:■ If the company fails to comply with the information and

consultation procedure or breaches the employee selection criteria, the court will declare the termination of the employment contract at the date of the dismissal and will order the employer to pay compensation that is not subject to pension contributions, equal to two months’ salary for each year of service, with a minimum of four months’ salary and a maximum of 24 months’ salary.

If the dismissal is not served in writing, the consequence is reinstatement plus damages (entire salary from dismissal date to reinstatement, in any case no less than five months’ salary).


Employees may challenge the dismissal before the court for failure to properly comply with the procedure and/or violation of the selection criteria:■ If the company fails to comply with the information and

consultation procedure, it must pay an indemnity (from 12 to 24 months’ annual salary).

■ In the case of a breach of the criteria for selecting the redundant employees, the consequence is reinstatement and compensation (capped at 12 months’ salary).

For employees hired from March 7 2015:The company must pay compensation (from four to 24 months’ annual salary) if it fails to comply with the information and consultation procedure or if it breaches the criteria for selecting the redundant employees.

dismissal until the date of reinstatement. Any other income earned by the employee in the relevant time span will be deducted from the amount awarded. In any case, compensation cannot be less than five months’ salary. The employer will also be ordered to pay social security contributions on such compensation. As an alternative to reinstatement, the employee is entitled to ask the employer to pay compensation equal to 15 months’ salary, without prejudice to the right to compensation for damages.The rules described in this paragraph also apply to dismissals found to be ineffective because they have been served orally and to dismissals based on the employee being unsuitable for the job because of a disability and found to be unfair.The burden of proof regarding the fairness of the dismissal always lies with the employer.Finally, it is important to note that the new regime also applies to employees hired before March 7 2015 if the employer met or will meet the more-than-15-employees threshold (or more than 60 in Italy) after said date, due to new hires.


Disputes can always be settled with an agreement before or during the relevant lawsuit.In fact, Legislative Decree 23/2015, which entered into force on March 7 2015, provides for a particular incentive designed to encourage the parties to reach an agreement to avoid too many legal proceedings being brought. However, this incentive only applies to those workers hired after March 7 2015 or to those hired by companies who meet the more-than-15-employees threshold (or more than 60 in Italy) due to the hiring of new employees after March 7 2015. In these cases, the employer may offer the employee – within 60 days of the dismissal in one of the appropriate venues provided for by law – an amount that is not subject to taxes and social security contributions, equal to one month’s salary for each year of service, with a minimum of two months’ salary and a maximum of 18 months’ salary by means of a cheque given to the employee. Said amount is halved and, in any case, cannot be higher than six months’ salary, if the employer employs 15 employees or fewer in the place of employment and 60 employees or fewer in the whole of Italy.The employee’s acceptance of the cheque in such venues entails the termination of the employment contract at the date of the dismissal and the employee’s waiver of any claim against the dismissal, even if already filed by him or her. Any other sums that are agreed upon, during the above procedure, for the purpose of settling any further dispute relating to the employment contract, are subject to the ordinary tax regime.


Collective redundancy occurs when an employer with more than 15 employees intends to dismiss at least five employees within a period of 120 days, either within one business unit or more than one business unit located in the same province, due to a reduction or transformation of business. A special information and consultation procedure with the trade unions/works councils (which lasts for a maximum of 75 days) must be carried out before serving the dismissals. The parties consult and negotiate with one another to examine the causes that have given rise to the redundancy and try



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Where provided for, the failure to obtain the data subject’s consent will result in criminal and administrative sanctions, without prejudice to the civil liability arising from the unlawful processing of data.Solely with regard to data concerning trade union memberships, there is no obligation to obtain consent for the processing of sensitive data relating to employees (or semi-self-employed persons or collaborators of various types) within the context of the employment relationship. The data subject’s consent is necessary in all other cases with the following exceptions: if the processing is necessary for fulfilling specific legal obligations or duties for the management of the employment relationship (including hygiene and safety and social security and welfare, subject to the provisions of the code of ethics and good conduct, which should be shortly issued on the subject matter); or if it aims only at checking the possible unlawful behaviour of the employees (so-called defensive surveillance). The prior authorisation of the Privacy Watchdog is required even in the event of exemption from the obligation to obtain consent for the processing of sensitive data.Data Controllers can transfer data within the European Union. As regards countries which are not part of the European Union, employers can transfer data, provided that:a) the data subject has given his consent in writing, in the case

of sensitive data;b) it is necessary to fulfil obligations deriving from the execution

of a contract of which the data subject is a part, to fulfil a specific request of the data subject, or to reach an agreement or fulfil one in the interest of the employee;

c) it is necessary to safeguard a relevant public interest;d) it is necessary to safeguard the life and the physical integrity

of a third party; ande) it is necessary to carry out defensive investigations or to

assert or defend a judicial claim.The transfer of data to a third country is also allowed when there is the consent of the Privacy Watchdog.Apart from the cases described above, the transfer of data to a country which is not part of the European Union is forbidden when the regulations of such country do not grant sufficient protection to the employee.


Yes, employees are entitled to ask for a copy of the personal information held by their employer.


The employer is prohibited from investigating for employment purposes (e.g. during the course of the hiring process) – including through third parties – the political opinions, religious beliefs or trade union affiliations of prospective employees, as well as any facts that are not relevant to assess if the employee is suitable for the job. The employer can only take into account the information that is relevant to assess the candidate’s ability to perform the specific task for which he or she will be hired. For example, during the interview, the employer can ask the employee for the documentation that certifies the qualifications acquired, but it can neither require a family status certificate or one attesting pending charges. On the contrary, a criminal record can be required from a candidate as the



Parties can enter into a non-competition covenant, in order to prevent the employee from working for a competitor and/or act in competition with the employer for a certain period of time following the termination of the employment relationship. They can also agree upon a confidentiality clause and a non-poaching clause.


Non-competition covenants can be enforced on the condition that they comply with the mandatory requirements set forth by the law. They must be limited in scope, territory, and time and must also be adequately compensated.Non-compete covenants are enforceable for a period of three years (increased to five years in the case of executives).


Yes, they do for non-competition covenants, as compensation is a requirement for the validity of the covenant. On the other hand, confidentiality clauses and non-poaching clauses do not require financial compensation.


If there is a breach of restrictive covenants, the employer may sue the relevant employee before the court in order to make them stop the competing activity. The employer is entitled to claim the restitution of the financial compensation paid, the payment of a penalty (if agreed in the covenant) and further damages, if any.



The general rule under Italian law and, specifically, the Data Protection Code, is that information systems and computer programs must be set up in such a way so as to ensure that personal data are only used to the extent necessary for reaching specific objectives set by the Data Controller. Otherwise, the data must either be used anonymously or measures must be implemented to ensure that the data subject may only be identified when strictly necessary.In particular, the processing of personal data can only be done with the express consent of the data subject, and such consent must be prior, explicit and voluntary so as to be unequivocal. Therefore, the data subject’s silence cannot be considered as a form of consent. The relevant legislation also permits the disclosure of data processing and the consent thereto to be given orally, but only for non-sensitive personal data. Instead, any disclosure and consent involving sensitive personal data must be given in writing.The data subject’s consent is effectively an expression of his or her general approval to the processing of his or her personal data.



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The Employment Appeal Court hears appeals on questions of fact and law. A challenge on a point of law goes to the Supreme Court (Corte Suprema di Cassazione).


Employment-related complaints are ruled by special procedures that are different from normal civil procedures.Since November 24 2010, a conciliation procedure is no longer mandatory before starting a lawsuit at court. Parties can either bring a claim before the Employment Court or request a conciliation or arbitration procedure, if certain conditions are met.Since July 18 2012, a new additional judicial procedure applies to complaints that only challenge the fairness of a dismissal where the employer employs more than 15 employees in the place of employment or within the same municipality, or more than 60 employees within the Italian territory.This procedure is no longer applicable to employees hired from March 7 2015.Since July 2011, judicial claims related to matters of employment and social security are no longer free of charge so a special contribution must also be paid in employment-related lawsuits.Such contribution is not due when the claimant has a taxable income of less than EUR 31,884.48 (as results from the last statement).For all other cases, the amount of the contribution is calculated based on the value of the claim.


The length of the proceedings depends on the type of matter involved in the lawsuit, on whether the employee has requested an urgency procedure and on which court (place) is involved. Normally, an employment claim before the Employment Court may last from a minimum of six or seven months up to a maximum of three or four years.


Yes, proceedings before the Court of Appeal usually last between two and three years.Appeal judgments can be challenged before the Supreme Court, where the proceedings usually last between two and three years.

law considers information concerning any final court judgment as relevant to recruitment.


Under Italian Law, the use of audio-visual systems or other equipment as a way of controlling the working activity of the employees at a distance is forbidden. Systems and equipment of control which are needed for organisational or productivity requirements or safety at work, whose use may allow monitoring of the employees at a distance, can be installed only with a prior agreement between the employer and the Works Councils or, in the absence of the latter, the internal Commission. Failing agreement, requested by the employer, the Local Employment Office – Inspection Services gives the instructions for the use of these instruments.Employers must also either sign an agreement with trade union representatives or obtain authorisation from a public authority to install any other equipment (e.g. cameras), through which they could also monitor employees’ activities.Under new legislation, which entered into force in September 2015, employers are no longer required to obtain authorisation to provide employees with equipment to be used to carry out their work (e.g. mobile phones or personal computers), even if the equipment is electronic and employers could use it to monitor employees’ activities and for all purposes related to the employment contract. However, employers are required to have a policy on the use of this kind of equipment and the ways monitoring occurs and must comply with data protection rules.


In general terms, the employer is prohibited from investigating for employment purposes any facts which are not relevant for assessing the employees’ suitability for the job. Therefore, it is prohibited for the employer to control the employee’s use of social media.However, access to social media can be relevant from a disciplinary perspective in case of breach of the employment contract, e.g. in case of excessive use during working hours, spread of confidential information, etc.



Employment tribunals are presided over by qualified professional judges who only deal with employment claims or claims regarding commercial agencies and independent workers.



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Franco ToffolettoToffoletto De Luca Tamajo e SociVia Rovello 12 Milan 20121 Italy

Tel: +39 0272 1441Email: [email protected]: www.toffolettodeluca.it

Valeria MorosiniToffoletto De Luca Tamajo e SociVia Rovello 12 Milan 20121 Italy

Tel: +39 0272 1441Email: [email protected]: www.toffolettodeluca.it

Toffoletto De Luca Tamajo e Soci is one of the five founding members of Ius Laboris, which today is the biggest international alliance of law firms specialising in employment and HR law. Through the Alliance, the firm is able to offer clients the highest standard of legal services across 53 countries and over 165 cities: truly global coverage, with local knowledge and expertise. The firm regularly manages cross-border projects across multiple jurisdictions, always finding innovative solutions tailored to its clients’ ever-changing needs.

Toffoletto De Luca Tamajo e Soci is rated in the top bands for labour and employment law by Chambers & Partners Europe and The Legal 500 EMEA. It was also shortlisted and recognised as a “Standout” firm by the Financial Times Innovative Lawyers Europe Awards and Report 2015 for its use of technology.

The firm’s most recent national awards include: “Employment Law Firm of the Year” at the Legalcommunity Labour Awards 2016; and “Employment Law Firm of the Year – Innovation” at the TopLegal Awards 2016. Furthermore, following an award nomination at the FT Innovative Lawyers Awards Europe, the Financial Times recognised the firm in October 2015 as a “Standout” firm for its use of technology in its FT Innovative Lawyers Report. The firm received recognition for a joint project that resulted in the creation of a new and unique piece of software: iLex.

Franco Toffoletto practises and specialises in employment law and is the Managing Partner of the law firm Toffoletto De Luca Tamajo e Soci, one of the major national players specialising in employment law, labour law and contracts with commercial agents.

Franco is the author of many articles and publications on employment law and regularly contributes to the Italian national daily, “Il Sole 24 Ore”. He is an employment law professor at the School of Higher Education managed by the Italian Employment Lawyers Association (AGI) and often speaks at both national and international conferences.

Franco is one of the founding partners of Ius Laboris – the biggest global alliance of law firms specialising in employment and human resources law – of which he was Chairman until 2012, and was also a founding partner of the AGI. Franco was also one of the founders of the European Employment Lawyers Association (EELA), as well as its Chair from 2003 to 2007. He is also a member of the International Bar Association (IBA).

Valeria Morosini is a Partner at Toffoletto De Luca Tamajo e Soci. She graduated with honours from Università Statale di Milano in 1997 and was admitted to the Italian Bar in 2000. She is a member of the European Employment Lawyers Association (EELA) and the Italian Employment Lawyers Association (AGI). Valeria is also a member of the International Bar Association (IBA), as well as a Vice Chair of the IBA’s Discrimination and Equality Law Committee. She is a regular speaker at international conferences.

Thanks to her truly international background (DEA in Paris X, as well as internships in the US and in France with Ius Laboris member firms), Valeria’s daily practice largely involves international matters on a wide variety of employment law and industrial relations issues, ranging from collective redundancies and international assignments to restructuring processes and immigration issues. She regularly coordinates complex cross-border projects involving multiple jurisdictions.



Chapter 21

Mori Hamada & Matsumoto

Shiho Ono

Yuko Kanamaru

Japan

other hand, should be made based on the person’s actual working conditions (not only by job title or the form or name of the contract) by taking into account various factors such as whether: (i) he/she has any discretion to refuse assignments; (ii) he/she is under someone’s control and should follow specific instructions regarding his/her work; (iii) the place and time for work are fixed; (iv) other persons are allowed to do the work; and (v) he/she is receiving wages in exchange for providing the work. Workers who are protected by employment law can be classified into the following categories:i) non-fixed-term workers (the so-called “regular workers”);ii) fixed-term workers, whose term of employment must not

exceed three years (or five years in certain cases stipulated in the LSA);

iii) part-time workers, whose prescribed working hours are shorter than those for regular workers; and

iv) temporary workers or dispatched workers, who are employed by temporary staffing agencies and dispatched to other companies under the Temporary Staffing Services Law.


An employment contract does not have to be in writing; an oral agreement for employment is effective. However, an employer is required to expressly provide certain key employment terms and conditions in writing to its workers. These key terms and conditions include matters concerning:i) the period of the employment contract;ii) the place of work and job description;iii) the start time and the end time for working hours, possible

overtime work, break time, rest period, rest days, and change in shifts (if the worker will work two or more shifts);

iv) the determination, calculation and payment of wages (except retirement allowance and extraordinary wages (such as bonuses)), and the dates for the calculation of wages, payment of wages and wage increases; and

v) the termination of employment (including regarding resignation, retirement, dismissal or any other cause for termination).


The minimum standards set out in the LSA are implied into employment contracts with fixed-term workers (see question 1.2), if



The two principal sources of employment law are the Labour Standards Act (the “LSA”) and its Enforcement Ordinance, both of which provide minimum standards for the terms and conditions of employment contracts. In addition, the Labour Union Act (the “LUA”) governs collective labour relationships, while the Labour Contract Law (the “LCL”) governs individual labour relationships by providing for the principles under which a labour contract is to be entered into or changed through voluntary negotiations between a worker and an employer, and other basic matters concerning labour contracts. Other important sources of employment law include the Industrial Safety and Health Act, the Employment Security Act, the Act on Improvement, etc. of Employment Management for Part-Time Workers, and the Act for Securing the Proper Operation of Worker Dispatching Undertakings and Improved Working Conditions for Dispatched Workers (the “Temporary Staffing Services Law”).The Japanese government is currently discussing draft legislation to amend employment regulations, including the LSA and the LCL, to improve the working environment, focusing mainly on the problems of long working hours and wage gaps between regular workers and non-regular workers. The draft legislations are expected to be submitted to and discussed in the Diet later this year. Some important court decisions also function as a source of law. The decisions of the higher courts, especially the Supreme Court, are seen as a source of law for lower courts, which usually hesitate to render judgments that contradict higher court rulings because such judgments would likely be overruled at the higher courts.


The LSA defines a “worker” as someone who is employed at and receives wages from a business or office, regardless of the type of occupation, and a worker is protected by Japan’s employment law. Independent contractors or self-employed people who enter into an outsourcing contract with a company and certain company executives, such as board members and corporate officers, who can work at their own discretion, are not protected under employment law because they are not considered “workers”. The distinction between an independent contractor and a company executive, on the one hand, and a worker protected by employment law, on the


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viii) An employer must pay at least the minimum wage under the Minimum Wages Law. Minimum wages are fixed according to regulations for each district or for certain industries.


As long as both the employer and the union (the collective bargaining parties) have the authority to agree on the subject terms and conditions, which must not be less favourable for the workers than the minimum standards set out in the LSA, they can agree on any terms and conditions during collective bargaining. In practice, collective bargaining agreements generally include major terms and conditions of employment such as wages and other benefits, days off, paid leaves, notice periods, promotions, transfers and disciplinary procedures. The employer is not required to discuss or agree on matters concerning the company’s organisation and high-level management which are not directly related to employment conditions. Collective bargaining usually takes place at the company or workplace level, but it can take place at the industry level as well.



The LUA defines “labour unions” as organisations or federations of unions formed voluntarily by and composed mainly of workers for the main purposes of maintaining and improving working conditions and raising the economic status of the workers; however, the following groups are not “labour unions”:i) a group which admits persons who represent the interests of

the employer including directors and workers in supervisory positions;

ii) a group which receives the employer’s financial assistance in paying the organisations’ operational expenditures;

iii) a group whose purposes are confined to mutual aid service or other welfare services; and

iv) a group whose purposes are principally political or social movements.

A union is not required to file any application with authorities to be recognised as a “labour union”, but it is required to file evidence with the Labour Relations Commission and demonstrate that all the requirements described above are satisfied when it takes legal actions, including applications for examination of cases of unfair labour practice.


The establishment of a labour union and its activities are guaranteed as basic labour rights by the Constitution of Japan and the LUA which stipulates these rights in detail. A labour union has the right to request an employer to enter into collective bargaining on any issue, provided that the issue relates to the labour union itself or the status of a worker who is a member of the union, regardless of the number of members. An employer is required to accept such a request and faithfully negotiate with the labour union; and the refusal of an employer to enter into collective bargaining without proper reasons could be an unfair labour practice which is prohibited by the LUA.

the contract is silent or provides terms which are less favourable for the workers than the minimum standards set out in the LSA. If a certain employment term is applied repeatedly and continuously for a long period of time, it is possible for that term to be implied into the employment contract on the basis of an implied agreement and general custom or practice. In addition, under the LCL, a fixed-term employment contract may be deemed renewed: (i) if the status of the fixed-term employment contract is not substantively different from a non-fixed-term employment contract due to repeated renewals; or (ii) when the continuation of employment can reasonably be expected even after the expiration of the term of the fixed-term employment contract, unless there is a justifiable reason not to renew the fixed-term employment contract upon expiration and the non-renewal is deemed to be socially acceptable.


The LSA and its Enforcement Ordinance set down minimum employment terms and conditions, such as the following terms.i) An employer can require its workers to work longer than the

statutory maximum hours, i.e., eight hours a day and 40 hours a week, only if it enters into a labour-management agreement (known as an “Article 36 Agreement”) with a union organised by a majority of the workers at the workplace or where no union exists with a worker representing a majority of such workers, and by filing such agreement with the local Labour Standards Inspection Office.

ii) If an employer extends the working hours beyond the statutory maximum hours, the employer must pay higher wages for each overtime hour equal to 125 per cent of the normal wages per work hour. For each overtime hour in excess of 60 overtime hours in one month, the rate for each overtime hour increases to 150 per cent of the normal wages per work hour. Small- and medium-sized employers, defined as employers whose capital amount, amount of investment or number of workers is less than certain thresholds, are currently exempt from the 150 per cent overtime rate; however, the LSA is expected to be amended to abolish this exemption.

iii) An employer is also required pay higher wages equal to 135 per cent of the normal wages per work hour for work on holidays.

iv) An employer must also pay an additional 25 per cent of the normal wages per work hour for work from 10pm to 5am. If a worker works overtime between 10pm to 5am, the employer must pay wages at the rate of 150 per cent of the normal wages per work hour (i.e., 125 per cent as overtime pay plus 25 per cent as night shift pay). If a worker works between 10pm to 5am on holidays, the employer must pay wages at the rate of 160 per cent of the normal wages per work hour (i.e., 135 per cent as holiday pay plus 25 per cent as night shift pay).

v) An employer is required to give break times during working hours for at least 45 minutes when working hours exceed six hours, and for at least one hour when working hours exceed eight hours.

vi) An employer is required to give workers at least one day off per week; however, this rule does not apply to an employer who provides workers with four days off or more over any four-week period.

vii) An employer is required to grant the stipulated minimum number of days of annual paid leave to a worker in accordance with the length of service of a worker, if the worker has been employed continuously for six months and has worked at least 80 per cent of the working days during such six-month period.

Mori Hamada & Matsumoto Japan


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Workers have no statutory entitlement to representation at the board level.

3 Discrimination


The LSA provides that employers must not use the nationality, creed or social status of any worker to discriminate against him/her with respect to wages, working hours or other working conditions. The LSA also provides for the principle of equal wages for men and women.


In addition to the general rules under the LSA mentioned in question 3.1, other rules which prohibit discrimination include the following: i) The Employment Security Law prohibits employers from

discriminating against a person by reason of any previous profession, membership of a labour union, race, nationality, creed, sex, social status and family origin.

ii) The Act on Securing, etc. of Equal Opportunity and Treatment between Men and Women in Employment (the “Equal Employment Opportunity Act”) prohibits discriminatory treatment based on sex in relation to the following matters:a) discrimination in recruitment and employment;b) assignment (including allocation of duties and grant of

authority), promotion, demotion and training;c) loans for housing and other similar fringe benefits as

provided by ordinance;d) change in job type and employment status; ande) encouragement to retire, mandatory retirement age,

dismissal, and renewal of the employment contract.iii) The Equal Employment Opportunity Act also prohibits

the disadvantageous treatment of female employees due to marriage, pregnancy, childbirth, and requesting absence from work which is allowed under the LSA.

iv) When the employer solicits or recruits potential employees through advertisements on job information websites or taking other similar actions, the advertisements must not specify restrictions on age and gender of potential employees except in certain cases stipulated in the ministry ordinances under the Employment Measures Act and the Equal Employment Opportunity Act.


Generally speaking, most of the rules explained in questions 3.1 and 3.2 do not require an employer to grant the same terms and conditions to all workers, and thus, if an employer successfully demonstrates that the alleged discriminatory treatment is based on justifiable grounds, the treatment may be deemed to be not discriminatory. When a discriminatory act in question is done by one worker or a few workers and is not a company-wide problem, the court may find that the employer is not liable for the discriminatory conduct

In addition, the following acts of an employer are prohibited as unfair practices:i) discharging or discriminating against an employee due to his/

her being a member of a labour union, having tried to join or organise a labour union, or having performed proper acts of a labour union;

ii) making it a condition of employment that an employee must not join or must withdraw from a labour union;

iii) controlling or interfering with the formation or management of a labour union;

iv) giving financial support to defray the labour union’s operational expenses; and

v) treating an employee in a disadvantageous manner because he/she has filed a complaint with the Labour Relations Commission.

An employer must hear the opinion of the labour union organised by a majority of the workers at a workplace concerning certain labour matters, including setting up or amending employment rules of the workplace. Furthermore, a labour union has the right to act collectively, which includes the right to strike. The LUA gives workers who engage in proper and justifiable actions immunity from criminal and civil liabilities and protection from unfavourable treatments by their employer.


Industrial actions (or labour dispute actions) should be taken “properly” in order to enjoy the protection of the LUA. The LUA provides that in no case should acts of violence be construed as justifiable acts of labour unions, but it does not provide specific rules as to what constitutes a proper industrial action. Generally, courts take into account the purpose and the manner of an action in deciding whether or not it was proper. With respect to procedural requirements, many labour unions are required to conduct a vote among their members before calling a strike under their constitutions, and a prior notice of a strike is sometimes required by the collective bargaining agreement between the union and the employer; however, these are not statutory requirements.


An employer is not required to set up works councils in Japan.


Not applicable, see question 2.4.


Not applicable, see question 2.4.



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to other companies with consideration to the working conditions of workers and conditions of the labour market, and having a balance with the wage levels of workers who engage in the same types of duties at the companies receiving the temporary staffing services. In addition, as stated in question 1.1, the Japanese government is currently discussing draft labour legislation including amendments, with one focus being on wage gaps between regular workers and non-regular workers. The draft legislations is expected to be submitted to and discussed in the Diet later this year.



Mandatory maternity leave lasts 14 weeks in general (six weeks before childbirth, and eight weeks after childbirth). The LSA prohibits an employer from: i) making a female worker who is expecting to give birth within

six weeks (the period should be increased to 14 weeks in the case of multiple fetuses) work, if she requests maternity leave; and

ii) having a female worker work within eight weeks after childbirth (unless she has requested to work six weeks after childbirth, and a doctor confirms that returning to work has no adverse effect on her).

In addition, a worker is entitled to take childcare leave for a child of less than one year of age (or until the child turns one and a half years old if some requirements are met).


A female employee is not entitled to salary during maternity leave or childcare leave, unless her employment contract or the employment rules of her employer stipulate otherwise. However, she is entitled to the following allowances under insurance laws.First, a female employee who gives birth is entitled to receive childbirth allowance equal to two thirds of her daily salary from the health insurance association she has joined. Second, a female employee who takes childcare leave is entitled to receive childcare allowance from the health insurance association she has joined, until the child turns one year old (or until the child turns one and a half years old if some requirements are met).


Employers are prohibited from treating a female employee in a disadvantageous manner because of maternity leave or childcare leave. Thus, an employer is generally required to enable a female employee to return to her original work after her maternity leave or childcare leave. Assigning her to a different position or reducing her wages can be deemed unlawful, if either is due to her taking maternity leave or childcare leave.In addition, a female employee who is raising an infant under one year old is entitled to time to care for the infant for at least 30 minutes twice a day, in addition to the normal rest periods.


A male employee is entitled to childcare leave. He is entitled to

if the employer has taken adequate measures to prevent such discriminatory conduct.


Workers have different ways of enforcing their discrimination rights depending on the situation. These ways include filing a civil lawsuit or an application for a labour tribunal proceeding, and requesting the court or labour tribunal to: i) declare the treatment (such as the discriminatory dismissal,

transfer or assignment order) as null and void; ii) order the employer to reinstate him/her (in case of dismissal);

and iii) order the employer to compensate him/her for any damage

which he/she has suffered due to the discriminatory treatment. In Japan, a worker cannot request punitive damages but can request damages for mental suffering.

Employers can settle claims at any time before or after they are initiated.


See question 3.4.


i) Fixed-term workersUnder the LCL, if a labour condition of a fixed-term labour contract is different from the counterpart labour condition of a non-fixed-term labour contract, the difference in the conditions is not necessarily unreasonable, considering the differences in the duties of the workers, the extent of responsibility accompanying the said duties, the changes in the duties and work locations, and other factors.ii) Part time workersThe Act on Improvement, etc. of Employment Management for Part-Time Workers provides for the following rules:a) With regard to a part-time worker whose work description

and level of work responsibilities are equal to those of regular workers at the same place of business, who has signed a labour contract without a definite period, and whose job description and assignment are likely to be changed within the same range as those of regular workers, then in light of the practice at said place of business and other circumstances, throughout that part-time worker’s employment period, the employer must not engage in discriminatory treatment regarding wages, education and training, use of welfare facilities and other dealings by reason of being a part-time worker.

b) An employer should endeavour to decide the wages (excluding commutation allowances, retirement allowances and others specified by ordinance) of part-time workers with due consideration to a balance with regular workers, and by taking into consideration relevant matters such as job description, job performance, job motivation, and abilities or experience of the part-time workers.

iii) Temporary workersThe Temporary Staffing Services Law, which was amended in 2015, provides that temporary staffing agencies should endeavour to decide the wages of temporary workers they employ and dispatch



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On a business sale either by a share transfer or an asset transfer, a worker does not have any specific statutory rights regarding information and consultation, but generally speaking, the employer should provide sufficient information and faithfully consult with the workers when it asks them to consent to the transfer. There is no statutory requirement regarding the time necessary for the process.


A business sale by itself will not justify the dismissal of employees, and thus, the general rules on dismissals apply to dismissals in connection with a business sale (see question 6.3).


An employer cannot freely change the terms and conditions of employment in connection with a business sale. If an employer would like to change the terms and conditions of individual employment contracts, it is required to obtain the consent of the workers. If it would like to make changes to the work rules which are disadvantageous to the workers, justifiable reasons for the changes are required.



Yes. An employer is required to provide at least 30 days’ advance notice to the employee, or to pay the average wage the employee would earn for a period of not less than 30 days in lieu of notice (“Payment in lieu of Notice”). The number of days for the advance notice can be reduced by the number of days for which the employer pays the average wage.


Yes. An employer can require employees to serve a “garden leave” if the employer pays wages to the employees during that period.


An employer may only terminate or dismiss an employee on grounds that are objective, justifiable and reasonable, and any termination or dismissal which is not on those grounds is invalid and deemed an abuse of the rights of the employer. In general, the reasons can be: i) incapacity (due to health or performance-related reasons) and

lack of qualification;

just one childcare leave in general; however, if the first childcare leave ends within eight weeks from the childbirth, he is entitled to a second one. He is not entitled to salary during such leave, unless his employment contract or the employment rules of his employer stipulate otherwise.


An employee who is taking care of a child under elementary school age is entitled to take a day off to take care of an injured or sick child for up to five working days per fiscal year (or up to ten working days if the worker has two or more children under elementary school age). He/she is not entitled to salary during such leave, unless his/her employment contract or the employment rules of his/her employer stipulate otherwise.


An employee is entitled to take a day off to take care of a family member who requires nursing care for up to five working days per fiscal year (or up to ten working days if the worker has two or more family members requiring nursing care). This leave can be taken in half-day increments. An employee is not entitled to salary during such leave, unless his/her employment contract or the employment rules of his/her employer stipulate otherwise.

5 Business Sales


When a business is sold through a share transfer, no transfer will take place because there will be no change in employer. In a business sale through an asset transfer, employees do not automatically transfer. The transferee (the buyer) and the transferor (the seller) may agree to include employment contracts in the business being sold, but if a worker refuses to consent to the transfer of his/her employment contract, the employment contract will not transfer to the transferee.


In a share sale, the employment conditions and status will not change. Collective agreements entered into before the share sale, and in force as of the share sale, will continue in force and their conditions will not change merely because of the share sale.In an asset transfer, an employment contract can be transferred to the buyer transferee (i) by including the employment contract in the business to be sold, or (ii) by having the worker resign from the transferor and enter into a new employment contract with the transferee. In the former case, the terms and conditions of the employment contract will remain the same even after the transfer unless otherwise agreed between the transferee and the worker. In the latter case, the terms and conditions may change depending on the work rules of the transferee or the new employment contract. Collective labour agreements will not transfer, unless otherwise agreed between the transferor, the transferee and the union.



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Also, an employer cannot dismiss a part-time employee who is considered to be equivalent to an ordinary employee, only due to the reason that he/she is a part-time employee.


See questions 6.3 and 6.9.Employees are not entitled to compensation on dismissal. However, an employer is generally required to make Payment in lieu of Notice (see question 6.1). In addition, since the validity of a dismissal is strictly examined by Japanese courts if disputed, employers often provide employees with severance payment to facilitate voluntary resignation. The amount of severance pay varies significantly with each company; however, in many cases, it is calculated based on the employee’s length of service.


As a general rule, advance notice of termination (see question 6.1) is required. In addition, any termination procedures stipulated under the employment rules or collective labour agreements must be followed.It is also desirable to notify the employee of the reasons for the dismissal and provide him/her an opportunity for self-vindication. Further, if so requested by the employee, an employer is required to provide him or her, without delay, with a certificate which certifies the period of employment, the type of work of the employee, the employee’s position, the wages, or the cause of retirement (if the cause for retirement is dismissal, the reason for the dismissal must also be provided).


An employee can bring a claim against the employer for declaratory judgment (determining that the dismissal is void and invalid) or a decision to confirm his/her position as an employee, by filing a petition for labour tribunal proceedings, provisional injunction or litigation.If the court (in the case of provisional injunction or litigation) or the labour tribunal (in the case of labour tribunal proceedings) determines that a dismissal is null and void, the employer must reinstate the employee and pay the employee’s wages or salary since the date of dismissal (so-called “back pay”) with interest. In principle, if the dismissal is judged to be invalid and the employee is reinstated, the employee cannot claim for damages. However, if any communication or action by the employer in relation to the dismissal is considered to be a tortious act, a claim for damages may be admitted.


Yes. Employers can settle claims at any time before or after they are initiated.

ii) misconduct; iii) operational necessity; or iv) request from a labour union based on a union shop agreement.Japanese courts strictly interpret the requirement of an ‘objective, justifiable and reasonable’ ground. Usually a dismissal is deemed lawful only if the cause of dismissal is of a significant degree, there is no other way to avoid the dismissal and there is almost no factor on the employee’s side that could be taken into consideration in favour of the employee.In cases of dismissal due to business reasons of the employer, the following general requirements have been formulated by Japanese courts in determining the validity of the dismissal: i) necessity of labour reduction, such as financial deterioration

of the employer; ii) necessity in selecting dismissal over other available measures

(for example, whether the employer could have avoided dismissal by using other means such as soliciting for early retirement);

iii) appropriateness of the selection of the employee being dismissed; and

iv) appropriateness of the dismissal procedure (for example, whether the employer provided sufficient explanation and opportunities for consultation).

If an employee does not dispute the validity of the dismissal, the dismissal will become effective. But if the employee disputes the validity of the dismissal, he/she would ultimately be considered to have been duly dismissed only if the court determines that the above-mentioned criteria have been met. If a collective labour agreement requires an employer to obtain the consent of a labour union to dismiss employees, a dismissal without such consent will be considered null and void.


Yes. An employer is prohibited from dismissing the following categories of employees: i) an employee during a period of absence from work for

medical treatment with respect to work-related injuries or illnesses or within 30 days after his/her recovery; and

ii) a female employee during a period of absence from work before and after childbirth which is taken in accordance the LSA or within 30 days thereafter.

In addition, an employer is not entitled to dismiss an employee on the any of the following grounds: i) nationality, creed or social status; ii) being a labour union member or having performed justifiable

acts of a labour union; iii) sex and, for a female worker, marriage, pregnancy, childbirth

or having taken leave from work before and after childbirth; iv) having taken childcare leave or family care leave under the

Act on the Welfare of Workers who Take Care of Children or Other Family Members Including Child Care and Family Care Leave;

v) having reported the employer’s breaches of employment protection laws to the relevant government agencies;

vi) having sought the advice of, or filed an application for mediation by, the head of the Prefectural Labour Offices; and

vii) having reported a violation in accordance with the Whistle-blower Protection Act.



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that factor iv) is not satisfied. In some cases where the employee receives a high salary, courts have decided that factor iv) has been satisfied since the compensation for the non-competition covenant was included in the basic salary even though the company did not grant compensation specifically for the non-competition covenant.With respect to a non-solicitation obligation, there are no major court precedents or well-established views regarding the validity and enforceability of a non-solicitation covenant, but there are a few precedents where courts have determined that a former worker’s solicitation of his/her former employer’s existing workers constitutes tort and ordered the worker to compensate the former employer where the solicitation was done in a manner that is not socially acceptable. If a worker has agreed to a confidentiality covenant or confidentiality obligations are included in the work rules regarding certain confidential information of the employer, the worker must abide by that covenant. If a confidentiality covenant does not limit its scope in relation to geographical area, the covenant is generally considered as being effective even outside Japan. A confidentiality covenant without any duration may be considered as unnecessarily and unreasonably restrictive and therefore the court may interpret that the covenant is valid only for a limited time.


There is no statutory requirement that an employer must provide workers with financial compensation in return for covenants, but the provision of financial compensation is an important factor in deciding whether a covenant is valid (see question 7.2).


Covenants are normally enforced through a provisional remedy. A provisional remedy (preliminary injunction) is a temporary remedy which is granted by the court before deciding on the merits to avoid substantial damage or imminent danger to the petitioner. The court will order a provisional remedy only if there exists: i) a right that needs to be preserved; and ii) a necessity to preserve that right. Unlike in a decision on the merits (main lawsuit), the level of proof for provisional remedy is merely prima facie. An employer may also claim for damages it suffered due to the former worker’s breach of a covenant.



Employees’ data, insofar as it falls within “personal information”, is protected under the Act on the Protection of Personal Information (the “APPI”), its Enforcement Ordinance and related guidelines. An employer is obliged to comply with the APPI as a “personal information-handling business operator” in dealing with employees’ personal information. The obligations of a personal information-handling business operator under the APPI include the following:i) undertaking necessary and appropriate measures to safeguard

personal information;


Yes. In case of any of the following dismissals, the employer must notify the competent public job-placement office of the dismissal of: i) 30 or more employees within one month;ii) five or more employees who are aged 45 years or older within

one month; or iii) an employee with disability.With respect to dismissals due to business reasons of the employer, see question 6.3.


Employees can dispute the validity of mass dismissals by filing a petition with a court or a labour tribunal. If the four criteria discussed in question 6.3 are not satisfied, the dismissal will be considered null and void, in which case the employer must reinstate the dismissed employees and provide back pay (see question 6.7).



In a typical case, restrictive covenants include non-compete clauses, non-solicitation clauses and confidentiality clauses.


Generally speaking, a non-competition covenant is considered a restriction on the free choice of employment, which is considered a basic human right in Japan, and thus deemed invalid and unenforceable except where there are reasonable grounds (under case law). Based on court precedents, courts take the following factors into consideration when deciding the validity and enforceability of non-competition covenants:i) whether there is a clear non-competition clause in the

employment contract or the rules of employment;ii) whether there is a necessity for the employer to have the non-

competition covenant;iii) whether the restriction is necessary and reasonable in scope;

andiv) whether the employee is sufficiently compensated for the

restriction. With respect to factor ii), if the worker’s position is close to top management or the worker deals with very important or sensitive confidential information of the company, it is generally understood that there is a necessity for the employer to impose a non-competition covenant on the worker to protect its legitimate interest. With respect to factor iii), generally speaking, the period and scope of restriction in relation to geographical area and business categories are considered. With respect to factor iv), generally speaking, if the employer does not give financial benefits to compensate the employee for a non-competition covenant, courts tend to decide



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On a separate note, the ancillary guidelines to the Employment Security Law, as a general rule, restrict an employer’s acquisition of some kinds of sensitive personal information of job applicants, including regarding race, ethnicity, opinions and creed, or history of union memberships.


The email accounts, telephones, and computer systems belong to the employer and should be used only for business operations in general. From this perspective, as a general rule, such equipment can be monitored if the monitoring is carried out for a business necessity. However, in carrying out the monitoring, an employer must take the following measures regarding personal information of employees.When a personal information-handling business operator has an employee handle personal information, it must exercise necessary and appropriate supervision over that employee to ensure control of the security of personal information (APPI, Article 21). This supervision may include things such as monitoring the employee’s actions online, or video monitoring the employee.The Guidelines Concerning Measures to be Taken by Entities to Ensure the Proper Handling of Personal Information Relating to Employment Management highly recommend an employer who wants to monitor employees to take certain measures, including: i) communicating the purpose of the monitoring to the

employees in advance; ii) clearly identifying the manager responsible for managing the

monitoring;iii) drawing up internal rules regarding monitoring and

communicating them to the employees in advance; andiv) auditing the monitoring programme to ensure that it is being

carried out appropriately.


An employer can control and restrict an employee’s personal use of social media in the workplace, as employees are obliged to devote themselves to performing their work at the workplace. The employer, however, may not control or restrict an employee’s personal use of social media outside the workplace, except in limited circumstances, for example, where an employee intends to leak business secrets or defame the company.



There are two main venues which have jurisdiction to hear employment-related complaints:i) an ordinary court, consisting of one or three qualified judges;

andii) a labour tribunal consisting of one qualified judge and

two laypersons who have specialised experience in labour relations.

ii) not using personal information except to the extent necessary for the purposes disclosed to the subject individuals;

iii) not disclosing personal information to any third party (subject to certain exemptions); and

iv) conducting necessary and appropriate supervision over employees and contractors.

The first significant amendment to the APPI is set to be in force on 30 May 2017. Under the amended APPI, in providing personal information of an employee to a third party in a foreign country, the employer is obliged to: i) obtain the employee’s consent in advance to the provision to

a third party in a foreign country; orii) ensure that the third party in a foreign country has a system

for continuously taking actions equivalent to those that a personal information-handling business operator must take in handling personal information, pursuant to the provisions of the APPI.

Without taking the above-mentioned measures, the employer is prohibited from transferring employees’ personal information to a third party in a foreign country.


The APPI generally entitles an individual to demand a personal information-handling business operator to disclose the retained personal information that can identify him/her. Thus, an employee has the right to know what personal information is held by the employer, unless there is a reason for not disclosing the retained personal information. It is generally understood that an employer may refuse to disclose, for example, details of a personnel evaluation as it may seriously interfere with the employer’s implementing its business properly (APPI, Article 28.2 (2) (ii)).


Yes. An employer may carry out background checks, insofar as it acquires personal information of job applicants lawfully (see APPI, Article 17).Under the APPI, an employer must notify or make public the purpose for which it intends to use personal information it has acquired when it acquires personal information (except in some cases, including where, judging from the circumstances, it can be said that the utilisation purpose is clear). Also, an employer is prohibited from acquiring sensitive personal information (such as information regarding race, ethnicity, and criminal history) of a job applicant without his/her consent. In practice, however, an employer usually requires a job applicant to submit a filled-in template CV which contains questions regarding personal information, including criminal records. Such acquisition and use of personal information of the job applicant by the employer would be deemed lawful and valid, because the applicant is deemed to have given his/her consent when he/she submitted the CV to the employer, and, given the circumstances in which the CV was submitted, it can be recognised that the utilisation purpose is clear (see APPI, Article 18.4 (iv)). While criminal records are held by the police and employers do not have the means to check them directly, a typical template CV enables an employer to obtain and utilise such information legally for the purpose of background checks.



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Shiho OnoMori Hamada & MatsumotoMarunouchi Park Building 2-6-1 Marunouchi, Chiyoda-ku Tokyo 100-8222 Japan

Tel: +81 3 6266 8539Email: [email protected]: www.mhmjapan.com

Yuko KanamaruMori Hamada & MatsumotoMarunouchi Park Building 2-6-1 Marunouchi, Chiyoda-ku Tokyo 100-8222 Japan

Tel: +81 3 6266 8542Email: [email protected]: www.mhmjapan.com

Mori Hamada & Matsumoto (MHM) is one of the largest full-service Tokyo-headquartered international law firms with domestic branches in Fukuoka, Nagoya and Osaka. A significant proportion of the firm’s work is international in nature, representing clients in cross-border transactions, litigation and other dispute resolution proceedings.

MHM has over 400 lawyers and other professionals and over 500 business services and other support staff. The firm’s senior lawyers include a number of highly respected practitioners and leaders in the Japanese and international legal community, including a past secretary general of the Inter-Pacific Bar Association, prominent law professors at the University of Tokyo, and previous Prosecutor-Generals of the Public Prosecutors Office. MHM also has experienced lawyers with primary legal qualifications in non-Japanese jurisdictions, including Australia, England and Wales, Hong Kong, India, Indonesia, Malaysia, Myanmar, the People’s Republic of China, the Philippines, Singapore, Thailand, the United States and Vietnam.

MHM is highly recognised by both clients and legal professionals in the following practice areas: mergers and acquisitions, joint ventures, finance, international capital markets (including JREITS), asset management, loans and securitisations, private equity, infrastructure/energy, PFI/PPP, insolvency/restructuring, intellectual property, antitrust and competition. Other core practice areas include tax and labour law.

MHM has a strong presence in South and South-East Asian countries with offices in Beijing, Shanghai, Singapore, Yangon, Bangkok, and an MHM “Jakarta desk” in AKSET Law offices. On 1 January 2017, leading Thai law firm Chandler & Thong-ek was successfully integrated into the MHM network. This significant integration enhances MHM’s capability to serve clients throughout ASEAN.

Shiho Ono is a partner at Mori Hamada & Matsumoto. Ms. Ono has a strong track record in representing corporations in labour-related dispute resolution proceedings (including litigation, provisional dispositions, labour tribunal proceedings, and prefectural labour relation commission proceedings) across a broad spectrum of matters, such as dismissals, claims for unpaid wages, staffing changes, workplace harassment, unfair labour practices, and claims for employee invention remuneration. She also has broad experience in providing advice to foreign corporations doing business in Japan. She is fluent in both Japanese and English.

Yuko Kanamaru is a senior associate at Mori Hamada & Matsumoto. Ms. Kanamaru deals with a wide range of domestic and international disputes, especially in labour-related matters, including litigation and labour tribunal proceedings. Her litigation experience includes two major dispute resolution proceedings in labour-related cases in Japan. She also regularly advises clients in a range of labour-related matters, such as formulation and implementation of employment rules, regulations and systems, personal information matters, overwork issues, workplace harassment and unfair labour practices. She is fluent in both Japanese and English.



At an ordinary court, once an action is brought, it will go through the submission of pleadings, oral proceedings and the examination of evidence. In these proceedings, conciliation is not mandatory before a complaint can proceed. On the other hand, proceedings at the labour tribunal are usually held for up to three hearings to hear the allegations of both parties and examine evidence. In these proceedings, conciliation is mandatory before a decision can be rendered by the tribunal, if there is a possibility for the case to be resolved by settlement. In both proceedings, the employee has to pay a fee to the court to submit a claim or a petition. The amount of the fee is based on the amount demanded by the employee in his/her claim or petition.


It takes approximately 12 months (on average) for an employment-related complaint before an ordinary court to be decided. If the complaint is brought before the labour tribunal, deliberations can take anywhere from 75 days to 90 days in general.


Yes. Both decisions by an ordinary court of first instance and a labour tribunal can be appealed. If a case which was pending before a labour tribunal is appealed, it will automatically move to an ordinary court. The average deliberation period at the appellate court is approximately six months.


Chapter 22

Deloitte Kosova Sh.p.k.

Luljeta Plakolli-Kasumi

Vjosa Misini

Kosovo

period of employment of more than ten (10) years shall be implied to be a contract for an indefinite period of time.


The Kosovo Labour Law provides for a minimum age for entering into employment (15 years of age), minimum days of annual leave (four weeks), minimum salary which is set annually by the Government of Kosovo, and minimum break periods (30 minutes). The minimum salary is set by the Socio-Economic Council (SEC) based on the criteria and procedures laid down in the Administrative Instruction of the Ministry of Labour and Social Welfare.


The Kosovo Labour Law provides that the terms and conditions of employment are to be agreed in a Collective Contract, which is defined as an agreement between employees’ and employers’ respective organisations and lays down rights, duties and responsibilities deriving from an employment relationship. The Collective Contract may not contain any less favourable rights for the employee or employer than the rights defined in the Law on Labour.



In accordance with the Law for Organizing Trade Union in Kosovo, workers’ organisations must be registered at the Ministry of Labour and Social Welfare (MLSW). A Trade Union Association must have at least 10 members.


After the registration at the MLSW, a Trade Union is recognised as a legal person and is entitled to represent its members before employers and public authorities in relation to any matter involving collective negotiations for employees, particularly in the promotion of social dialogue, economic and social rights and labour relations, as well as managing its resources for protecting the rights of employees, etc.



The main sources of employment law in the Republic of Kosovo are: Constitution of the Republic of Kosovo; Law on Labour No. 03/L-212; Law on Safety and Health at Work No. 04/L-161; Law on Foreigners No. 04/L-219; Law on the Protection of Breastfeeding No. 05/L-023; Law No. 04/L-011 for Organizing Trade Union in Kosovo; and Law No. 03/L –200 On Strikes. The employment of civil servants is governed by separate laws and regulations. Other sources of employment law include a number of administrative instructions.


The Law on Labour foresees special protection for employees in the private and public sectors, as well as employees whose employment is regulated through a special Law, if the special Law does not provide for a solution for certain issues deriving from the employment relationship. The employment law also protects foreign employees and persons without citizenship who are employed in the territory of the Republic of Kosovo. The employment law provides for special protection to employed, pregnant and/or breastfeeding women, employees under the age of eighteen (18) as well as employees with disabilities.


Article 10 of the Law on Labour specifies that employment contracts have to be in writing and must be signed by both parties – the employee and the employer.


An employment contract must, at least, contain the following mandatory terms and conditions: details of the employer and the employee; job description; place of work; working hours; commencement date and end date of employment; salary and other allowances or incomes; and details of annual leave. If the employment contract contains no indication of the duration of the employment, it is implied that the term of employment is for an unspecified period of time. Furthermore, a contract for a fixed period of time that is expressly or tacitly renewed for a continued


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that is motivated by more than one ground or which is committed more than once, or which has lasted for a long period of time or had harmful consequences especially for the victim, is considered as a severe form of discrimination. Any differentiation, exclusion or priority given in relation to a specific workplace, based on determined criteria required for that workplace, are not considered discrimination.


Associations, organisations or other legal entities may initiate or support legal procedures on behalf of claimants, with their consent, for the development of administrative or judicial procedures foreseen for the implementation of obligations set in the Law on Protection from Discrimination.


Any person who claims to be a victim of discrimination, under the provisions of the Law on Protection from Discrimination, has the right to file a lawsuit against the defendant and to take all legal actions to the competent court.


The possible remedies are: prohibition of performance of activities, which violate or may violate the right of the employee, or to compel the employer to eliminate all discriminatory actions from the employee; compensation of material or non-material damage caused by the infringement of the rights protected by this Law according to compensation on lawsuit; ordering of temporary measures in accordance with the provisions of the Law on Contentious Procedure (if the plaintiff has proven credible that his/her right for equal treatment has been violated and, if deemed necessary, ordering a measure with the aim of eliminating the risk of irreparable damages, especially for severe violations of the right on equal treatment, or with the aim of preventing violence); ordering of a shorter deadline of execution than the one defined in the Law on Enforcement Procedure; and publishing in the media the court decision, which proves the violation of the right to equal treatment.


No special protection in relation to discrimination is envisaged by the Law for these types of workers. The Law on Labour provides for special measures in terms of the protection and the health and safety of minors, pregnant women and employed mothers, employees with disabilities, etc.



An employed woman is entitled to maternity leave of up to twelve (12) months.


According to the Law for Organizing Trade Union in Kosovo, a Trade Union can undertake actions such as protests and employee strikes in accordance with international conventions, applicable laws and Trade Union Statute in order to exercise pressure for the fulfilment of a Trade Union’s requirements. The taking of industrial action is also governed by the Law on Strikes, which guarantees the elementary right of the employee and Trade Union bodies. The use of violence and undertaking of punitive measures by the employer against employees who have participated in a protest or a Trade Union strike is prohibited.


According to the Law for Organizing Trade Union in Kosovo, there is no such requirement; however, the employers may create an employers organisation, which the employer can join at their own discretion for the protection of their organisation’s and their own rights.


There are no provisions contained in the Law on Labour regarding co-determination rights.


Since the above-mentioned Law does not define the employer’s organisation requirement, it is implied that the interaction between these two unions may be regulated by a mutual agreement.


This is a matter left to the agreement between the employer and the employee.

3 Discrimination


The Constitution of the Republic of Kosovo, the Law on Labour and the Law on Protection from Discrimination provide employees with protection against all forms of discrimination. Any discrimination that includes exclusion or preference made on the basis of race, colour, sex, religion, age, family status, political opinion, national extraction or social origin, language or trade-union membership, which has the effect of nullifying or impairing equality of opportunity or treatment in employment, is prohibited.


All types of discrimination are unlawful. Discriminatory behaviour

Deloitte Kosova Sh.p.k. Kosovo


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In cases of statutory change, change of employer, respectively, on the day of the change of the employer, in compliance with the Collective Contract and employment contract, the new employer shall take over all obligations and responsibilities of the previous employment relationship that are applicable. Furthermore, the previous employer is obliged to inform properly and entirely the new employer of the rights and obligations from the Collective Contract and employment contract to be transferred.


According to the Law on Labour, and as specified above, the employer must inform the employees in writing of such event. The Law does not foresee the timeline of the process or sanctions for failing to comply with this requirement.


If the employee refuses the transfer to the new employer or does not declare within five (5) days from the day of the announcement, the previous employer may terminate the employment contract.


Unilateral changes are not permitted. The terms and conditions shall remain in compliance with the Collective Contract and employment contract as stated above.



In the case where the employment relationship is terminated by the employer, the employee must be given prior notice of the termination. The length of the notice of termination varies and depends on whether the employment contract was stipulated for a definite or indefinite term.If an employee has a definite term contract, notice must be given thirty (30) days before, whereas for employees that have an indefinite term contract, the following notice periods are applicable: (i) between six (6) months and two (2) years of employment, thirty (30) calendar days; (ii) between two (2) and ten (10) years of employment, forty-five (45) calendar days; and (iii) above ten (10) years of employment, sixty (60) calendar days.


Compensation during maternity leave is divided as follows: during the first six (6) months of maternity leave, the payment is done by the employer and is an amount equal to seventy percent (70%) of the employee’s basic salary; during the next three (3) months, maternity leave is paid by the Government of Kosovo and is an amount equal to fifty percent (50%) of the average salary in Kosovo; the employed woman then has the right to extend her maternity leave for another three (3) months without payment. The employer may not terminate the employment relationship of a woman whilst they are on maternity leave.


The Law on Protection of Breastfeeding specifies that every employed breastfeeding woman is entitled to one (1) or two (2) hours of paid time each day, at the beginning, in the middle or at the end of the working hours, in agreement with the employer. In order to claim such time, she shall notify the employer in writing and provide a certificate issued by the doctor which confirms that the employed woman is breastfeeding.


The father of the child may assume the rights of the mother if the mother dies or abandons the child before the end of the maternity leave.


The father of the child has the right to: (i) three (3) days’ paid leave at the birth or upon adoption of the child; and (ii) two (2) weeks’ unpaid leave after the birth or upon adoption of the child, at any time before the child reaches the age of three (3). The employee must inform the employer of his intention to take leave at least ten (10) days in advance.


Employers cannot extend the working hours of a single parent with a child under three (3) years’ old or with a child that has disabilities. Furthermore, night shifts may only be performed by single parents and women with children younger than three (3) years of age or with children with permanent disabilities with their consent. Mothers with children up to three (3) years of age and single parents, as well as persons with disabilities, are entitled to an additional two (2) days of annual leave.

5 Business Sales


In such event, the previous employer is obliged to inform, in writing, all employees of the transfer of obligations and responsibilities to the next employer.



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Inspectorate. If the decision of the Labour Inspectorate is in favour of the employee, he/she may file a complaint at the respective court. Depending on the decision of the respective body, the employee may return to his/her workplace or receive compensation.


Any eventual dispute, which may arise regarding the employment relationship, may be settled amicably and in good faith through direct negotiations between the parties.


The Law on Labour provides for collective dismissal, and involves the dismissal of at least ten per cent (10%) of the employees but not less than twenty (20) employees discharged within a six (6)-month period. In the case of a collective dismissal, the employer is obliged to make severance payments to its employees who have an indefinite contract. The amount varies and depends on their period of employment with the company:■ between two (2) and four (4) years of service, one (1) month’s

salary;■ between five (5) and nine (9) years of service, two (2) months’

salary;■ between ten (10) and nineteen (19) years of service, three (3)

months’ salary;■ between twenty (20) and twenty-nine (29) years of service,

six (6) months’ salary; and■ from thirty (30) years of service, seven (7) months’ salary.


In accordance to the Law on Labour, an employee may not be dismissed until the employer provides the severance payment. If the employer fails to comply with its obligations, the employees are entitled to issue a complaint to the respective court.



The applicable legislation in Kosovo does not stipulate restrictive covenants. In practice, these covenants are usually contractual, meaning they are stipulated in the employment contract or in internal regulations of any particular company in the form of non-competition or non-solicitation clauses, and would be applicable for a certain period of time after the termination of an employment contract.


Since the applicable legislation in Kosovo does not expressly provide for restrictive covenants, the parties to the employment contract may agree to the general terms and conditions on this clause.


The employer may deny the employee access to the premises of the company during the period of notification, namely prior to terminating the employment contract.


The employees may initiate internal procedures for resolving issues deriving from the termination of an employment contract, if this is envisaged under the employment contract and employer’s internal policies. Employees can also submit an appeal to the Labour Inspectorate requiring protection with regard to his/her dismissal and, as a last resort, take the matter to court.


The Law on Labour provides that it is prohibited to terminate the employment relationship during pregnancy, maternity leave and absence from work due to special care for a child, except in cases of a collective dismissal.


The employer is entitled to terminate the employment contract of an employee in cases where: such termination is justified for economic, technical or organisational reasons; the employee is no longer able to perform the job; the employee has committed serious cases of misconduct; the employee’s performance of work duties is unsatisfactory; the employee is guilty of repeating a minor misconduct or breach of obligations; or the employee’s performance remains unsatisfactory in spite of a written warning. Upon dismissal, the employee is entitled to receive his/her salary until the last day of work and also be compensated for unused annual leave.


An employer who wants to terminate an employment relationship must respect the notification period as prescribed by Law. In addition, the employer must serve the employee with a written decision for the termination of the employment contract, such decision shall include grounds for the dismissal.


In the case of a dismissal, the employee is entitled to make a complaint to the employer or its relevant bodies. Moreover, if he/she is not satisfied with the decision of the employer or its relevant bodies, the employee may submit an appeal to the Labour



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all publicly available sources if the consent of the employee has been given or if it “is necessary for the purposes of fulfilling the obligations and specific rights of a data controller (in this case the employer) in the field of employment...”.



According to the Law on Courts, the employment disputes shall be submitted to the Basic Court – General Department. The Basic Court is a court of first instance. Unless otherwise provided by Law, all cases before the General Department of the Basic Court shall be adjudicated by one (1) professional judge.


According to the Law on Labour, and upon the parties’ agreement, the protection of rights may also be resolved through a mediation process. Rules and procedures for resolution of labour disputes through mediation are determined by the provisions of the Law on Mediation and other applicable legal provisions. The Law on Contested Procedure regulates the procedure for employment-related complaints. The claim has to be submitted in writing before the competent Basic Court. The contesting party shall pay a fee, which is based on the administrative instruction issued from the Kosovo Judiciary. The plaintiff should attach the certificate of the paid court taxes to the claim.


According to the Law on Contested Procedure, the defendant has to reply to the claim within fifteen (15) days after receiving the official documents from the court. Within thirty (30) days from receiving the reply by the defendant, the court sets the preparatory session. Article 420 of the same Law specifies that the main hearing be held within thirty (30) days from the end of the preparatory session. As said, the procedure will go through two (2) court hearings and, as such, it shall not take longer than one (1) year, but due to the large number of outstanding cases at the Basic Court, the decision on employee disputes may take longer than one (1) year.


Pursuant to the Law on Contested Procedure, the parties have the right to submit a complaint against the first instance court judgment. This can be done through means of attack foreseen by the legal provisions of this Law. With regards to a complaint in the Court of Appeal, as the second instance court, the procedure is similar to the first instance stipulated in question 9.3 and it may also last up to one (1) year.




The law does not provide the enforcement of such covenants; however, the parties may submit a complaint to the respective court for any breach of contract that may arise from the employment contract. The enforcement of such covenants would be decided by the relevant courts of the Republic of Kosovo.



The Law on Protection of Personal Data stipulates that the consent of the employee should be given, and an approval from the National Agency for Protection of Personal Data (NAPPD) should be issued for the transfer of employee data to other countries.


The Law on Protection of Personal Data, specifically Article 22, specifies that data subjects are entitled to request, and the data controller is obligated to provide, among other things: 1) the personal data stored about such employee; 2) the purposes of the processing and the categories of personal data being processed; 3) the legal basis for the processing; and 4) the origin of the data.


According to the Law on Protection of Personal Data, pre-employment checks, such as criminal record checks, medical record checks, etc. are classified as sensitive personal data. In this regard, Article 6 of the aforementioned Law stipulates, among other things, that sensitive personal data may be processed “if the processing is necessary for the purposes of fulfilling the obligations and specific rights of a data controller in the field of employment…”. With this in mind, the employer could justify the pre-employment checks with the aforementioned provision.


According to the applicable laws, yes, the employer is entitled to monitor and employee’s emails, phone calls and the use of the employer’s computer system.


According to applicable laws, the employer is entitled to use



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Luljeta Plakolli-KasumiDeloitte Kosova Sh.p.k. “Ali Hadri” street, n.n.Zona Industriale 10000 PrishtinaKosovo

Tel: +386 49 780 769Email: [email protected] URL: www2.deloitte.com/al/en

Vjosa MisiniDeloitte Kosova Sh.p.k. “Ali Hadri” street, n.n. Zona Industriale 10000 PrishtinaKosovo

Tel: +386 49 780 764Email: [email protected] URL: www2.deloitte.com/al/en

Deloitte Kosova Sh.p.k. is an affiliate of Deloitte Central Europe Holdings Limited, a member firm in Central Europe of Deloitte Touche Tohmatsu Limited. Deloitte Kosova Sh.p.k., founded in 1999, has extensive knowledge of the local market and of best practices from around the world. With more than 15 years of operations in Kosovo, Deloitte Kosova Sh.p.k. is a reputable firm and enjoys the distinction of being the leading professional services organisation in the country, delivering world-class assurance, tax, legal, consulting, financial advisory and technology services. The practice serves many of the country’s largest companies, public institutions, and successful fast-growing companies.

In 2011, Deloitte Albania and Deloitte Kosova agreed on a closer cooperation by forming the Deloitte Albania & Kosovo cluster. Comprising over 300 people across the two offices, this collaboration enables Deloitte Albania & Kosovo professionals to use their combined size, scale and expertise to offer a greater breadth and depth of service to our clients where and when they are needed.

Luljeta Plakolli-Kasumi is the Legal Manager in the Tax & Legal Department of Deloitte Kosova Sh.p.k. Before Deloitte, she worked for the Council of Europe Office in Kosovo for almost 14 years. She also served in the Board of Directors of KEP Trust as a local lawyer with international experience. She also teaches courses in commercial law, intellectual property rights and arbitration law in the Faculty of Law of the University of Prishtina, and is author of a number of publications in the given subject matters, including sports law. Luljeta holds an LL.M. Degree in International and Comparative Law from the University of Pittsburgh School of Law, and a Bachelor Degree from the University of Prishtina, Law Faculty. She is fluent in Albanian, English, Turkish and Serbo-Croatian.

Vjosa Misini is a Senior Legal Associate at the Tax Department of Deloitte Kosova Sh.p.k. She graduated in Law from the University of Prishtina and is currently doing a Master’s Degree LL.M. with the University of London, Queen Mary. Prior to joining Deloitte, she had five years of experience in economic and commercial law working in the banking sector. Her areas of expertise include commercial law, including contract and corporate law, economic law, banking law, property law, and insurance law. Vjosa is fluent in Albanian (native speaker) and English.



Chapter 23

FCLAW – LAWYERS & PRIVATE NOTARIES

Miguel Quental

Paulo Cordeiro De Sousa

Macau


The Labour Relations Law does not contain provisions regarding collective bargaining. Collective bargaining is not usual in Macau at company or industry level. However, employers and employees may reach agreements with contractual terms different from the ones set forth by the Labour Relations Law, provided that implementation of these terms does not result in working conditions less favourable to the employee’s than those established by the Labour Relations Law. If the working conditions agreed by contract are less favourable to the employees than the ones established in the Labour Relations Law, such terms shall be deemed null and void and shall be replaced by the provisions of the Labour Relations Law.



Under Article 27 of the Macau Basic Law, all employees have the right to form representative organisations and to join trade unions. However, this right has not yet been defined or regulated by law. For this reason, there are still no formal labour unions in Macau SAR.


See the answer to question 2.1 above. There are still no formal labour unions in Macau SAR.


See the answer to question 2.1 above. There are still no formal labour unions in Macau SAR.


There are no provisions in the Labour Relations Law regarding



The main sources of employment law in Macau are the Labour Relations Law (Law no. 7/2008) and the Law for the employment of non-resident workers (Law no. 21/2009).


The Labour Relations Law distinguishes between resident and non-resident workers. The employment contracts for resident workers can be classified into two categories: permanent contracts and term contracts (which have a maximum period of two years and may be fixed-term contracts or, in some special cases, variable-term contracts). Non-resident workers may only be employed under fixed-term contracts that may never convert into permanent contracts. Part-time work shall be subject to special legislation (not yet published).


Permanent contracts are not subject to any special form and may be concluded verbally or in writing. Fixed- or variable-term labour contracts and juvenile labour contracts (acceptable in certain cases) shall be subject to written form.


The Labour Relations Law does not have any reference to terms implied into contracts of employment.


Yes. There are many statutory minimum labour standards regarding working hours (eight hours per day, 48 per week), annual leave (six days), maximum probation period (30 days for term contracts, 90 days for permanent contracts and 180 days for permanent contracts with employees whose work is of a highly technical nature or involving special qualifications, as well as for employees who hold leadership and management positions), paid sick leave (six days), maternity leave (56 days), paternity leave (two days not paid), etc.


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If the discrimination claim is successful, the employee is entitled to receive compensation for the damages that he has suffered.


There are no legal provisions regarding additional protection to “atypical” employees.



Female employees are entitled to not less than 56 days of maternity leave. Of the 56 days of maternity leave, 49 days must be taken immediately after birth, and the days left may be taken consecutively or separately, before or after birth, at the discretion of the female employee.


Female employees whose term of employment has lasted more than one year on the birth date of their child are entitled to receive the basic remuneration corresponding to the period of maternity leave. Female employees whose term of employment reaches one year during maternity leave are entitled to receive the basic remuneration corresponding to the remaining period of maternity leave after the completion of one year’s service. Female employees shall not be instructed to perform work incompatible with her physical condition during pregnancy and within three months of delivery, and the employer shall not unilaterally terminate the employment with female employees during pregnancy or within three months of delivery, except with just cause. In the case of non-compliance with the above, the employer shall be liable to pay a compensation to the dismissed female employee equivalent to 56 days of remuneration, without prejudice to any additional compensation that may be legally due.


See the answer to question 4.2 above. Female employees shall not be instructed to perform work incompatible with her physical condition within three months of delivery and the employer shall not unilaterally terminate the employment with a female employee within three months of delivery, except with just cause.


Fathers have the right to enjoy two working days (not paid) for reasons of paternity or adoption.

the setting up of work councils or any other form of representative bodies for employees.


See the answer to question 2.4 above. The Labour Relations Law does not provide for co-determination rights of employees.


See the answers to questions 2.1 and 2.4 above.


No. Employees are not entitled to representation at board level.

3 Discrimination


Yes. Under Labour Relations Law, all employees shall have equal opportunities for employment based upon nondiscrimination conditions. No employee or applicant for employment shall be unduly privileged, or discriminated against or deprived of any right or exempted from any duty on the grounds of, inter alia, national or social origin, descent, race, colour, gender, sexual orientation, age, marital status, language, religion, political or ideological beliefs, membership of associations, education or economic background.


See the answer to question 3.1 above.


Yes. A difference in the treatment of employees regarding a situation in which discrimination would be prohibited may not constitute illegal discrimination if, due to the nature of the work or the context in which it is carried out, such a different treatment constitutes a justifiable and decisive requirement for the performance of the work.


The Labour Relations Law does not contain specific provisions regarding compensation of employees in case of illegal discrimination. Nevertheless, the employer who treats an employee or a job applicant in an unjustifiable discriminatory manner may be fined. An employee who has been discriminated against may claim for civil damages in civil courts.Both parties can settle claims at any time during, before or after the claim is initiated.

FCLAW – LAWYERS & PRIVATE NOTARIES Macau


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with the employees new terms and conditions for the employment, amending the employment contracts accordingly.



Yes. A notice period must be observed in the case of termination of a contract without just cause (unilateral termination). The notice period may be established in the employment contract (the notice period for the employee cannot be longer than the notice period for the employer).In the absence of contractual provisions regarding the notice period, the Labour Relations Law sets forth that the notice period is 15 days for the employer, but only of seven days for the employee.If the employer does not comply with the notice period, the employee shall be entitled to compensation (the employer shall pay to the employee the basic remuneration regarding the days of the notice period). In addition, such notice period shall be taken into account for computing the seniority of the employee.


The Labour Relations Law is silent in this respect. However, our understanding is that employers can require employees to serve a period of “garden leave”, as mentioned, if the employees are fully paid during such period.


According to the provisions of the Labour Relations Law, either the employer or the employee may terminate the labour contract with or without just cause.In the case of termination of the contract with just cause, the employer must give the employee written notice of the decision to terminate the employment within 30 days after becoming aware of the relevant facts, summarily describing the facts relating to the employee.The lack of written notice or the lack of grounds in the just cause invoked shall be considered termination of the employmet without just cause, in which case, the employee shall be entitled to compensation which is equivalent to double the amount that would be due by the employer in the case of termination without just cause.The employer may freely terminate without just cause the labour contract, but the employee is entitled to compensation equivalent to:1) seven days of the basic remuneration if the period of

employment is over the probationary period and up to one year;

2) ten days of the basic remuneration per year of service if the period of employment is over one year and up to three years;

3) thirteen days of the basic remuneration per year of service if the period of employment is over three years and up to five years;

4) fifteen days of the basic remuneration per year of service if the period of employment is over five years and up to seven years;


Absences may be justified (but not paid) due to the pressing need to provide assistance to a member of the household, subject to a maximum of 12 working days per calendar year. The law does not contain any provision regarding absences to feed and tend to the child.


The law does not contain any provision regarding this issue.

5 Business Sales


In the case of a share sale, since the employing entity will remain the same, there is no transfer of employees. On the other hand, in case of a transfer of a commercial enterprise (transfer of business), under the Macau Commercial Code, employees shall automatically be transferred to the acquirer, except if, prior to the transfer, the transferor and the acquirer have entered into an agreement pursuant to which the employees will continue to work for the transferor in another business.


In the case of transfer of a commercial enterprise (transfer of business), the employment contracts should remain in force, untouched, unless otherwise agreed with the employees. Nevertheless, according to the law, the employee may terminate the employment contract with just cause, in which case he/she may be entitled to receive compensation. Our understanding is that business transfers should not affect collective agreements, if they exist.


The law does not contain any provision regarding specific information and consultation rights on a business sale.


See the answer to question 5.1 above. As mentioned, employees may not be dismissed in case of a business sale.


Employers are not free to change the terms and conditions of the employment contracts in any circumstance (transfer of shares or transfer of business). However, the new employer may agree



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iii) chronic tardiness, leaving early or abandoning work during the working hours without authorisation;

iv) unjustified absences from work, which directly cause serious harm to the enterprise or, irrespective of any harm, when the number of unjustified absences is greater than three consecutive days or five separate days in each year;

v) false statements regarding the justification of absences;vi) an abnormal reduction of productivity which has been

intentionally caused by the employee;vii) repeated provocation of disputes with other employees of the

enterprise;viii) acts of physical violence, insult or other abuse punishable

under law directed at the employer, superiors or other employees of the enterprise;

ix) severe harm to the enterprise’s interests; andx) violation of regulations on occupational hygiene and safety.


Yes. In the case of termination of contract with just cause, the employer must give the employee written notice of the decision to terminate the employment within 30 days after knowledge of the relevant facts, summarily describing the facts relevant to the employee. In the case of termination of contract without just cause (unilateral termination), employers are required to give notice to the employee within the notice period set forth in the contract, or within a 15-day notice period if the contract is silent on this matter. If the notice period is not complied with, the employee is entitled to compensation and the notice period shall be taken into account for computing the seniority of the employee.


See the answer to question 6.3 above. In the case of lack of written notice or lack of grounds in the just cause invoked, an employee can bring a claim against his employer by filing a lawsuit in the labour court. If the court decides that the dismissal is not valid, the employee shall be entitled to compensation equivalent to twice of what he/she should be able to receive in the case of termination of the employment without just cause. In principle, the employee can also claim for other damages.


Yes; it is possible to reach a settlement agreement on the claims at any time during, before or after they are initiated.


No. The law does not contain any provision regarding additional obligations of the employer if it is dismissing more than one employee at the same time.

5) sixteen days of the basic remuneration per year of service if the period of employment is over seven years and up to eight years;

6) seventeen days of the basic remuneration per year of service if the period of employment is over eight years and up to nine years;

7) eighteen days of the basic remuneration per year of service if the period of employment is over nine years and up to 10 years; or

8) twenty days of the basic remuneration per year of service if the period of employment is over 10 years.

Please note that there is a legal limit for the maximum amount of compensation to the employee. The limit is 12 times the basic remuneration of the employee in the month of the termination of the contract, irrespective of the duration of the employment. Additionally, the monthly basic remuneration used to calculate compensation is limited to a maximum amount of Mop$20,000.00, save if a higher value has been agreed upon between the employer and the employee.There is no legal obligation to obtain the consent of a third party if the employer wishes to terminate an employment contract unilaterally, with or without just cause.The law does not provide for the reinstatement of the employee and back payment of salary or other benefits.


Yes. There are two categories of employees that enjoy special protection against dismissal. According to the Legal Regime of Compensation for Damages arising from Accidents at Work and Occupational Diseases (Decree-Law No. 40/95/M), during the period of partial temporary incapacity, the employer is required to occupy employees who are victims of an occupational accident or occupational disease in functions compatible with their health situation. An employer who terminates the employment relationship with an employee who is a victim of an industrial accident or an occupational disease without due cause, while he/she is temporarily incapacitated, must pay him/her compensation equal to three months’ salary, without prejudice to any other compensation provided by Law for unilateral termination.According to the Labour Relations Law, the employer shall not unilaterally terminate the employment of a female employee during pregnancy or within three months after birth, except with just cause. Otherwise, the employer shall be liable to pay compensation to the fired female employee equal to 56 days of remuneration, without prejudice to any other compensation provided by law for unilateral termination.


Employees are not entitled to compensation on dismissal with just cause. In general, any fact or serious circumstance that makes it impossible to continue the employment shall constitute just cause for termination of the contract. Among others, the following are considered just cause for the employer to terminate an employment contract:i) wilful disobedience to orders given by superiors;ii) repeated lack of commitment in fulfilling duties inherent to

the exercise of the employee’s functions;



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Yes. During the course of the employment, the employee is entitled to obtain from the employer copies of his/her personal information that is held by the employer.


There are no statutory standards about this issue. In practice, for some senior positions, it is usual to carry out pre-employment checks, which are closely related to the employment relationship to be established.


In accordance with Personal Data Protection Law, employers have the right to monitor employees’ telephone calls, emails, use of internet by the employees and video surveillance of the employee. Such monitoring involves collecting personal data from the employee; thus, the employer must previously inform the employee that he will be monitored, and the employee must give his/her consent. Prior to deciding to monitor the employee, the employer should assess the need for such monitoring and give careful and comprehensive attention, in particular, to the following items:(1) the purpose of collecting the data and whether it is legitimate;(2) whether the practice of monitoring is necessary for achieving

the purpose, and whether alternatives to monitoring are available, which will minimise involvement in the processing of personal data;

(3) whether the monitoring practice, scope and timing is appropriate and justified;

(4) the data that should be collected and whether they are essential for attaining the expected goals;

(5) whether the monitoring will safeguard the interest of the employer or the interest of the employee;

(6) the harmful results brought about by inappropriate handling of the data collected; and

(7) how to formulate the rules for protecting personal data and the Personal Data Collection Statement.

As monitoring is an act falling within the scope of personal data collection, the employer carrying out employee monitoring should abide by the Personal Data Protection Law, handle personal data in transparent and legal ways with due respect to personal privacy, fundamental rights and freedom as bestowed by law and observe the principle of good-will. The violation may constitute administrative infringement, or even a criminal act; furthermore, the employer may also be liable to compensate the employee for damages suffered.


There are no guidelines about such issue. However, our opinion is that employers may not control an employee´s personal use of social media outside the workplace.


The law does not contain any provision regarding this issue.



The Labour Relations Law does not contain any provision on restrictive covenants. However, it is very common to negotiate with certain categories of employees’ post-employment covenants, notably regarding non-competition and confidentiality obligations. Such restrictive covenants must be agreed in writing, addressing, e.g., the terms of the non-competition restrictions and its time limits, including reasonable compensation during the restraint period.


The Labour Relations Law does not contain any provision regarding this issue.


There are no statutory standards or guidelines about this matter in the Labour Relations Law. However, in practice, the provision of financial compensation during the non-competition restriction period is one important element to be taken into consideration by the court when assessing the validity of such covenants. The amount of the compensation should be reasonable in order for it be enforceable.


If the employee does not comply with the non-competition restriction, the employer may claim for damages in the labour court. The amount of the damages is often stipulated in the restrictive agreement.



The Labour Relations Law sets forth that the employer and the employee should mutually respect each other’s personal rights, in particular, the right to privacy of their personal lives. The right to privacy relates to access to and disclosure of information relating to the private and personal lives of either party, such as their respective family life, emotional and sexual lives, state of health and their political and religious convictions.Employee data can be transferred to other countries provided that the employer notifies the Data Protection Authority in Macau and complies with the further requirements of the Personal Data Protection Law (Law No. 8/2005).



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Miguel QuentalFCLAW – LAWYERS & PRIVATE NOTARIESAv. Almeida Ribeiro Edif. Circle Square, 13.º, B-E Macau

Tel: +853 2833 0885Email: [email protected]: www.fclaw.com.mo

Paulo Cordeiro de SousaFCLAW – LAWYERS & PRIVATE NOTARIESAv. Almeida Ribeiro Edif. Circle Square, 13.º, B-E Macau

Tel: +853 2833 0885Email: [email protected]: www.fclaw.com.mo

Established in 2003, FCLAW’s principal goal is to provide the highest quality legal services, seeking long-term partnering relationships with clients, in order to provide the best solution to its clients’ needs.

The underlying aim of the firm is to identify clients’ needs and to meet those promptly and efficiently.

For each practice area, FCLAW actively participates in procedures and negotiations providing legal services to private clients, domestic and international leading corporations and financial institutions, governments and governmental organisations.

Together with our lawyers, FCLAW works across practices and diverse jurisdictions to provide the highest quality and rigorous legal services, bringing their collective experience to bear on the issues that clients face.

Miguel Quental is a Partner at FCLAW. He is a guest lecturer at the Faculty of Law, University of Macau, teaching Labour Law and Business/Commercial Law, and has been published in several articles on Labour matters, as well as being an author of a textbook on Macau Labour Law, published in 2006 and 2012. Miguel is also an invited instructor at the Macau Lawyers Association and at the Legal and Judicial Training Centre of the Macau SAR, and an invited consultant of the Department of Juridical Reform for the “Revision of the Commercial Code”.

Graduate in Law, Faculty of Law of Coimbra (Portugal). Master in Juridical Business Sciences, Faculty of Law of University of Coimbra.

Admitted in the Portuguese Law Society and in the Macau Law Association.

Paulo Cordeiro de Sousa is an Associate at FCLAW. He is engaged in practices related to the tax law, civil law, corporate and commercial law, financial law and public law.

Paulo is a graduate in Law from the Faculty of Law of the Lisbon University and a post-graduate in Business Management and Tax from the Institute of Higher Financial and Tax Studies. He completed the coursework for the post-graduation programme in Intellectual Property at the Faculty of Law of the Lisbon University and Portuguese Intellectual Property Association.

Admitted to the Portuguese Law Society and the Macau Law Association.

a labour claim. Nevertheless, employees are able to request for judicial support in order to be exempt for payment of judicial fees.


In the first instance (Labour Court) the complaints normally take six to 12 months to be decided.


Yes. Regardless of the value of the claim, employers and employees can always appeal to the Court of Appeal in lawsuits in which the discussion of the validity or subsistence of the employment contract is in question or in lawsuits arising from accidents at work or occupational diseases. Otherwise, the appeal may be limited regarding the value of the claim. The average decision time at the Court of Appeal is normally around eight to 12 months.



The Labour Court is the only court that has jurisdiction to hear labour disputes between employers and employees. The labour court is composed of a single judge or a panel of three judges.


Conciliation is not mandatory before a labour complaint is filed in the labour court. After the labour case is filed in court, there will be a mandatory conciliation between employer and employee at the Public Prosecutor Office. An employee has to pay a fee to submit



Chapter 24

Debarliev, Dameski and Kelesoska, Attorneys at Law

Emilija Kelesoska Sholjakovska

Ljupco Cvetkovski

Macedonia


The employment contract shall be concluded in writing and must be kept in the headquarters of the employer. A copy of the signed contract of employment shall be handed to the employee on the date of signing the employment contract.


The Labour Law regulates the mandatory contents of the employment contract. The employment contract shall at least contain: i) information on the parties, their residence or seat; ii) date of entry into employment; iii) job title or data type of work for which the employee concluded the employment contract, with a brief description of the work to be performed under the contract of employment; iv) provisions on the obligation of the employer to inform the employee about risk positions and special professional qualifications or skills or special medical supervision, in accordance with the law, stating the specific risks under the legislation that may result from the work; v) place of work performance; vi) the duration of employment, when the contract was signed for a definite time; vii) provision of whether the worker is employed part- or full-time; viii) provision for daily or weekly regular working hours and allocation of working hours; ix) provision for the amount of the basic salary, which is expressed in the amount of money that goes to the worker to perform the work according to the law, collective agreement or employment contract; x) provision for other benefits belonging to the worker to perform the work according to the law and the collective agreement; xi) provision for annual leave or the manner of determining annual leave; and xii) an indication of the general acts of the employer in which are stated certain conditions of a worker.


The employers are bound by the regulations on the minimum wage for workers, daily and weekly breaks, annual leave duration, maximum working hours, termination causes and notice periods, working age limitations, overtime payment and limitations, informing procedure and severance payments for redundancies and other issues specifically regulated with the abovementioned sources of the employment law.



In Macedonia, the Constitution of the Republic of Macedonia and the Labour Law of Republic of Macedonia mainly govern employment issues. Further, depending on the area of regulation of labour issues, there are also employment regulations governed by: the Law on employment and insurance against unemployment; the Law on labour inspection; the Law on records in the field of labour; the Law on employment of disabled persons; the Law on holidays of the Republic of Macedonia; the Law on temporary employment agencies; the Law on volunteering; the Law on peaceful settlement of labour disputes; the Law on employment and work of foreigners; the Law on safety and health at work; the Law on minimum wage; and the Law on protection from harassment in the workplace.For employees working in the public sector, the Law of administrative officers and the Law for employees of the public sector govern their employment.


The Labour Law protects and applies to any natural person that has concluded an employment contract with an employer. The workers protected by the Labour Law are: (i) the worker working for an employer with a headquarters or a representative office in Macedonia, whose work is performed in Macedonia; (ii) the worker whose employer performs the work in Macedonia under an employment contract concluded in accordance with a foreign law; and (iii) the worker whose employer from Macedonia has sent him or her outside to work abroad.In accordance with the Macedonian regulations, the workers are mainly distinguished in accordance with the type of the contract, which can be an: employment contract with an undefined or defined employment contract time; employment contract with a young person; seasonal employment contract; part- or full-time employment contract; employment contract for performing work from home; employment contract for housekeepers; or an employment contract for business people (management contract).


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salary. The representative trade union is also entitled to negotiate and conclude collective agreements and to initiate a strike in order to protect the rights of the workers.


The trade union and its associations at higher levels have the right to call a strike in order to protect economic and social rights of its members from employment. The strike must be announced in writing to the employer or employers’ association that it is directed against.


In accordance with the regulation in Macedonia, there is no obligation for employers to set up works councils. But, in the case of informing and consulting with the workers, there is an obligation for a privately owned company, public company or other legal entity having more than 50 workers and institutions that have over 20 workers to appoint a representative from the employer to perform the information and the consultation.


The labour regulations do not contain any provisions regarding the matter of co-determination rights of a works council.


The works council’s rights are not determined by the labour regulations. The employer or the representative association of the employers are entitled to negotiate and conclude the collective agreement with the representative union of the workers.


The employees are not entitled to representation or any attendance at the board level of their employer.

3 Discrimination


The employer is prohibited from putting the applicant for a job or a worker in an unequal position because of racial or ethnic origin, colour, sex, age, health condition or disability, religious, political or other beliefs, union membership, national or social origin, family status, economic status, sexual orientation or other personal circumstances. Also, in accordance with the law, women and men must be provided with equal opportunities and equal treatment. The principle of equal treatment implies a ban on direct and/or indirect discrimination.


In Macedonia, collective agreements are concluded on a general level of the Republic and, on the level of a special branch or department of the employer, in accordance to the National Classification of Activities and individual-level employer. On a general level of the Republic, there are the: i) general collective agreement for the private sector of the economy; and ii) general collective agreement for the public sector, as well as other specified collective agreements such as the collective agreement for health workers, construction workers, agricultural and food production workers, etc. Usually in Macedonia, the bargaining of collective agreements takes place at the industry level.



Workers have the right, at their free choice, to establish trade unions and become members, under the conditions laid down by statute or the rules of that union. Trade unions can constitute confederations or other forms of association in which their interests are connected to a higher level (trade unions at higher levels). The trade union of a higher level becomes a legal entity on the day of registration in the Central Register of the Republic of Macedonia, following a previous entry into the register of trade unions or the register of associations of employers. The trade unions are registered in the Register of Unions, which is kept in the Ministry responsible for labour affairs. Submitting a request for entry into the register, for which decision from the Ministry is obtained, does the registration.


The trade union is entitled to represent, promote and protect the economic, social and other individual and collective interests of workers on a general level. The unions can constitute confederations or other forms of association in which their interests are connected to a higher level (trade unions and employers’ associations on a higher level). In accordance with the law, the unions have the right to associate and cooperate with international organisations established due to the realisation of their rights and interests. The union may collect a registration fee and membership fee with the purchase, gift or any other legal way to acquire property; forced execution can be implemented on movable and immovable property of the union necessary for holding meetings. A member of the union may seek court protection in case of violation of his or her rights under the statute or other rules of the union or association. A worker must not be placed in a less favourable position than other workers because of trade union membership. The trade unions with members employed by a particular employer may appoint or elect one or more union representatives who will advocate the worker’s right with that employer. The trade union representatives are entitled to expect the employer to protect and promote the rights and interests of the members. The employer is obliged to provide premises for the activity to the trade union representative of the biggest union. The trade union representative is protected from termination of employment without the union’s consent as well as the decrease of

Debarliev, Dameski and Kelesoska, Attorneys at Law Macedonia


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Workers during pregnancy, birth and parenting are entitled to paid leave from work for a period of nine consecutive months. If the worker gives birth to more than one child (i.e. twins, triplets or more), the maternity leave lasts for 15 months.


A worker who uses maternity leave for pregnancy, childbirth and parenting, or to take care of a child, is entitled to remuneration. The employee whose employment contract is terminated due to an expiry of the definite time and uses the right of remuneration, due to pregnancy, childbirth and parenting, continues to exercise this right until the expiry of the absence. The employer is banned from terminating the employment agreement of the worker who exercises the right of maternity leave.


At the end of the maternity leave, the worker is entitled to return to the same job or, if that is not possible, an adequate position under the terms of the employment contracts. If the worker returns to work before the end of the maternity leave, the worker is entitled to the right of salary by the employer, as well as 50% of the determined remuneration. Following an absence due to pregnancy, childbirth and parenting, a worker who is breastfeeding, even after she starts working full-time, will be entitled to a paid break during working hours that will last one-and-a-half hours a day. The worker is entitled to the right of additional paid break time for the first year after the birth of her child.


The father is entitled to the right to take paid paternity leave up to seven working days due to the birth of his child. Fathers are entitled to take paternity leave only if the mother does not use the right of the maternity leave.


The employer may not require any data on pregnancy of a worker, unless she herself does not submit the data related to her pregnancy. In accordance to the law, if the employee performs work during her pregnancy that may adversely affect her health or the health of the child, the employer is obliged to provide her with another job and salary, if it is more favourable for her.


During pregnancy and until the child is one year old, the worker cannot perform overtime or work at night. A worker that has a child from one to three years of age may be ordered to perform overtime


The law recognises two types of discrimination: direct and indirect discrimination on the grounds mentioned in question 3.1. These types of discrimination refer to both the job applicant and the worker. Direct discrimination is any conduct motivated by any of the abovementioned grounds by which a person has been placed, or could be put, in a less favourable position than other persons in comparable cases. Indirect discrimination exists when a certain seemingly neutral provision, criterion or practice puts or would put a person at a particular disadvantage compared with other persons, a job applicant or employee for a certain capacity, status, belief or conviction related to the abovementioned grounds.


In Macedonia, the burden of proof in a discrimination claim lies with the employer. The employer shall not be held liable if the activities of distinction, exclusion or giving priority in terms of a certain job were done when the nature of work is such, or the work is performed in such conditions, that the characteristics associated with some of the abovementioned grounds are real and decisive conditions for performing the work.


In the case of discrimination, an employee has two options: (i) to file a claim to the Commission for protection against discrimination; or (ii) to file a claim in front of the Civil Court against the employer. The employee is able to settle the claim both before and after the claim is initiated.


An employee who has succeeded in the discrimination claim is entitled to (i) refuse to participate in actions that violate or may violate the employee’s right to equal treatment, i.e. to perform actions that eliminate discrimination or its consequences, (ii) compensation for material and immaterial damage caused by the violation of the rights protected by this law, and (iii) announce to the media any violations of equal treatment at the expense of the defendant.


The law does not entitle the atypical workers to any additional protection regarding discrimination in relation to employment. The law provides that in terms of conditions of employment, the workers employed on a fixed-term contract cannot be treated in a less favourable manner than permanent workers solely because they have an employment contract for a definite time, unless different treatment is justified by objective reasons.



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their workers, the transferor or transferee shall promptly consult with the representatives of trade unions of its employees in connection with such measures to reach an agreement.


The transfer of the company or parts of the company itself does not give grounds for the dismissal of workers, except dismissals for economic, technical or organisational reasons that require personnel changes.


An employer, who has obtained the employment rights of the workers, is obliged to provide all the rights, obligations and responsibilities that the workers had at their previous employer. The new employer is obliged to ensure these rights for at least one year, until the expiration of the employment contract or collective agreement that the obligations on the previous employer.



The worker and employer may terminate the employment contract within the specified statutory or contractual notice period. When the contract is terminated, the parties are obligated to respect the minimum duration of the notice period. If the employer terminates the employment contract with an individual worker or fewer workers, the notice period is one month. The notice period is two months in the case of termination of employment of more than 150 employees or 5% of the total number of workers working for the employer prior to the termination of employment. If the employer terminates the employment contract of seasonal workers, the notice period is seven working days. The notice period starts on the day after the worker received the decision for termination of the employment contract.


The law does not regulate the right of an employer to require an employee to serve a period of “garden leave”. For the duration of the notice period, the employer is only obliged to allow the employee leave of four hours during the working week in order to seek another job.


The employer may terminate the employment contract only if there is a valid reason for refusal related to the conduct of the employee (personal reason by the employee) for violating the working order and discipline or work obligations (cause of fault), or if the cause

or night work only after prior written consent. A worker who is parent to a child that is seven years of age or younger, or has a seriously ill child or a child with a physical or mental disability, and who lives alone with the child and takes care of their upbringing and protection may be required to perform overtime or work at night only with a prior written consent by the worker. One of the parents of a child with developmental disabilities and special educational needs has the right to work half of the full-time hours if both parents are employed or if the parent is single, based on the findings of the competent medical board, if the child is not placed in institution for social healthcare.

5 Business Sales


In the case of a transfer of activities of a company or parts of the company, or in the case of a transfer of tasks or part of them from the employer-carrier to another employer-transferee, the rights and obligations arising from employment completely transfer to the employer-transferee to whom the business is sold. When a company ceases to exist due to the division of the company body, deciding on the division of the company determines which of the new companies established assume the rights and obligations of labour relations to the previous employer. The transfer of the company or parts of the company itself does not give grounds for the dismissal of workers, except dismissals for economic, technical or organisational reasons that require personnel changes.


If the workers are transferred to the employer-transferee, they are entitled to all the rights arising from the labour regulations, as well as their employment agreement. However, it should be noted that before the transfer of the rights and obligations arising from the employment of workers by the employer-carrier and employer-transferee, the transferor and transferee are obligated to inform the unions of this fact and to consult them in order to reach an agreement. The law does not regulate how the business sale affects the collective agreements, but it is required that the unions are informed and consulted in order for an agreement to be reached. This agreement may include the collective agreements’ issues and the transfer of the rights and obligations from the agreements to the new employer.


Prior to the transfer of the rights and obligations arising from the employment of workers by the employer-carrier and employer-transferee, the transferor and transferee are obligated to inform the unions of this fact and to consult them in order to reach agreement on: i) the established or proposed date of the transfer; ii) the reasons for such transmission; iii) legal, economic and social implications for workers; and iv) measures envisaged in relation to the workers. Where the transferor or the transferee predict measures relating to



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Prior to the termination of the contract of employment due to a personal reason, the employer has to issue the worker a warning in a written form for failing to meet obligations and the possibility of termination in the event of further violations of the same.If the employment contract is terminated, the employer is obligated to state the reasons for the termination, defined by law and the collective agreement, and the employer is required to prove the merits of the cause that justifies the termination and to provide an explanation.


The worker is entitled to appeal to the management or to the employer against the decision to terminate the employment contract. The complaint shall be filed within eight days from receipt of the decision for the termination of the employment contract. The decision on the appeal is taken within eight days of the filing of the complaint. When no decision is taken on the complaint or when the worker is not satisfied with the decision taken on the complaint, the worker is entitled to take proceedings before a competent court. At the request of the worker, the union can represent workers in opposition proceedings.


The employer is able to settle the claim with the employee either before or after they are initiated.


If the employer intends to make a decision on the termination of the employment of a number of workers due to business reasons, or at least 20 employees for a period of 90 days at each termination of employment regardless of the total number of employees by the employer, it shall be considered a collective dismissal due to business reasons. When the employer intends to carry out collective redundancies, the process shall be initiated with consultation with the workers’ representatives, at least one month before the collective dismissal. The employer is obligated to provide the representatives with all relevant information before starting consultations to achieve an agreement. After the consultation with the representatives, the employer shall issue a written notice to the office in charge of employment issues regarding the help and services of mediation in employment. This notice shall be issued no later than 30 days prior to the termination of the employment.


If the employer fails to fulfil the obligation stated in question 6.9, a fine of 3,000 Euros shall be imposed.

is based on the needs of the operation of the employer (business reason). The law also provides for cases when the employment contract is terminated due to unfounded reasons. According to the law, unfounded reasons for cancellation of the employment contract are: i) membership in a union or worker participation in union activities in accordance with law and collective agreements; ii) the filing of a complaint or participation in proceedings against an employer for the purpose of confirming the breach of contractual and other obligations arising from employment before arbitral, judicial and administrative authorities; iii) approved absence due to illness or injury, pregnancy, birth and parenting, care of a family member and unpaid parental leave; iv) the use of an approved leave of absence and annual leave; v) serving in the military or military exercise; and vi) other cases of suspension of the employment contract stipulated by this law.In accordance with the Labour Law, the provisions relating to termination of the employment contract shall apply in the case when the employer terminates the employment contract and, at the same time, the employee is also proposed with a new amended employment contract.As a general rule, according to the law, the employer is not required to obtain any kind of consent from a third party before the employee’s contract is terminated. The only exception of this rule in accordance with the Labour Law is the case when the employer wants to terminate the employment contract of the union representative. The employer may terminate the employment contract of the union representative only with prior consent of the union.


Other than the categories of employees stated in question 6.3, in accordance with the Labour Law, the union representative is protected against dismissal during the whole period of their term of office and at least two years after expiry of their term of office.


The employer is entitled to dismiss the employee due to reasons related to the individual worker when the worker, because of his behaviour, lack of knowledge or opportunities, or for failure to meet specific conditions set by law, is not capable of performing contractual or other obligations of employment (personal reasons). The employer may terminate the employment contract of a worker for personal reasons only if the worker is provided with the necessary working conditions and is given appropriate instructions, guidelines or a written warning from the employer related to the work claiming that the employer is not satisfied with the manner of the execution of duties, and if the worker does not improve the performance by the deadline set by the employer.The employer can also dismiss the worker if the worker is no longer needed to perform certain work under the conditions stated in the employment contract due to economic, organisational, technological, structural or similar reasons by the employer (business reasons). In the case of termination of the employment contract for business reasons, the employer is obliged to pay the worker severance payment, which is determined in a number of net wages that the employer will pay according to the time the worker has spent at work.



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and delivered to third parties if this is necessary for exercising the rights and obligations of the employment relationship or related to employment. The personal data of workers, whose collection no longer has a legal basis, must be immediately removed and ceased of use. The law does not regulate the right of a transfer of an employee’s data freely to other countries by an employer.


The personal data of workers may be collected, processed, used and delivered to third parties by the employer, or by the person employed by the employer and who is specifically authorised.


In accordance with the law, the employer at the time of conclusion of the employment contract shall not require from the candidate for employment data on family or marital status or information related to family planning. The employer is also banned from asking the candidate for employment to submit documents and other evidence that are not directly related to employment. Furthermore, the candidate is not obliged to answer questions that are not directly related to employment.


In the Labour Act of Macedonia, there is a general provision stating that the employer is obliged to protect and respect the personality and dignity of the employee, as well as to take care and protect the privacy of the employee. The law does not specifically state the ban of the employer to monitor the employee’s communications, but these acts can be considered as acting against the obligation for protection of the personality and dignity of the employee.


The law does not directly regulate if the employer can control an employee’s use of social media in or outside the workplace, but the employer is entitled to ban the use of the social media during working hours or even ban the employee from accessing social media on the employer’s computers. However, the employer is not entitled to ban the use of the social media outside of the workplace and after working hours.



In accordance with the Law on Courts of Macedonia, the competent court for labour disputes in Macedonia is the Court of First Instance. The Appellate Court shall be competent after appeal on the decision of the Court of First Instance. If the criteria are met, the dispute can finally be taken in front of the Superior Court.



For the duration of employment, the workers shall not, without the consent of their employer, for themselves or on a third party’s account, perform or conclude any deals related to the business of the employer or a competitive or potentially competitive employer. The employer may require compensation of the damage caused by the actions of the worker. During their employment, if the worker gains technical, production or business knowledge and business relations, the employer and the employee can agree on a provision for prohibition of competitive action after the termination of employment (competitive clause) in the employment contract.In accordance with the law, the worker is banned from using for their own use or from giving to a third party data considered confidential to the employer. This obligation applies to the worker whose employer determines that the data is confidential, was entrusted with the data, or was aware of it. The worker is responsible for issuing confidential data, if he or she knew or should have known of such capacity of the data.


The ban from competition activities for the worker lasts for the whole time during the employment. After the employment, if the employer and the worker have agreed on a competitive clause, the competitive clause can last up to two years after the termination of the employment.


In accordance with the law, in the case when respecting the competition clause prevents the worker from earning a proper income, the employer shall, for the time that the worker is respecting the prohibition, pay cash compensation to the worker. The compensation for respecting the competitive prohibition must be determined in the employment contract, and shall be at least half of the average salary of the worker for the last three months prior to the termination of the employment contract.


If the worker fails to comply with the ban of competition activities, fails to keep the data confidential, or does not respect the competition clause for the agreed period after the termination of the employment, the employer is entitled to claim damages for the worker’s actions in court.



The personal data of workers may be collected, processed, used



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the Appellate Court shall decide on the appeal filed against the decision of the Court of First Instance within 30 days of receipt of the application or within two months if before the Appellate Court to hold a hearing.


If the criteria related to the civil procedure are met, the decision of the First Instance Court can be appealed in front of the Appellate Court. In proceedings of labour disputes, the Appellate Court shall decide on the appeal filed against the decision of the Court of First Instance within 30 days of receipt of the application or within two months if before the Appellate Court to hold a hearing.


For employment-related complaints in Macedonia, Civil Procedure is applied. The conciliation is not mandatory before a complaint can proceed. The employee is obligated to pay a fee to submit a claim in front of the Court that is related to the amount of compensation that is claimed.


In proceedings of labour disputes, the procedure before the Court of First Instance must be completed within six months from the date of filing the claim. In proceedings regarding labour disputes,


Emilija Kelesoska SholjakovskaDebarliev, Dameski & Kelesoska, Attorneys at LawMirche Acev no. 2/3 Skopje Republic of Macedonia

Tel: +389 2 3136 530 / 3215 471Email: [email protected]: www.ddklaw.com.mk

Ljupco CvetkovskiDebarliev, Dameski & Kelesoska, Attorneys at LawMirche Acev no. 2/3 Skopje Republic of Macedonia

Tel: +389 2 3136 530 / 3215 471Email: [email protected]: www.ddklaw.com.mk

Accepting the premise that no one can be equally versed in all fields of law, Debarliev, Dameski & Kelesoska Attorneys at Law (DDK) has been created as a company committed to be the leading business law firm in Macedonia.

Debarliev, Dameski & Kelesoska Attorneys at Law is also the first law company established in the territory of the Republic of Macedonia, distinguishing itself in the market with a clear business and corporate law orientation, complemented by an excellent network of legal experts covering the complete territory of Republic of Macedonia.

The quality of Debarliev, Dameski & Kelesoska Attorneys at Law rests mainly upon the quality of its attorneys, their accessibility and efficiency. DDK’s attorneys at law share outstanding academic backgrounds, as well as a strong commitment to legal perfection.

The partners of DDK have more than 15 years’ law practice experience and have exceeded clients’ expectations by providing sophisticated and efficiently-managed legal services.

DDK offers excellent legal services to clients involved in all of the biggest M&A and energy projects in Macedonia, and has been engaged as counsel in numerous successful PPP projects, privatisations, capital markets transactions, banking, joint ventures, etc.

Emilija Kelesoska Sholjakovska is one of the founders of Debarliev, Dameski & Kelesoska Attorneys at Law. Employment legislation, intellectual property, electronic communications, competition, corporate law, taxation and M&A are her most valued areas of expertise.

Emilija Kelesoska Sholjakovska graduated from the Iustinianus Primus Faculty of Law in Skopje, Republic of Macedonia, in 1997. She first started working at Kolevski Law Office Skopje, and subsequently continued at MENS LEGIS Law Company. Following this, she worked at Spirkovski Law Offices and later established Debarliev, Dameski & Kelesoska Attorneys at Law, along with partners Dragan Dameski and Ivan Debarliev.

In 1999, Emilija Kelesoska Sholjakovska was admitted to the Macedonian Bar Association, and since 2001 has been a member of the Bureau for Protection on Industrial Property Rights. She is also a member of the International Advocates Union (UIA) and the International Bar Association (IBA).

Ljupco Cvetkovski is a parner and a licensed attorney at law and has been based in Debarliev, Dameski & Kelesoska Attorneys at Law since 2006. While focusing his expertise on employment relations, corporate law and litigation, Ljupco also works on energy, M&A and private public partnerships. He is a member of the Macedonian Bar Association. Ljupco Cvetkovski has participated in a large number of seminars, training programmes, conferences and various surveys, such as “Investing Across Borders 2010”, “Training Seminar for Lawyers on the European Convention on Human Rights in 2006 and 2007” and “Training of Trainers for Developing Defence Lawyer’s Skills”.


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lack of a written contract does not for that reason alone invalidate the employment relationship or the contractual terms.There is no obligation to provide specific information in writing to employees save and except as required under the Personal Data Protection Act 2010 (“PDPA”).


Certain terms can be implied by law or by custom.The EA imposes certain minimum terms and conditions of employment. Any condition of service under the EA that is more favourable to an EA employee prevails over that in the employment contract or will apply in the event it is not provided for in the employment contract.Regardless of contractual terms, by law, all employees have an implied right: to protection from unjust dismissal; to paid maternity leave; to unionise or join a trade union (unless specifically excluded by the TUA); to contribute and receive contributions to the Employees’ Provident Fund and the Employees’ Social Security (unless specifically excluded by the EPF Act or the SOCSO Act, as the case maybe); and to have their personal data handled in a manner that is consistent with the PDPA.EA employees have the right to minimum wage.Employees also have an implied right to be treated with mutual trust and respect.The Income Tax Act imposes an obligation on employers to make deductions from salaries payable at source and remit the payment towards the employees’ personal income tax payment in accordance with a schedule issued by the Inland Revenue Board.


EA employees are entitled to the following minimum terms and conditions of employment:■ maximum hours of work per day and per week;■ overtime payment for work in excess of normal hours of

work;■ protection from deduction of wages;■ paid annual leave/vacation leave;■ paid sick leave;■ eleven paid gazetted public holidays, five of which are

determined by law;■ termination notice period;



The main sources of employment law are legislation, subsidiary legislation and case law. In instances where local case law does not address an issue, case law from commonwealth countries, especially the United Kingdom, is persuasive.


Most laws protect all levels of employees. However, there are certain exceptions, such as:The Employment Act, 1955 (“EA”) in general only protects employees who fall within the following categories (“EA employees”):■ any person whose monthly wages are MYR 2,000 or below;

and■ any person who (irrespective of salary) is employed:

■ as a manual labourer;■ as a supervisor of manual labourers;■ to operate or maintain any mechanically propelled vehicle

for the purpose of transporting passengers or goods or for reward or commercial purposes;

■ as a domestic servant; or■ in certain positions in sea-going vessels.

There are, however, certain provisions of the EA that extend to all employees or employees who fall outside the above categories.Foreign nationals working in Malaysia (and certain other categories of employees) are excluded from the application of the Employees’ Provident Fund Act 1991 (“EPF Act”) and the Employees’ Social Security Act 1969 (“SOCSO Act”).The Trade Unions Act 1959 (“TUA”) does not allow for certain categories of employees to become union members.


The EA (which applies only to EA employees) provides that employment contracts lasting for more than one month must be in writing and must include a provision for termination. However, the


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■ by way of secret ballot, the percentage of the workmen concerned who are members of the trade union making the claim.

After ascertaining the above matter(s), the DGIR is required to notify the Minister of Human Resources who shall then give his decision on the recognition claim. Where the Minister decides that recognition is to be accorded, such recognition is deemed to be accorded from such date as the minister may specify; this is usually the date when the claim was made.


A trade union may sue in its name.A trade union has immunity from legal proceedings in respect of any act carried out in contemplation or in furtherance of a trade dispute on the ground only that such act induces some other person to break a contract of employment, or that it interferes with the trade, business or employment of some other person or with the right of some other person to dispose of his capital or of his labour as he wills.A trade union also has general immunity from liability in tort subject to certain exceptions.


Industrial action such as strikes, pickets and lockouts are governed by statute.The TUA provides that a trade union of workmen and a trade union of employers may only call for a strike or lockout, respectively, if:■ they obtain the consent by secret ballot of at least two thirds

of their total number of members; ■ they have allowed for at least seven days to lapse after

submitting the results of the secret ballot to the Director General of Trade Unions; and

■ the proposed strike or lockout is in compliance with the rules of the trade union and all applicable laws.

Picketing peacefully for the purpose of obtaining or communicating information, or persuading or inducing an employee to work or abstain from working, is permissible, provided the employees do not attend in such numbers or otherwise in such manner as to be calculated to intimidate any person, obstruct the approach thereto or egress therefrom of the employer’s premises or workplace, or lead to a breach of the peace.There are, however, certain circumstances in which the IRA prohibits strikes, pickets and lockouts.


Works councils do not exist in Malaysia.


This is not applicable. See question 2.4 above.

■ payment of termination benefits, except in cases where the termination of employment is due to misconduct or poor performance; and

■ a minimum wage of MYR 1,000 per month or MYR 4.81 per hour in Peninsular Malaysia and MYR 920 per month or MYR 4.442 per hour in Sarawak, Sabah & the Federal Territory of Labuan.

All employees, except for those excluded from the application of the EPF Act, are entitled to EPF contributions that are no less than at the rate prescribed by the EPF Act.All employees, except for those excluded from the application of the SOCSO Act, are entitled to SOCSO contributions that are no less than at the rate prescribed by the SOCSO Act.All female employees, except for certain exempted categories, are entitled to paid maternity leave of no less than 60 consecutive days.The Persons with Disabilities Act 2008 provides that persons with disabilities shall have the right to access employment facilities on an equal basis to those persons without disabilities.


Only a trade union which is registered with the Director-General of Trade Unions (“DGTU”) and has been granted recognition by the employer, in accordance with applicable laws, may enter into collective bargaining with the employer. The collective bargaining process is also regulated by law. Collective bargaining takes place at company level.



The Industrial Relations Act 1967 (“IRA”) provides the mechanism and requirements for trade union recognition. A trade union may obtain recognition by serving the employer, in a prescribed form, with a claim for recognition in respect of the workmen or any class of workmen employed by the employer. Within 21 days after the service of the claim, the employer must either:■ accord recognition; or■ notify the trade union of workmen concerned in writing the

grounds for not according recognition.If recognition is not accorded by the employer or the employer does not respond at all within the stipulated 21-day period, the trade union may report the matter to the Director General of Industrial Relations (“DGIR”) within 14 days of the receipt of the notification of non-recognition or after the expiry of the time frame of 21 days, failing which the claim for recognition by the trade union will be deemed to be withdrawn.The DGIR, upon receipt of the report from the trade union, may take such steps or make such enquiries to ascertain:■ the competence of the trade union of workmen to represent

the workmen in respect of whom recognition is sought to be accorded; and

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No, they do not. However, the Employment (Part-Time Employees) Regulations 2010 set out how legal entitlements such as overtime, public holidays, annual leave and sick leave are to be applied to part-time employees.



By law, the minimum entitlement to paid maternity leave is 60 consecutive days.


A woman is entitled to her pay and all contractual benefits as if she had been in active service, except for benefits that are tied to actual active work, e.g. attendance allowance.


The woman has the right to resume work as if there has been no break in her service.


No, not by law.


No, there are not.


No, they are not.

5 Business Sales


No. There is no automatic transfer of employees upon a sale of business, and in fact, by law, employees’ contracts of employment will be deemed terminated. In the case of a share sale, the employment contract is unaffected.


This is not applicable. See question 2.4 above.


No, there is no law providing for such representation.

3 Discrimination


All employees have a right to be treated fairly and with mutual trust and respect. Accordingly, all forms of discrimination are not permissible. However, there are no specific statutes or laws that prohibit discrimination.


As mentioned in question 3.1 above, all forms of discrimination are not permissible. However, discrimination is only not permissible when it is individual in nature. Collective decisions that may in other jurisdictions be viewed as discriminatory are not prohibited. For example, collective separation actions that classify employees according to age group or differing terms of employment for men and women are permissible.


There may be a variety of defences available to discrimination claims, such as business needs, convention, lack of prejudice, etc.


Employees may bring a civil claim or may terminate their contract of employment on the alleged ground of breach of contract by the employer and then commence an unjust dismissal action. In both instances, settlement out of court is possible.


In the case of a civil claim, the employee would be entitled to damages and a restitution of rights or benefits denied. In an unjust dismissal action, the employee would be entitled to back wages from the date of termination of employment to the date of the final hearing in court (capped at 24 months) together with reinstatement to the previous job; or back wages from date of termination of employment to the date of the final hearing in court (capped at 24 months) and compensation in lieu of reinstatement, calculated at the rate of one month’s salary for each year of service.

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Employees have protection against unjust dismissal. An employee who considers himself to have been dismissed without just cause or excuse may make a representation for reinstatement under the IRA. If the employer is not able to prove that there was a just cause or excuse to dismiss the employee, the employee will become entitled to back wages from the date of termination of employment to the date of the final hearing in court (capped at 24 months), together with reinstatement to the previous job; or back wages from the date of termination of employment to the date of the final hearing in court (capped at 24 months) and compensation in lieu of reinstatement, calculated at the rate of one month’s salary for each year of service.Third party consent is not required prior to dismissal.


All employees are protected from unjust dismissals.


An employer may be entitled to dismiss an employee for reasons related to the individual employee when the employee is guilty of misconduct that is inconsistent with continued employment or poor performance. Dismissals for business-related reasons are possible in the case of retrenchments or on closure or sale of business. Employees who are dismissed for business-related reasons are entitled to compensation. The EA prescribes the minimum termination benefits payable to EA employee as follows:■ 10 days’ wages for every year of employment if he has been

employed for a period of less than two years;■ 15 days’ wages for every year of employment if he has been

employed for a period of two years or more, but less than five years;

■ 20 days’ wages for every year of employment, if he has been employed for a period of five years or more; and

■ pro rata in respect of an incomplete year of service, calculated to the nearest month.

For non-EA employees, there is no statutory obligation to pay termination benefits. However, case law dictates that if the financial position of the employer permits, and especially if the retrenchment exercise is carried out with the aim of increasing efficiency and profits, fair and reasonable benefits should be made available to all employees. Presently, one month’s salary for each year of service for all levels of employees (which is higher than the minimum prescribed by the EA) is considered fair and reasonable.


Specific procedures are applicable for all types of dismissal and differ in accordance with the grounds for dismissal.


In the case of employees who accept employment with the acquirer, there is no automatic transfer of individual contractual rights. Collective agreements entered into between the selling entity and a trade union will continue to apply vis-à-vis the acquiring entity.


There are no information or consultation rights associated with a sale of business unless provided for in a collective agreement. As a matter of good labour practice, employers are encouraged to inform the employees and trade unions prior to the transaction being made public.


By law, all employees are deemed terminated upon a business sale. They will be entitled to termination benefits (as provided by statute for EA employees, and if provided by contract for non-EA employees) unless they are offered continued employment with the acquirer (with full recognition for years of service with the selling entity) within seven days of the sale on terms and conditions of employment that are no less favourable.


Yes, but a change that is less favourable to the employees will entitle the employees to termination benefits payable by the selling entity.



Employees have to be given notice of termination unless they are dismissed for misconduct or poor performance. The minimum notice period is as prescribed in the employment contract. For EA employees, the minimum notice period should be as prescribed in the employment contract or the EA, whichever is longer.The minimum notice period prescribed under the EA is as follows:■ four weeks’ notice, if he has been in employment for a period

of less than two years;■ six weeks’ notice, if he has been in employment for a period

of two years or more, but less than five years; and ■ eight weeks’ notice if he has been in employment for a period

of five years or more.


Yes, garden leave is permissible.

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uses confidential information or an unfair advantage he has derived during his employment.


No, they do not.


By commencing a civil action to obtain remedies, such as interlocutory or interim injunctions, permanent injunction, and/or damages.



The employer has an obligation to deal with the employee data in accordance with the PDPA. The PDPA requires that consent is sought from the employee before such data may be processed. Certain exceptions apply to the General Principle, such as where the data is being processed for the performance of a contract. However, whether or not the exceptions under the General Principle apply, the employer would have to issue a written notice, in both English and Malay, to inform a data subject of the following: (a) that personal data of the data subject is being processed by or

on behalf of the data user, and to provide a description of the personal data to that data subject;

(b) the purposes for which the personal data is being or is to be collected and further processed;

(c) any information available to the data user as to the source of that personal data;

(d) the data subject’s right to request access to and to request correction of the personal data and how to contact the data user with any enquiries or complaints in respect of the personal data;

(e) the class of third parties to whom the data user discloses or may disclose the personal data;

(f) the choices and means the data user offers the data subject for limiting the processing of personal data, including personal data relating to other persons who may be identified from that personal data;

(g) whether it is obligatory or voluntary for the data subject to supply the personal data; and

(h) where it is obligatory for the data subject to supply the personal data, the consequences for the data subject if he fails to supply the personal data.

The PDPA also prohibits the transfer of personal data out of the country save where exceptions apply or where consent has been obtained from the data subject.There are additional obligations relating to the disclosure, protection and security, retention, maintenance of integrity and access to personal data.


Yes. Subject to certain exceptions, pursuant to the access principle


An employee who considers himself to have been dismissed without just cause may make a representation for reinstatement under the IRA. If the employer is not able to prove that there was a just cause or excuse to dismiss the employee, the employee will become entitled to back wages from the date of termination of employment to the date of the final hearing in court (capped at 24 months), together with reinstatement to the previous job; or back wages from date of termination of employment to the date of the final hearing in court (capped at 24 months) and compensation in lieu of reinstatement, calculated at a rate of one month’s salary for each year of service.Alternatively, an employee may bring a civil claim for breach of contract. Ordinarily, the remedy available is limited to damages that are equivalent to the salary that would have been paid during the termination notice period.An EA employee may also make a claim for termination benefits under the EA.


Yes, but in the case of a representation for reinstatement under the IRA, any settlement that is achieved prior to a representation for reinstatement being conciliated upon in accordance with the provisions of the IRA may not always be binding on parties.


Collective termination by way of retrenchment or upon closure of operations is subject to certain requirements in terms of compliance with both the legality of the termination and process.


In the same way as they would enforce their rights in the event of an individual dismissal. The remedies are also the same.



Generally, restrictive covenants are not enforceable. The Contracts Act 1950 provides that every agreement by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, is to that extent void. Therefore, a restrictive covenant that prohibits any employment or involvement with a competing business is not enforceable.


Restrictive covenants are only enforceable where the employee

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the Employment Act or the Minimum Wage Order. The Director General’s powers to enquire into complaints extend to non-EA employees whose salaries do not exceed MYR 5,000 a month where the complaint is of non-payment of wages or other payments due to them under their contracts of employment.The civil courts also have jurisdiction to hear employment-related claims.


An employee who wishes to make a representation of unjust dismissal under the IRA has to do so within 60 days of the alleged dismissal. The Industrial Relations Office will make an attempt at conciliation and, if the matter is not settled, may refer the matter to the Industrial Court for adjudication. The courts have ruled that it is only matters that are frivolous and vexatious that should not be referred to the Industrial Court.Complaints to the Director General of Labour should be made in accordance with the provisions of the EA.Claims may be filed in the civil courts in the same manner as any other civil suit.


Depending on the nature of the claim, the mode the complaint is brought and the stage at when it is settled, it can take between three months and three years. It is not unheard of for claims to extend well beyond three years.


It is possible to appeal a decision of the civil court and a decision of the Director General of Labour. An award of the Industrial Court may only be challenged by way of a judicial review application to the High Court on the grounds that, in making its award, the Industrial Court has committed an error of law. The time taken will differ and may be between six months and two years. In certain instances, it may extend beyond two years.

provided for in the PDPA, an employee has the right to make a written request for access to his personal data and to make corrections if any of the data is found to be inaccurate, incomplete, misleading or not up-to-date.


Yes, but subject to the consent of the prospective employee.


Yes, if the facilities and equipment are part of the employer’s property and provided for purposes of work.


The employer may impose controls or restrictions on the use of social media by employees during work hours and with the use of the employer’s property. However, usage outside the workplace or work hours may not be controlled.



The Industrial Court has jurisdiction to hear the following matters:■ representations for reinstatement brought by an employee

who considers himself to have been dismissed without just cause or excuse;

■ trade disputes between an employer and his workers;■ claims of non-compliance by one party to an award handed

down by the Industrial Court or a collective agreement; and ■ applications to interpret collective agreements.Employees who come within the purview of the EA may make a complaint to the Director General of Labour in respect of wages or payments due to them under their contracts of employment,

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Selvamalar AlagaratnamSkrineUnit No. 50-8-1, 8th Floor Wisma UOA Damansara50, Jalan Dungun, Damansara Heights50490 Kuala LumpurMalaysia

Tel: +603 2081 3999Fax: +603 2094 3211Email: [email protected]: www.skrine.com

Skrine is one of the largest full-service law firms in Malaysia with a depth of experience in a range of legal matters acquired through its more than 50 years of practice. The firm is currently led by 40 partners with over 100 lawyers across the Corporate, Dispute Resolution and Intellectual Property Divisions. Skrine’s employment practice area is well established with its partners having extensive and in-depth experience.

Selvamalar Alagaratnam is a co-head of the employment practice group of Skrine, one of Malaysia's largest law firms. She has more than 20 years’ experience in all aspects of employment law, both contentious and non-contentious.

She is the Vice Chair of the International Bar Association's Employment and Industrial Relations Committee, a member of Lawasia's Industrial Law Committee, a committee member of the Malaysian chapter of the International Society for Labour and Social Security Laws and a member of the Malaysian Bar’s Industrial Law Committee.

She has co-authored several publications including The Law of Dismissal, The Malaysian Court Forms: Employment Law Section and The Legal Guide to Employee Dispute Resolution – Malaysia, and is a regular presenter at domestic and international legal conferences.

Selvamalar is listed in the Chambers Asia Pacific guides and in the Who’s Who Legal Management & Labour.

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Chapter 26

Hogan Lovells BSTL, S.C.

Hugo Hernández-Ojeda Alvírez

Luis Ricardo Ruiz Gutiérrez

Mexico

cent of the salaries related to vacation days; (iii) 15 days of salary as a Christmas bonus; (iv) maximum of 48 hours as weekly work shift for day shifts; (v) a rest day or day off per week; (vi) profit sharing; and (vii) minimum wage (currently, the daily minimum wage is MXN$80.04), among others.


The employer and the trade union are able to agree on any terms and conditions of employment through collective bargaining agreements (i.e. benefits, compensation, work shifts, training, positions, etc.) as long as the agreement: complies with the minimum mandatory rights and benefits granted by the MFLL; does not contain provisions that contradict such law; and is filed before the Labour Authority.



According to the MFLL, unions have the right to call a strike against an employer in order to force the execution of a collective bargaining agreement (CBA), regardless of whether the union actually represents the majority of the employees. Due to the aforementioned, employers that do not have a CBA executed and duly registered before the Labour Court may face several calls to strike. It is mandatory for the Labour Court to reject any calls to strike of a trade union other than that with which the employer has previously executed a CBA duly registered before such authority. However, a different trade union does have the right to file a “Union Certification” procedure with the Labour Court. This procedure consists in this second union arguing that, rather than the union with which the company has executed the registered CBA, it is the employees’ organisation that represents the actual interests of the majority of the workers in the company. In cases where the second trade union is able to prove that it is the organisation that represents the workers, it will have all the rights and duties conferred upon the trade union, including the right to call to strike.


According to the MFLL, trade unions have several rights, such as: prepare their own by-laws and regulations; elect their



The main sources of employment law are: (i) constitutional rights; (ii) international treaties approved by the Mexican Senate; (iii) precedents of the Supreme Court of Justice (jurisprudence); (iv) general rules of law; (v) tradition; and (vi) general rules of fairness.


The Mexican Federal Labour Law (MFLL) protects all the individuals involved in an employment relationship. The MFLL considers three different types of workers/employees: (i) unionised workers; (ii) non-unionised workers; and (iii) entrusted employees.


According to the MFLL, employment contracts must be documented in writing. Otherwise, in case of litigation, the employer is obligated to evidence the working conditions.


Employment agreements could be executed for a fixed time, for a specific task, for initial training, for a specific season, or for an indefinite time.Employment agreements must contain: (i) information of the parties; (ii) term of the employment; (iii) services to be rendered by the employee; (iv) place in which the services will be rendered; (v) salary information (i.e. amount, terms to be paid, payment day, etc.); (vi) training references; (vii) holidays; and (viii) any other working condition agreed to by the parties.


The minimum employment rights are: (i) vacation – six days for the first year of service, eight days for the second year of service, 10 days for the third year of service; after that, vacation days are increased by two days every five years; (ii) vacation bonus – 25 per


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against the employer or his property, or where the employees work in government establishments or shops during wartime. If the Court declares a strike illegal, the strikers’ employment relationships are automatically terminated.


The MFLL does not provide for works councils.







3 Discrimination


The MFLL prohibits any kind of discrimination. All individuals involved in an employment relationship are protected against discrimination on the grounds of: race; nationality; sexual preference; immigration condition; religion; civil status; social condition; age; gender; and/or disability.


Any kind of discrimination is unlawful. According to the MFLL, discrimination practices are also prohibited during the hiring process.


In case of a claim for discrimination, the employer must prove that no discriminatory practice or policy are applicable or have occurred; otherwise, a fine and other sanctions could be imposed on the employer.


Employees affected by discriminatory practices or policies could file or claim before the Labour Court or the National Board to Prevent Discrimination.

representatives; and organise their management and administration, as well as their activities and action programmes. In addition, trade unions may also: file a call to strike with an employer in order to enforce the execution of a CBA; object to information being filed by the employer with the Treasury Department in connection with profit sharing; request the employer to withhold the employees’ contributions for the trade union agreed on the CBA; participate in the preparation of the companies’ training programmes; file a union certification procedure when they represent the majority of the employees of an employer; and execute the CBA, among others.


The MFLL recognises strikes as a temporary suspension of the work performed by a trade union of workers. The MFLL contains the applicable rules for strikes and their procedure. The notice for strike should be filed by the trade union before the competent Labour Court in order to accomplish one of the specific objectives mentioned in the MFLL (review the CBA or law collective bargaining agreement, obtain a balance between the employees’ and the employer’s rights, enforce the execution of a collective bargaining agreement or law collective bargaining agreement, secure compliance with the remedies imposed for a breach of the collective bargaining agreement, request the compliance to obligations related to profit sharing, and support another strike that shares any of the goals listed herein). The majority of the employees should perform the strike; otherwise, after the strike starts, the employer may file a procedure requesting the cessation of the strike. Except for forcing the execution of a CBA, only the trade union in charge of the CBA may call for a strike or give notice of the strike. It should give notice of the strike to the employer, including a list of its demands, the objective of the strike, and the exact date and time when work activities will be suspended. Once a strike notice has been given to the employer, any, and all, action against the employer’s assets should be suspended.The labour union should also file a copy of the strike notice before the Labour Court at least six days prior to the strike in the case of private companies, and at least 10 days prior to the strike in the case of public services. Within the 48 hours following receipt of notice, the employer should file a written answer with the Court. The Court will then conduct a conciliation hearing. The employees should appear at the conciliation hearing to proceed with the strike. The employer should also appear; otherwise, the strike notice remains in full force and effect. This pre-strike period may be extended at the request of the labour union, but the strike will take place if no settlement is reached at this stage. During a strike, the employees should bring any ships, aircraft, trains, buses, or other means of transportation en route to their last scheduled destinations. For strikes affecting hospitals, clinics, and similar establishments, patients should continue to receive care until transferred to another location. A minimum number of employees, as determined by the Court, should also continue working in activities that would cause severe problems or compromise the safety or well-being of the workplace, machinery, equipment, or raw materials, should they be completely suspended, or to enable suspended business activities to resume. The Court may refuse to approve a strike if it fails to meet the requirements in the MFLL. The employees should then return to work within 24 hours. It is illegal for employees to strike in a number of cases, such as when a majority of the striking employees engage in violent acts

Hogan Lovells BSTL, S.C. Mexico


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Yes, employers are obligated to provide five working days as paternity leave.


Yes, to provide pregnant women with a safe place to work. In case of adoption, maternity/paternity leave applies and the time corresponding to the maternity and paternity leave shall be considering for purposes of seniority.


Yes, if the employer and employee agree to modify the working conditions, the employee shall be able to render services on a flexibility basis.

5 Business Sales


Employees automatically transfer to the buyer in a share sale if the employees continue working for the buyer. In the event of an asset transfer, the following scenarios could be applicable: (i) employees could be transferred to the buyer; (ii) the employment of the personnel could be terminated; (iii) a mix of scenarios (i) and (ii); and (iv) the employees could continue working for the seller. The transfer of personnel is normally negotiated during the process of acquisition.


The working conditions of the personnel could not be affected or reduced in case of employer substitution (transfer of employees); therefore, if a CBA is applicable to the personnel, such an agreement must be transferred to the buyer.


There is no obligation on the employer to inform or consult with the personnel regarding a business sale. However, it is always advisable to comment and discuss the terms of the sale with the union representatives to avoid misunderstandings.


If the decision is to terminate the employment of an employee due to the business sale, the employer must pay the corresponding severance (three months of integrated salary, plus 20 days of integrated salary for each year of service, plus a seniority premium).

Employers can settle claims before litigation is initiated or even when litigation takes place.


Remedies could be anything from a fine of approximately US$20,000.00 to a severance payment.


No, there is no additional protection for “atypical” workers.



According to the MFLL, maternity leave will last 12 weeks (six weeks before the child is born and six weeks after birth). The period before birth can be negotiated by the employee in agreement with the employer in order to be partially enjoyed after birth. In the case of adoption, maternity leave lasts six weeks.


During maternity leave, women are entitled to the benefits that they would normally receive. In addition, the following rules apply:■ Pregnant women may not work under hazardous conditions,

or perform industrial tasks during the night or during extraordinary hours or during sanitary contingencies. Their salary, benefits, and rights should not be affected.

■ Statutory maternity leave may be extended as necessary if work is not possible because of the pregnancy or the delivery of the child.

■ During the nursing period, the new mother is entitled to two additional 30-minute rest periods per day to feed the child in an adequate and hygienic place set aside by the employer. If this is not possible, the parties may agree to reduce her work shift by one hour.

■ When returning from maternity leave, the employee is entitled to return to her employment, provided that no more than one year has passed since the date of delivery.

■ Maternity leave does not affect longevity of service.■ The employer should have enough seats available for

pregnant women.■ During maternity leave, the Mexican Social Security Institute

will pay the working mother 100 per cent of her daily salary as a social security contribution. If the maternity leave period is extended, she is entitled to 50 per cent of the daily salary of social security contribution for a period of up to 60 days.


The rights of women after maternity leave are: (i) to be considered as a regular employee; and (ii) two daily breaks of 30 minutes during the following six months as a lactation period or a one-hour reduced shift.



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year of service (integrated salary is calculated adding to the salary all benefits and payments earned by the employee), as well as a seniority premium.


No, there are not (except for termination with cause in which a notice should be delivered during the termination). However, it is recommended to execute termination agreements, which must be ratified before the Labour Court for its enforceability.


Claims or legal actions that an employee can bring are: (i) reinstatement in his/her job; and (ii) payment of legal severances. In both cases, the payment of back salaries and other benefits are part of the claims remedies.


Yes, the employer is able to settle, before or during, a labour claim at any stage of the procedure before the Labour Court resolves the case.


No, there are no additional obligations. However, if the personnel will be substituted by new equipment or technology, the employer must pay, in addition to the severance, a month’s integrated salary.


Employees are able to sue an employer, either individually or jointly, for their reinstatement or for a full severance payment. If the employer obtains a resolution against its interests, and if it fails to comply with its obligations, the Labour Court could order the attachment of goods in order to preserve the rights of the plaintiffs in the case.



From a labour perspective, restrictive covenants in general are not recognised by the MFLL due to the provisions contained in Article 5 of the Mexican Constitution. This Article expressly prohibits covenants in agreements or contracts by means of which a person “restrains temporarily or permanently to a determined lawful profession, industry or business activity” and grants individuals the right and freedom to engage in any lawful activity, except when there is a valid resolution that determines that the third party’s rights are affected.


No. If the working conditions/rights suffer a modification that reduces the employee’s rights, the employee will be able to sue the new employer, asking for the maintenance of the labour rights or for the termination of the employment and payment of the full severance, plus back salaries.



There is no obligation for the employer to inform employees in advance about the termination of employment.


There is no prohibition for the employers to impose such a condition. However, the prevailing practice in Mexico is not to ask for a period of “garden leave” and terminate the employment the day on which the employee is informed.


In the case of a wrongful dismissal, the employee could sue the employer asking for his/her reinstatement or the payment of full severance. An employee could be dismissed with cause by the employer only if one or more reasons for termination determined by the MFLL are applicable. In this case, the employer has the burden to prove the reason for termination. If the employer is not able to prove the above, the payment of full severance plus back salaries will apply. The employer does not require consent from a third party to dismiss an employee.


No, there are not. Employees with an authorised leave of the Mexican Social Security Institute cannot be dismissed during such a period.


Only when the employer rescinds the employment due to the cause of termination stated by the MFLL, is it not obligated to pay the severance. Otherwise, if the employer terminates the labour relationship without reasons for termination, the severance payment will have to be paid. Severance consists in the payment of three months’ integrated salary, plus 20 days of integrated salary per



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data protection. The Federal Law for the Protection of Personal Data in the Possession of Private Parties (Federal Law), effective on July 6, 2010, sets forth that all personal data processing or treatment (gathering, disclosure, storage, and use) is subject to the consent of the individual to which such data belongs, unless such processing is contemplated within one of the exceptions provided by the Federal Law. In general terms, there are two main obligations under the aforementioned Federal Law that must be observed by the employer as data controller: (i) the need to deliver a privacy notice to the data subject (employees), which must comply with specific requirements; and (ii) the creation of a personal data department, which will promote the protection of personal data within the private entity and represent the private entity if an application for access, rectification, cancellation or objection of personal data is filed by the data subject with the employer or before the data protection authority (Federal Institute for Access to Public Information and Data Protection). The employer should also take the necessary measures to secure the protection of its employees’ personal data. The corresponding authority may sanction employers for not complying with these privacy protection obligations. Employers can only transfer employee data freely in the country or abroad in case of one of the specific exceptions allowed by the Federal Law (i.e. permitted by Law or a Treaty, for prevention or medical diagnose, within entities of the same Group that operate with the same processes and internal policies, etc.) or in terms of the privacy notice. Otherwise, the employees’ consent is required for the transfer.


Yes, as long as the employee complies with the process and provisions to exercise the right to access his/her personal data as described by the Federal Law.


Yes. Nevertheless, it is advisable to obtain express employee’s consent.


Yes, as long as these communications are maintained in the work tools property of the employer. Notwithstanding the aforementioned, it is advisable to obtain express employee’s consent and recognition that these communications could be monitored by the employer.


Yes, as long as the employer establishes appropriate policies and dispositions in the internal labour regulations to enforce the applicable terms according to labour dispositions.

In addition, the Mexican Constitution, as well as the MFLL, establishes that employees’ rights cannot be waived. This means that restrictive covenants or agreements run the risk of being considered null and void. Notwithstanding, it is customary to include restrictive covenants and confidentiality clauses either in the employment contract or in separate agreements, as grounds for justified causes of termination of employment in case said obligations are breached. It is also common to agree to post-employment restrictive covenants on civil agreements in return for additional compensation for employees in return for performance of said obligations. Restrictive covenants shall remain in full effect between the parties until one of the parties brings an action against the other before the Courts, in order for the latter to issue a decision declaring the agreement void before the Civil Courts. Once the Civil Court declares the agreement to be null and void, it will order for events to be “restituted” to their initial status by means of which an employee will be requested to deliver the compensation paid for performance of the obligations of restrictive covenants. Notwithstanding the above, the Industrial Property Law expressly includes that “the individual or company that contracts an employee that is working or has worked as a professional, advisor or consultant that renders or has rendered services for another individual or entity in order to obtain its trade secrets will be liable for the payment of damages and lost profits caused to such individual or entity”. A person or entity that, by means of any illegal way, obtains information that contains a trade secret, will also be liable for damages and lost profits.


There are no judicial precedents in this regard. Based on our experience, in order for these clauses to be enforceable, it is important that they are limited to a specific territory, period of time, and industry. They must also identify the confidential information protected thereby.


This is advisable, in order to strengthen their enforceability. For further information, please refer to question 7.1.


This will depend on the restrictive covenants, as well as on how the parties agree these covenants. One option may be by means of a civil agreement, filing a civil claim alleging damage and lost profits due to the breach of these covenants, and even criminal liability. Please refer to question 7.1 for further information.



Even though the MFLL does not establish a specific provision on the matter, the Federal Constitution establishes the right of personal



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Once this stage is finished, the Court sets an additional hearing for the parties to offer and render evidence to support their claims and objections. After introducing evidence, the parties are given time to file their final arguments. The file is then submitted in order for the Labour Court to issue the resolution and notify each of the parties.

After the parties are notified of the resolution, they have 15 days to challenge it by means of a constitutional proceeding (amparo) before the Collegiate Court of Labour Matters.

Nevertheless, please note that the aforementioned Constitutional Amendment does establish a mandatory one-hearing conciliation process before a complaint can proceed; this Amendment also implies the establishment of a new conciliatory authority that will not depend on the judicial department. It is expected that there might be additional amendments to labour procedures as a result of the Constitutional Amendment described.

b) The collective conflicts procedure depends on the type of conflict filed by the parties (i.e. collective conflicts of an economic nature, and strikes). Please refer to question 2.3 for further information.

c) According to the MFLL, labour procedures before courts are free of governmental fees for the parties.


The labour procedure takes around two to three years to be decided.


The first instance resolutions are able to be appealed before the Federal Collegiate Tribunal by the amparo process. Such a process takes from five to nine months to be resolved.

AcknowledgmentThe authors would like to acknowledge the assistance of their colleague Mary Carmen Fuertes Abascal in the preparation of this chapter.



Currently, labour claims are resolved by Federal and Local Conciliation and Arbitration Boards (Courts). These are formed by representatives from the government, the employees’ sector, and employers. There is a constitutional amendment that has been approved, but has not yet been published and therefore is still not enforceable, that includes the creation of Federal and Local Labour Courts that will not be formed by representatives from the government, the employees’ sector, and employers, but will depend on the judicial authorities (as the courts with jurisdiction to hear non-employment-related complaints).


All individual or collective disputes arising from labour relationships between the employer and the employee or between the employer and the trade union should be resolved before the Labour Courts that exist at the federal and local levels. a) Individual disputes generally arise when an employee files a

claim against an employer with the competent Board. Filing a claim initiates the “ordinary” procedure; after receiving the employee’s claim, the Board sets a date and time for a hearing that has two stages (conciliation, and claim and answer to such a claim).

During the conciliation stage, the Board seeks to facilitate a settlement between the employer and the employee. If the parties fail to settle, the lawsuit proceeds into its second phase: claim; and answer to such a claim. The employee may ratify, clarify, or make further claims and the employer may answer and challenge these.



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Hugo Hernández-Ojeda AlvírezHogan Lovells BSTL, S.C.Paseo de Tamarindos 150-PBBosques de las LomasMexico, D.F. 05120Mexico

Tel: +52 55 5091 0137Email: [email protected]: www.hoganlovells.com

Luis Ricardo Ruiz GutiérrezHogan Lovells BSTL, S.C.Paseo de Tamarindos 150-PBBosques de las LomasMexico, D.F. 05120Mexico

Tel: +52 55 5091 0155Email: [email protected]: www.hoganlovells.com

Hugo Hernández-Ojeda focuses on labour and social security law.

He began his professional career in 1991 as an intern at Barrera, Siqueiros y Torres Landa (now Hogan Lovells) in civil and immigration law. In 1992, he joined Santamarina y Steta, S.C. as an intern in the labour and social security department, and later he became an associate attorney in the firm. In 2001, he became senior partner in another firm, heading the labour and social security department. In 2008, he rejoined as partner, heading the labour and social security practice.

Practices

■ Labour and Employment.

■ Social Security.

■ Pensions.

Awards/Rankings

■ The Legal 500, Band 3 in Labour and Employment.

■ Recommended by Latin American Corporate Counsel Association (LACCA) during 2013, 2014, 2015 and 2016.

■ Chambers Latin America, Band U and Band 4 in 2013 and 2014 respectively, and Band 3 in Labour and Employment in 2015 and 2016.

■ Recommended by The Client’s Guide 2011 and 2012; Who’s Who Legal, 2010–2016.

Hogan Lovells BSTL, S.C.

With top-tier knowledge of local law, Mexican business culture, a wide variety of industries, and an international outlook, Hogan Lovells BSTL is uniquely suited to advising both Mexican and international clients in their legal and business needs both on the ground in Mexico and around the world. As the Mexican market expands, reforms, and continues to change the business landscape, we offer our clients well-informed legal counsel that will help them take advantage of this unprecedented growth in opportunities. Our nearly 100 lawyers in Mexico City and Monterrey, including 21 partners, are recognised by major trade publications, including Chambers and Latin Lawyer, as leaders in their fields. With significant experience in the full range of legal services, including corporate, labour & employment, pensions, finance, regulatory, litigation, arbitration, and intellectual property, our team offers comprehensive legal advice for entering, expanding, or investing in the dynamic Mexican market.

Luis Ricardo Ruiz Gutiérrez focuses on labour and social security law.

He began his professional career in 1973 as an intern at the firm Gonzalez de Castilla, S.C. in Civil Litigation. In 1977, he joined Barrera, Siqueiros y Torres Landa (now Hogan Lovells BSTL) in civil litigation. In 1979, he started working in the labour and social security department of the firm, and he became an associate attorney in in 1980. In 1987, he became senior partner of the firm, heading the labour and social security department, and as of 2008, he is partner at the labour and social security practice.

Practices

■ Litigation and Arbitration.

■ Social Security.

■ Labour and Employment.

■ Pensions.

Awards/Rankings

■ The Legal 500 Labour & Employment.

■ Chambers Latin America, Band 2 in Labour and Employment, 2011, 2012, 2013, 2014, 2015 and 2016.

■ Recommended by The Client’s Guide, 2011 and 2012.

■ Acknowledged by Who’s Who Legal in 2011, 2012 and 2016 in Management, Labour & Employment.



Chapter 27



Patrícia Nunes Borges

Mozambique

employees and thus imposes several limitations on the hiring of foreign employees – as foreseen both in the Employment Law, Decree No. 37/2016, of 31 August 2016, Decree No. 63/2011, of 7 of December 2011 and Decree No. 108/2014, of 31 December 2014.


As a rule, employment agreements should be executed in writing and contain, at least, the following information: (i) identification of the parties; (ii) professional classification and professional occupational category of the employee; (iii) place of work; (iv) duration of the agreement and terms for its renewal; (v) amount, means and period of wages’ payment and details of additional payments; (vi) hiring date; (vii) established agreement term and its justification (in the case of a temporary employment agreement); (viii) date of the agreement and, in the case of a fixed-term agreement, termination date; and (ix) signatures. In the event that the agreement is not executed in writing, employees should be provided, in writing, with at least the above-mentioned statutory information.In any case, the fact that there is no written employment agreement does not affect the validity of the employment relationship and the employee’s acquired rights – i.e. for all legal purposes there will be an employment relationship even if there is no written employment agreement and the Employment Law provisions will apply.As an exception, fixed-term employment agreements for a period of less than 90 days do not need to be executed in writing.


One of the most important implied terms is that every employment contract is performed in good faith, which demands a mutual obligation of trust and confidence between employer and employee. Furthermore, some terms may be implied by an applicable collective bargaining instrument or by the Employment Law (for instance, permanent employment agreements will always be subjected to a 90-day probation period, unless the parties choose to reduce or exclude it).


The Employment Law sets down minimum employment terms



The Constitution of Mozambique establishes in its Title III, Chapter V (Economic, Social and Cultural Rights, and Duties) a number of fundamental rights, such as freedom of association (Trade Unions), the right to work and the right to strike. Additionally, Mozambican Employment Law (Law No. 23/2007, of 1 August 2007) is applicable to all employment relationships in Mozambique. Employment relationships of foreign non-resident employees are governed by Decree No. 37/2016, of 31 August 2016 and Decree No. 63/2011, of 7 December 2011.Furthermore, there is complementary legislation applicable to certain types of employment agreements, and other employment-related matters, such as the occupational accidents and illnesses regime (Decree No. 62/2013, of 4 December 2013). International conventions and treaties, to which Mozambique is party, as well as collective bargaining instruments, are also sources of employment law.Finally, labour customs of each profession, sector or company are also a secondary source of labour law, provided they are not contrary to law or good-faith principles, except to the extent that individual or collective bargaining instruments render them inapplicable.


Any person who carries out a productive activity, either in the context of an economically subordinated relationship, or when there is no opposition by the employer, is classified as an “employee” and, thus, protected by the Employment Law.Notwithstanding, the Employment Law does not apply to employment relationships between Government, local councils and other public institutions and its employees. These employment relationships are governed by specific legislation.Complementary legislation to the Employment Law sets forth special rules for certain types of activities and, therefore, certain types of agreements, such as domestic employees, work-at-home employees, miners, seafarers, dockworkers, artist and showmen, professional athletes, etc. Employees are thus distinguished primarily by the type of agreement entered into with their employer.Another main factor of distinction is the employee’s nationality. In fact, Mozambique Law is very protective towards national


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Yes. Even though the right to strike is a constitutional fundamental right, the Employment Law establishes the procedure for a strike to be declared.


The implementation of a works council is a right that is solely attributed to employees. As such, employers will not be required to take any action regarding the setting up of works councils.Works councils should be implemented at a company level, with the intent to represent the company’s employees, whenever a trade union subsidiary body does not exist. As a result, their rights and responsibilities, though not expressly provided in the Employment Law, are those of a union shop steward or a union committee, notably: (i) to promote and defend employee’s interests; (ii) to represent and assist all or any employment in any existing conflict with the employer; (iii) to represent employees upon industrial actions such as strikes; and (iv) to be consulted by the employer upon collective redundancies, restructuration processes and in the case of any alteration of the working conditions that might substantially affect the employees, etc.Works councils representatives are elected in a General Employee’s Assembly expressly convened for that purpose.


Works councils, as well as trade unions, shall be consulted by the employers in a number of subjects regarding the company’s employees. However, regardless of this consultation rights, works councils agreement on employers’ proposals is not mandatory and thus they have no co-determination right.


On the one hand, trade union rights are to be exercised by trade union structures, even if subsidiary (union shop stewards and union committees). On the other hand, although a works council’s main powers are those of a trade union’s, the latter’s rights will only be exercised, at a company level, whenever there are no trade union representation structures in said company. In other words, works councils are considered subsidiary to trade union stewards and union committees.Regardless of their subsidiarity, under the legal provisions of the Employment Law, only trade union structures can represent employees in collective bargaining. The right to collective bargaining is, thus, exclusive of trade unions.


No, they are not.

and conditions, namely, minimum wages, minimum employment conditions, holidays, duration of worktime, termination of employment agreements, etc., which shall prevail over employment agreements and collective bargaining instruments.


The purpose of collective bargaining is to establish and stabilise collective employment relations. Hence, said regulation instruments typically govern the following matters: (i) relationship between employers and trade union bodies; (ii) reciprocal rights and duties; (iii) mechanisms for extra-judicial resolution of labour disputes; (iv) the applicable procedures, terms and notice periods for termination; and (v) territorial area of application.These provisions operate to full extent, unless an employment agreement establishes more favourable conditions to the employee.Collective bargaining instruments are more common at industry level.



Pursuant to the Constitution of Mozambique, employees shall have the freedom to organise professional associations or trade unions, in order to defend individual or collective interests.Other rules regarding professional associations and trade unions are established in Chapter V (Direitos Colectivos e Relações Colectivas de Trabalho) of the Employment Law.Trade union recognition is contingent upon registration of its statutes with the Employment Administration’s central body, following a special procedure provided in the Employment Law.


The Mozambican Employment Law establishes several forms of trade union structures, namely union shop stewards and union committees, trade unions, regional trade unions, trade union federations and general confederation. Either shop stewards and union committees are trade union subsidiary bodies within a company, depending on the size of the company.Each trade union organisation (including the subsidiary bodies), has its own duties and rights. Overall, trade unions have the right to: (a) support their associates legally protected rights and interests; (b) participate in the drafting of employment legislation; (c) participate in the definition and execution of employment, vocational and further training, productivity, wages, safety, hygiene and protection at work and social security matters; (d) collude with the Labour Inspectorate on law and collective bargaining enforcement and monitoring; (e) comment on reports and other documents concerning regulatory instruments issued by the International Labour Organization; (f) meet at company level; (g) post notices and information related to union affairs at appropriate places within the companies; and (h) represent employees in employment litigations.Above all, trade unions have the right to collective bargaining, possibly the most significant way of representation of its associates.

FCB Sociedade de Advogados Mozambique


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void, thus entitling the employee to the right to claim damages and to be reinstated or, if he/she chooses so, duly compensated. Also, employees may terminate their agreements with just cause, being entitled to a proper compensation.


The law protects every employee in equal terms. No additional protection is granted to said “atypical” workers.



Female employees are entitled to 60 consecutive days’ maternity leave, which may begin 20 days before the estimated date of birth.


Female employees on maternity leave are entitled to a maternity allowance paid by Social Security. Moreover, women on maternity leave, and until one year after giving birth, are entitled to protection against termination, unless a serious disciplinary offence which determines the immediate impossibility of maintaining the employment relationship is committed.


Upon their return from maternity leave, the employee will maintain her prior rights. Additionally, maternity protection in the Employment Law entitles pregnant, those that have recently given birth and breastfeeding employees to special protection against dismissal, until one year after giving birth.


Fathers are entitled to a one-day paternity leave, every two years, which shall be enjoyed on the day immediately following the childbirth.


During pregnancy, women have the right not to perform any tasks that may risk their medical condition. Moreover, from the third month of pregnancy, women have the right not to perform night or overtime work and not to be transferred from their usual place of work.Furthermore, women in their breastfeeding period (which must be informed, in writing, to the employer) are entitled to interrupt their work schedule to breastfeed for two half-hour periods, or a one-hour period in the case of an uninterrupted work schedule, until a maximum of one year after the birth and without loss of remuneration.

3 Discrimination


Yes. Under the Constitution of Mozambique, all citizens have the same rights and duties, regardless of their skin colour, race, genre, ethnic origin, place of birth, religion, education, social status, parent’s marital status, occupation or political conviction.Furthermore, the Employment Law sets forth a principle of equality between foreign and national employees, as well as a general prohibition of discrimination amongst employees.


Both direct and indirect discrimination are deemed unlawful. Although positive discrimination is encouraged, the Employment Law specifies some particular circumstances where negative forms of discrimination are prohibited. Thus, equal opportunities and equal treatment must be assured in access to employment, vocational training, career promotion and working conditions, and no employee may be privileged or prejudiced due to ascendancy, age, genre, sexual orientation, marital status, economic situation, education, origin or social status, reduced working capacity, disability, chronic disease, nationality, ethnic origin, race or skin colour, religion, political beliefs, trade union membership and strike support.


When facing a discrimination claim, the employer may defend itself before the court by arguing that the treatment is justified, and thus, non-discriminatory.Defence against discrimination claims may differ depending on whether the employee sued over a direct or indirect discrimination. Against direct discrimination claims, the employer may argue, for instance, that the nature of the activity or the context of its performance requires a different treatment. This argument goes for the principle of what is different should be treated differently. Against indirect discrimination claims, defences by arguing the pursuit of a certain justifiable goal by the employer may be deemed successful, provided that the given different treatment is necessary, adequate and proportional to the pursued objective.


Employees may defend themselves before the competent authorities and employers can settle before or after a claim is filed.


Successful discrimination claims entitle employees to a compensation for both material and non-material damage.Nevertheless, if the discriminatory treatment led to termination of the employment agreement, the dismissal will be deemed null and



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in the respective employment agreements. However, employers may amend existing employment agreements by mutual agreement, provided that such agreement does not breach the general rules.



In general, termination by serving notice to the employee is not allowed. Termination of employment agreements by the employer varies depending on whether the agreement is permanent or temporary (fixed or unfixed term).Fixed-term contracts can be terminated before the end of the agreed term or of its renewal provided the employee is given prior notice. Unfixed-term agreements can be terminated once the circumstances that led to the temporary employment take place. As for permanent employment agreements, they can only be terminated within specific cases set forth in the Employment Law and described below in question 6.6. The general notice period is 30 days, although the contract or the collective bargaining agreement may establish a longer period.


The Employment Law of Mozambique does not foresee the possibility of “garden leave”. However, it is possible to agree with employees that, during the notice period, they will not have to attend work, provided that the salary continues to be paid.


The employer may only dismiss an employee in the cases described below in question 6.5 and specific procedures must be followed by the employer, depending on the grounds for dismissal.An employee is treated as being dismissed if the employer unilaterally terminates the employment relationship. For instance, a termination agreement and the expiry of a fixed-term employment agreement are not considered as dismissals.Third party consent is not required for dismissals; although in some cases, trade unions or works councils may have to be consulted.


Maternity protection in the Employment Law entitles pregnant, new mothers and breastfeeding employees to special protection against dismissal, until one year after giving birth.Furthermore, works council or trade union body members cannot be dismissed without just cause for any grounds concerning their performance of their rights, duties and responsibilities.


Women are entitled to 30 days per year of justified absence in the case of illness or accident of children under 18 years old.

5 Business Sales


As a rule, on a business sale, by means of an asset transfer, the position of the employer (the seller) in the employment agreement is automatically transferred to the buyer.Nevertheless, the business sale may determine the termination of the employment agreement provided that: (i) the employee agrees with the seller (first employer) to stay at his service; (ii) the employee has reached the retirement age and requests it; (iii) the employee has well-founded fear or lack of confidence in the buyer; and (iv) the buyer intends to alter or actually alters, within the following 12 months, the company’s object, provided that such alteration substantially affects the employees’ working conditions.The sale of shares does not have any direct impact on the employment agreements.


In the event of a business sale, the new employer undertakes the contractual position assumed by the previous employer. Therefore, employees shall maintain their previous employment rights and duties, and the applicable collective agreement shall uphold.


The Employment Law establishes the procedure to be followed in the event of a business sale. Both seller and buyer shall inform and consult with the trade union representatives within the company or works council (in the case there are no trade union bodies) of the date and reasons for the business sale, as well as its foreseeable consequences.


Employees can be dismissed not as a result of the business sale itself, but in connection with it. The business sale may provide the employer (either the seller or the buyer) with structural, economical or technological grounds for a collective dismissal or a termination of the employment agreement with prior notice.


In general, the new employer is required to provide the same terms and conditions of employment to the transferred employees as established



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1. Accusation phase: the disciplinary procedure must be initiated within 30 days of the fault being identified. It begins with a written communication (the Indictment Note) to the employee, and to the trade union subsidiary or to the works council, with a full description of all facts allegedly carried out by the employee. Upon the delivery of the indictment note, the employer may choose to suspend the employee until the decision of the disciplinary procedure is made.

2. Defence phase: within the following 15 days, the employee may present his/her written defence, attaching any document or requesting any evidence (for instance, witness testimonial) that may be considered relevant.

Once the production of evidence is completed, trade union bodies or works councils have a right to counsel, within five days.

3. Decision phase: thereafter, within 30 days, the employer must issue the final decision. The decision must include reasoning, arguments and gathered evidence, and refer to all grounds for the disciplinary sanction (in this case: the dismissal). A copy of the decision must be sent to the employee, the union and the Ministry of Employment within the same deadline.


Employees are free to challenge either the procedure or the grounds of their dismissal. In the case of an unlawful dismissal, the employee may request: (i) damages caused by the dismissal; (ii) salaries regarding the period during which the proceeding was pending (with a limit of six months); and/or (iii) reinstatement or alternatively compensation corresponding to 45 days’ wages per each year of seniority.Such actions must be filed within six months of the employer’s decision to terminate the employment.


Yes, employers may settle claims either before or after they are filed at court.


The Mozambican Employment Law provides two main types of redundancy procedure: collective dismissal and individual redundancy. On the one hand, a redundancy occurs whenever the employer faces economic, technological or structural circumstances which determine the need for a reorganisation or conversion of the company, or a reduction or closure of activities, which makes it necessary to eliminate or significantly alter some jobs.On the other hand, a dismissal of more than 10 employees based on structural, technological or market reasons is deemed a collective dismissal. The intention to proceed with a collective redundancy must be disclosed, in writing, to the employees, trade union representatives or works council and the Ministry of Employment before the negotiation process.Within the collective redundancy, the negotiation and consultation procedure between the employer and the employees’ representatives cannot last more than 30 days and should essentially cover the following matters: (i) grounds for the dismissal; (ii) possibilities


1. The employer is entitled to dismiss for reasons related to the individual employee when there is cause for dismissal, i.e., fault in the conduct of the employee, which due to its seriousness precludes the possibility of maintaining the employment relationship. Pursuant to the Employment Law, the employer shall be entitled to dismiss the employee with just cause in the following cases:(a) manifest inaptitude of the employee for the job, only

discovered after the probation period has ended;(b) culpable conduct on the part of the employee, sufficiently

serious to justify dismissal (disciplinary dismissals);(c) arrest or imprisonment of the employee if, by the nature of

his/her tasks, the arrest or imprisonment affects his tasks; and/or

(d) economic reasons which may be technological, structural or market-related (dismissal for objective reasons).

Dismissals on the grounds of (a), (b) or (c) do not entitle the employee to compensation, but only to the credits arising from the termination of the employment contract. 2. The employer is entitled to dismiss for business-related reasons when there are objective reasons (technological, structural or market-related) that may affect not only an individual employee, but also a number of them, causing a series of individual redundancies or a collective dismissal (see question 6.9 below). Compensation payable to an employee on a fixed-term agreement corresponds to the salaries between the dismissal and the date on which the contract was due to terminate.Compensation values for employees on a permanent employment agreement should be as follows:1. 30 days of wages per each year of service, if the employee’s

base wage is equivalent to one to seven times the national minimum wage;

2. 15 days of wages per each year of service, if the employee’s base wage is equivalent to eight to ten times the national minimum wage;

3. 10 days of wages per each year of service, if the employee’s base wage is equivalent to eleven to sixteen times the national minimum wage; or

4. three days of wages per each year of service, if the employee’s base wage is equivalent to more than sixteen times the national minimum wage.

However, it is important to take into consideration that there are transitional provisions set forth in the Employment Law, depending on the date in which the contract was entered into.Different compensation values can be established either in the employment agreement or in a collective bargaining agreement, provided they are more favourable to the employee.


Disciplinary dismissals, or dismissals with just cause by the employer, must be preceded by a disciplinary procedure, otherwise, they will be deemed null and void. The statute of limitation to bring a disciplinary action against the employee is six months after the misdemeanour.



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Mozambique does not yet have any specific data protection law. Nevertheless, the Constitution of Mozambique sets forth some rules for the protection of data, making clear reference to personal privacy and the right to inviolability of correspondence or other private data or information. Furthermore, the Employment Law reinforces employees’ rights to privacy. Hence, regarding employment relationships, employers’ power to collect and process personal data is restricted by the employee’s fundamental right to privacy.As per the above, there are three stages to consider regarding data protection: collecting; processing; and transferring. Firstly, the sole collection of personal data needs to comply with the fundamental principle of proportionality – i.e. it is necessary to assess whether the information to be collected is suitable, adequate and justified to achieve legitimate and specific purposes (e.g. see question 8.3 below). In respect of the processing of the employee’s data, it is paramount that it cannot be used for purposes other than, or at least incompatible with, the purpose that justified its initial collection.With regard to the free transfer of data to other countries, the law does not provide a straight answer to this issue. Nevertheless, under the Employment Law, employee’s personal data obtained by the employer is subjected to confidentiality and hence cannot be provided to unauthorised third parties, without the employee’s consent, unless legal provisions so determine.


Taking into account that such information is personal, the employee has the right be informed on and to access his/her personal data. Moreover, it is also arguable that employees must have the right to access and to rectify their personal data. Therefore, employees do have the right to obtain copies of their personal information being held by the employer.


Employers may only carry out the pre-employment checks deemed fundamental, i.e., those containing information that is strictly necessary and relevant according to the specific job to be performed. In other words, there has to be a “need to know” connection between the information required and the specific function for which the prospective employees are being hired. For instance, if a candidate will be in a position that directly handles money, it would be justifiable to request information about prior convictions to confirm whether or not the applicant was convicted on corruption, extortion or fraud crimes.

of avoiding or, at least, mitigating its effects; and (iii) measures to be taken in order to mitigate its impending consequences. The burden of proof of structural, technological or market reasons for the dismissal lies with the employer.Both cases of redundancy give every dismissed employee the right to a 30 days’ prior notice plus a compensation calculated as described above in question 6.5.


Mass or collective redundancies can be challenged at either judicial or an arbitration court.Should the court find the dismissal unlawful or unjustified, the employee will be entitled to be reinstated within the company or, if he/she prefers, to be duly compensated. The employee will always have the right to the unpaid salaries during the period between the dismissal and the court’s decision, with a maximum of six months’ salary.



The Employment Law does not include any specific provision regarding restrictive covenants. Considering that the Constitution of Mozambique acknowledges the right to work as a fundamental right, any restrictive covenant must not infringe the constitutional right’s core.Restrictive covenants such as non-compete or non-soliciting are known to be particularly hostile to constitutional rights regarding employment relationships. However, and considering that the employment law has not yet expressly foreseen such possibility, it is arguable that under the Civil Code, said covenants are not prohibited. In any case, those clauses must be assessed on a case-by-case basis.


Please see question 7.1 above.


The Employment Law is virtually silent on the matter. However, if parties agree on said clauses under the general civil rules, it is safe to say that one way of avoiding an infringement of the constitutional right to work is to duly compensate the employee for any restrictive covenant there might be.


Please see question 7.1 above.



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Additionally, arbitration agreements will also be valid and enforceable, provided that there is an arbitration clause.Mediation is mandatory and shall take place before a mediator appointed by the labour mediation and arbitration body.


Dispute resolution in employment matters is governed by several different statutes: the Employment Law (Articles 180 to 193); the Mediation and Arbitration Act (Law No. 11/99, 8 July); the Labour Procedure Code; the Civil Procedure Code; and the Civil Code.The collective conflict resolution regime, set forth in the Employment Law, with the necessary adaptation, applies to disputes arising from individual employment relationships. Therefore, although conciliation is optional, mediation is mandatory, before submitting the claim to arbitration or to the labour courts, except for interlocutory injunctions.The arbitration procedure is governed by the Employment Law. Arbitration is always optional, unless the employer is a state company, or a company that provides for basic needs services and the Commission for Mediation and Arbitration so determines.If and when the claim is filed with the court, the employee and the employer are given notice to attend a mandatory conciliation hearing with the purpose of reaching an agreement. The judicial phase begins only if no agreement is reached. The only fees to be paid by the employee in order for a claim to be submitted are the court fees. Nevertheless, in certain situations, the employee may be exempted from this payment, upon submission of a duly substantiated request.The Labour Procedure Code also establishes special procedures regarding occupational accidents and illnesses.


The timescale for completion varies on a case-by-case basis, also depending on the court’s workload. The average timescale for first-instance proceedings is six months.


Appeals must be filed with the competent Mozambican Appeal Court. The law does not establish the possibility of a second appeal. However, practice tends to show that decisions of the Appeal Court can be challenged before the Employment Section of the Supreme Court. The timescale for these proceedings varies on a case-by-case basis, also depending on the court’s workload. However, the average timescale is one year.


The Employment Law admits that the employer may set forth rules for the use of company’s equipment, within which IT equipment and IT tools are included. Moreover, under the Employment Law, the employer can prohibit the use of company’s equipment for personal matters.However, monitoring of employee communications is not expressly established neither in the Constitution, nor in the Employment Law. Therefore, such possibility must be seen and carefully analysed on a case-by-case basis. Notwithstanding, the constitutional protection of the employee’s right to privacy must never be infringed. In other words, there must always be a balance between employee’s privacy rights and the powers given to the employer by the Employment Law, bearing in mind that the first has constitutional dignity.To conclude, the monitoring of an employee’s communications through any means or tools provided by the employer is possible, though with some constraints: (i) the employee must be made aware of the possibility of his/her communications being monitored; (ii) the employee’s right to privacy must be protected (for example, the content of a personal email cannot be accessed, which means only the topic can be monitored; regarding telephone calls, it is enough to assess if the call was for personal or professional matters); (iii) the decision to monitor must be suitable, adequate and necessary for the purposes pursued by the employer; and (iv) the processing of the monitored information must follow the terms described in question 8.1.


The Employment Law does not establish any special rules regarding the protection or monitoring of employee’s social media accounts. Therefore, the same principles described above in questions 8.1 and 8.4 are applicable.



Considering that provincial and district labour courts are not yet fully operational, labour disputes fall under the jurisdiction of the competent provincial and district judicial courts. Whenever a claim is filled with the court, the Public Attorney’s Office shall conduct a mandatory conciliation hearing trying to reach an agreement between the parties.



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Patrícia Nunes BorgesFCB Sociedade de AdvogadosAvenida da Liberdade n.º 249, 1.º1250-143 LisbonPortugal



■ In 2001, attended a postgraduate course in Labour Law, at the University of Lisbon School of Law, and also a Post-Graduate course in European Criminal Law at Faculdade de Direito da Universidade de Coimbra.

■ In 2008, also attended a postgraduate course in Public Law and Employment at the Faculdade de Direito da Universidade de Coimbra.








b) Public /Administrative Law & Public Tenders / Environmental Law;




f) Tax;





■ Degree in Law in 2005 from the Universidade Católica Portuguesa.

■ Joined FCB in 2005 and became an Associate Lawyer in 2007.

■ Integrates the Employment, Benefits and Pensions Department. Also works in the Corporate, Commercial and M&A Department.

■ In 2009, attended a postgraduate Course in Labour Law at the Faculdade de Direito de Lisboa.

■ Has attended several seminars and conferences, both as a speaker and as a participant, regarding labour and employment matters.



Chapter 28

Chajec, Don-Siemion & Zyto Legal Advisors

Piotr Kryczek

Weronika Papucewicz

Poland

the length of annual leave, any collective agreements governing the employee’s conditions of night-time work, methods of confirming arrival at work and justification of absences from work. Irrespective of the above requirements imposed by law, it is recommended to formalise the principles of employment for evidencing purposes.


Provisions of employment contracts may not be less advantageous to the employee than provisions of binding laws and the employer’s internal labour regulations, in particular work regulations, wage regulations and collective labour agreements.As with any other contracts in Poland, employment contracts must be performed in good faith.Other, additional terms arising from the general provisions of the Labour Code may by implied by the parties of the employment contract such as confidentiality and non-compete obligations.


Working time may not exceed eight hours per day and an average of 40 hours per average working week, with certain exceptions such as balanced working time or work in continuous activities. Employees are entitled to a minimum uninterrupted rest period of 11 hours in every 24-hour period and 35 hours per week. Work performed over the working time standards constitutes overtime work and must be paid additionally. The maximum number of overtime hours per year amounts to 150 hours (unless collective labour agreements, internal regulations or individual contracts provide otherwise).Employees are entitled to 26 working days’ paid leave per year (or 20 working days if the total employment and education period is shorter than 10 years).The remuneration specified in the employment contract may not be lower than the statutory minimum salary (PLN 2,000 in 2017 approx. EUR 450).As noted above, some professions (e.g. teachers, mine-workers, and others) are subject to specific rules and privileges based on branch-related legislation.


Terms and conditions set forth in collective bargaining agreements



In Poland, the main sources of employment law are international law (e.g. ILO conventions), EU law and national law. Domestically, the main source is the Polish Labour Code and a number of other statutory acts and secondary regulations to the Code regulating in more detail various aspects of employment, such as collective labour agreements and other collective arrangements, and regulations setting out the rights and obligations of the parties of an employment relationship.


The Labour Code protects workers employed under employment contracts. Generally, employees are equal, but the Code distinguishes a few types of workers who are protected, e.g. an employee who is pregnant cannot be laid off and cannot work overtime, at night, outside of the permanent workplace or in the shift-time system without her prior consent.Another group protected against termination are employees who will reach retirement age within four years or trade union activists while performing their functions (the consent for termination of the board of the trade union organisation is required). Moreover, the employer cannot terminate an agreement with an employee who is absent for justified reasons because of a leave or illness. The Labour Code also protects employees on maternity leave and young employees (aged 16 to 18).It should be noted that some professions (e.g. teachers, mine-workers and others) are subject to specific rules and privileges based on branch-related legislation.


Yes, Polish law requires an employment contract to be concluded in writing. If a contract is not concluded in such form, an employer must confirm basic employment terms (such as remuneration, work position, place of work, working time and work commencement date) in writing prior to starting employment, otherwise the employer might be held liable and be forced to pay a fine. The employer must also provide the employee with additional written information about certain general conditions of work such as the length of the working day and week, the frequency and method of remuneration payments,


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non-binding opinions on a number of matters. In July 2016, there were approximately 3,500 work councils in Polish companies.


The employer is obliged to provide the works council with information about the activities and economic situation of the company and expected changes in this respect, as well as any actions that could lead to significant changes in work organisation or employment (planned layoffs, changes in work organisation, employment policy, etc.). Other matters that must be subject to consultation or consent of the council may be agreed with trade unions or other employee representatives.


The rights of works councils overlap with the rights of trade unions, but even then an employer who employs at least 50 workers is obliged to establish a works council. In companies in which there is both a works council and a trade union, the role of the works council is often marginal.


There is no such obligation. The owners of the employing company may, at their discretion, decide that a person appointed by employees will be a member of company’s management board or supervisory board. Such situation is not frequent in the private sector.

3 Discrimination


Polish law clearly prohibits any discrimination in employment. Poland has implemented two anti-discrimination directives: 2000/43/EC Racial Equality Directive; and 2000/78/EC Employment Equality. General anti-discriminatory provisions are set forth in several provisions of the Labour Code and in the Antidiscrimination Act which protects against discrimination other than that resulting from employment relations, e.g. discrimination at work performed under civil law contracts.


It is prohibited to discriminate on the grounds of sex, age, disability, race, religion, nationality, political beliefs, trade union membership, ethnic origin, denomination or sexual orientation, as well as employment for definite or indefinite terms, or on a full-time or part-time basis.Employees must be treated equally in the establishment and termination of employment relationships, terms and conditions of employment, promotion and access to training to develop their professional qualifications.

(CBAs) apply to individual employment contracts. CBAs can be concluded on a company and inter-company level as well as on an industry level.The level of unionisation in Poland amounts to about 11%. Most trade unions comprise industry workers (miners, shipbuilders, steelmakers, etc.) and public sector workers (teachers, nurses, doctors, etc.).



Under the Trade Unions Act, the trade union may be established by at least 10 eligible employees in the company. The employees have to enact a statute and then apply for a registration to the National Court Register. Once the trade union is registered, it becomes a legal person. Trade unions have the right to establish national federations and confederations.


Generally, an employer cannot terminate or alter a trade unionist’s employment contract with notice without the consent of the trade union. The other rights include:■ the right to negotiate and execute collective bargaining

agreements and other agreements;■ the power to agree on internal rules, especially work and pay

rules;■ the right to express opinions on legislative proposals, statutes

or other normative acts;■ the right to give an opinion on individual employment

matters, especially termination of an employment contract; and

■ the right to be informed and consulted during group layoffs.


Industrial action is regulated by the Act on Collective Labour Dispute Resolution. The right to strike is guaranteed by the Polish Constitution, but the right to organise strikes is reserved for trade unions. A strike is the ultimate stage of collective dispute resolution, and must be preceded by mandatory negotiations and mediation and optionally by arbitration.


The Act on Informing and Consulting Employees (implementing 2002/14/EC Directive) stipulates that employers with 50 or more workers must inform them of their right to set up a works council. The council is elected by all employees and its composition depends on the size of the company (three, five or seven members unless the number is set in an arrangement with the employees). The employer is obliged to inform the works council about the activities and economic situation of the company, as well as any significant changes in work organisation or employment (for instance planned layoffs). The council is also entitled to present its

Chajec, Don-Siemion & Zyto Legal Advisors Poland


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The length of maternity leave depends on the number of children born:■ 20 weeks – one child at birth;■ 31 weeks – two children at birth;■ 33 weeks – three children at birth;■ 35 weeks – four children at birth; and■ 37 weeks – five or more children at birth.Leave of up to six weeks can be used prior to the expected date of childbirth.


A female employee receives an allowance paid by the Social Insurance Institution (ZUS). The amount of the maternity benefit differs depending on the case; in principle, it is equal to 100% of the ground of benefit assessment basis for the first six or eight weeks (depending on the number of children born) and 60% for the period of parental leave after the above-mentioned periods. However, in certain cases, it may be equal to 80% of the ground of benefit assessment basis. The employee is protected from dismissal during the maternity leave (with some exceptions).


After the leave, the employee must resume work at the previous position or, if this is impossible, at a position equivalent to the previous position or a position corresponding to her professional qualifications and with remuneration not lower than before the maternity leave.A female employee is entitled to take unpaid childcare leave or ask for reduced working hours during which she is protected from dismissal. Moreover, a female employee who is breastfeeding is entitled to two additional breaks from work included in her working time, the length of which depends on her working hours and the number of children born.


An employee who is a father taking care of a child is entitled to paternity leave of two weeks until the child is 24 months old. The leave can be split into two parts, neither of which can be shorter than one week. Paternity leave is granted upon a written request submitted no later than seven days before the commencement of that leave and the employer is obliged to accept that request.Additionally, the father may use a part of the mother’s maternity leave – the mother employee must use at least 14 weeks of her maternity leave and can waive the right to the remaining portion and grant it to the father employee, at his written request.


Immediately after using maternity leave, both parents are entitled to parental leave of up to 32 or 34 weeks (depending on the number

The Labour Code stipulates that the principle of equal treatment is violated when the employer differentiates the employee’s situation on the basis of one or more reasons resulting in, among other things, the refusal to enter into or dissolve a work contract, or disadvantageous remuneration for work or other employment conditions, or deprivation of promotion or other benefits.


Defence in discrimination cases may not be easy since, in such type of cases, the employer must to prove that they use objective criteria for all employees. This means that an employer must demonstrate that any action connected with employment had justified and legitimate grounds, e.g. an increase of salary was in line with the company’s general promotion policy.Introduction of and compliance with internal rules against discrimination (e.g. a code of conduct) may significantly strengthen an employer’s position in such defence.


Victims of discrimination may enforce their rights during and after employment termination, and may lodge a claim for compensation.Employees who exercise the right to compensation for a breach of equal treatment rules must not be treated unfavourably, in particular it may not cause termination of their employment. Employees are also entitled to notify the National Labour Inspectorate. The Inspectorate may conduct an inspection and may impose a fine on the employer. When an employee files a claim, settlement ending the dispute is possible both before and after the claim is brought before the labour court until the final judgment is passed.The employee who accuses the employer of discrimination does not have an obligation to prove this accusation in front of the court. However, he/she still has to substantiate the complaint of unequal treatment and determine which of the criteria of discrimination the employer has applied.


A person whose rights regarding anti-discrimination were violated has a right to compensation equal to at least the amount of the statutory minimum wage.


“Atypical” workers do not have any additional protection, but they cannot be treated worse than other “typical” employees. Disabled employees have additional rights, such as:■ an appropriate workplace with special facilities;■ working hours limited to eight hours per day and 40 hours per

week;■ night work and overtime work is forbidden;■ an additional 15-minute break at work;■ additional annual leave (10 days per year); and■ additional rehabilitative leave (up to 21 days per year).



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to terminate his/her employment contract upon giving seven days’ notice (such termination has the same legal effect as termination with notice by the employer).A collective agreement of the previous employer continues to apply to the transferred employees for one year from the transfer, unless otherwise stated in the separate regulations. The new employer may introduce more favourable conditions for this group of employees.


The information about a planned transfer must be provided to the employees at least 30 days before the planned transfer date and must contain: the date and reasons of the transfer; legal, economic and social implications for the employees; and any measures to be taken regarding the conditions of employment, remuneration and retraining. There is no sanction for a breach of this obligation. However, failure to fulfil the information duty can result in an employer’s liability for any damages caused to an employee. The length of the procedure depends on the company size and the conditions of a particular transaction.


No, the transfer itself cannot constitute grounds for termination of an employment relationship by an employer.


Generally, employers are not entitled to change independently the terms of employment in connection with a business sale, but the employer and trade union can conclude a relevant agreement in this respect.



Employees must be given a notice of termination, unless the parties conclude a mutual agreement in this respect. In the case of an indefinite term contract, a reason must be offered in writing by the employer that would justify the notice of termination. A contract may be also terminated without notice due to a gross violation by the employee of his/her duties.The period of notice under indefinite and definite contracts depends on an employee’s length of service in a company:■ two weeks – if the length of service is shorter than six months;■ one month – if the length of service is at least six months; and■ three months – if the length of service is at least three years.In the case of employment for a trial period, the terms of notice are as follows:■ three working days – if the trial period does not exceed two

weeks;■ one week – if the trial period exceeds two weeks; and■ two weeks – if the trial period exceeds three months.

of children born) in aggregate. This leave can be split into no more than four parts, cannot be shorter than eight weeks and can also be taken by both parents at the same time. Parents are able to take 16 of the 32 weeks of parental leave later (by the end of the calendar year in which the child becomes six years old). It is granted upon written request submitted 21 days before the leave starts and the employer is obliged to grant the leave.Also, an employee employed for at least six months (including prior periods of employment) has the right to unpaid extended upbringing leave to provide personal care to the child. The length of that leave lasts up to 36 months and it can be granted by the end of the calendar year in which the child becomes six. Both parental and upbringing leave can be combined with work for one year.


Every employee is entitled to take unpaid childcare leave or ask for reduced working hours. If the parental leave is combined with work, the leave is extended in proportion to the time worked – the parent is able to combine work with parental leave for a maximum of 64 or 68 weeks (depending on the number of children born). Additionally, a woman who is breastfeeding is entitled to additional breaks from work included in her working time, the length of which depends on her working time and the number of children born. An employee raising at least one child aged upto 14 is entitled to be granted two paid days or 16 hours off per calendar year. The employee is entitled to an allowance while taking care of a child aged up to eight years (paid for up to 60 days) and while taking care of other family members (paid for up to 14 days).

5 Business Sales


The sale of shares in the company does not affect the employees and they remain employed by the same company.In the case of transfer of assets (transfer of an organised part or entire enterprise) in the form of a sale or contribution to another company, the new employer (company) becomes party to the existing employment relationships by law. This means that employees are transferred to a new employer automatically.The criteria of estimating whether the transfer of enterprise (organised part thereof) has been effected have been developed in the jurisdiction of the Tribunal of Justice of the European Union and are adopted by Polish courts. In the Spijkers case, the Tribunal set-out several tests that have to be taken into consideration in this respect. The crucial question is whether the buyer continues the seller’s activity or starts a new activity of a similar type. Other important aspects include the type of the enterprise, determination whether material tangible components of the enterprise have been transferred (such as buildings and real property), the value of intangible components at the time of the transfer, whether the majority of employees have been taken over by the new employer, if the handling of clients has been transferred upon the transfer, and others. Each case and its circumstances should be reviewed individually.


Within two months from the transfer date, the employee is entitled



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disciplinary dismissal is a serious breach of basic duties (such as unauthorised absence at work, refusing to carry out a task). An employment contract may be terminated without notice if there is no fault on the employee’s part but he/she is unable to work due to incapacity to work caused by an illness lasting for some specific period of time. In practice, business-related reasons may require that the job position of the employee be liquidated due to economic or organisational changes in the company. Justified reasons for dismissal not related to employees include the following:■ where there is causality between the position’s liquidation and

the termination (further employment is no longer needed);■ where the liquidated position is identified in a manner that

does not give rise to any doubt; and■ where there has been approval of organisational changes by a

relevant authority or other entity, if required by law.


The employer must meet the following requirements:■ termination must be preceded by informing trade unions (if

they exist);■ it must be done in writing;■ it must contain the reasons for termination (in contracts for

an indefinite term) and information on how to appeal against termination; and

■ after the termination, the employer is obliged to issue and provide the employee with a certificate of employment.


The employee may bring a claim for a court to invalidate the termination, or if the contract of employment has already been terminated, for reinstatement to work or for compensation. The compensation must be awarded at the amount of remuneration due for two weeks up to three months, but in any case it may not be lower than the amount of remuneration for the notice period.The remedies for a successful claim mostly depend on the ability to prove the reason of termination and observance of the termination procedure. Mistakes made during such procedure significantly increase an employee’s chances of success before the labour court.


An agreement with the employee can be settled both before and during the course of court proceedings until the final judgment is passed.


Group layoffs are regulated by the Act of the Specific Principles of Terminating Labour Relationships for Reasons Not Attributable to the Employees (implementing 98/59/EC Directive). The Act applies to entities that employ at least 20 employees and plan to terminate within 30 days (including a minimum of five terminations by mutual agreements) employment contracts for business reasons of at least:


The Polish law does not recognise a “garden leave” period. Under the Labour Code, the employee is obliged to use their remaining leave during the notice period, provided that the employer has granted such leave. The employer is able to unilaterally release the employee from the obligation to work during the notice period (the employee retains the entitlement to remuneration).


Employees may appeal against termination with notice to a labour court within seven days of the date of the notice, and may claim that the notice be void, reinstatement to work or compensation. In the case of termination without notice, an employee has 14 days to lodge a claim for reinstatement to work or compensation. The employee may challenge the reasons for termination or other breaches of law (for instance lack of consultation with trade unions).The employee is treated as dismissed at the end of the notice period. In the case of termination without notice or a disciplinary dismissal, the termination is effective as of the day when the employee received the termination notice.If there is a trade union representing the employee, it must be notified by the employer in writing about the intention to terminate the employee’s indefinite-term employment contract with notice. The trade union may present its objections with reasons to the employer in writing. Only in the case of employees with special protection against dismissal (trade union board members) is the consent of the trade union required.


The following groups of employees are specially protected:■ pregnant women;■ employees who will reach retirement age in less than four

years;■ trade union activists;■ employees on childcare leave, on vacation, maternity leave or

unpaid carer’s leave;■ members of the works council;■ so-called social labour inspectors; and■ employees protected for a valid reason, in particular those on

sick leave with a doctor’s certificate.


Reasons related to the individual employee may include personal reasons (e.g. long sickness) or reasons related to the employee’s behaviour (e.g. loss of trust). The employer may also terminate the employment contract without notice if the employee is at fault (disciplinary dismissal). In practice, the most common reason for



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employee is entitled to receive, for the entire period of the covenant, compensation which must not be lower than 25% of his/her recent remuneration during the non-compete period. The compensation may be paid in monthly instalments.


The former employee is liable for a breach of the non-competition clause under the Labour Code. An employer who does not perform its obligations, i.e. stops paying compensation, may be sued by the employee before a labour court.In the case of a breach of the non-competition clause, the Suppression of Unfair Competition Act will apply. The Act defines actions which may be considered acts of unfair competition and regulates the rules for liability for such acts. In accordance with the Act, any act such as: “transfer, disclosure or use of third party information which is confidential or receipt of such information from an unauthorised person, if it threatens or violates the interests of the entrepreneur” is considered an act of unfair competition.



The employer is a personal data controller of the personal data of its employees and is obliged to protect such data. The employer cannot share such data with any third party without an express consent of the employee (with some exceptions, such as a court’s order). The personal data protection rules also apply to candidates and former employees.Under the Polish Labour Code, an employer may require an applicant to provide certain information only. Additionally, an employer may require an employee to provide additional information if necessary to exercise special rights to which an employee is entitled under labour law. The Labour Code vests the employer with the right to require additional personal information only if the applicant/employee is obligated to provide such information directly under other regulations.Generally, employee data transfers to a “third country” (outside the European Economic Area) are only allowed if the country of destination ensures an adequate level of protection (at least the same as that applied in Poland). No express legal definition of an “adequate level of protection” exists; it is to be assessed by a data controller on an individual basis. Personal data may be transferred to a third country that does not ensure at least the same level of data protection as Poland if: (i) the employee has given his or her written consent; (ii) the transfer is necessary to perform a contract between the employee and the employer or takes place in response to the employee’s request; (iii) the transfer is necessary to perform a contract concluded in the interest of the employee between the employer and a third party; (iv) the transfer is necessary or required by reasons of public interest or for the establishment of legal claims; (v) the transfer is necessary in order to protect the vital interests of the employee; or (vi) the transfer relates to data which is publicly available. Alternatively, the transfer of personal data to such a third country may be permitted with prior approval of the Inspector General for Personal Data Protection, provided that the employer ensures adequate safeguards (e.g. standard contractual clauses) with respect to the protection of privacy, rights, and freedoms of the employee.

■ 10 employees when the total number of employees is lower than 100;

■ 10% of employees when the entity employs at least 100 but less than 300 workers; and

■ 30 employees when the entity employs at least 300 workers.Before the group layoffs, the employer is obliged to:■ consult its decision with trade unions or other employees’

representatives;■ provide trade unions with information on reasons for layoffs,

number and professions to be laid off, the planned date of layoffs, the criteria of selection for dismissal and the order of layoffs;

■ provide the same information to the local Employment Office; and

■ award dismissed employees a severance pay which amounts to:■ one month’s remuneration, if the employee was employed

for less than two years;■ two months’ remuneration, if the employee was employed

from two to eight years; and■ three months’ remuneration, if the employee was

employed for more than eight years.The employer must settle with the trade unions an agreement regarding the terms of layoffs or – if there is no trade union or when the agreement is not possible – the employer must itself regulate the layoffs.


If the employer fails to fulfil its obligations, it can lead a court to invalidate the termination, or alternatively award compensation or reinstate the employee to work. The employee can also claim for rightful severance pay.



There are a few restrictive covenants after termination: ■ post-contractual non-compete clause; ■ confidentiality clause; and■ non-solicitation clause.


The parties may set, in a separate agreement, a non-compete obligation which will be binding after termination of the employment contract. Such an agreement must be in writing, must stipulate the period of the non-compete clause and the compensation for compliance. There are no restrictions as to the duration of such covenants. The confidentiality clause and non-solicitation clause may be a part of such agreement.


In the case of a post-contractual non-compete obligation, the former



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In practice, Polish employers draft internal legal procedures which are binding on their employees (the Social Media Policies). A Polish SMP must contain:■ a statement of purpose motivating the introduction of the

policy;■ a list of actions and behaviours on social media that the

employer prohibits; and■ a list of possible disciplinary measures that may be applied

when the SMP is violated.Employees must remember their duty to take care of the best interests of the company and keep confidential any information where disclosure of such could cause damage to the employer. Publishing some information about the company via social media may therefore be recognised as a breach of duties.



In Poland, labour courts are competent for all legal proceedings between employers and employees. Claims arising out of employment relationships are decided by labour courts that constitute separate organisational units of district courts; and labour and social insurance courts that constitute separate organisational units of regional courts.


Civil procedure applies to employment-related complaints. Conciliation before both the labour court and the civil court is not mandatory. A settlement ending a dispute between the employer and employee is possible at each stage of proceedings before the labour court. If a conciliatory commission exists in the workplace of the employee, before submitting a claim to a court, the employee may request such conciliatory commission to initiate mediation.Employees do not have to pay a fee for submitting claims to a labour court unless the value of the case exceeds PLN 50,000 – a fee of 5% of the value of the dispute will then apply.


On average, first instance, decisions take between six months to two years to be decided, depending on the court.


It is always possible to appeal against a first instance decision. Appeal courts rule on such appeals (depending of the region of Poland) in about six months to one year.

In accordance with the EU regulation which will become effective from May 2018, legislation regarding data protection will be modified; for example, the candidate will have a right to demand the employer to remove his/her personal data from the system or the employer will have more information obligations towards employees.


Employees are entitled to manage and update their data. To do so, they must provide a written request to the employer. The employer must answer in writing within 30 days and inform the employees about their rights and collected data, but does not have to make it available.


The employer may only require a candidate to provide the data set out in the Labour Code and other statutes. The employer cannot process any other personal information which it deems necessary for its purposes even with the consent of the employee/applicant. According to the rulings of the Polish courts, as well as the doctrinal views, such consent may not be given freely as there is an imbalance of power between the employer and the applicant/employee. In Poland, the possibility of examining the criminal record of a candidate for employment only exists for professions and positions specifically set out in multiple separate statutes (e.g. judges, doctors, university teachers). The data in question are not included in the relevant catalogue in the Labour Code; therefore, employers are forbidden from processing this information.


There is no specific regulation in Poland that concerns the monitoring of employees at work; however, the general rules on data protection apply. Monitoring is generally allowed but it must be reasonable, proportional to its aims and must not violate the dignity or privacy of employees. In practice, the best way to legally monitor employees at work is to inform them about the possible monitoring. According to the Labour Code, employees are obliged to perform specific work for the employer and under the employer’s direction at a place and time specified by the employer. Consequently, the employer is entitled to check if employees use the company’s email, telephones and computers to perform work and not for private use.


No codes and regulations concerning Internet use in the workplace exist in Poland. Under Polish general legal conditions, it is necessary to refer back to general principles when regulating social media, such as: (i) privacy protection; (ii) the right of the employer to direct employees’ labour; and (iii) the protection of trade secrets.



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Piotr Kryczek Chajec, Don-Siemion & Zyto Legal AdvisorsZajęcza 15 St. 00-351 Warsaw Poland

Tel: +48 22 492 40 00Email: [email protected] URL: www.cdz.com.pl

Weronika PapucewiczChajec, Don-Siemion & Zyto Legal AdvisorsZajęcza 15 St. 00-351 WarsawPoland

Tel: +48 22 492 40 00Email: [email protected]: www.cdz.com.pl

Piotr Kryczek – Attorney-at-law, Partner, Head of the Employment Law Department of Chajec, Don-Siemion & Żyto Legal Advisors.

Piotr specialises in employment, competition, intellectual and industrial property law with a particular focus on trademark issues. His clients include international and large domestic corporations, and leading companies from the SSC/BPO and IT industries. He represents clients in proceedings before civil and commercial courts of all instances.

Piotr advises on restructuring and employment reduction procedures, employment-related matters during M&A transactions, the introduction of internal regulations, non-competition contracts, the processing of personal data of employees and share option plans for employees.

Piotr worked for the Polish Antimonopoly Office (now UOKiK), and later as a board member and Chief Legal Counsel of CANAL+Polska (now nc+), the first pay television in Poland.

He cooperates with the Helsinki Foundation for Human Rights and is actively involved in pro bono activities for a number of foundations and private individuals.

Piotr is recommended by The Legal 500 EMEA 2016 in the field of employment law.

Chajec, Don-Siemion & Żyto Legal Advisors is a leading Polish law firm with a strong track record. CDZ offices are positioned in strategic locations, major business centers in Poland, i.e. Warsaw, Krakow and Lodz.

Since 2011, CDZ has been a member of Interlaw, an International Association of Independent Law Firms, and a supporting member of the Association of Business Service Leaders (ABSL) and ASPIRE, leading organisations representing the SSC and BPO sectors in Poland.

For many years, CDZ has been recommended by The Legal 500 EMEA and Chambers Europe. In 2016, its work has been recognised in eight fields of law: corporate and M&A; employment; TMT; private equity; dispute resolution, restructuring and insolvency; banking and finance; and competition/antitrust. Our lawyers are also recommended as leaders in their practice areas.

Weronika Papucewicz – Lawyer, Associate in the Employment Law Department of Chajec, Don-Siemion & Żyto Legal Advisors.

Weronika specialises in individual and collective labour relations, anti-discrimination law, personal data protection, and labour law-related litigation. Weronika supports international entrants to the Polish market in employment law matters, such as hiring employees and drafting the required documentation. She mainly advises clients from the BPO/SSC sectors on labour law, including employment termination, introduction of new internal regulations, non-competition contracts and processing of employee personal data.

She graduated from the Warsaw University’s Faculty of Law and Administration and the American Law School of the Center for American Law Studies. She is also a Ph.D. graduate in law sciences from the Institute of Legal Sciences of the Polish Academy of Sciences.

Weronika is an author of numerous press publications related to individual and collective labour law and has been a speaker during conferences on employee participation, the operation of trade unions in companies and collective disputes.

In 2014, Weronika was named a Rising Star in the ranking of the nationwide law newspaper Dziennik Gazeta Prawna.



Chapter 29



Susana Bradford Ferreira

Portugal

■ for a fixed-term employment agreement, the term and the grounds/reasons for entering into it;

■ the employee’s annual leave, or the rules for calculating the leave;

■ notice periods for termination of the employment agreement, or the rules for calculating those periods;

■ employee pay (amount and regularity); ■ a regular weekly and daily schedule; ■ the applicable collective bargaining agreement, if any;■ the identification number of the employer’s accident

insurance policy and insurance company; and■ identification of the respective employees’ compensation

fund.


Yes. All employment relationships implicitly include the employer’s obligation to provide work, to pay for the work rendered and to provide a safe working environment. As for the employee, every employment agreement implies that the employee will carry out the work and be loyal to his employer. Additionally, employment agreements are always subject to an implied probation period, unless the parties choose to reduce or exclude it in writing.


The Labour Code guarantees minimum employment conditions that the employers have to observe, such as minimum wages, holidays, maximum working hours, etc., which shall prevail over employment agreements or collective bargaining instruments.


Collective bargaining instruments may rule on all aspects of the employment relationship, unless a specific legal rule forbids it. There are also specific matters that can only be ruled by collective bargaining agreements if more favourable to the employee. In Portugal, collective bargaining is most common at industry level.



The Portuguese Constitution sets forth a number of fundamental rights and principles in its Chapter III regarding both employees and employers.The Labour Code, collective bargaining instruments and the individual agreements are also main sources of employment law. Labour practices of each profession, sector or company are also a secondary source of labour law.Finally, European legislation is also a main source.


The Labour Code protects every employee, regardless of the specific type of agreement entered into with the employer. Nevertheless, there are specific regulations applicable to certain types of employees (such as domestic employees, professional athletes, artists and showmen).Employment relationships between public institutions and their employees are also governed by special legislation.


As a rule, employment agreements do not have to be in writing. As an exception, promissory, term employment agreements, teleworking, temporary and pre-retirement employment agreements, as well as employment agreements with a foreign employee, must be in writing.However, the Labour Code requires the employer to provide employees with some information in writing, notably: ■ complete identification of the employer, including its

corporate group relationship; ■ the employee’s place of work; ■ the employee’s job title or a brief description of his/her

duties; ■ the date of signing the employment agreement and the

employee’s start date;


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The matters in which works councils must be consulted include: (i) winding-up of the undertaking and requests for bankruptcy; (ii) any measures that may lead to a substantial reduction in the number of employees, the substantial deterioration of working conditions, or substantial changes in the work organisation; (iii) changes to the criteria for employee professional classification or promotion; and (iv) change of location of the company or any of its establishments.


As per the above, works councils and trade unions operate with different principles and objectives. Specifically, they have a distinct set of rights, namely the right to declare strikes and the right to collective bargaining, both exclusive of trade unions.


No, they are not.

3 Discrimination


All employees are protected against discrimination. The Portuguese Constitution sets forth that all citizens are equal before the law and have similar rights and duties, thus guaranteeing legal protection against discriminatory acts and practices, namely on the grounds of ancestry, genre, race, age, disability, language, place of origin, religion, political or ideological convictions, education, economic situation, rank or sexual orientation.


The Labour Code deems both direct and indirect discrimination to be unlawful. Direct discrimination occurs whenever an employee is treated less favourably than another employee in a comparable situation, and due to one of the reasons set out above. Indirect discrimination takes place when, in an apparently neutral provision, criterion or practice, an employee is put at a particular disadvantage.


Facing a judicial claim of discrimination, the employer may argue before the court that the different treatment is justified, and did not rely on discrimination.Defence against discrimination claims may differ depending on whether the employee sued over direct or indirect discrimination. Against direct discrimination claims, the employer may argue, for instance, that the nature of the activity or the context of its performance requires a different treatment. This argument invokes the principle that what is different ought to be treated differently. Against indirect discrimination claims, a defence is possible by arguing the pursuit of a certain justifiable goal by the employer and it may be deemed successful, provided that the given different treatment is necessary, adequate and proportional to the pursued objective.



The Portuguese Constitution recognises the right of employees to freedom of association, thus guaranteeing: (i) the freedom to form trade unions at any level; (ii) the freedom of membership (affiliation); (iii) the freedom to decide the organisation and internal regulations of trade unions; (iv) the right to engage in trade union activities within the company; and (v) the right to have political opinions.


In order to defend and promote the defence of rights and interests of the represented employees, the Portuguese Constitution recognises the following rights of trade unions: (i) to enter into collective bargaining agreements; (ii) to provide services of an economic and social nature to their members; (iii) to take part in drafting labour legislation; (iv) to represent employees in labour litigations and administrative procedures; and (v) to take part in the company’s restructuring.


Yes. Both the Portuguese Constitution and Labour Code guarantee the right to strike, setting forth a series of provisions that govern the right to strike and the proceedings that ought to be complied with.


The organisation and activity of a works council – hereby understood as representatives committees at company level – is governed by law. The Portuguese Constitution sets out the right of every employee to organise and participate in a works council in order to further their labour interest. These councils are not to be confused with union representation in the company. They are quite different in their nature, origin and respective rights – namely to: (i) receive all information necessary to carry out their activities; (ii) exercise thorough supervision of company management; (iii) intervene in the company’s restructuring processes, change of work conditions and dismissal procedures; (iv) take part in the drafting of labour legislation and economic and social planning; and (v) manage the company’s social works.Works council representatives are appointed by an election process.


Although works councils must be consulted, through a written consultation procedure, before the employer issues a decision in some matters, the agreement of works councils is not necessary for the decision to be implemented.

FCB Sociedade de Advogados Portugal


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Yes, 15 business days of leave within the first month following the birth must be observed by the father. Five days of said 15 days must be mandatorily used after the birth. The father is also entitled to 10 business days, consecutive or not, to be used at the same time of the mother’s maternity leave.On the other hand, the father may also be entitled to 120 or 150 days of parental leave, provided that the mother does not use the same leave. For further information, please see question 4.1.


When breastfeeding or bottle feeding, the mother or father are entitled to a daily leave of two distinct periods, without loss of remuneration or privileges. Unless otherwise agreed with the employer, each leave has a maximum duration of one hour, a period which is extended in the case of multiple births.


When caring for children under the age of 12 or for children with a disability or chronic illness (regardless of their age), the employee can benefit from: (i) 30 days per year of absence to render the necessary assistance; (ii) a period of absence equivalent to the duration of the hospitalisation, in the case of illness or accident; and (iii) flexible working hours or the right to work part-time.When caring for children over the age of 12, the employee can benefit from a 15-day per year period of absence in order to render the necessary assistance, in the case of illness or accident.

5 Business Sales


Yes. In the event of a transfer (by an asset transfer) of the ownership of a business, an undertaking, an establishment that is part of an undertaking, or an establishment that constitutes an economic unit, the transferee is assigned the legal position of the employer in the employment agreement with the affected employees, and assumes liability for payment of fines applied in cases of labour offences. The concept of ‘transfer’ includes an assignment, transfer or return of the economic exploitation of the company. According to some case law, provided that the changes to an employment agreement entail significant and substantial changes to the employee’s position, the employee may refuse to be transferred and terminate the employment agreement with cause.The sale of shares does not have any direct impact on the employment agreement.


In the event of a business sale, the new employer undertakes the contractual position assumed by the previous employer, and


Employees may enforce their discrimination rights before the Commission for Equality in Work and Employment (CITE), as well as before courts. Notwithstanding the foregoing, employers may always settle with the employees, both before and after the procedure is initiated.


Successful discrimination lawsuits entitle the employees to: (i) compensation for both material and non-material damage; (ii) reinstatement in the company (in case of termination of employment agreements); and (iii) compensation for the termination of their employment agreements (should it be the case). Additionally, employees may terminate their agreements with fair cause, and in such case are entitled to compensation for such termination.


Besides special protection given to pregnant employees, recently become mothers and union representatives or members of employees’ representation bodies, all employees are granted the same protection regarding discrimination, regardless of the type of employment agreement.



Working parents are entitled to parental leave of 120 or 150 consecutive days as per new-born child, which they can share after the child’s birth, without prejudice to the mother’s exclusive initial parental leave (six weeks’ initial parental leave immediately after giving birth). This leave may be extended by 30 days (up to a maximum of 180 days) when each parent takes exclusive leave of 30 consecutive days, or two periods of 15 consecutive days, after the mother’s mandatory leave. In the event of more than one child being born at the same time, the leave period is increased by 30 days for each additional child.


While on leave, the employee’s rights remain unchanged, except in relation to pay. The Portuguese Constitution specially protects female employees against the loss of any other privileges during this maternity leave.


Upon her return to work from maternity leave, the employee shall have the same rights as before. Moreover, during the breastfeeding period, the employee is entitled to time off and protection against termination.



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60 days (depending on the duration of the agreement being up to six months, between six months and two years, or longer).Additionally, termination of an employment agreement during the trial period must comply with a seven or 15 days’ notice, if that trial period has lasted more than 60 or 120 days, respectively. In this case, if the required advance notice is not given, the employer will have to pay compensation corresponding to the missing notice period.


Although Portuguese law does not expressly and formally recognise the concept of “garden leave” during an employee’s notice period, the employer may release the employee from the performance of work, provided that the he/she agrees so, without loss of pay.


The employer may only dismiss an employee when there are objective or subjective reasons related to the company or to the employee, respectively. In both cases, a formal procedure must be followed. Otherwise, the termination of the agreement shall be deemed unlawful. The employees may challenge the dismissal by filing a claim before the court. An employee is treated as being dismissed if the employer unilaterally terminates the employment relationship. Expiration of term employment agreements and termination upon trial period is not deemed a dismissal.Consent from third parties is not required in order for an employer to dismiss, except for cases of dismissal of pregnant employees, recently become mothers or those breastfeeding, as well as employees on parental leave. However, it is mandatory to communicate the decision to both the works council and the respective trade union (if applicable).


Pregnant employees, new mothers or those breastfeeding, employees on parental leave, and employees’ representatives enjoy additional protection against dismissal.


1. An employer is entitled to dismissal for reasons related to the individual employee when there is “cause” for dismissal. The Labour Code defines “cause” as a fault in the conduct of the employee, which due to its seriousness precludes the possibility of maintaining the employment relationship because the conduct undermines the requisite of trust on which the relationship is built. The Labour Code provides some examples of cause for termination: (i) illegitimate disobedience to orders given by hierarchical superiors; (ii) violation of rights and guarantees of employees;

therefore the employee will continue to have the same rights that he/she had with the previous employer, including length of service.Collective bargaining agreements applicable to the original employer must be maintained by the new employer by the expiration date of the collective bargaining agreement or, at least, during 12 months following the transfer, except if a new collective bargaining agreement applies to the new employer.


Yes. Both the transferor and the transferee must inform the employees’ representatives [i.e. (i) employees’ committees; (ii) inter-union committees; (iii) union committees; and (iv) union representatives] or all of the employees if there are no employees’ representatives, who are affected by the transfer of the following: (i) the date and the reasons for the transfer; (ii) the legal, economic and social implications of the transfer for the employees; and (iii) any measures envisaged in relation to the employees.The information must be given in writing within “reasonable time” before the transfer and, in any event, at least 10 days before the consultation referred to below, if applicable.The transferor and the transferee must consult the employees’ representatives on the envisaged measures in relation to the relevant employees in view of reaching an agreement.The violation of these provisions constitutes a minor administrative offence and does not interfere, in any case, with the transfer itself.


A business sale cannot determine the dismissal of employees covered by the transfer nor cause the redundancy thereof. However, the business sale may provide the employer (either the seller or the buyer) with structural, economical or technological grounds for a redundancy procedure (collective or individual).


Once the new employer undertakes the contractual position of the previous employer, all employment agreements are transferred, and the previous terms and conditions of employment are maintained. However, employers may amend existing employment agreements by mutual agreement, or unilaterally, provided that there is no violation of general rules, in the same terms it could occur if no transfer existed.



In general, termination by serving notice to the employee is not allowed. However, for fixed-term employment agreements, the employer must serve notice to the employee with 15 days’ notice before the term expires. For uncertain-term employment agreements, such notice must be given with a minimum notice of seven, 30 or



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(i) compensation for pecuniary and non-pecuniary damage;(ii) reinstatement without prejudice of the employee’s job

position and seniority, or compensation varying between 15 and 45 days of basic salary and seniority allowance per year of seniority (taking into account the date of the final and binding court award), with a minimum of three basic salaries plus seniority allowances; and

(iii) salaries not earned between the date of the unlawful dismissal and the final and definitive court decision, plus interest at the applicable legal rate, including, for example, Christmas bonuses and vacation allowances, any mandatory salary increases, etc.

In certain cases, if the lawsuit is pending before a court of first instance for more than one year, the company will only be liable to pay monthly salaries accrued over the first 12 months. The State will then be liable for payment of all monthly salaries accrued after these first 12 months and until the court of first instance issues its ruling. Should an appeal be filed against this ruling and the court find against the company, the employer will be liable for all the salaries accrued while the appeal was pending. Any amounts received by the employee as a result of the termination (e.g., unemployment benefits or salaries from another employer) will be deducted from these salaries. However, the company will be obliged to reimburse the Social Security Services of the unemployment benefits the employee has been receiving.


It is possible for employers to settle claims before and after they are initiated. Portuguese law admits both extrajudicial conciliatory mechanisms and judicial conciliatory agreements.


Yes. The Labour Code provides for two types of redundancies: (i) collective; and (ii) individual.Collective redundancy is the successive or simultaneous termination of employment agreements over a three-month period by the employer, affecting at least two to five employees, depending on the size of the undertaking: two if the employer is a company with fewer than 50 employees; and five if the employer is a company with more than 50 employees. When collective redundancies do not apply based on the number of affected employees, individual redundancies can be applicable. Individual and collective redundancies require a specific procedure to be complied with.


Employees may enforce their rights in relation to mass dismissals through legal action and within a period of six months after the date of termination.On the other hand, an injunction for preventive suspension of the collective redundancy must be requested within a period of five working days of the date of receipt of the notification for dismissal.Failing to comply with its obligations, the employer can be sentenced to compensate the employees for both material and non-material damage, as well as to reinstate them in the company.

(iii) repeated conflicts with employees; (iv) repeated disinterest in complying with due diligence with the obligations of his/her functions; (v) infringement of the company’s serious material interests; (vi) false statements concerning justifications of absences; (vii) unjustified absences from work that directly determine damage or serious risks to the company, or whose number reaches, in each year, five in a row or, regardless of damage or risk, a total of ten; (viii) lack of observance, with fault, of the rules of safety and health at work; (ix) physical violence, insults or other offences, punishable by law; (x) abduction or, in general, crime against members of the company; (xi) non-compliance or opposition to the fulfilment of a judicial or administrative decision; and (xii) abnormal reductions of productivity or quality in the performance of work. In this case, there are no financial consequences for the employer besides the payment of the credits arising from the termination of the employment agreement.2. Additionally, an employer is entitled to dismiss for business-related reasons based on market, structural or technological reasons when the collective or individual redundancy applies. Within redundancy procedures (either individual or collective) the employee(s) will be entitled to compensation. The compensation amount will vary depending on the employee’s length of service, the effective date of the employment agreement and the employee’s base salary.


Yes. The employer may only terminate employment agreements with cause following a disciplinary procedure, which must be instituted within 60 days of the date when the employer became aware of the employee’s misconduct. However, if needed, the employer may conduct an internal investigation to look into further evidence to substantiate the accusation. In this case, the internal investigation must be initiated no more than 30 days after there is a suspicion of irregular conduct. If the employer finds the employee has committed a breach in the employment agreement, an ‘indictment note’ must be served to the employee, describing the facts he/she is accused of, within 30 days of concluding the internal investigation.Upon receipt of the ‘indictment note’, the employee may file a written defence within 10 working days and request certain means of proof (depositions from witnesses, documentation to be attached to the disciplinary file, etc.) to be adduced by the employer.After completion of this phase, a full copy of the file on the proceedings must be delivered to the works council or trade union (if applicable), which may, within five working days, issue its opinion on the case. After receiving these opinions, or after the period for issuing an opinion has elapsed, the employer has 30 days to issue a final decision, either in favour of the employee or assessing a disciplinary penalty. This decision must be notified in writing to the employee. If there is no works council or trade union, the 30-day period begins on the date of the last investigation.


The employee may challenge both the validity and the fairness of the dismissal before the court. In the case a court finds the dismissal unlawful, the employee will be entitled to:



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is restricted by the employees’ right to privacy. Under the Portuguese Data Protection Act, personal data must be: (i) processed lawfully and in good faith; (ii) collected for specified, explicit and legitimate purposes; (iii) never processed when incompatible with such purposes; and (iv) kept for no longer than necessary for the purposes for which it was collected.Furthermore, any transfer of data must rely on one of the legitimate grounds. Therefore, in the case of cross-border transfers to a non-adequate country, authorisation of the Portuguese Data Protection Agency (CNPD) will be required. This occurs whenever the transfer is not made: (a) to a company registered under U.S. Safe Harbor; (b) to a country deemed as adequate by a decision issued by the European Commission; or (c) through the EU Model Contract C2C. The cross-border transfers to adequate countries do not require CNPD authorisation, but rather CNPD notification.


Employees have the right to access personal data without constraint at reasonable timings and without excessive delay or expense. Furthermore, under the Portuguese Data Protection Act, employees’ rights include the right to be informed on the identity of the data controller, as well as on the purpose for which the personal data is being processed and respective categories. Also, employees must be informed of the existence and conditions of their right of access and right to rectify.


From a labour standpoint, as a general rule, the employer cannot run, directly or through a third party, a background check on job applicants regarding his/her private or personal life. Nonetheless, it is possible to conduct such background checks (i) if the information is strictly necessary to assess the job applicant’s ability to perform his/her future duties, and (ii) when there is a written request justifying the need for such information. From a data protection standpoint, the company can only process information containing personal data without the individual’s consent in certain specific situations set forth in the law. Additionally, sensitive data (such as criminal records and medical examinations) can only be collected with a prior authorisation from the CNPD.


The Labour Code protects the employee’s right to privacy regarding personal messages. Nevertheless, this does not affect the employer’s right to enforce policies on the use of IT tools. In any case, the employer is obliged to notify employees on the terms and restrictions of the use of company equipment and data processing. Monitoring IT tools carry risks to the privacy of the employee and therefore should be carefully analysed and assessed on a case-by-case basis and accompanied by a set of measures that ensure a minimum level of intervention. Furthermore, control of the employees’ movements during their free and personal time is inadmissible.

The employee may also file a complaint with the labour authorities, which may take action to apply an administrative penalty.



Non-competition agreements and permanence covenants are recognised in Portugal.


Non-compete clauses may last for at most two years after the termination of the employment relationship. This may be extended to three years for employees whose activity involves a relationship of trust or who have access to sensitive information concerning competition matters. All non-compete clauses must meet the following requirements: (i) the clause must be in writing, notably in the employment

agreement or termination agreement; (ii) the jobs or activities covered must cause damage to the

employer; and(iii) the employer must pay the employee compensation for

restricting his or her professional activities during that period. This sum may be reduced in case the employer has spent large sums on the employee’s professional training.

As per the permanence covenant, the employee shall be obliged not to terminate his agreement, for a period not exceeding three years, as compensation for expenses made by the employer in connection with training. The employee may be released of such obligation by paying the expenses made by the employer.


Employees must be properly compensated for the non-compete agreements.


Restrictive covenants must be set forth in writing and its enforceability depends on the content of the clause. Permanence covenants are automatically applicable. Non-compete clauses may be automatically enforced after the termination of the employment agreement. Upon violation of restrictive covenants, legal action may be taken, and the party that failed to comply with the covenant may be sentenced to pay damages.



Within the Portuguese legal framework, personal data protection has constitutional dignity. Hence, the employer’s power of management



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The procedure will differ according to the nature of the complaint, since special procedures will apply to different types of claims. As a rule, in employment-related judicial complaints, the court must promote a conciliatory hearing. In some special procedures, this conciliatory phase will occur not before the court, but before the Public Attorney’s Office. In order to submit a claim, an employee will have to pay court/justice fees. Nevertheless, in certain situations, the employee may be exempted from this payment, for example, when represented by the public prosecutor’s office. A trade union’s legal department may also represent employees, being responsible for the payment of any fees there might be.


On average, employment-related complaints typically take between one and two years to be decided by the first instance court.


Yes, as a rule, it is possible to appeal from a first-instance decision before a second instance court (the Court of Appeals). However, the admissibility of the appeal will, in principle, depend on the type and value of the claim at stand. The appeal will always be admissible, regardless of the value of the claim, regarding: (i) the determination of the professional category of the employee, his/her dismissal, reintegration and validity of employment agreement; (ii) accidents at work or occupational disease; and (iii) legal proceedings of welfare institutions, family allowance and syndicates. Appeals on substantial matters (i.e. on the claim itself and not related to procedural matters) usually take between one and two years to be decided.


Monitoring the employee’s use of social media on an occasional basis, rather than on a permanent one, may be acceptable. Nevertheless, this can never, on any occasion, be extended to the monitoring of private messages. Also, even though the employee has the constitutional right to freedom of speech, the employer’s intervention may be justified when regarding the disclosure of the company’s confidential information, as well as in the event of any damage to the company’s image or best interests.On the other hand, taking into account some of the employee’s duties (notably the duty to be loyal), employers may regulate off-work conduct to the extent that it has a detrimental impact on the employment relationship, including in cases where the employee may disclose confidential company information or other content which might harm the reputation or interests of the company or respective co-employees.



On a first instance level, the Labour Court, presided by one judge, has jurisdiction over employment-related complaints.Subsequently, the Social Division of the Court of Appeals, ruling with a panel of three judges, has jurisdiction to decide on appeals against Labour Courts’ decisions.At the last stage of hierarchy of the courts stands the 4th Division of the Supreme Court of Justice also ruling with a panel of three judges. Additionally, the Constitutional Court has exclusive jurisdiction over violation of any constitutional provision.



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Susana Bradford FerreiraFCB Sociedade de AdvogadosAvenida da Liberdade n.º 249, 1.º1250-143 LisbonPortugal







b) Public / Administrative Law & Public Tenders / Environmental Law;




f) Tax;






■ In 2001, attended the Post-Graduate course in Labour Law, at the University of Lisbon School of Law, and also a Post-Graduate course in European Criminal Law at Faculdade de Direito da Universidade de Coimbra.

■ In 2008, also attended the Post-Graduate course in Public Law and Employment, at the Faculdade de Direito da Universidade de Coimbra.



■ Degree in Law from the Faculdade de Direito da Universidade de Lisboa.

■ Joined FCB in 2015 as a Trainee Lawyer.

■ Integrates the Employment, Benefits and Pensions Department.

■ Susana holds a Master Degree in Forensic Law from the Faculdade de Direito – Catholic University of Lisbon, concluded in 2016.

■ Between 2015 and 2016, Susana collaborated, as junior research assistant, in the publication of books and other academic papers in the field of tax litigation and arbitration.


Chapter 30

Pachiu & Associates

Mihaela Cracea

Iulia Dobre

Romania

overtime; and, in what concerns fixed-term workers, their ILAs are limited to the period mentioned in the agreement.In addition, the Labour Code and other relative legal provisions regulate the temporary workers who are employed by temporary workforce agencies and who are made available to companies, called beneficiaries, for determined periods of time. The temporary workers enjoy the same rights as the beneficiaries’ own employees.


ILAs have to be concluded in writing, in the Romanian language, based on the parties’ mutual consent, prior to the commencement of the employment relations. The obligation to conclude the ILA in writing is incumbent on the employer.Prior to the conclusion of an ILA, the employer shall inform its potential employee about the main provisions of the ILA, such as job position, job description, work place, salary and working hours.Moreover, prior to the commencement of the activity, the employer should provide the employee with an original copy of the ILA.


ILAs take a form that briefly includes the main and most important details regarding employment.The ILA shall provide for the most essential conditions of employment, such as: (i) identification of the parties; (ii) job position; (iii) work schedule; (iv) work place; (v) salary and other indemnifications; (vi) details concerning holidays; (vii) trial period; (viii) notice period; (ix) criteria of employees’ appraisals; and (x) parties’ rights and obligations, as well as any other significant/special details that the parties are willing to establish explicitly (e.g. confidentiality, non-compete obligations, intellectual property rights, etc.).


Employers may negotiate the main details of the ILA with the employees, but cannot decide upon conditions less favourable to employees than the ones set up by the law.There are certain minimum terms and conditions that must be considered by the employers, such as trial period, salary, annual leave, minimum working conditions, maximum number of working hours per day/month, procedure in the case of dismissal, notice period, etc.



The main sources of employment law are the Labour Code (Law No. 53/2003), as republished in the Official Gazette No. 345/18.05.2011 and further modified (the “Labour Code”), and the Social Dialogue Law (Law No. 62/2011), published in the Official Gazette No. 322/10.05.2011 (the “Social Dialogue Law”) as further modified.For other labour-related matters, such as labour, health and safety, protection of maternity in the workplace, non-discrimination, social security, and the protection of employees in the case of transfer of undertakings, etc., there are particular legal sources.


There are two types of workers: (i) workers employed by private legal entities; and (ii) workers employed by public institutions and authorities (i.e. public servants).The employment laws protect both categories of workers, but there are certain differences regarding the applicability of such legal provisions, as follows:■ Workers from the private system may negotiate details

concerning their Individual Labour Agreements (“ILAs”) within the limits set by the applicable legal provisions, such as salary, holiday, work time, etc. In this case, the employment laws represent only the legal frame, whereas such workers may have a more flexible approach with regards to the conditions of their specific labour positions.

■ Labour relations applicable to workers in the public system are ruled by special and derogatory legal provisions. Such workers may not negotiate and change all the conditions of their employment.

As regards the workers from the private system, the legal regulations provide for full-time workers and part-time workers, as well as for fixed-term workers and workers employed for an unlimited period of time.All the rights and obligations applicable to full-time workers and to workers employed for an unlimited period of time are recognised as applicable to part-time workers and fixed-term workers as well. The main difference between such categories is that: in relation to part-time workers, the working time is less than the normal working hours provided by the legal regulations for a full-time worker (i.e. 40 working hours per week) and they are not allowed to work


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A trade union is entitled to take industrial action if it considers such a measure to be in the best interests of the represented employees.The main industrial action available to a trade union is the strike. A strike can be declared only if it was notified to the employer at least 48 hours in advance and if all the other reconciliation procedures provided by the Social Dialogue Law have been exhausted. There are three types of strike: (i) a warning strike; (ii) a proper strike; and (iii) a solidarity strike.A proper strike represents the collective and voluntary cessation of work by the employees of a company, or within a certain industry. Attending to a strike is the sole option of the employees. The employees who are not attending the strike are obliged to continue their employment activity. The warning strike cannot exceed two hours. The solidarity strike cannot exceed 24 hours.Certain rules are set for energy and public sector employees that must ensure one third of activity in case of a strike. Also, certain categories of public personnel, such as prosecutors, judges and military personnel, may not initiate strikes.


Works councils may only be set up following EU regulations regarding employers/groups of employers.Such employers must offer the proper conditions for negotiation regarding the setting up of the works councils or the setting up of the information and consulting procedure.Such negotiations may be initiated by the employer, or the employees may request the establishment of a works council. The request of the employees is to be addressed to the central management.With regards to works councils, Romanian legislation provides such entities with the sole purpose of informing and consulting employees.The members of the works councils are employees appointed either by the representatives of the employees or elected directly by the employees, if there are no such representatives. The number of members must be between three and 30, with representatives of both genders, and should provide at least one representative of each European Member State where the employer has affiliates.According to the number of employees in a particular Member State, one or more additional representatives may also be appointed.


The works councils must be informed regarding any measures that the company or group of companies intend to take, directly or indirectly affecting the interests of the employees.The works councils do not have, according to Romanian legislation, any co-determination rights regarding the measures to be taken by the employer.

Moreover, an employee may never waive his/her minimum legal rights as provided by labour legislation, not even in a direct and written form. If the ILA contains certain terms that are inconsistent with the minimum legal rights, such terms are deemed null and void, becoming applicable the minimum legal rights.


As of the enactment of the Social Dialogue Law, the Collective Bargaining Agreement (“CBA”) at national level does not exist anymore. Such agreements might be concluded only at industry level and will be applicable only to contractual parties. Furthermore, collective bargaining also takes place at company level. Negotiation at this level is mandatory for companies having at least 21 employees. However, the conclusion itself of a CBA is not mandatory; only the negotiation.During collective bargaining, parties usually aim to agree upon more favourable employment terms and conditions than the minimum standards recognised by the law.



Trade unions are independent legal entities, without a lucrative purpose, established for the protection and promotion of collective and individual rights of the employees who are trade union members.Firstly, in order for a trade union to be recognised, it must be registered with the territorial competent court of law. To this aim, at least 15 employees of the same employer are required to sign the minutes of the organisation. Secondly, to be considered representative and to take part in collective bargaining, trade unions must meet the following requirements: ■ at company level, to be legally established and to include at

least 50 per cent + 1 of the total number of employees; ■ at industry level, or group companies level, to be a

representative organisation for that particular industry, including at least 7 per cent of the number of employees in that industry; and

■ at national level, to be a nationally representative trade union confederation that covers over 5 per cent of the total number of the employees in the country.


Trade unions are independent legal entities, without a lucrative purpose, established for the protection and promotion of collective and individual rights of the employees that are trade union members.For this purpose, trade unions have the right to submit, on behalf of their members, petitions and motions of claims based on a power of attorney issued by such members.Representative trade unions have the right to take part in collective bargaining, to be consulted with respect to any measures envisaged by the employer and which might have an impact on the workers, such as collective lay-offs.

Pachiu & Associates Romania


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accordingly, the employer may settle such a claim by taking the necessary measures to protect the employee from discrimination.Furthermore, if the employees consider that they have been discriminated against, they are entitled to file a formal complaint with the National Council for Combating Discrimination, within one year as of the date when the discriminatory action took place, or from the time he or she learned of such an action.If the employee is still not satisfied with the result of the complaint, he or she is entitled to file a discrimination claim to the competent court of law. The claim may be settled amicably by the parties, if they reach an agreement, even after the litigation is initiated.


An employee who has proven that he or she has been discriminated against may request and obtain (i) special (moral) and/or compensatory damages, (ii) reinstatement of the status quo ante position, or (iii) cancellation of the discriminatory situation (measure, deed).Further, in the case of dismissal on discrimination grounds, the employee may request to be reinstated in his/her former position.


The legal provisions with regards to the rights and obligations of the workers are the same for all categories of workers. The differences are triggered only by the nature of their employment contract.



Maternity leave consists of 126 calendar days, usually 63 days before birth (pregnancy leave) and 63 days after birth (nursing leave). Both nursing and pregnancy leaves may be compensated between each other, according to the doctor’s recommendation and the mother’s option. Nonetheless, the nursing leave must not be fewer than 42 calendar days.Starting on 1 January 2011, people who have earned income for 12 months in the year prior to the child’s birth may have a discretionary benefit of the following rights: (i) parental leave for children under the age of one year (three years in the case of disabled children), as well as a monthly allowance; or (ii) parental leave for children under the age of two years, as well as a monthly allowance.


Employees who have fulfilled the minimum time of subscription to the Sole National Fund for Health Social Insurances may benefit from a maternity indemnity. The minimum time of subscription is for 12 months prior to the start of the maternity leave.As an exception, employees giving birth within nine months since they ceased to be insured for reasons unrelated to them are entitled to receive the maternity indemnity.


The trade unions or the representatives of the employees are entitled to appoint the members of the works councils, in compliance with the legal conditions regarding the number and capacity of such members.After the setting up of the works councils, such councils shall collaborate with the trade unions or the representatives of the employees in order to simplify the procedures of informing and consulting with the employees on any measures and/or issues pertaining to the employees’ interests.


Employers are not obliged to invite the representatives of the employees to the Board of Directors’ meetings having on the agenda issues that may affect the employees, from a professional, economic, social, cultural or sportive point of view. However, if invited, such representatives do not have any right of decision as there is no obligation to appoint employees of the company as members of the Board of Directors.

3 Discrimination


The employer must comply with the principles of equal treatment, non-discrimination and equal opportunities for all of its employees.Direct or indirect discrimination towards an employee, based on criteria such as gender, sexual orientation, genetic characteristics, age, national origin, race, colour of skin, ethnic origin, religion, political orientation, social origin, disability, family conditions or responsibilities, or trade union membership or activity is prohibited.


The employer must observe and respect non-discrimination principles during the recruitment process, when concluding the ILA and for the entire term of the ILA, as well as when terminating the ILA. Any type of discrimination on the grounds mentioned hereinabove is considered unlawful, and may be sanctioned by the Romanian courts of law and by the National Council for Combating Discrimination.


If a discrimination claim has been registered with the competent court of law, the sole defence for the employer is to prove, with testimonies, written documents and other legal evidences, that no measures or actions were taken towards the employee based on discriminating views, but based on objective grounds related to his/her actions and/or activities within the company.


Provided that an employee considers any discrimination is being exerted in his/her regard and he/she informs the employer



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5 Business Sales


Yes, Romanian legislation has transposed Council Directive No. 2001/23/EC on the approximation of the laws of the Member States relating to the safeguarding of employee’s rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses. The transposition was made by Law No. 67/2006 on the protection of employees’ rights in cases of the transfer of a business, units or parts thereof, published in the Official Gazette No. 276/28.03.2006 (“Law No. 67/2006”).According to Law No. 67/2006, a transfer of an undertaking occurs if the ownership over a business or part of a business is transferred from a transferor company to a transferee company with the objective of keeping such an undertaking in operation after the transfer. As a consequence of such transfer, the employees are automatically transferred to the buyer. In cases of share sale, considering that this is a corporate change at shareholding level, such a change does not have a direct and automatic consequence on the employees.


The transferee company has to take over all individual and collective labour agreements concluded between the transferor company and its employees. The employees must enjoy the same rights they had prior to the transfer, and the provisions of the ILAs concluded between the transferor company and the employees remain valid.The transferee company has to observe that the transferred employees are not granted rights that are inferior to those which they had under the ILAs and under the CBA concluded with the transferor company.With regards to the CBA, the transferee company may only renegotiate the transferor company’s CBA after one year as of the takeover date.


The transferor has to inform the transferee of all the rights and obligations that are to be transferred.Moreover, 30 days prior to the takeover date, the transferee and transferor must inform, in writing, their employees about: (i) the envisaged takeover date, including takeover reasons; (ii) the legal, economic and social consequences of the transfer; (iii) the decisions affecting the employees; and (iv) the working conditions to be provided upon takeover.In cases where such a transfer affects the employees, the employer has to consult the trade union/employees’ representatives at least 30 days prior to the transfer date.Non-compliance with the provisions regarding the transfer of an undertaking results in a fine of RON 1,500 to RON 3,000 (approximately EUR 350 to EUR 700).


Employers cannot dismiss employees who have been on maternity leave for a period of six months after the employee’s return to work. Such an interdiction is not applicable in cases of judicial reorganisation or insolvency of the company. Pregnant employees or employees who have returned from nursing leave or who are breastfeeding and are working in hazardous conditions are entitled to a relocation to a safer position, or to the improvement of their working conditions. If neither is possible, the employee is entitled to maternity risk leave for up to 120 days.Women that have recently given birth or are breastfeeding may not be compelled to perform night work.


Fathers are entitled to five calendar days of paternity leave. The paternity leave shall be awarded upon request, within the first eight weeks after the birth of the baby.If the father has graduated in a course concerning the rearing of children, he is entitled to an additional 10 calendar days of paternity leave.Also, according to a legal provision which entered into force on 1 March 2012, the other parent has to be granted one month from the period of leave for raising the child. Otherwise, the right to benefit from such a month of the parental leave will be lost. Basically, in cases where the mother chooses the two years’ parental leave, she can stay with the child for one year and 11 months and the remaining one month shall either be granted to the father or lost. In situations in which the mother dies at birth or during the nursing leave, the father is entitled to the rest of the mother’s leave, receiving the correlative indemnity. Last but not least, during the paternity leave, the father is entitled to benefit from the monthly child-raising allowance. Also, the father is entitled to benefit from the insertion incentive in case he decides to return to the job before the child reaches the age of one.


Either the mother or the father may, upon request, benefit from parental leave, for a period of time until the child has reached the age of one or until the age of two.Employees having a disabled child may benefit from parental leave until the child reaches the age of three.


Pregnant employees may benefit from a maximum number of 16 hours per month for pre-natal consultations, without a decrease in their salary rights.Employees that are breastfeeding benefit from two work breaks for breastfeeding, of one hour each, until the child reaches the age of one. These two hours may be granted as a shortening of the work programme upon the employee’s request without decreasing the salary income, and shall be entirely borne by the employer.



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misconduct, the employer has to establish a commission that should propose the dismissal.Moreover, in cases of dismissal of an employee based on their physical/mental incapacity, a decision of the competent medical experts has to be taken.


The Labour Code provides for situations in which the dismissal of an employee is not possible. According to the Labour Code, it is not permitted to dismiss an employee based on criteria such as gender, sexual orientation, genetic characteristics, age, national origin, race, colour of skin, ethnic group, religion, political opinions, social origin, disability, family status or responsibility, trade union membership or activity, or for exercising, under the law, the right to strike and trade union rights.Moreover, it is forbidden to dismiss an employee in the following cases: during illness leave attested by a medical certificate; during quarantine; during the entire period when the employed woman is pregnant, provided that the employer found out about her pregnancy before the issuance of the dismissal decision; during maternity leave; during the leave for raising a child up to the age of two years, or in the case of a disabled child, up to the age of three years; during nursing leave for a sick child of up to seven years, or in the case of a disabled child, for underlying illnesses, until the child turns 18; during the exercise of an elected position within a trade union body, except for the case when the dismissal is ordered for a serious disciplinary misconduct or repeated disciplinary misconducts; or during annual leave.However, such interdictions are not applicable in cases of dismissals due to the insolvency of the employer, legal reorganisation or winding-up.


Under the Labour Law, dismissal on the grounds of (i) an employee’s disciplinary misconduct, (ii) an employee’s professional incapacity, (iii) an employee’s physical/mental incapacity, or (iv) an employee being in police custody or in house arrest for more than 30 days, is considered to be related to the employee, whilst the dismissal due to the closing of the employee’s position is classed as business-related.The latter can be either individual or collective, if a certain number of dismissed employees is reached.In cases of dismissal due to (i) the employee’s professional incapacity, (ii) the employee’s physical/mental incapacity, or (iii) the closing of the employee’s position, the employer has to grant the dismissed employee compensation as provided by the applicable CBA. If there is no such CBA applicable to the company, no compensation is granted as the legal provisions do not provide for such.


In each dismissal case, the employer has to issue a dismissal decision, which has to be communicated to the employee and to provide for certain mandatory elements, such as the dismissal reasons, the prior notice period, etc.


The business sale may not represent a reason for dismissal. All the employees have to be transferred and the transferee may not claim any individual or collective dismissal of the transferred employees based on the occurrence of the transfer.


The employers may not change the labour conditions of the transferred employees without the prior approval of the employees.Any amendments to the terms and conditions of employment have to be included in the ILA or in an additional act to the ILA.



An ILA may be terminated: (i) by law; (ii) by mutual consent; (iii) upon the employee’s initiative; or (iv) upon the employer’s initiative.With regards to the employer’s initiative, it is not allowed to dismiss an employee without cause, even if the employee is granted compensation and an extended notice period. Considering such, an employee may be dismissed only in the following limited situations: i. employee’s disciplinary misconduct; ii. employee’s professional incapacity; iii. the closing of the employee’s position; iv. employee’s physical/mental incapacity; or v. if the employee is in police custody or in house arrest for

more than 30 days.In the case of points ii–iv hereinabove, the employer has to give a notice of termination and grant the employee a prior notice of at least 20 working days. The applicable CBA at industry and/or company level, as well as the ILA, may provide for an extended notice period.


It is possible to serve a period of “garden leave” only if the employee agrees to such a period. Otherwise, the employer may not limit the right of an employee to work, even during the notice period.


The Labour Code expressly provides the situations in which an employee may be dismissed. In each case, dismissal must be grounded on a dismissal decision and a formalistic procedure must be strictly observed.Further, the employer has to sustain the necessity and grounds of dismissal in case of litigation. There is no need to obtain third-party consent. However, in cases of dismissal for disciplinary



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employees have the right to challenge the dismissal decision in a court within 30 calendar days of the date the dismissal decision was communicated (as provided by the Labour Code) or within 45 days of the acknowledgment of such a decision (as provided by the Social Dialogue Law).Furthermore, in cases where the employer has failed to pay the mandatory compensation, the employees have the right in court to request the payment within three years as of the date when such payment was due.



Under Romanian Law, during the term of the ILA, an employee may undertake a non-competing obligation following termination of the ILA. Based on such an obligation, the employee will not be allowed to undertake any activity in his/her own interest or in the interest of a third party, which may compete with the activity performed for the benefit of the former employer, nor to perform activities on behalf of the former employer’s competitors.The employee may also undertake a confidentiality agreement regarding the obligation not to disclose information with respect to the activity of the company/employer.


The non-competing obligation undertaken by an employee is only valid for a maximum period of two years after the termination of the ILA. The fidelity obligation, if agreed, is valid for the entire duration of the ILA and, after its termination, for a period agreed by the parties.


The non-competing clause is valid only if the former employer pays the former employee a non-competing indemnification. The non-competing indemnification must amount to at least 50 per cent of the average gross salaries of such an employee for the last six months prior to the termination date of the ILA. Such an indemnification shall be paid on a monthly basis during the whole period of such a covenant.There is no mandatory indemnification in the case of the confidentiality obligation.


For the enforcement of a non-competing obligation, the parties must expressly provide in the ILA, or in an addendum to the ILA, certain elements stipulated by law: (i) the prohibited activities; (ii) any third party in favour of which the employee is restricted to perform such activities; (iii) the period of time for which the non-competing clause will produce effects; (iv) the amount of the non-competing monthly indemnification; and (v) the geographic area in which the employee can be in real competition with the former employer.

Furthermore, in cases of dismissal due to the employee’s disciplinary misconduct and the employee’s professional incapacity, the employer has to observe formalistic procedures provided by the Labour Code and the applicable CBA.In the first case mentioned in the above paragraph, the employer has to carry out a preliminary disciplinary inquiry, and in the latter, an evaluation of the employee has to be performed. Both the preliminary disciplinary inquiry and the evaluation are performed by commissions/specific employees established by the employer for such purposes.


Each employee has the right to challenge, before the courts of law, during the 45 days following the acknowledgment of such a decision, the dismissal decision issued by the employer. In case of litigation, the burden of proof is incumbent on the employer, which has to prove the existence of the reasons for dismissal and that they justified the dismissal of the employee. In cases of unfair dismissal, the court may impose the reinstatement of the employee to the position held prior to the dismissal and the payment of the salaries accrued between the dismissal and the date of reinstatement.Moreover, if requested, the court may impose on the employer the payment of special (moral)/compensatory damages and/or court expenses. However, moral damages are very rarely granted.


Pecuniary claims may be settled before, or after, they are initiated.However, under the Labour Code, an employee may not waive the rights granted by law, one of the rights being the challenge of a dismissal decision issued by the employer. Any transaction by which the employee waives such rights is null and void.Considering such, it is difficult to settle reinstatement claims before or after they are initiated, as such settlement would equal re-employment.However, courts of law allow the amicable settlement of claims.


Collective lay-offs require a formalistic procedure over a period of 30 days and apply in the event of termination of the ILA by the employer of at least: 10 employees if the employer has between 20 and 100 employees; 10 per cent of the employees if the employer has between 100 and 300 employees; or 30 employees if the employer has at least 300 employees.In the case of collective lay-offs, the employer must consult the trade union/employees’ representatives regarding the intended lay-off and notify the labour authorities of such a dismissal.


In cases of mass dismissal, as in the case of individual dismissals, if the employer fails to comply with its obligations, the dismissed



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The employers might also request other information and documents from the prospective employees, provided that they are relevant or strictly necessary for the targeted job (considering the job description or a requirement of the legal provisions). This information might concern criminal records, medical files, etc.


Employers are entitled to monitor communications means provided by the employer, including the use of company emails and telephone calls, as well as the use of the internet.Such monitoring will only be deemed legitimate, however, if employees were previously informed about such monitoring and instructed that the company’s infrastructure should not be used for personal purposes. Nevertheless, even if an employer has access to such means of communication, it will not have the right to disseminate any private information which they identify in relation to the private lives of the employees.


The employer might control the use of social media of an employee only if social media activities are among the employee’s job duties. Otherwise, even if an employee accesses his social media accounts using the company’s computers, the company cannot control the private communications through these social media accounts.As for the employee’s use of social media outside the workplace, as long as the employee does not use the employer’s terminals, the employer cannot control and monitor this activity.



Employment-related complaints are settled at first instance by the tribunal, competent within the range of the claimant’s domicile/residence or headquarters, where special labour sections are established. At first instance, the cases are settled by a panel consisting of a judge and two judicial assistants. On second appeal, the case is heard by a panel of three judges at the courts of appeal.The decision of the first court is definite and enforceable.


Employment-related complaints have to be settled in an emergency regime. The claims are exempted from the judicial stamp fee and from a judicial stamp. Furthermore, as a general rule, hearing terms cannot exceed 15 days. The employer has the burden of proof and the legal summoning procedure can be performed 24 hours prior to the hearing date. Evidence must be submitted to the court before the first court hearing of the parties. The conciliation is not mandatory prior to the initiation of the court proceedings.



The legal framework in the field is Law No. 677/2001 on the protection of individuals with regard to the processing of personal data and on free movement of such data (“Law No. 677/2001”), implementing the provisions of the Directive No. 95/46 on the protection of individuals with regard to the processing of personal data and on free movement of such data.Employers have the obligation to process the employees’ personal data according to the provisions of Law No. 677/2001. The main purpose of processing employees’ personal data is human resources, meaning that the personal data is processed in order for the employer to be able to fulfil its obligations towards their employees.Although the employers do not have the obligation of notifying the data protection authority with respect to the processing of employees’ personal data for human resources purposes (please refer to Decision No. 200/2015 and the former Decision No. 90/2006 issued by the Romanian Data Protection Authority – “DPA”), employers have an obligation to inform employees about such processing, about the categories of personal data that are processed, the addressees and their rights with respect to their personal data (especially the right to access the data, the right to object to processing and the right to intervention).The personal data of the employees can be transferred to other countries provided that such countries’ legislations provide for the same level of protection of personal data as Romania does. The transfer to third countries (i.e. which are not EU Member States) requires the preliminary notification of DPA and, in some cases, the DPA’ clearance. Moreover, in most of the cases, the prior consent of the employees on such a transfer is also required.


As is the case with any data subject, employees have the right to access their personal data processed by the employer and to exercise any other rights recognised by Law No. 677/2011 including their right to request and to obtain information from their employer about the processing of their personal data. The employer must disclose to the employees information including the purpose of the processing, categories of processed personal data, data recipients, etc. Likewise, the employees are entitled to obtain copies of the documents in their personal files which may comprise their personal data.


Employers are entitled to carry out pre-employment checks on prospective employees, using only public information and the information provided by the employees through their CVs (information such as name, sex, gender, civil status, professional experience, training and education, preferences). Such processing of personal information included in the CV is, according to Decision No. 200/2015 and to the former Decision No. 100/2007 issued by the DPA, exempted from notification to the authority, provided that this information is processed only for recruitment purposes and that the CVs are voluntarily transmitted by the person concerned.



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Mihaela CraceaPachiu & Associates75–77 Buzesti Street, 5th floorBucharest 1RO-011013Romania

Tel: +40 21 312 1008Fax: +40 21 312 1009Email: [email protected]: www.pachiu.com

Iulia DobrePachiu & Associates75–77 Buzesti Street, 5th floorBucharest 1RO-011013Romania

Tel: +40 21 312 1008Fax: +40 21 312 1009Email: [email protected]: www.pachiu.com

Mihaela is a lawyer with over 14 years of professional experience, being part of the firm’s Corporate and M&A Department and coordinating the IT and data privacy, as well as the labour and employment practice areas in this department.

Mihaela has built a solid expertise and legal competence in the IT, data protection and intellectual property fields and manages projects of data privacy in the digital field, information security and cross-border data flow matters.

Other highlights of Mihaela’s practice involve holding training sessions on the measures to be implemented so as to ensure data privacy and cyber security compliance and reviewing IT and data privacy policies and other related documentation in terms of local and European statutory provisions in the field.

As a labour and employment lawyer, she has been involved in projects on staff restructuring and transfer of undertaking, by providing guidelines, drafting the required documentation, assisting the clients during the negotiations and following up on the post-acquisition issues.

As a graduate of the Faculty of Law of the Ovidius University in Constanta, Mihaela holds a LL.M. degree in Business Law and is an intellectual property counsel on trademarks. She is fluent in English and conversant in French and co-authored several international comparative legal guides focusing on data protection matters and digital environment. She has also attended, as a speaker, several local conferences on cyber security and data privacy.

Pachiu & Associates is a leading business law firm based in Bucharest. The firm was established in 2002 developing a sound practice covering all areas of law. There are currently five partners, each heading a department and a practice area in the firm.

Due to our well-established network of clients and partners, we have constantly been involved in a variety of cross-border transactions.

We provide first-class legal skills and market knowledge, combining exceptional legal skills with innovative and lateral thinking, and we believe to have the expertise in guiding you through each key milestone of the project.

Pachiu & Associates has been always noted for the commitment to client service and ability to assist clients with their most demanding legal and business challenges.

We deliver our services in English, German, French, Italian and Spanish with the same ease as we do in Romanian.

We may be of assistance worldwide through our membership with certain regional and global legal networks and many other reputable law firms located in business centres around the world.

www.pachiu.com

Iulia is a Junior Associate with Pachiu & Associates and a member of the Corporate and M&A Department. The practice areas she specialises in are competition, labour law, intellectual property, corporate, and IT & Data protection.

She is a graduate of the Faculty of Law at the University of Bucharest and of the University of Paris I Pantheon-Sorbonne, holding a Maîtrise Degree in European and International Business Law with the latter. Iulia is fluent in Romanian, English and French.


The decisions of the tribunal can be appealed at the Courts of Appeal, where special labour sections are established. The decision of the Court of Appeal is final and it usually takes one year for a decision to be settled. However, an appeal does not prevent the enforcement of the first instance court’s decision. Essentially, the first court’s decision is enforceable as of right (de jure) and the appeal may suspend the effects of such a decision exceptionally, only for strong reasons and only after the submission of bail by the interested party.


As a general rule, even if the complaints have to be judged with urgency, a case may take up to two years if an appeal against the first instance decision is filed. However, it is possible to have a complaint settled within a year if no such appeal is filed.



Chapter 31

Law firm Šafar & Partners, Ltd Martin Šafar

Slovenia

the envisaged signing of the contract and with a written employment contract upon its conclusion.Pursuant to the ERA-1, the employment contract must be executed in writing; however, according to the law and case law, a relationship between the employee and the employer that has all elements of an employment relationship is also deemed an employment relationship and is implemented as such even if the employment contract is not in writing. In such a case, the employee has the right to request from their employer, any time during the employment relationship, to submit to them the employment contract. In the event of a dispute concerning the existence of an employment relationship, it is presumed that the employment relationship exists if all elements of an employment relationship exist.


The ERA-1 stipulates some terms regarding the performance of work within the employment relationship, whereas additional terms can be agreed upon also in a collective agreement or an employment contract. In compliance with the ERA-1, the worker is obliged: to perform work with due diligence at the workplace and with regard to the type of work for which the employment contract has been concluded, at the location and during the working time laid down for performance of work, taking into consideration the employer’s organisation of work and business operations; to observe the requirements and instructions of the employer in relation to the fulfilment of contractual and other obligations arising from the employment relationship; to respect and implement the regulations and measures regarding safety and health at work and perform their work with due care; to inform the employer of all relevant circumstances that affect or might affect the fulfilment of their contractual obligations and also of any changes of data that affect the fulfilment of the rights deriving from the employment relationship; to refrain from all actions which, given the nature of the work they perform for the employer, may cause material or moral damage or might harm the business interests of the employer; and not to exploit for their personal use or disclose to a third person the employer’s business secrets and during the employment relationship to not perform work without the employer’s written consent for their own account or for the account of a third person nor conclude business falling under the activity that is actually carried out by the employer and represents or might represent competition to the employer.The ERA-1 also stipulates the obligations of the employer, namely that the employer must provide the worker with the work agreed upon in the employment contract, provide to the worker appropriate remuneration for their work, provide the worker with safe and healthy working conditions in accordance with the special



The main source of employment law in the Republic of Slovenia is the Employment Relationships Act (hereinafter: ERA-1), the amended version of which was enforced in 2013. The ERA-1 is harmonised with European legislation and incorporates all applicable and binding international conventions, EU directives and regulations. Trade union activity, collective agreements and many other aspects of employment law, as well as special categories of workers, are governed by special regulations.It should be noted, in particular, that the rights and obligations of the parties to the employment relationship in collective agreements and internal regulations can be stipulated differently or more favourably than those presented herein.


A worker is any natural person who has entered into an employment relationship by signing an employment contract. An employment contract can be concluded by any natural person who has fulfilled the conditions for performing work and is older than 15 years. The ERA-1 governs and applies to all workers, whereby the employment relationships of some workers, i.e. managers, can also be stipulated otherwise. The ERA-1 also stipulates the category of “economically dependent person”, namely a self-employed person who does not employ workers and, under a civil law contract, performs work in person, independently and for remuneration (earning 80% of their annual income from the same client) over a longer period of time under the circumstances of economic dependency. In compliance with the ERA-1, economically dependent persons are entitled to limited labour law protection.


An employment relationship is stipulated in an employment contract, which must be concluded in writing. The employment contract is deemed legal and valid when it is signed by both the employee and the employer. The employer must provide the worker with a draft written employment contract at least three days prior to


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To answer this question appropriately, a distinction must be made between trade unions holding the status of a representative trade union and the rest. The former can: conclude collective agreements with general validity and participate in the decision-making bodies dealing with issues of economic and social security as well as propose candidates from among workers who participate in management; issue opinions on draft general acts of the employer in compliance with the ERA-1; consult the employer about the change of employer and transfer of workers to a new employer and, in the case of termination of employment of a large number of workers, consult about the introduction and performance of night work, etc. Trade unions without this status do not enjoy the abovementioned rights.


These rules are laid down in the Strike Act stipulating that trade unions can also organise a strike action. The strike committee must announce the strike at least five days before the date of its beginning by sending a decision on the commencement of the strike to the management and executive bodies in the organisation and/or to the employer; whereas in the case of a strike of workers in a specific branch or activity and a general strike, the decision must also be sent to the competent body in the Chamber of Trade and Commerce and/or professional association. If the trade union does not take part in the organisation of the strike, its representatives can participate in the negotiations for a reasonable settlement of a dispute if they have been invited by the parties to the dispute.The strike committee and the workers who take part in the strike must organise and manage it in a manner that does not constitute a threat to the safety and health of people and property and that enables the continuation of the work after the strike. The Strike Committee and the workers participating in the strike must not prevent the workers refusing to participate in the strike from working.For organisations and employers who perform an activity or work of special social significance, as well as for organisations with special significance for national defence, the right to a strike can only be exercised under the condition that the minimum work process is ensured that guarantees the safety of people and property or is an indispensible condition for the life and work of citizens or work of other organisations, as well as fulfilment of international obligations. In such cases, the deadline for announcing the strike is 10 days. In the cases referred to in this paragraph, the participants must submit a proposal for the settling of the dispute during the period from the announcement of the strike to the day of its commencement.In a body and/or an organisation of a socio-political entity as well as in other state bodies, workers can exercise their right to strike under the condition that the strike does not essentially threaten the exercising of the function of these bodies and organisations, whereas the strike must be announced to the official who leads the body or the organisation by way of submitting the decision at least seven days before the commencement of the strike.The workers of the bodies for national defence and internal affairs can exercise their right to strike under the terms that are stipulated by laws governing the rights and obligations of workers in such bodies.

regulations on safety and health at work, protect and respect the worker’s integrity and take into account and protect the worker’s privacy, provide a working environment such that the worker is not subjected to sexual or other harassment or mobbing on the part of the employer, a superior or co-workers as well as protect the worker’s personal data.


The list of minimum employment terms and conditions that the employer has to observe would extend beyond the limits of this contribution. They mainly concern minimum payment for performed work, duration of a working day, week and year, duration of annual leave, notice period, amount of severance pay, etc.

1.6 To what extent are terms and conditions of employment agreed through collective bargaining? Does bargaining usually take place at the company or industry level?

In the Republic of Slovenia, employment relationships and the rights and obligations of workers and employers are largely regulated by collective agreements, namely at the level of branch of industry, professional collective agreements and also at the corporate level. The ERA-1 lays down some specific rights and obligations that have to be included in the collective agreement. Collective agreements stipulate a number of rights and obligations in terms of amount and/or duration that are laid down in a basic form in the ERA-1. It should be noted that the provision that is more favourable for the worker as the weaker party in the employment relationship always applies.Collective agreements are concluded for an individual branch and/or profession and are not automatically binding upon employers, except in case their applicability is extended; otherwise they are only binding upon the signatories. As a rule, collective agreements at the corporate level are concluded only by large companies.



In the Republic of Slovenia, trade union activity, as one of the fundamental human rights that is also protected by the Constitution of the Republic of Slovenia, is governed by the ERA-1 and the Representativeness of Trade Unions Act.A legal entity acquires the status of a trade union on the date of the issue of a court decision on the deposit of the articles of association or some other basic act. Special terms and conditions that a trade union should fulfil are not prescribed. The Representativeness of Trade Unions Act expressly specifies the terms and conditions that a trade union must fulfil in order to acquire the status of a representative trade union, namely it must be democratic and exercise freedom of membership in trade unions, freedom of functioning and implementation of membership rights and obligations, it must operate uninterruptedly for at least six months, it must be independent from the state and the employers, financed mainly from the membership fee and other own sources and it must have the number of members as defined by law.

Law firm Šafar & Partners, Ltd Slovenia


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works council as well as cover the works council’s costs of work, at least the costs of premises where meetings are held, clients received or the work performed by the professional members of the works council, the costs of materials used by the works council and the costs of administrative staff for the works council.


Prior to adopting status and personnel issues of the company and the issues concerning safety and health at work, the employer must consult the works council and strive to align the viewpoints during the consultation. The employer’s decisions concerning the adoption of the bases for the use of annual leave or other types of absence from work, the criteria for assessing job performance of workers, the criteria for remuneration of innovation activity in the company and the criteria for promotion at work must first be approved by the works council, which also applies to decisions in case a change in the company’s status, sale of the company or its considerable part, a change in the company’s activity, organisational changes, changes in technology or diminished economic activity of the company causes an increase or reduction in staffing levels. If the works council refuses the approval, such a refusal does not affect the correctness and legality of the employer’s decision. If the employer, prior to adopting the decisions, fails to inform the works council about issues related to changes in the company’s activity, organisational changes, changes in technology or a decline in the economic activity or if they adopt a decision related thereto without having conducted the required procedure with the works council, the works council can suspend the employer’s decision based on a resolution and at the same time initiate the procedure for resolving of the dispute. The works council may also act in the same manner when the employer fails to meet the legally defined deadlines for individual phases of the procedure in joint consultation or fails to request a joint consultation about the status and personnel issues. In both cases, the employer must not implement their decision until a final decision is reached by the competent body, i.e. the arbitration board that is composed of the same number of members appointed by the works council and the employer as well as one neutral chairperson who is appointed based on mutual agreement.


The representative trade unions of the employer may convene an assembly of all workers that passes a resolution on the call to election to the works council; otherwise, the rights of the trade union representatives and works council members do not interact.


In a two-tier management system, workers’ participation at the board level is implemented through the employee representatives in the company’s supervisory board or board of supervisors and also through the employee representative in the company’s management board (human resources executive). In a one-tier management system, the workers participate in the management through employee representatives in the board of directors and the committee of the board of directors as well as through the human resources executive. The number of employee representatives in the supervisory board is


In compliance with Slovenian labour legislation, setting up a works council is the right of workers, not the obligation of employers. Workers can set up a works council or select an employee representative and thus participate in the management of the company.A special law (the Worker Participation in Management Act) lays down the formation, composition, term of office and election of a works council, the method and election of the works council members, termination of membership in the works council, protection of voting rights, participation of workers in the company’s bodies, workers’ participation in the management of the company and resolving of disputes. The election of the works council and/or the employee representative is a precondition for the workers to exercise their right to participate in the management in compliance with the law. If a company does not have a works council or a works council representative, the workers can only exercise this right individually, not collectively.Through the works council or employee representative, the workers receive information, make proposals and give opinions, request a joint consultation with the employer, co-decide on individual issues and request from the employer to postpone their decision until the final decision is adopted by the competent body. The works council’s obligation to inform encompasses issues concerning the company’s economic position, the company’s development goals, the state of affairs in production and sales, the general economic position of the industry, change of activity, changes in the organisation of production and in technology, as well as the annual account and annual report. The workers have the right to set up a works council if the company employs more than 20 employees with a right to vote (it is granted to those workers who have been employed by the company for six consecutive months, whereas the managers, the procurators and the family members of the managerial staff do not enjoy the right to vote). In a company employing less than 20 workers with a right to vote, these workers can participate in the management through an employee representative. The number of the members of the works council depends on the number of employees. The term of office of the works council members is four years and the members can be reappointed. If the employer has already established a works council, the latter adopts the resolution on the calling of elections to the council, whereas in other cases such a resolution is adopted by the assembly of all workers that can be convened on the initiative of three workers or the representative trade unions in the company. Depending on the size of the company, the function of the works council member can be professional and the costs of the salary of such a member are borne by the employer. Setting up a works council or electing an employee representative is a legally defined right of the workers that the employer cannot deny.A more detailed regulation of the rights of the works council and their enforcement is defined in a written agreement between the works council and the employers, and such an agreement may stipulate a broader scope of the co-management rights than provided by law. The works council meets during working hours if the work process enables this. If the works council meets outside the working hours because of the nature of the work process, the time the members spend at the meeting is included in their working time. The employer must grant the members of the works council the right to five paid hours a month for attending the meetings of the



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The employer can reach an agreement with the employee about the employee’s claims from the time they learn about such claims until the time their decision becomes final, and later also until the execution of the court decision.


In the case of an established violation of the prohibition of discrimination or mobbing in the workplace, the employer is held liable for damages to the candidate and/or worker under the general rules of civil law, which means that they are liable for the reduction in assets, prevention of an increase in assets and infliction of physical pain, mental distress or fear.The worker may claim compensation in the case that they sustain physical pain or mental distress or fear, and may request from the employer to pay for the publication of the judgment or its correction or the order to revoke the employer’s statement that constitutes a violation, or in the case of any other conduct that can be used to attain the purpose that is attained through compensation.Non-pecuniary damage incurred by a candidate or worker shall also include mental distress sustained owing to unequal treatment of a worker and/or discriminatory conduct of the employer and/or failure to provide protection from sexual or other forms of harassment or workplace mobbing. In the calculation of compensation for non-pecuniary damage, it must be ensured that the compensation is effective and proportional to the damage sustained by the candidate and/or worker and that it discourages the employer from repeating the violation, which constitutes the first and only punitive damage in the Slovenian legal system.


In terms of discrimination, these types of workers enjoy the same rights as full-time workers and those working under contract for an indefinite time. The same applies to the new category of economically dependent persons.



A new Parental Protection and Family Benefits Act was passed in 2014 in order to implement the new European legislation and to promote the equalisation of the burdens among parents or caretakers. Previous types of parental leave were not only renamed (now called maternity leave, paternity leave, parental/childcare leave), but also slightly restructured. There is no more talk of adoption leave since all the rights biological parents and adoptive parents have are now equal.Maternity leave lasts for 105 days and is intended for the mother-to-be to prepare for the childbirth and for the mother to look after her baby after its birth as well as for protection of the mother’s health upon childbirth and afterwards. The mother of the child is entitled to the maternity leave, yet under specific terms this right is also granted to the father of the child or some other person or one of the child’s grandparents. The mother must take the maternity leave 28 days before her due date, which is determined by her gynaecologist.

determined in the company’s articles of association; however, it must not be lower than one third and higher than one half of all members of the supervisory board, whereas the number of representatives in the board of directors is also stipulated in the company’s articles of association, of whom at least one member must be the employee representative. A company with a two-tier management system with more than 500 employees has an employee representative that is appointed to the management board by the works council, whereas in a company with a one-tier management system and more than 500 employees one of the employee representatives is appointed to the management board as human resources executive, based on a proposal by the works council.

3 Discrimination


The prohibition of discrimination is regulated in the ERA-1 in detail. The law prohibits discrimination based on any personal circumstance such as nationality, race, ethnic origin, national and social origin, sex, colour of skin, health condition, disability, religion or belief, age, sexual orientation, family status, membership in a trade union or pecuniary status.The ERA-1 expressly prohibits sexual and other harassment as well as workplace mobbing.

3.2 What types of discrimination are unlawful and in what what circumstances?

Both direct and indirect discrimination are unlawful, namely during the employment relationship as well as at the time of employment, upon promotion, during training, education and re-qualification and in regard to salaries and other benefits from the employment relationship, absence from work, working conditions, working hours and the cancellation of employment contracts.Differing treatment based on any personal circumstance referred to in the preceding paragraph does not constitute discrimination if, owing to the nature of the work or circumstances in which the work is performed, a certain personal circumstance represents a significant and decisive condition in respect of the work and such a requirement is in proportion to and justified by a legitimate objective.


In contrast to what is customary, when the worker files a discrimination claim, the burden of proof lies with the employer. The employer can successfully defend themselves against the accusations of discrimination if they prove that they, in the abovementioned circumstances, treated the worker equally to other workers and/or that the different treatment was lawful.


The worker can enforce their rights directly with the employer, based on a request or in a mediation or arbitration procedure, if the two are defined. Eventually, they can also enforce their rights by filing an action with the court of appropriate jurisdiction.



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Men have practically the same rights arising from parenthood as women; they are entitled to paternal leave instead of maternity leave, and are under some circumstances protected against the termination of their employment contract. It is also important to note that for the period of 18 months the mother has the right to breastfeed her child for an hour a day with the right to be paid for this time.


A woman who looks after a child until that child is three years old, looks after a child with severely impaired mobility or a child who is moderately or severely mentally impaired until this child is 18 years old or who looks after two children until the younger child finishes the first grade of primary school has the right to part-time work. In the latter case, at least one year of part-time work has to be carried out by the father. The part-time work must cover at least one half of the weekly hours of attendance.

5 Business Sales


Yes, in the case of a legal transfer of a company or a part thereof, the employees are automatically transferred to the new employer. According to case law, the employer need not conclude new employment contracts with the workers.


In compliance with the ERA-1, the employees have the right to refuse to work for the new employer. In such cases, their employment relationship is terminated based on an extraordinary termination of employment by the previous employer. The workers who switch employers in such a way and their rights from the employment contract deteriorate for objective reasons can cancel the employment contract, whereby they enjoy the same rights as if their employment contract was cancelled by the employer for business-related reasons.The new employer must assure the workers that the rights and obligations under the collective agreement that was binding on the previous employer continue to stay in force for at least one year, unless the collective agreement ceases to be valid prior to the expiry of one year or a new collective agreement is concluded prior to the expiry of one year.


The previous employer and the new employer must inform the employer’s trade unions about the date or proposed date of the

The mother is also entitled to 130 days of parental leave. The father has the right to his own 130 days of this type of leave and can pass all of them to the mother for a combined period of 365 days, whereas the mother can only transfer 100 days of this type of leave to the father with 30 days being non-transferable.It has to be noted that there are exceptions to practically every rule regarding the use of all types of leave, since there are many specific situations that can occur (death of the parent, loss of parental rights, abandonment of the child, etc.).


One of the most important rights is the right to the parental allowance. However, a woman who looks after a child is entitled to part-time work that must cover at least one-half of the weekly hours of attendance. This right has to be granted to a parent by the employer. The parent can then apply to the Centre for Social Work to enforce the right to be paid a proportionate part of social security contributions up to the full amount of work obligations that is calculated based on the minimum salary.


A woman has the right to return to the job she had before she took maternity leave and to perform work under the terms stipulated in her employment contract. Generally speaking, the worker may enforce the rights they obtained or the rights that have improved during the worker’s absence from work due to parental leave immediately after they start working if they could not enforce them during their absence; these must be provided for by the employer.The employment contract of a female worker can be terminated during their pregnancy and breastfeeding period up to the age of one year of the child only in the case of extraordinary termination of employment contract or the initiation of a procedure for dissolution of the employer, which applies also to parents who use the full parental leave period, provided that the employer has first obtained an approval from the inspector of labour.


Yes, fathers have the right to a 30-calendar-day paternal leave that is intended solely for fathers so that they, together with the child’s mother, can look after their child at such a tender age. The father must use the first 15 days of paternal leave in the period before the child is six months old (otherwise this portion of paternal leave expires), whereas the remaining 15 paid days can be used up until the child finishes the first grade of primary school. If the father takes maternal leave instead of the mother, he is not entitled to the first 15 days of the paternal leave.In 2016, a father was entitled to paternity leave of 70 days upon the birth of the child as well as to a paternity compensation for the first 20 days (but not the remaining 50 days), though his social security contributions are paid from the proportionate part of minimum wage. In 2017, a father will be entitled to paternity leave of 50 days. In 2018, the father will have the right to a 30-calendar-day parental leave, as stated above.A father can use 30 days of the paternal leave with full or partial absence from work and by taking consecutive days (without interruptions) or intermittent days. As already mentioned in our answer to question 4.1, the father is also entitled to 130 days of parental leave which can be transferred in full to the mother.



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Prior to an ordinary cancellation of the employment contract for business-related reasons, the employer is not obliged to serve to the worker the notice of cancellation as was the case under the previous ERA.The minimum notice periods depend on the person cancelling the employment contract and on the reasons for the cancellation, and they are stipulated in the ERA-1, collective agreements, internal regulations and optionally also in the employment contract.


When the employer is unable to provide work for their workers temporarily but no longer than six months in a calendar year, they can dismiss the worker based on written notice on garden leave so as to preserve the job. The worker is entitled to a pay equal to 80% of their average monthly salary for a full-time job in the last three months and/or the period of the last three months prior to the absence; moreover, the worker is obliged to respond to the employer’s requests in the manner and under the conditions specified in the notice of garden leave.In any case, the employer can place the worker on garden leave after giving them the notice period and paying them a salary equal to 100% of the base referred to in the previous paragraph.


Workers are protected against dismissal with the provisions of the ERA-1, the provisions of the branch collective agreements and the employer’s internal regulations. The employer may thus lawfully cancel the employment contract only based on a justified reason and provided the employer respects all procedural safeguards. Attention should be drawn to the categories of workers under special protection to whom the employer, under specific terms and for specific reasons, cannot cancel the employment contract or may only do this if the worker expressly agrees with it.It is deemed that the worker’s employment contract is cancelled at the time the worker receives the notice of cancellation of employment contract and/or when the fiction of service of the notice becomes effective. The employer cannot revoke the served notice of cancellation of employment contract by unilateral action. As a rule, the employment relationship of a worker terminates on the date of expiry of the notice period, except for the worker whose employment contract has been cancelled for business-related reasons or for a reason of incompetence and who is, upon the expiry of the period of notice, absent from work due to temporary incapacity because of illness or injury (their employment relationship is terminated on the day they return to work or should return to work, but no later than at the end of six months after the expiry of the period of notice). In some cases, the employer must obtain approval prior to cancelling the employment contract. The employment contract of an appointed or elected shop steward cannot be cancelled without approval of the body of which they are a member or the trade union, if they act in compliance with the law, the collective agreement and the employment contract, unless they, for a business-related reason, refuse to take the offered substitute job or if the cancellation occurs in the framework of the dissolution of the employer, whereby the

transfer and the reasons for the transfer, as well as about the legal, economic and social implications of the transfer and the envisaged measures for workers at least 30 days prior to the transfer. For the purpose of reaching an agreement, the previous employer and the new employer must consult the trade unions at least 15 days prior to the transfer about the legal, economic and social implications of the transfer and about the envisaged measures for workers.If there is no trade union at the employer, the workers affected by the transfer must be informed in a manner customary to the employer about the deadline and the circumstances of the transfer.If the failure to fulfil the obligations referred to in the previous two paragraphs results only in a sanction for a violation, the trade union may initiate a collective labour dispute.


In compliance with the ERA-1, a change of employer is not, in itself, a lawful reason for the termination of the employment contract for business-related reasons; however, this does not mean that, after the transfer of the company or a part thereof, the new employer is not entitled to restructure their work process and to terminate the employment contracts of redundant workers for business-related reasons.


Pursuant to the ERA-1, in the case of a legal transfer of a company or a part thereof, a merger or a division of a company or a change of employer does not constitute a change of employment relationship for the worker; on the contrary, the worker preserves all the rights and obligations arising from their employment relationship with the previous employer with the new employer.



Prior to an ordinary cancellation of an employment contract based on fault, the employer is obliged, within 60 days following the identification of the violation and no later than six months from the occurrence of the violation, to remind the worker in writing about the fulfilment of obligations and the possibility of cancellation of their employment contract should the worker repeat the violation of the contractual and other obligations under the employment relationship within one year of receipt of the written warning, unless otherwise stipulated by a branch collective agreement; in any event the time period cannot be longer than two years.Prior to ordinary cancellation based on fault or incompetence and prior to extraordinary cancellation of the employment contract, the employer must acquaint the worker in writing with the alleged violations or the alleged incompetence, as well as give them the opportunity to defend themselves within a reasonable time period that may not be shorter than three working days, unless circumstances exist due to which it would be unjustified to expect the employer to provide the worker with such an opportunity.



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The employer can reach an agreement with the worker about the claim of the latter either before an action is filed with the court or subsequently, until the court decision becomes final or is executed.


Yes, he does – in the case of an institute of cancellation of the employment contracts of a large number of workers for business-related reasons, namely when an employer with 20 to 100 employees dismisses at least 10 of them, when an employer with 100 to 300 employees dismisses at least 10% of them and when an employer with 300 or more employees dismisses at least 30 of them. In such cases, the employer must cancel the employment contracts following a special procedure, draw up a redundancy programme and notify the trade union and the Employment Service of the Republic of Slovenia about the reasons for the cessation of the need for performance of work by workers, the number of workers and the anticipated categories of redundant workers.


Before the dismissal, the workers can enforce their rights collectively through the trade union with whom the employer must consult about all essential circumstances of the dismissal and reach an agreement with it about the proposed criteria for determining redundancies, the alternatives to prevent and limit the number of dismissals as well as the possible measures aimed at preventing and mitigating the harmful consequences.After receiving a notice of cancellation of an employment contract, every worker can enforce their rights individually, namely by filing an action with the court to establish the illegality of the cancellation of the employment contract.



In compliance with the law, workers must refrain, during the employment relationship, from all conduct which, given the nature of the work performed for the employer, materially or morally harms or could harm the employer’s business interests. They are also obliged to protect the employer’s business secrets and, during the employment relationship, must not compete with them without their written approval (non-compete covenants).The employer who thinks that the worker, while performing or in relation to their work, gains technical or business knowledge and establishes business connections can include in the employment contract a special non-compete clause prohibiting the worker from performing a competitive activity after the termination of the employment contract.

employer is not obliged to obtain any approval. In the case of certain reasons for cancellation of employment contract to specific categories of workers, the worker’s express approval is required. The employer must also obtain an “approval” from a governmental committee in the case of a cancellation of an employment contract for the reason of incompetence and incapacity to perform work under the terms stipulated in the employment contract due to disability, whereby the employer is not bound by such approval; the existence of the terms and, consequently, the legality of such a cancellation of employment contract are established in a dispute before the court.


The following workers are to some extent protected against dismissal: members of the works council, shop stewards, members of the supervisory board who represent workers, employees’ representatives in the council of an institution as well as appointed or elected shop stewards; workers aged 58 or over or workers who lack at most five years of pensionable service to fulfil the conditions for old-age retirement; female workers during pregnancy and breastfeeding mothers up to the child’s age of one year; parents who are on full parental leave without interruptions, including one month after the leave was used; and disabled workers and those absent from work due to illness.


The reasons for cancellation of an employment contract that are related to an individual worker include: violations committed by the worker serving as grounds for an ordinary cancellation of the employment contract (based on fault) or, in the case of an extremely severe violation of obligations under employment relationship, for extraordinary cancellation; incompetence and incapacity to perform work under the conditions set out in the employment contract owing to disability pursuant to the regulations governing pension and disability insurance or the regulations governing employment rehabilitation and employment of disabled persons.The business-related reasons include cessation of the need for the performance of certain work under the terms of the employment contract, whereby such reasons can be of an economic, organisational, technological, structural or similar nature.


See the answer to question 6.1.


The worker can file an action with the court to establish the illegality of the cancellation of the employment contract and its annulment; to establish that the employment relationship still lasts and to re-establish the employment relationship and return to work, which also encompasses other rights arising from the employment relationship, including the pecuniary ones.



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Employees have the right to obtain all the personal data and documentation that is kept in the personal files of their employers. In order for the employees not to abuse this right, the Personal Data Protection Act sets out that such requests can only be submitted after a reasonable time period has elapsed since the previous request; such time frame is prescribed by law.


Without special stipulations, such background checks are not permitted. The principle of proportionality on a case-by-case basis should always be considered when a decision as to whether the personal data on job applicants and employees can be gathered should be made. In no case may an employer require an employee to provide information on their family or marital status, pregnancy, family planning or other information unless it is directly related to the employment relationship.


Slovene legislation, court practice and the decisions of the Information Commissioner regarding the issues in question are very strict and sometimes even impossible for the employers to deal with. If a specific account or telephone number is in use by the employee the employer has no right to look at any data that is linked with it or is being trafficked through it. The same prohibition applies even to the traffic data itself (phone numbers called, emailed persons, etc.). The argument for this is that persons who contacted the employee did not give consent for the data to be seen or used by any other person.


The only way for the employers to have such control is to limit access to media sites. If an employee is performing his work outside of the actual work place or at home the employer can also limit access to social sites but this applies only to the computer or other electronic devices that are the property of the employer.



The rights and obligations arising from employment relationships as well as individual and collective labour disputes are adjudicated by specialised labour courts. The court of first instance decides by a panel of judges except if the law prescribes that a case be adjudicated by a single judge (in case of pecuniary claims up to a defined value, suspension of employment contract, probation, etc.).


The non-compete clause is only valid if in writing, if the employer pays the worker a monthly fee for complying with the clause (see question 7.3 below) and if the termination of the employment contract is a consequence of an extraordinary termination of the employment contract by the employer (although not due to all of the reasons), an agreement, an ordinary termination of the employment contract by the employee or an ordinary termination of employment contract based on fault.The non-compete clause must be laid down with reasonable time limits of prohibition of competition; it may not exclude the possibility of suitable employment of the worker and must not be in contravention of the principle of equivalent mutual performance. The non-compete clause must not be longer than two (2) years.


The employer must determine and pay to the worker compensation for respecting the non-compete clause; such compensation must amount to a monthly payment of at least one-third of the worker’s average monthly salary in the last three months prior to the termination of the employment contract.


If the worker violates the non-compete clause, the employer may request, by filing an action, that he ceases violating the clause, compensates for the loss incurred as a result of the violation and surrenders the business transactions concluded for their account, transfers the benefits of the business transactions concluded for their account or waives their right to compensation. The sanctions for the violation, including the contractual penalty, are usually stipulated in detail in the non-compete clause.



Data protection in general is regulated by the Personal Data Protection Act, with the protection of employees’ data also regulated by the ERA-1. Employers must manage the personal data of employees and safeguard it in accordance with the law. Once the legal basis no longer exists, the employer must immediately delete and stop using the employee’s personal data. Personal data of employees may be collected, processed, used and communicated to third parties only in cases stipulated by the law and if this is necessary for the realisation of the rights and obligations arising from the employment relationship or in connection with the employment relationship. Personal data can be transferred to third countries in accordance with the Personal Data Protection Act and with the provision that an order is issued by the national supervisory authority, which determines that a certain third country, to which the personal data is being transferred to, provides a sufficient level of protection of such data. The order is not necessary if a third country is listed among countries which provide a sufficient level of protection of personal data.



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disputes. In such a case, the worker and the employer may, no later than within 30 days from the deadline for the fulfilment of obligation or elimination of violation by the employer, reach an agreement on settlement of the dispute by arbitration. If the arbitration board does not reach a decision within the time limit stipulated in the collective agreement, and no later than within 90 days, the worker, within the following 30 days, may request judicial protection before the court of appropriate jurisdiction.The worker and the employer may, within 30 days from the deadline for the fulfilment of obligation or elimination of violation by the employer, also agree on the settling of the dispute by mediation. In the event mediation is not completed successfully within 90 days after the agreement on mediation, the worker may enforce judicial protection before the labour court within a further 30-day period following the unsuccessfully completed mediation.In the labour dispute proceedings, court fees must be paid, unless stipulated otherwise for individual types of proceedings, by the Court Fees Act that distinguishes between pecuniary and non-pecuniary disputes.


To answer this question appropriately, disputes concerning the existence or termination of employment relationship, which are prioritised by the court, must be discussed separately from other disputes. In the case of the first type of dispute, the average time period from the filing of an action to the decision of the Higher Labour and Social Court, which becomes final upon serving, is a year and a half on average; in the case of other disputes, the time period is slightly over three years.


It is always possible to appeal against a first instance decision; the Higher Labour and Social Court decides on such an appeal in around six months to one year.

The panel of judges in a court of first instance is composed of one professional judge and two lay judges, namely one from the list of candidate workers or insured persons and one from the list of employers or institutes.The appeals against the decisions of the first-instance labour courts are adjudicated by the Higher Labour and Social Court, namely by panels of judges that are composed of three professional judges. Extraordinary appeals are decided by the Supreme Court of the Republic of Slovenia.


The worker may request the establishment of illegality of the cancellation of the employment contract, of other modes of termination of the employment contract or of decisions on disciplinary responsibility of the worker within 30 days from the day of the serving of notice and/or the day when they learnt about the violation of the right. The same deadline applies for the filing of an action by a non-selected candidate who believes that the prohibition of discrimination was violated during the selection procedure.With regards to other violations of the rights and obligations arising from an employment relationship, the worker may or must, in the event the employer fails to fulfil their obligation arising from the employment relationship or to eliminate the violation within eight working days after being served the worker’s written request, request judicial protection before the labour court of appropriate jurisdiction within 30 days from the expiry of the deadline for the fulfilment of obligations or elimination of the violation by the employer.Irrespective of the deadline referred to in the previous paragraph, the worker may file for pecuniary claims arising from the employment relationship, which become statute-barred after five years, with the exception of statutory default interest (which becomes statute-barred after three years), directly with the labour court of appropriate jurisdiction.The collective agreement that is binding on the employer may stipulate arbitration as a means for settlement of individual labour



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Martin Šafar Law firm Šafar & Partners, LtdResljeva cesta 251000 Ljubljana Slovenia

Tel: +386 1 432 20 84Fax: +386 1 234 27 70Email: [email protected]: www.op-safar.si

Law firm Šafar & Partners, Ltd is a Slovenian boutique law firm providing all types of legal services while specialising in labour and employment law. It was funded by Vesna Šafar, who has over 40 years of experience in labour and employment law both as a judge and as a lawyer.

The highly dedicated team managed by Martin Šafar is widely recognised for their work among Slovenian and foreign clients as well as its peers. Law firm Šafar & Partners, Ltd counsels not only the biggest and most important companies in Slovenia regarding every possible employment law issue including mergers and acquisitions but also takes on difficult cases from private clients who need the best representation possible.

Members of the firm, which together with Vesna Šafar are also recognised in the legal guide Chambers & Partners, are highly active as legal authors and as lecturers at many conferences.

Martin Šafar is a Founding and Managing Partner at the Law firm Šafar & Partners, Ltd. He counsels clients on a wide range of employment and labour law issues as well as other matters. He also practises in the areas of company disputes, commercial litigation and contracts. Martin also specialises in insolvency cases.

Together with his partners, he counsels some of the most influential companies in Slovenia. His clients hold him in high regard for his litigation skills. He regularly represents companies in court in all kinds of civil law matters. He is a member of the Bar Association of Slovenia and can represent his clients at every level of the court system, all the way up to the Supreme Court.

Martin Šafar studied law at the University of Ljubljana, where he graduated cum laude. He is fluent in English, Croatian and Serbian. He also understands and speaks German and French.



Chapter 32

CLAUDE & MARTZ, S.L.P. Samuel González

Spain

we have special relations such as that of imprisoned individuals, professional sportspeople, trade representatives, stevedores, lawyers and even artists and performers.The most significant special relationship is that of Senior Managers (or also called Top Executives), which is specifically regulated in a separate piece of legislation and is highly dependent on the bond of trust and confidence between the parties. Its main features include a very low minimum severance upon termination (which may be raised upon agreement), and significant room for the negotiation of terms & conditions.


The general rule is that a binding, legally enforceable employment contract can be executed in writing or orally. It is left entirely to the parties to agree on its form. Nevertheless, this general rule does not apply to certain employment agreements where the immediacy and recurrence in the performing of the employment-related services is not as intense as in a full-time permanent relationship (i.e. internship agreements, training agreements, part-time contracts, fixed-term contracts with an expected term of more than four weeks, permanent seasonal contracts, teleworking contracts, agreements to procure replacement of workforce, or those entered into in Spain to cover a job position abroad). Regardless of the form of the contract, employment law mandates that the employer must provide the employee with written details on the so-called basic terms of the contract, these being the commencement date of employment, type of contract, professional group, salary, working hours, and the applicable Collective Bargaining Agreement.


There are several duties and rights which both employer and employee must observe during the employment relationship that are considered to be implied since: (i) they are not expressly and profusely set out and provided for in the applicable regulations; and (ii) they do not require specific compensation in consideration thereof. The most important remain the employee’s duty of trust and confidence towards the employer, and the duty of loyalty which refrains the employee from pursuing personal gain or advantage in detriment of the interests of the employer.



Employment law is a complex and changing area of law which brings together multiple regulations on the basis of hierarchical dependence. Supremacy is represented by the Spanish Constitution, followed by the law, Collective Bargaining Agreements (which have been ruled to be collective employment contracts between employers and employees – or Unions; with a spirit of generalised applicability as that of legislative instruments), employment contracts (whether individual or collective), habits or usages (which will only apply absent all the above or by express reference), and judicial precedents (binding judicial precedents are those virtualised in rulings from the Labour Chamber of the Supreme Court).Moreover, Spanish employment law also includes international treaties incorporated into the Spanish legal system, EU regulations of direct applicability as a Member State, recommendations and resolutions of the International Organisations of which Spain is a member, and case law from the European Court of Justice and the European Court of Human Rights. These international legislative mechanisms are not as relevant as local law. However, they have become increasingly relevant and noticeable since they have managed to change current national regulations in aspects such as the recognition of specific marital unions for State-subsidised benefit eligibility, the change in the reference unit for collective dismissals, and the granting of the same severance framework to employees with permanent and fixed-term contracts.


Employment law protects ordinary employees, as well as those employees who hold a special bond with their employer. The former are regulated by the Workers’ Statute which provides for large employee protection and sets the minimum standards to take into account in employment agreements (driven by the idea that employment relationships are still uneven and unbalanced in terms of rights and duties between an employer and an employee). The latter are regulated individually in several pieces of legislation which address the specialty of each of one of them.Ordinary and special employment bonds between an employer and an employee relate to a different level of commitment between the parties to the contract, or to the object matter of the contract. Hence,


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CLAUDE & MARTZ, S.L.P. Spain


Both employer and employee must observe the minimum standards and practices set out in the applicable statutory regulations and the applicable Collective Bargaining Agreement. Likewise, they must observe the minimum wage limitation which is reviewed on a yearly basis by the Government.


Collective Bargaining Agreements have been traditionally negotiated by and between the most representative Unions and Corporation representatives in every specific industry or sector. In that sense, employers and employees could only adhere to the terms set out in the resulting Collective Agreement or chose to improve the standard terms and conditions referred therein (either at a collective or individual level). However, the well-known and well-regarded Spanish Labour Reform passed in 2012 allowed more flexibility to execute Collective Bargaining Agreements at a company level, which are now set to prevail over the industry Collective Bargaining Agreements in issues as important as salary, compensation of overtime, working time schedule, annual holiday plan and specific mechanisms for an appropriate balance between working and family life.



The Constitution ensures that every individual has the right to join (and to refrain from joining) a Union, to serve as a representative of that Union at a company level, and to be elected as an employees’ representative within the workplace. Likewise, from a collective standpoint it guarantees the right to generalised unionisation, and even confers extensive representation powers on the so-called “most representative Unions” at a legislative level as a valid interlocutor with the Government in key decisions related to the labour market.Both the Workers’ Statute and the Union Freedom Act regulate the specific rights and duties of the elected members of the employees’ representation bodies. Their prerogatives include consultation and the delivery of corporate information whenever prospect decisions from management may affect the level of employment within their scope of representation.


Regardless of the right to stipulate their own internal functioning procedures (as any other legal organisation), they have specific rights which may affect the employer-employee relationship on a daily basis. In this regard they may: (i) participate as employees’ representatives in collective bargaining procedures such as collective dismissals or collective material alterations of working terms and conditions; (ii) file individual/collective complaints and represent the interests of the affected employees in Court; and (iii) call for workplace elections to choose employees’ representatives.


Industrial action, as well as the employer’s right to lockout, are two sides of labour conflicts which are regulated specifically in the Strikes Act 17/1977. However, the lack of detail in such regulation on what should be permitted or considered abusive from either side makes the legality and articulation of these situations highly dependent on case law and judicial precedent.


Employees are entitled to elect workers’ delegates or a works council (the former only in workplaces employing between 11 and 49 workers; the latter where 50 or more individuals are employed), although they are not compelled to do so if they prefer to remain without formal representation before the employer. The election process is carefully regulated in the Workers Statute and Royal Decree 1844/1994 on Union Elections and is formally supervised by the Labour Authority. Representatives are chosen from amongst the employees themselves and the company may only facilitate the election process by providing relevant information on headcount and by making the company’s premises available for the polls on the day of the election.Workers’ delegates and works councils are entitled to receive, amongst others, relevant and updated information from the employer on company performance and business prospects, levels of absenteeism, information on the hiring of new employees and consultation when corporate decisions may affect the level of employment within their scope of representation. Apart from the main purpose of controlling the management in whatever issues may affect the workforce in the short term, they also embody the ideal of cooperation with the employer when implementing measures to enhance productivity and competitiveness. On the other side, they are subject to a general duty of confidentiality and non-disclosure.


Neither workers’ delegates nor works councils have co-determination rights. In this sense, even if the employer has the duty to inform or consult with these on specific issues, their refusal to follow the corporate decision would not stop the employer from legally going ahead with the unsupported actions.Nevertheless, despite the above, it is always important and relevant to ensure the representatives’ conformity with the management’s proposals in order to preserve a working environment free from tension and exasperation.Despite this lack of co-determination rights, there are current projects to increase the employee’s representation at a managerial level. For instance, law 31/2006 on the implication of employees in the European Companies and Cooperatives has incorporated EU policies which foster the implication of workers’ representatives in decision-making processes at board level, although there is still no specific mechanism which would grant the formal incorporation of a Union to the board.


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Workers’ delegates and works council members are often affiliates of Unions, although this is not a prerequisite to being elected. In fact, they operate as two different ways of procuring labour representation in the company: on one hand the employees’ representatives which are universally elected by all workers and represent all of them before the employer; and on the other, Union representation within the workplace in the form of a Union division, which can only be set up in workplaces employing 250 employees or more, and where only the employees who are members of such Union are represented.From a practical standpoint both ways of gaining representation interact on a daily basis, and both categories of representatives are protected by statutory regulations and by the Union Freedom Act.


No, they are not.

3 Discrimination


The Spanish Constitution provides for protection against discrimination and retaliation on the basis of the following protected traits: birth; race; sex; religion; or any other personal or social condition. This specific protection has been inserted into the employment statutory regulations in a rather more broad manner, whereby employers must always protect employees against discrimination and retaliation on the basis of sex, marital status, age, race or ethnicity, social condition, religion or belief, political opinion, sexual orientation, union membership, and preference to choose a certain co-official language of communication rather than Spanish.This protection does not only address an active role on the side of the employer in acting against proven discrimination and retaliation fact patterns, but mandates the employer to engage in preventive measures to avoid potential conflictive situations.


Discrimination is considered unlawful both in its direct and indirect manner from a statutory standpoint. In this sense, it is not only reprehensible when the unlawful conduct is directly intended to discriminate, but also when the employer indirectly treats certain individuals and/or group of employees differently from others for reasons other than those which are objective or business-driven.


The burden of proof lies on the employer to provide evidence that no discrimination has occurred. In this sense, we should differentiate between two types of situations when talking about discrimination claims: the ones filed by protected employees where no legal defence to the claim is possible (the protected nature of the employee triggers an automatic confirmation of the alleged discrimination); and those claims filed by unprotected employees where statutory regulations

admit legal defence by the employer (namely that the decision or act challenged was not driven by discrimination impulses but by other business-related reasons).


Employees may challenge any employer decision which they understand has been taken on the basis of discrimination, by filing a claim before the Labour Courts. The claim should request the reversal of the allegedly unlawful decision and/or request the termination of employment in the event of constructive dismissals with related severance. If the discrimination is finally awarded by the Court, the employee may also request compensation for the breach of the individual fundamental rights and the damages inflicted.Parties may settle disputes before the ruling of the Court is issued. However, the law mandates (not in relation to all types of claims) that a previous conciliation hearing must take place before the filing of the claim to exhaust redress procedures and ensure that the parties have at least one preliminary meeting to go over the specific request of the employee.


As pointed out in our previous answer, the employee may be successful in having the Court decide that the employer’s discriminatory decision must be reversed, or having the Court decide that the employer has not duly prevented the situation or protected the employee against the discrimination, and hence terminate the contract on the basis of constructive dismissal. The latter would trigger the payment of the highest statutory severance.


No, they do not. Atypical workers have the same level of protection as any other employee. Please note that a recent ruling from the European Court of Justice has reinforced the EU’s commitment to uphold this equal protection, especially regarding the termination and severance legal framework.



In relation to maternity, adoption and foster care, female employees are entitled to a leave of absence of up to 16 uninterrupted calendar weeks (to be further extended in the event of multiple births or premature childbirths). The mother must mandatorily be on leave for the first six weeks. The remaining period of time may be transferred over to the father or kept by the mother to complete her 16 weeks in total.


Mothers on maternity leave are entitled to Social Security benefits in the form of a monthly instalment amounting to 100% of their Social


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Security regulatory base. This benefit shall be in place throughout the whole term of the leave.Fathers are also entitled to social security benefits, but only for as long as they remain on paternity leave (13 calendar days). This period may be added to any transferred leave of absence to which the mother may have relinquished.She would also benefit from public health insurance for the new-born.


A female employee returning from maternity leave has the right to be reinstated in her same job position under identical employment terms and conditions as prior to her absence. This prerogative also applies during the first year of the leave of absence she is also entitled to take in order to look after the newborn.


Yes indeed, the father may opt to take paternity leave for a total period of 1 calendar month as from January 2017. Although fathers have the possibility of taking this month off whenever they choose as long as it falls within the 16 calendar weeks of maternity leave, it is usual to have male employees request the paternity leave straight after the two days’ leave they are permitted to take in order to attend the baby’s delivery have elapsed.Extended paternity leave applies in cases of delivery of multiple babies or when babies are born with some sort of disability.


Female workers are entitled to one hour of absence from work every day to breastfeed an infant aged less than nine months.Women, at their choice, may substitute this right for a reduction in their working day by half an hour for the same purpose, or accumulate this into complete days under the terms provided for by the applicable Collective Bargaining Agreement or by mutual agreement. Although this working time reduction was originally intended for breastfeeding, case law has interpreted that it is aimed at procuring the better adaptation of the new-born to his new life, and therefore this entitlement is open for the working father as well as the mother. It has even been granted by case law to fathers whose female partners were not legally entitled to this breast-feeding time-off (due to their condition of self-employed individuals).Moreover, either parent may opt for a formal working time reduction (between an eighth and a half of his/her working time) for as long as the child is aged under 12, with a proportional reduction in salary and in other compensation benefits.


Any employee considered to be directly in charge of a child under 12, or any other person with special caring needs (for as long as they are siblings of up to the second degree of consanguinity or affinity), is entitled to a working time reduction, with a proportional reduction in salary and in other compensation benefits. Such working time reduction must take place within the employee’s working time schedule and remains a choice of the employee to which the employer has a right of veto for business-related reasons.

5 Business Sales


Section 44 of the Workers’ Statute has been enacted in response to the EU regulations which mandated the passing of a piece of legislation at EU Member States’ level which guaranteed the continuance of employee job positions and salaries in the event of an asset transfer. In this regard, the transferee would subrogate in the transferor’s rights and obligations, and so must respect every single term and condition applicable to the existing workforce.However, should the transaction involve only a share purchase or a change in the company’s legal status, this would not trigger a protected situation for the workforce.


The new employer (transferee) shall be subrogated in all labour and Social Security rights and obligations of the former, including pension and other benefits’ commitments, under the terms set forth in the specific statutory regulations and the applicable Collective Bargaining Agreement. Upon a transfer, the affected workers’ relationship shall continue to be governed by same Collective Bargaining Agreement as before up until this last one expires without renewal, or until a new Collective Agreement is deemed to apply to both the transferred employees and the ordinary ones.


Section 44 of the Workers’ Statute mandates that both the transferor and the transferee must inform the affected employees’ legal representatives, in writing and sufficiently in advance (construed by usages to be a minimum of 15 calendar days), on the following terms of the transfer of undertakings:a) envisaged date of effective transfer;b) causes for the transfer;c) legal, economic and social consequences of the transfer for

the workers (in the event of envisaged workforce streamlining projects or relocation); and

d) measures set forth with regard to the affected workforce in the event of drastic changes in the level of employment.

As pointed out in c) and d) above, in the event an alteration of working terms & conditions and/or a collective suspension/termination project is in place and is duly communicated, a consultation must be called for to negotiate the contents of such alteration and/or suspension/termination decisions.Should neither the transferee nor the transferor kick-off the consultation procedure, then they would be considered in serious breach of applicable legislation and would be subject to a fine by the Labour Inspectorate.


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The implementation of TUPE regulations within the EU (via the Directive which requires an active implementation into local law by all EU Member States) aimed to prevent transferred employees from release when their job positions remain within an autonomous and productive unit (such as a work centre or an independent branch of activity) after the sale. They have the right to remain within their unit for as long as it exists.However, the transferor may not choose to terminate all employment contracts for a legally binding cause, to avoid being considered liable for the transfer of workforce when indeed the business sale did not match the TUPE requirements as per workforce, and/or the transferee does not want to take the employees on board for undisclosed reasons.


Neither the transferor nor the transferee has full freedom to unilaterally change the terms and conditions of employment in connection with a business sale. In this regard, the business sale in itself is not a valid reason to proceed with a material alteration of working terms and conditions. Nevertheless, should both parties envisage that changes in such terms and conditions be brought into effect, a consultation period must be called in order to determine – along with the employees’ representatives – what these changes should be.



Employees must always render written notice of their intention to leave the company. They are mandated to honour the notice period they may have agreed to in their employment agreement, or abide by the notice term referred to in the applicable Collective Bargaining Agreement. Should there be no specification on the length of notice, a customary 15-calendar day period would apply.


No they cannot, unless expressly referred to in the employment agreement. Garden leave clauses are not provided for statutorily. This is the reason why they may only be mutually agreed to within the scope of the employment contract.In the event an employer puts an employee on garden leave without having included such a clause in the contract, the employer risks the employee claiming an undue lack of occupation, which ultimately may result in the employee pursuing a court case seeking to uphold a case for constructive dismissal (on the basis of a severe breach of the employer’s duties for not procuring sufficient occupation).


Dismissed employees may resort to challenging their dismissal in Court. For that purpose they must clear a mandatory first stage conciliation claim where any agreement will have the same legal validity as a Court ruling.Generally speaking, there are two kinds of dismissal: express (written); and tacit. Only express (written) dismissals are considered to be legal. Tacit or implied terminations are to be taken as unfair or null and void, since they fail to meet the written statutory requisite, if not infringing upon the affected employee’s fundamental rights. Employees are treated as being dismissed when there is a formal explicit communication sent out by the employer stating the cause for the termination, as well as the other relevant statutory requisites according to the type of dismissal. It would not fall within the fair dismissals area (and therefore, is not advisable), however we should point out that employers also treat employees as dismissed when they remove them from payroll, ban them from entering the employer’s premises, or verbally warn them not to come back to work. Consent from a third party is not required under any circumstance to proceed with an individual or collective dismissal.


Referring to our answer to question 3.3, any employee (whether female or male), who is on leave or away from the company due to maternity, paternity, or childcare circumstances is automatically protected against dismissals. This protection grants his/her reinstatement plus the payment of back pay and any compensation for damages that the Court may feel appropriate, in the event the dismissal is nevertheless taken into effect.


1) Employers are entitled to dismiss employees on the basis of their behaviour when such behaviour is deemed to constitute gross misconduct.

Termination related to circumstances exclusively related to the employee is also possible during the probationary period when the employee is dismissed due to his incapacity to perform the basic responsibilities of his position.

In both cases there is no right to statutory severance.2) Termination based on business-related reasons (or

redundancy) is triggered upon the elimination of the affected employee’s position for technical, organisational, productive or economic reasons or constraints.

Compensation for redundant employees statutorily amounts to 20 days of salary per year of service, capped as of one year’s salary. For this purpose, salary is construed to include any and all remuneration concepts paid to the employee in his/her last monthly pay slip, excluding the so-called supplementary benefits. Only when the employee is entitled to certain salary concepts which vary greatly on a monthly basis will the calculation take into account a mean average of his/her annual salary.


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Employers must provide (i) written notice of their intention to terminate such contract, (ii) such notice must include the causes for the termination and a detailed explanation on the events that have led to the termination, and (iii) the notice shall also refer to the effective date of termination (disciplinary dismissals usually take effect immediately, although the employer has the possibility of introducing a longer period for the termination to take effect).There is no statutory mandate to attach relevant documentation in support of the causes set out in the letter.


An employee may bring a formal claim challenging: (i) the ultimate causes for the termination; (ii) the lack of compliance with formal statutory requirements; or (iii) the validity of the termination (since it breaches his/her fundamental rights; since there are grounds to be considered retaliation against the affected employee; or since the decision has been taken to disregard the employee’s protected situation).Remedies for challenges based on points (i) and (ii) above are the declaration of the unfairness of the dismissal and the award of statutory severance amounting to 45/33 days of severance per year of service. For the situation depicted in point (iii) the remedies are the invalidation of the termination decision, immediate reinstatement of the affected employee, payment of back pay and the award of general and special damages upon production of sufficient evidence to prove these are necessary.


Employers may settle existing claims (anytime up until the Court issues its ruling), and even prospective claims that may not yet have been filed, as long as the termination has been communicated to the affected employee. The Spanish Constitutional Court has established that in order to settle a dispute, that dispute must exist at the time of the settlement, and since the core of the dispute in this case would be the communication of dismissal itself, any settlement must take place after the communication.


Absolutely. The collective termination of a number of employment contracts within a period of 90 days would trigger the obligation to terminate such contracts by means of a collective dismissal procedure. This procedure is more burdensome than proceeding through individual dismissals since it triggers consultation with employees through workers’ representatives, mandatory communications of such consultation to the Labour Authority, the surveillance of such process by the Labour Inspectorate and a firm time constraint as to the dates in which the terminations may be taken to effect.


They enforce their rights by: (i) actively participating in the negotiation period with the company, which has to be called for prior to the implementation of the dismissals; (ii) actively participating in the meetings that the labour authority and/or the labour inspectorate will hold with the parties to supervise the whole of the negotiation process and the final outcome; and (iii) having the right to challenge the dismissals both on an individual and collective basis (a collective objection estops individual claims and a final judicial decision on a collective demand has absolute authority as res judicata).



The Workers’ Statute acknowledges the right of employers: (i) to restrict the employee’s capacity to compete against its business once they have exited the company; (ii) to force the employee’s exclusivity during employment to prevent him/her from working elsewhere; and (iii) to prevent him/her from leaving the company by agreeing to a permanence period in consideration of a particularly interesting training or academic programme.


With regard to (i) post termination non-competes, this restriction is enforceable for as long as the parties agree to, although the maximum duration is capped at two yearsThe remaining (ii) and (iii) will last for as long as the relationship remains in force.


With regard to (i) post termination non-competes, the answer is yes, it must be compensated to both parties’ satisfaction. The Workers’ Statute does not establish a specific percentage or amount which would serve as sufficient and valid as compensation thereof, however case laws points out that compensating this duty with between 20% and 50% of the base salary would do; with reference to (ii) exclusivity, this must also be compensated, the set amount is 10% of the base salary; and finally, (iii) when talking about permanence due to the specialisation of the affected employee through a training or academic programme, the employer would not have to compensate the employee and his/her only expense would be the subscription to the training course.


In order to enforce restrictive covenants any employer would have to resort to court proceedings and file a claim requesting specific performance or pay back. To be successful, the employer must be particularly confident that he/she implemented the restriction correctly (that is, that any restriction language was worded correctly and included in the employment agreement, and that any compensation requirement was met), since very recent case law has


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Pre-employment checks (or Employment Background Checks) are in direct conflict with the right to privacy. If such checks investigate specific details on the employee-to-be which are considered to be private without have been given specific authorisation by the affected employee, this could trigger criminal liability on the part of the employer. Criminal records would definitely qualify as private information.However, this kind of investigation from prospective employers are very rare in Spain since the vast majority of an individual’s sensitive and private information can only be accessed by them personally.


Yes. To the extent employees’ devices remain the employer’s property, and that the employer informs the workforce sufficiently in advance on the possibility of monitoring, the employer may not only undertake these checks, but use them as evidence to sanction the affected employees in the event of unlawful use. This prerogative of the employer has been confirmed by the Supreme Court as well as by the European Court of Justice in numerous rulings.In the event the two requisites above are not met, any check may be construed as a breach of the employees’ right to privacy (personal, and that of communications).


The same requisites as the ones referred to in our answer to question 8.4 apply here. In-house policies normally address the possibility of accessing social media although with limitations (i.e. giving a certain number of minutes of access per day). Customary use of these communication tools is generally possible. However, this remains at the discretion of the employer.



The Labour or Industrial Courts are the ones with material jurisdiction over workplace disputes as well as employer-employee confrontation. They serve as Courts of first instance.At a higher level we would find the Labour Chamber of the Superior Courts of Justice of each region in Spain, which, on a general basis, would have legitimacy to hear appeals on decisions from the Labour or Industrial Courts which lie below, and hear cases in the first instance when the controversy relates to a number of workplaces within the region where the Superior Court sits.The Labour Chamber of the Supreme Court also has material jurisdiction on labour disputes although they may only hear cases in the first instance when they refer to a controversy involving workplaces located in different regions of Spain.


confirmed that restrictions can be deemed unlawful due to a lack of formalities. This would leave the employer with no grounds on which to request specific performance but just pay back, and this may not be at the company’s entire satisfaction.



Employers are mandated to create a specific database with all the details they collect about their employees. The existence of this employee database must be communicated to the Data Protection Agency. Depending on the importance of each specific piece of information from a given employee, the employer will be mandated to observe a specific level of protection and security (i.e. administrative details are to be processed with a minimum protection level; information on personal likes and dislikes and existing problems, debts or sanctions with the authorities are to be processed with a medium protection level; and information on personal beliefs, religions, political affiliation and health issues must be managed with the highest level of protection). Failing to create this database, as well as failing to ensure the adequate level of protection shall subject the employer to sanctions by the Data Protection Agency for the breach of data protection regulations. The employee must agree in writing to having his/her details incorporated into a company database, as well as to having his/her details transferred to any third party, with the alternative choice to opt out if he/she wishes. From a practical standpoint, the employer usually inserts this consent into the employment contract. The transfer of data to third parties within the EU requires no specific authorisation. However, if such transfer is to a third party located outside the EU, the Data Protection Authority must authorise such transfer in writing. Out-of-EU transfers are only permitted to countries which grant a similar level of protection to private details (“Safe Harbour”), such as the US, Switzerland, Canada, Argentina, and New Zealand. On October 6, 2015, the European Court of Justice issued a judgment declaring as invalid the European Commission’s Decision 2000/520/EC of 26 July 2000 on the adequacy of the protection provided by the US in relation to the Safe Harbour privacy principles. This agreement has been replaced by the “Privacy Shield” Frameworks which subject data transfer to and from the EU (including Switzerland as a member of the European Economic Area) and the US to major and permanent scrutiny as well as strengthening the authorities’ accountability to irregular or illegal disclosure.Furthermore, the European Commission has issued Regulation (EU) 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data repealing Directive 95/46/EC due to inconsistent adoption throughout the Member States. This new piece of legislation aims to provide one clear and comprehensive definition of personal data, reformulate the approval process for transferring data so that it is easy to understand and more easily accessible.


Yes. Indeed any employee is entitled to request a full description of the personal details that are held by their employer, with an indication of the information’s source and level of protection.


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Samuel GonzálezCLAUDE & MARTZ, S.L.P.C/Serrano, 27, 7ª 28001 MadridSpain

Tel: +34 918 283 133Email: [email protected]: www.claudemartz.com

Samuel holds a degree in Law and a degree in Business Administration from Universidad Pontificia Comillas (E-3 ICADE), as well as an LL.M. in International Legal Studies from Georgetown University, specialising in employment discrimination, workplace mediation and employee compensation.

He is currently the Managing Partner of Claude & Martz and is well known for cross-border labour advice and his added-value contributions related to transnational mobility.

Samuel renders advice to both domestic and foreign companies in their processes of staff restructuring, redefinition of transnational HR policies and workforce optimisation. His counsel is sought amongst others, to secure legal staff streamlining at white-collar and blue-collar level, to take wage reductions to effect, to procure the alteration of material employment terms and conditions upon business constraints as well as the retention of executive profiles and highly qualified employees.

Samuel defends his clients’ interests at both jurisdictional and Public Administration level.

Claude & Martz provides an integrated approach to HR and legal strategy. It implements smart problem-solving mechanisms to employment, labour and employee benefits issues and delivers ongoing high quality counselling and supervision on workplace regulations.

The firm is particularly devoted to cross-border employment litigation, to international labour standards protection and to dealing with the legal side effects of complex worldwide managerial and organisational scenarios. It has gained reputation for high quality and state-of-the-art legal solutions to international employment controversies dealing with both employers and employees.

With a clear aim of serving as the client’s main HR and employment partner, Claude & Martz is set out to be the one and only employment boutique internationally oriented within the Spanish market. Its team of highly-experienced lawyers bring together the understanding of years of practice and a fresh approach to new employment realities in changing times.


Conciliation is only mandatory in certain claims, namely those where the outcome need not be immediately adjudicated. Others where time is an issue are procedurally excluded from this previous requisite (i.e. claims related to social security, collective dismissals, vacations, workplace elections, relocation, material alteration of working terms & conditions, work/life balancing, or protection of fundamental rights).


It largely depends on the subject of the complaint, but the time frame ranges from weeks to years.For instance terminations typically take up to six months to be decided as from the filing of the claim, when other less urgent matters take up to one and a half years to be adjudicated (such as claims for payment).


Not all decisions from the Labour or Industrial Courts can be appealed. Those which are not materially relevant (less than EUR 3,000), and those which deal with matters which require an urgent outcome (i.e. Union elections, controversy over the date in which

holidays may be taken, disciplinary sanctions imposed by employers with little relevance), are banned from being appealed.Appeals usually take between 9 and 12 months to be decided.


Chapter 33

EmpLaw Advokater AB Annika Elmér

Sweden


The Employment Protection Act (1982:80): this act is, in principle, mandatory to the benefit of the employee, e.g. providing for notice periods, type of employment, protection from unfair dismissals, time bars and remedies. Employer organisations and trade unions may, to a certain extent, agree on deferring provisions in central collective bargaining agreements.The Annual Leave Act (1977:480): this act entitles employees to a minimum of 25 vacation days per year. The act also includes principles on calculation of vacation pay and vacation pay in lieu of vacation. Employer organisations and trade unions may, to a certain extent, agree on deferring provisions in central collective bargaining agreements.The Working Hours Act (1982:673): this act limits the working hours, defines the minimum rest and the maximum number of overtime hours.There is no legislation on minimum pay in Sweden.


The Swedish labour market is to a wide extent regulated by collective bargaining agreements, in which terms and conditions are set out in detail. Collective bargaining agreements exist both at industry and company level as such, but bargaining takes place foremost at industry level.



The recognition and formation of trade unions is guaranteed and protected by constitutional law. Freedom of association is guaranteed for both employees and employers.


The main function of the trade unions is to safeguard the interests of their members, i.e. the employees, when it comes to work



Sweden is generally governed by the civil law tradition, and within employment law, Swedish legislation aims, in some ways, to resemble that of other Nordic countries. EU Law has with few exceptions been rapidly implemented in the Swedish legal system. The main sources of the national employment law are found in the Swedish Constitution, statutes, authority provisions, case law, collective bargaining agreements, individual employment contracts and employer decision-making.


The law protects employees equally. Hence, there is no legal difference between blue-collar and white-collar employees. Employees in managerial positions, such as a managing director of a limited liability company, do not enjoy employment protection by way of law.


Employment contracts need not to be in writing. However, an employer shall unilaterally inform the employee of the most important terms and conditions of employment. Such information shall be given in writing no later than one month after commencement of employment. Normally, this information is provided in a written employment contract.


The duty of loyalty is implied in all contracts of employment. The duty is mutual, whereby the employer shall safeguard the employer-employee relationship in various ways and the employee shall avoid any conflict of interest which could reasonably be demanded considering the employee’s position, etc.


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on grounds of gender, age, transgender identity, sexual orientation and ethnic origin, as well as religion and disability.


Discrimination is defined as: 1. Direct discrimination: when someone is disadvantaged by

being treated less favourably than someone else is treated, has been treated or would have been treated in a comparable situation, if the disadvantage is associated with any of the protected grounds.

2. Indirect discrimination: when someone is disadvantaged by the application of a provision, a criterion or a procedure that appears neutral but that may put people of any of the protected grounds at a particular disadvantage, unless the provision, criterion or procedure has a legitimate purpose and the means that are used are appropriate and necessary to achieve that purpose.

3. Inadequate accessibility: when a person with a disability is disadvantaged through a failure to take measures for accessibility.

4. Harassment: conduct that violates a person’s dignity and that is associated with one of the following grounds of discrimination: sex; gender identity or expression; ethnicity; religion or other belief; disability; sexual orientation; or age.

5. Sexual harassment: conduct of a sexual nature that violates someone’s dignity.

6. Instructions to discriminate: orders or instructions to discriminate against someone in a manner referred to in points 1–4.

The Discrimination Act also prohibits reprisals.


The employer has the burden of proof in establishing the equal treatment of employees. Thus, the employer must be able to show that the reasons for differential treatment have been objectively justified.


If the employee is a member of a trade union, the trade union may raise claims on behalf of the employee. If not settled, the trade union may bring the claims before the Labour Court.If the employee is not a member of a trade union, or, if the trade union for any reason chooses not to represent the employee, the employee may report the alleged discrimination to the Discrimination Ombudsman (DO). The DO will make an investigation and potentially raise claims on behalf of the employee. If not settled, the DO may bring the claims before the Labour Court.Finally, the employee may bring claims for alleged discrimination before the District Court.The parties may settle the case by way of a mutual agreement as long as the main hearing has not been held in a court.


The employee may claim damages, mainly for injury to feelings

environment, employment protection, wage development, etc. The means to achieve the greatest influence for their members is to agree on collective bargaining agreements and to achieve high coverage on the labour market for these agreements.Employers bound by a collective bargaining agreement shall consult with the local trade union prior to taking any decision of importance relating to either the organisation as such (collective changes) or to the terms and conditions of individual employees (individual changes). Also, employers not bound by a collective bargaining agreement have a duty to consult with the trade unions in certain situations. In the line of business, the employer further has a duty to continuously inform the local trade union on business development, finances, etc. The local trade union representatives are chosen by members of that specific trade union.


Constitutional law and the Co-Determination in the Workplace Act (1976:580) provide trade unions with a far-reaching right to take industrial action.


There is no such requirement. However, in accordance with EU Directive 2009/38/EC, an employer shall, under certain circumstances, assist and facilitate the setting up of a European Work Council.


With regards to works councils, the question is not relevant from a Swedish perspective. However, employers have a duty to consult with the trade unions in various situations prior to taking decisions.


This is not relevant in Sweden.


Privately held limited liability companies with at least 25 employees shall give right to two employee representatives on the board of directors. Where the number of employees exceeds 1,000, the employees have a right to three representatives.

3 Discrimination


Employees are protected against discrimination, which is prohibited

EmpLaw Advokater AB Sweden


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According to the Parental Leave Act (1995:584), employees have a right to leave in order to take care of their child during the first 18 months from birth or from adoption (until the adopted child turns eight), a right to reduce working hours until the child is eight years of age, and further a right to temporary leave in order to take care of a sick child (until the child is 12 years of age). Employees exercising their right under the act are protected against any disadvantages related to the parental leave. During the first 18 months from a child’s birth, the parents are entitled to 480 days of parental pay benefits via the social security system. Apart from 90 days each, the parents can divide the days between them.Many collective bargaining agreements contain provisions on supplementary parental pay.


See question 4.5 above.

5 Business Sales


If the business sale leads to a change of employer, the employees automatically transfer to the buyer. However, the individual employee has a right to oppose to the transfer and stay employed with the seller.


Any individually accrued rights, such as vacation, transfer to the buyer. The terms and conditions of employment according to the collective bargaining agreement, which the seller is bound by, transfer to the buyer for a period of 12 months. Occupational pension vehicles do not transfer.


Both the seller and the buyer have a duty to consult with the relevant trade unions. The consultation process normally takes between two and four weeks. Should the employer fail to consult, the trade union may claim damages for the breach.


Employment contracts may not be legally terminated on the grounds of the transfer itself.

and under certain circumstances for financial loss. Further, discriminating terms of contract may be declared null and void.


Less favourable employment terms than those applicable to other employment relationships may not, without proper and justified cause, be applied to fixed-term and part-time employment relationships merely because of the duration of the employment contract or working hours. Information on vacancies must be provided in a way which ensures that part-time and fixed-term employees, as well as temporary agency workers of the user company, have the same opportunity to apply for these jobs as permanent or full-time employees.If the employer, hiring its employee as a temporary agency worker to a user company, is neither bound by a collective agreement nor required to observe a generally applicable collective agreement in its employment relationships, at least the provisions of the collective agreement applicable to the user company must be applied to the employment relationship of the temporary agency worker.A temporary agency worker is entitled to benefit from the employee benefits and services offered by the user company to its employees on the same conditions as the employees of the user company, unless a difference in treatment can be justified on objective grounds.



Maternity leave is defined as seven weeks of consecutive leave just before or just after giving birth. Two weeks are mandatory in connection with giving birth.


The employer has no duty to pay anything to the employee during the maternity leave. However, the employee is covered by the social security system.


The employee has the right to return to her employer and her position. If her position is no longer available, she shall be offered another equivalent position in accordance with her employment contract.


Male employees have a right to paternity leave in connection with a child’s birth or adoption (10 days). During these 10 days, both parents can stay at home with their child and receive parental pay benefits via the social security system.



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protection in connection with dismissal due to redundancy. The local trade union has a right to protect its elected local representatives under certain circumstances in relation to redundancy dismissals.


1) Just cause for personal reasons is rather difficult to reach and is also associated with great risks for the employer. Typically, the employer shall take measures in order to assist the employee in improving the behaviour and/or performance in order to avoid dismissal.

2) Dismissal for business-related reasons (redundancy) is normally seen as based on just cause. However, the employer has a duty to consult with trade unions prior to such dismissal and shall under certain circumstances also apply the Last-In-First-Out principle when serving notice.

If the employer has just cause for dismissal, salary and other employment benefits shall be paid during the notice period. No other compensation is due.


Dismissal due to personal reasons shall be preceded by other measures from the employer, such as a warning or performance improvement plan. If such measures do not precede a dismissal, the breach of contract should be of a very severe nature. Every dismissal due to personal reasons shall be subject to a thorough legal review in order to avoid the most obvious risks. Prior to serving notice of termination, the employer shall notify the employee of the considered termination and if the employee is a member of a trade union, the trade union shall be notified as well. The employee/trade union has a right to demand consultations on the considered termination.In relation to dismissals due to business-related reasons (redundancy), an employer bound by a collective bargaining agreement shall consult with the trade union prior to taking the decision leading to organisational change. Who to dismiss is also a topic for consultations with the trade union. Regardless of the reasons for dismissal, there are formal requirements of the written notice to be handed to the employee.


The employee can either claim damages for injury to feelings or for financial loss, or claim the dismissal null and void. The damages for injury to feelings are fairly low, between EUR 5,000 and 13,000. Financial damages range from six to 32 months’ pay depending on length of service.


Yes, the parties may agree on settling the claims before or after they are initiated, as long as the court has not delivered its ruling.


Harmonisation of conditions of employment according to collective bargaining agreements can be made by the employer organisation and the trade union. If this is not possible, the buyer may not legally change the terms and conditions of employment based on the seller’s collective bargaining agreement during the first 12 months following the transfer. For other changes in individual employment contracts, the buyer has no more rights to change the terms and conditions than the seller.



An employer shall serve written notice of termination prior to dismissal with notice, regardless of the reason therefore. The notice period according to law vary between one to six months, depending on length of service. The employee may give notice observing a one-month notice period.Collective bargaining agreements often provide for other notice periods than those according to law.In the case of a serious breach of contract from the employee’s side, the employer shall serve written notice of immediate dismissal (dismissal without notice).


The employer may under certain circumstances unilaterally release the employee from the duty to perform work during the notice period. When the parties agree on a mutual separation, it is common to agree also on garden leave.


The employer shall have just cause for dismissal with notice and legal grounds for immediate dismissal (without notice). The employment protection in Sweden is very strong and the risk for the employer is therefore significant in case of wrongful dismissal. There are no circumstances where the employee is treated as being dismissed; rather, it is the measures taken by the employer which constitute a dismissal.No consent from a third party is required prior to serving notice of termination.


Employees with reduced ability, who have enjoyed certain adjustment of work, and employees on parental leave enjoy special



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The protection of personal data is provided for in the Personal Data Act, the application of which is supervised by the Data Protection Authority. The Personal Data Act gives the employer a right to process and store personal data related to the employment relationship without any formal consent from the employee. However, the processed personal data shall at all times be necessary for the employer in order to fulfil the employer’s duties under the employment contract and with due respect to the integrity of the employee. The personal data shall be collected from the employee directly and not a third source. The employer may transfer legally obtained employee data to other countries within EU/EEC. However, transfer of employee data to third countries is strictly regulated, e.g. by way of Privacy Shield.The EU Data Protection Regulation will be implemented in Sweden in the coming years.


Yes, personal data which is processed and stored by the employer.


In principle, it is possible to carry out pre-employment checks in Sweden, but there are relatively strict and detailed rules of whom will have access to, e.g., criminal records and financial status. If the employer carries out business within schools or the childcare industry, the employer is obliged to check criminal records. Other employers may ask the job seeker to retrieve a criminal record and show the employer. However, an official government report has suggested a change of law in this respect.


Yes, this is possible to a certain extent especially if the employer has a policy, clearly stating what is being monitored, how and why.


Only if the employee, by use of social media, acts in breach of his/her employment contract, e.g. the duty of loyalty.



District courts with the composition of one to three judges and the Labour Court with the composition of three to seven members. In


If more than five employees will be dismissed due to redundancy during a period of 90 days, the employer has a duty to notify the Swedish Public Employment Service.


The Swedish employment law makes no distinction between mass dismissals and other dismissals; rather, the law defines dismissal due to redundancy without regard to the number of employees concerned.



The most common post-termination restrictions are confidentiality, non-competition, non-solicitation and customer protection.


The possibilities for an employer to enforce a non-competition clause are rather restricted. Typically, only key employees should be subject to such restrictive covenants and they are enforceable after the employee’s own dismissal, dismissal with notice from the employer due to personal reasons and dismissal without notice. It is common to enforce such restrictions for a period of between six and 12 months. Employers bound by collective bargaining agreements may have other restrictions to take into consideration.Non-solicitation and customer protection clauses are widely used for a period ranging between six and 18 months.Confidentiality undertakings range from six months onwards and may not have any time limitation at all.


Normally, the employer will have to pay 60% of the employee’s salary during the time under which a non-competition clause is valid. The employer does not have to pay any compensation for confidentiality, non-solicitation and customer protection clauses.


Restrictive covenants are normally combined with a contractual penalty. Such contractual fine ranges from four to six months’ salary. If the restrictive covenants are not combined with a contractual penalty, the employer can take the matter to court and request compensation from the employee due to the breach. Violation of a non-competition obligation results in an obligation to pay damages for verifiable damage.



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Annika ElmérEmpLaw Advokater ABHumlegårdsgatan 4, 2 tr.,SE114 46 StockholmSweden

Tel: +46 70 573 89 59Email: [email protected]: www.emplaw.se

EmpLaw Advokater is a modern boutique law firm, offering support to employers within employment and HR law. We take pride in offering hands-on advice directly accessible to our clients and often take into account not only the law but also other aspects of managing people.

We represent public and private employers both in day-to-day matters and as legal counsels in court and arbitrations. We are also appointed arbitrators on a regular basis.

Annika is specialised in employment law matters with a strong focus on hands on advice to employers. She offers employers a sensible and business related/accepted way forward in managing their human capital. Her experience covers all aspects of employment law and HR related matters, but she is specifically an expert in restructuring, performance management, dispute resolution and leadership with regards to employment law.


It is possible to appeal against a District Court decision. Such appeal is directed to the Labour Court, which will first take a decision on the merits on a leave to appeal within two to six months. In many employment-related disputes, the Labour Court is the first and final court for settling the matter.

the standard seven-member court, there are three neutral members, two members representing the interests of the employer and two representing employee interests. The chairman and vice chairman are found among the neutral members of the court.


An employment-related civil case becomes pending when a written application for a summons is filed by the plaintiff to the competent district court/the Labour Court. After that, a summons is issued where the defendant is requested to respond to the demands. Generally, the proceeding continues to an oral preparation in a preparatory hearing and after that to a main hearing.Conciliation is not mandatory, but the possibilities for settlement are commonly explored throughout the process.The district courts collect a fee, EUR 280, from the plaintiff for submitting a claim. The Labour Court collects no such fee.


The main hearing in a district court is scheduled between 12–18 months after summons is filed. The main hearing in the Labour Court is normally scheduled within 12 months after summons is filed.



Chapter 34

Homburger

Balz Gross

Gregor Bühler

Switzerland


There are various implied terms which govern the employment relationship. Most of them are outlined in the Code of Obligations. Some terms are mandatory; others will only apply if the parties do not agree otherwise.Terms might be implied based on past practice. For example, if a bonus has been paid for years, the employee might have a contractual entitlement to such payments.


There are statutory minimum employment terms and conditions, e.g. at least four weeks’ holiday per year and a notice period of not less than one month.There is no statutory minimum salary. However, mandatory collective bargaining agreements provide for a minimal pay in certain industries.


There are collective bargaining agreements in certain industries, e.g. construction, hotels/restaurants, the pharmaceutical industry, etc. Some collective agreements were declared mandatory for the entire industry by the government.Bargaining usually takes place at industry level.



There is no statutory recognition process as in other jurisdictions. In general, trade unions have to be separate legal entities with the main aim to improve conditions of employment, and they have to be independent from employers and other third parties and the membership has to be voluntary.



The main sources of employment law in Switzerland are the Code of Obligations, the Labour Act and the terms agreed in the contract of employment. In some industries, mandatory collective bargaining agreements will apply.Additional legislation includes specific rights or obligations, e.g. the Participation Act, the Act on Equal Treatment of Women and Men, the Data Protection Act, the Merger Act or the Ordinance against Excessive Compensation.


Swiss employment law does not distinguish between different types of workers, i.e. the same rules apply for all employees. There are some additional provisions for specific types of employees, e.g. for pregnant women. Further, statutory rules regarding overtime will not apply for members of senior management. Only self-employed persons are not subject to employment law. Not the wording of the contract, but whether an individual is, in fact, running their own business or not is relevant to determine if an individual is considered as self-employed. If a person works under the instructions of an employer and/or with the employer’s means of work, he/she will be considered to be an employee.


Contracts of employment do not have to be in writing. However, certain terms need to be in writing and duly executed by both parties to be valid and binding, in particular if they deviate from the statutory default rules (e.g., terms regarding notice periods, overtime, probationary periods, post-contractual non-compete obligations). Moreover, the employee must be provided with the following particulars in writing: names of the employer and employee; starting date of employment; function; compensation; and weekly hours of work.


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No, they are not.

3 Discrimination


Protection against discrimination is based on the general duty of the employer to protect the employee’s rights of personality. The employer must not discriminate against an individual employee without objective reasons. Employees are only protected against discrimination by employers, however, if such discrimination resulted in a violation of their rights of personality. Within that limited scope, the employees are protected against discrimination regardless of the basis of the discrimination, i.e. age, disability, race, political belief, religion or otherwise.The Federal Disabled Equality Act only directly protects employees of the federal government; hence, disabled persons are protected within the framework of the general protection of their rights of personality. There is, however, an increased protection in connection with building laws.There is a broader protection against discrimination because of gender. The Federal Gender Equality Act provides for detailed substantive and procedural rules that shall protect employees against discrimination because of their gender.Further, the international agreements between the European Union (and its Member States) and Switzerland on the free movement of persons provide for equal treatment of employees who are nationals of a contracting party. Such persons may not, by reason of their nationality, be treated differently from employees who are nationals of the other contracting party as regards conditions of employment and working conditions, especially as regards pay or dismissal.


The law protects against any sort of direct or indirect discrimination. Discrimination is defined as treating an employee worse than others. There is no protection against the (arbitrary) better treatment of other employees. In addition, even arbitrary discrimination by the employer may be tolerated unless the discrimination results in the violation of the employee’s rights of personality, in particular because the discrimination reflects a disregard of the employee’s personality.The Gender Equality Act protects employees against any kind of direct or indirect discrimination based on gender, including discrimination because of civil status, family situation and pregnancy. The protection exists for the entire employment relationship, from the negotiations on a new employment to retirement (and retirement benefits) and termination. It includes protection against unfavourable working conditions, lower salary and sexual harassment.


There is no unlawful discrimination if employers are able to establish that the unequal treatment does not result in the violation of the employee’s right of personality, i.e. that there are valid reasons


There are no specific statutory rights that employers have to be aware of. Collective bargaining agreements might provide for some rights of trade unions. In particular, to enforce the terms of collective bargaining agreements, e.g. minimal pay, joint commissions (consisting of trade unions’ members and employers’ representatives) might be established. Such commissions are entitled to get access to certain documents like payroll data. Further, there are joint commissions consisting of trade union members, employers’ representatives and governmental authorities which shall ensure that employment terms will not unduly worsen in certain industries. These official joint commissions have the right to review employment conditions and they might recommend the government to declare existing collective bargaining agreements compulsory for the whole industry or to issue minimal terms for certain functions (such minimal terms currently apply for domestic work only on a national level).


There is a constitutional right to take industrial action, but there are no statutory rules. Precedents suggest that a strike should be considered as an action of last resort. Collective bargaining agreements will usually restrict the right to strike. It is discussed whether further conditions apply, in particular that strikes need to be supported by a trade union and that the strike has to aim at a matter that can be dealt with in a collective bargaining agreement.


All businesses with more than 50 employees have to set up a works council on request of the employees. A fifth of the workforce (or 100 employees) can ask for a vote; if the majority of the voting employees support the request, elections have to take place. The election will be organised by the employer and employees jointly. Only a few companies have set up a works council in Switzerland.


Works councils only have information rights and they have to be consulted before certain decisions (regarding work safety, mass dismissals, transfer of a business or pension plans) are taken. Further, see the answers to questions 6.9 and 6.10 regarding the social plan in case of a mass dismissal.


There is no established way of interaction. In any event, only a few companies have works councils.

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Moreover, collective bargaining agreements and the individual employment agreements often contain additional rules which further improve the position of the employee during pregnancy and following birth.


During the 14 weeks’ statutory maternity leave, the contractually agreed remuneration is replaced by a compensation of 80 per cent of the last average remuneration. The compensation is presently (2016) capped at CHF196 per day and the employer can recover the payments from a social security fund. It is unclear whether employers have to top up payments to a certain extent.The rules on maternity leave do not cover the issue of whether an employee continues receiving the contractually agreed salary if she is not working during pregnancy and following birth (but for the period of 14 weeks covered by the maternity leave rules). The right to remuneration will depend on the duration of the employment and the contractual agreement in the employment contract. In addition, employers regularly are insured against the risk of employees not working during pregnancy and following birth. To the extent insurance coverage exists and reaches a statutory limit, the insurance’s payments replace the claim to remuneration.


Maternity leave does not change the terms of the employment relationship. Hence, the employee will have the same rights and obligations upon her return to work as before the maternity leave. She will regularly have to continue the same job as before birth, unless otherwise agreed with the employer.


There are no statutory rights to paternity leave, but some collective bargaining agreements and individual agreements provide for a right to take paternity leave.


Parents have a statutory right to stay away from work for three days to take care of sick family members.


No, they are not.

5 Business Sales


If a business unit is transferred in an asset deal, the contracts of employment assigned to this business will automatically transfer from the seller to the buyer. Employees can object to the transfer.

to treat one individual employee differently or rather that some employees are treated better than others (and not that individual employees are discriminated against), or that the different treatment is so minor that it does not result in a violation of the rights of personality. The Gender Equality Act sets much more stringent standards, and any discrimination that is based on gender, whether directly or indirectly, is generally prohibited.


A violation of the prohibition against discrimination is a violation of statutory employment law and the employment contract. Employees have to file a lawsuit with the courts that have jurisdiction for employment matters; a mandatory conciliation proceeding is part of the proceeding. Employees can freely dispose of the claims made in discrimination proceedings, and claims are frequently settled before or after proceedings are initiated.


The main remedy in discrimination proceedings is monetary compensation. Employees also have a right to an order of the court prohibiting continuation of discrimination, or prevent a threatened discrimination. In gender discrimination cases in connection with an alleged discriminatory dismissal, the court can order the provisional re-employment of an employee and eventually cancel the termination and order definitive re-employment. This is not possible in all other discrimination cases in connection with alleged discriminatory dismissal, where the only available remedy is monetary compensation.


There is special legislation on employment placements designed to protect temporary workers that are placed by professional agencies. In addition, certain collective bargaining agreements have special rules for part-time workers, or workers that are on call. Finally, legislation protects posted workers.



A female employee is generally entitled to 14 weeks of paid statutory maternity leave following the child’s birth. In addition to the provisions on maternity leave, there are other rules on pregnancy and status following birth. These rules provide, in particular, that an employer shall not terminate the employment relationship during pregnancy and during a period of 16 weeks following birth. In addition, an employee must not work during a period of eight weeks following birth, and she is only required to work during an additional period of eight weeks if she agrees to do so. Similarly, the employee is only required to work during pregnancy and during the nursing period if she agrees to do so.



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Amendments to the detriment of employees only (e.g., cuts of base salaries, increase of working hours) might be deemed to be abusive if the employer is unable to provide objective reasons for the change. Employees who will not accept the new conditions and, therefore, quit the employment after the notice period might be able to claim an indemnity of up to six months’ salary (see question 6.3).



Employees have to be given notice of termination of their employment. The length of the notice period is agreed in the employment contract, subject to statutory rules on minimum length and equality of the notice periods for notice to be given by employer and employee.An employment relationship can be terminated with immediate effect for cause.


Yes, and it is general practice to put employees on garden leave during their notice period in certain industries, such as the financial service industry and for senior managers.A ‘right to work’, which excludes the employer’s right to put an employee on garden leave, only exists under very special circumstances, in particular for jobs that require the employee to continuously work in order to keep certain qualifications (pilots who may lose their licence, artists, etc.).


An employee is treated as being dismissed if either party to the employment contract has given notice of termination, and the employment relationship ends at the end of the notice period. No third-party consent is required for a dismissal. Employees are protected against abusive dismissal. Such abuse exists, for example, if notice of termination is given because the employee raises a bona fide claim arising out of the employment agreement, because the employee exercises a constitutional right, because notice is only given to prevent the coming into existence of a claim arising out of the contract, or because notice is given for a reason that is inherent to the personality of the other party (gender, race, origin, nationality, age, etc.). An abusive dismissal will be effective, but the employee is entitled to compensation (see below, question 6.5).In addition, the employer shall not give notice of termination during protected periods. Such protection against dismissal exists while the employee is on military or civil service or a foreign aid project, or while the employee is totally or partially incapacitated to work because of sickness or accident (the latter protection period is limited to 30 to 180 days, depending on years of service). In addition, protection against dismissal exists during pregnancy and for a period of 16 weeks following birth. A notice of termination given during such a protected period is null and void.

An objection results in a termination of the employment relationship after the expiry of the statutory notice period.A share sale does not affect the employment agreements, because the identity of the employer will not be altered. Hence, employees will still be employed by the same company under the same contracts.


Employees will work for a different employer after the transfer, but under the same employment contract. Hence, all current terms of the employment contracts will transfer with the employees.The buyer has to comply with collective bargaining agreements for a period of one year after the transfer, unless such agreements will expire or will be terminated earlier. In some industries, mandatory collective bargaining agreements apply. A share sale does not trigger a transfer.


Employees (or the works council, if there is one) have to be informed about the reasons for the transfer and its legal, economic and social implications for the employees. If measures that might affect employees are considered (e.g., dismissals, change of terms and conditions of employment agreements), a consultation is required. The consultation period should not be less than two weeks (longer periods might be required in certain circumstances), and a few additional days will be needed to prepare proper information and to consider any proposals made during the consultation. The law does not provide for specific sanctions for failing to inform and consult in the case of an asset deal. However, if the Merger Act applies, employees have the right to block the commercial register if the employer failed to duly inform/consult. This can delay the closing of the transaction.No specific information or consultation rights apply in case of a share sale.


Yes, but a business need might be required for the dismissal. Consultation has to be completed before notice is given. Mass dismissals will trigger further consultation rights and notification obligations.


Employees have to be consulted regarding changes of terms and conditions in connection with a business sale (see question 5.2 above). There are no further specific restrictions. Hence, the same rules apply as for an amendment of employment agreements that is not in connection with a business sale: employers can unilaterally change terms and conditions, but they have to take the applicable notice periods into account, i.e., no employee has to accept new terms before the contractual notice period expired. After the expiry of the notice period, the employee can either continue to work under the new conditions, or quit the employment.

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employees [for businesses with 20 to 99 employees], or 10 per cent of the employees [for businesses with 100 to 299 employees], or more than 30 employees [for larger businesses]). In addition, the local labour office must be informed of the dismissals.Further, companies with more than 250 employees have to agree on a social plan with a union, a works council or the employees if they intend to dismiss at least 30 employees.


The mass dismissal will be considered abusive if the employer has not properly consulted with the employees. The employees have a claim for payment of a penalty of up to two monthly salaries. If the employer fails to inform the local labour office, the dismissal will not become effective. In case the parties cannot agree on a required social plan (see above, question 6.9), an arbitral tribunal will establish the plan.



Non-compete covenants are recognised by the law. All types of post-employment restrictions on the employee are regularly considered non-compete covenants and their enforceability is tested according to the rules established for non-compete covenants.


Non-compete covenants must be agreed in writing. The covenant is only enforceable if the employee had access to information on the employer’s customers or to business secrets. In addition, the covenant is only binding if the use of the information obtained by the employee could seriously harm the employer. Further, any covenant will become void if the employer gave notice without valid reason or if the employee terminated the employment for a valid reason for which the employer is responsible. Finally, the restriction must be reasonably limited with regard to its duration, the place where it should apply and the type of operation covered.


Payment of financial compensation is not a requirement, but increases the chances that a covenant can be enforced.


In case of a violation of the covenant, the employer can ask for financial compensation for the loss suffered. The contractual clauses often provide for a liquidated damages clause. In addition, the employer can ask for a court order to prohibit the employee to continue the competing activity if the non-compete covenant expressly mentions such a right of the employer. The courts weigh the interests of the employer and the employee, and may order the employee to stop the competing activity if the non-compete covenant is found to be enforceable.


Whilst employees are all treated alike, certain rules will only protect specific categories of employees (e.g., pregnant women, etc.). Further, there is a (dischargeable) presumption that the dismissal of a member of the works council is abusive.


Swiss law is governed by the principle that both the employer and the employee have the right to give notice of termination for any reason. No special reason is required. The dismissal must not be abusive, however (see above, question 6.3).Employees are generally not entitled to compensation on dismissal. A rule on mandatory severance payments for employees who are more than 50 years of age and have worked more than 20 years for the same employer has become practically defunct because payments made by the employer to the pension plan can be regularly deducted from the severance payment.The employee is entitled to a compensation for up to six monthly salaries if the dismissal was abusive.


No. Collective bargaining agreements or individual agreements frequently state that the notice must be in writing or must even be served by registered mail.


All claims regularly arising out of the employment contract become due upon termination of the employment relationship. It is disputed whether the employer and employee can agree that certain claims (in particular claims arising out of deferred bonus schemes) only become due a certain period after termination. Apart from claims arising because a dismissal is abusive (see above, question 6.5), there are no other claims.


In case of a true settlement: yes. However, the employee may not waive mandatory claims arising out of the employment relationship during the employment and before one month after the end of the employment.


The employer must consult with the employees before a final decision on the dismissals is taken if the dismissal is considered a ‘mass dismissal’ (i.e., dismissal within a period of 30 days of 10



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To the extent that the employment falls under the Labour Act, monitoring mechanisms are not permitted if they are directed at the employee’s behaviour. However, they may be permitted if they pursue other aims, for example, security or controlling the proper use of the work infrastructure and working time. Monitoring mechanisms need to be codified in internal regulations and the latter communicated to the employees.In general, an employer will only be able to monitor peripheral data (such as the point in time of the communications or interactions, their length, and the involved connections). Monitoring the actual content of communications requires outstanding interests, which the employer will not be easily able to show. As regards telephone communications, in principle, they are protected by criminal law.


An employer may control social media in the workplace if it is necessary for the performance of the employment contract and further is proportionate. Under these conditions, an employer may block social media completely.In contrast, it is rather unlikely that an employer is able to show a legitimate interest in controlling an employee’s use of social media outside the workplace. However, this may for instance hold true for ideological enterprises (“Tendenzbetriebe”).



The 26 cantons are responsible for organising the court system. Hence, depending on the place of jurisdiction, either a labour court or an ordinary district court will hear employment-related complaints. Labour courts will often be composed of a legally qualified district judge and two lay judges, one elected on behalf of the employees/trade unions and the other on behalf of the employers. If there is no labour court, one or a panel of three (usually) legally qualified judges will hear the case.


There is a mandatory conciliation hearing before a claim can be filed. Thereafter, the proceedings start with an exchange of briefs, unless the amount in dispute is below CHF30,000 and it is decided that proceedings should be oral only.Courts are usually prepared to outline their preliminary view of the case during the first hearing. The majority of cases are settled based on such preliminary assessments.



The employer may handle data concerning the employee only to the extent that such data concern the employee’s suitability for his or her job or are necessary for the performance of the employment contract. Such data must have a close connection to the employment, and any gathering of data must be strictly proportionate to its purpose. Gathered data may only be used for its initial purpose and must be protected against unauthorised handling by third persons. As a matter of principle, the employee must be aware of any data gathering and of its purpose, and consent to it. The same holds true for any monitoring activities by the employer.The transfer abroad of employee data must respect the principles explained above. In addition, Swiss law takes into consideration whether a transfer would seriously jeopardise the personality rights of the concerned employee. This would in particular be the case if, from a Swiss law perspective, there is no legislation in the foreign country that can guarantee an appropriate level of protection. The Federal Data Protection and Information Commissioner keeps a list of foreign countries that are deemed to provide an appropriate level of protection; this list may be viewed on the Commissioner’s website. If there is no foreign legislation that can guarantee an appropriate protection, employee data may only be transferred abroad under certain circumstances, for example, after the employee has given his or her consent or if the disclosure takes place within the same legal entity or company, or between legal entities or companies of a corporate group, provided that the entities and companies concerned have committed themselves to certain minimal data protection rules.


Every employee is in principle entitled to get unlimited access to all data that has been collected in his or her regard. However, the employer may restrict, deny or postpone the access in case there is a legal exception of if he or she can show preeminent own interests or interests of third persons not to (fully) grant the requested access. In this case, the employer must disclose the applicable limitation and explain its reason to the employee.The employee can exercise the right of access without preconditions; in particular, he or she does not need to show a particular interest. The right of access is exercised in writing, and is free of charge. In general, the employer has 30 days to respond in writing (and with photocopies), provided the employee does not agree to another proceeding.


Yes, employers may do so. However, these checks require the knowledge and consent of the employee; they must have a close connection to the employment and be proportionate.As the case may be, the checks may concern licences, certificates and non-compete covenants. If material to the employment, they may involve extracts from criminal records, statements from the debt collection office and statements concerning the employee’s state of health.



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There is a right to appeal within 30 days after the judgment has been handed down. In most cantons, a panel of three judges of the court of appeal will hear the appeal.The Swiss Supreme Court will review decisions of courts of appeals in employment matters if the amount in dispute exceeds CHF15,000. Appeals are limited to points of law.

Acknowledgment The authors would like to thank Dr. iur. Pierre-Yves Marro, LL.M. for his assistance in the preparation of this chapter.

There are no court costs if the value of the dispute is below CHF30,000; some cantons will apply a higher threshold. In all other cantons, the claimant has to advance the likely costs. The amount of the court costs depends on the value in dispute and the canton where the claim is filed; they can be considerable. If the claim is upheld, the defendant will be ordered to reimburse the paid costs to the claimant. In addition, the losing party will be ordered to compensate the other party for its lawyer’s fees (payment made according to a schedule, not actual fees paid).


The conciliation proceeding should take a few weeks only. Thereafter, a straightforward claim in an oral proceeding (i.e., the amount in dispute is below CHF30,000) should take less than six months. Other cases might be pending for one to two years.



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Balz GrossHomburger Prime Tower, Hardstrasse 201P.O. Box 314CH-8037 ZurichSwitzerland

Tel: +41 43 222 10 00Fax: +41 43 222 15 00Email: [email protected]: www.homburger.ch

Gregor BühlerHomburger Prime Tower, Hardstrasse 201P.O. Box 314CH-8037 ZurichSwitzerland

Tel: +41 43 222 10 00Fax: +41 43 222 15 00Email: [email protected]: www.homburger.ch

Homburger is a leading Swiss business law firm with more than 120 lawyers representing and advising major international and Swiss clients.

The members of Homburger’s Employment Law working group are drawn from Homburger lawyers in the various practice teams, in particular from the internationally leading Litigation | Arbitration, Corporate | M&A and Tax practice teams.

Homburger represents its clients before Swiss courts and arbitration tribunals in employment-related matters and advises on all employment law issues, in particular on:

■ employment contracts for executives, including compensation packages, non-compete covenants and “golden parachutes”;

■ standard employment contracts and customised employment concepts (contracts, regulations, employee handbooks);

■ employee participation plans and variable compensation schemes (e.g. long-term incentive schemes, management participation on acquisitions, stock option plans, bonus and gratification schemes);

■ transfer of business units and outsourcing;

■ business restructuring (staff reduction, collective dismissals), contract and gardening leave;

■ data protection; and

■ posting of employees and work permit applications.

Homburger’s employment lawyers are in regular contact with distinguished employment experts in other jurisdictions.

Dr. iur. Balz Gross, LL.M. (born 1964) is a partner with Homburger and Co-Head of Homburger’s top ranked interdisciplinary Employment Law Group. His employment practice focuses on advice on top management compensation, including bonus schemes, and related litigation and arbitration. Recognised a leading individual in employment, litigation and arbitration in the relevant directories, he is also the deputy head of Homburger’s Litigation/Arbitration Practice Team. He is an author of a commentary on Swiss cartel law (section on procedure), of the commentary on the Swiss Federal Act on Jurisdiction and Enforcement (section on contracts), the commentary on articles 68 to 96 of the Swiss Code of Obligations (relating to performance) and the commentary on the new Swiss Federal Act on Civil Procedure (section intervention, joinder, litis denuntiatio) and has published on legal proceedings, fraud and money laundering, recovery of assets and liability in tort.

From 1989 to 1992, he was a scientific assistant for contract and private international law at the University of Zurich, in 1993 a District Court Clerk, admitted to the Bar in 1994 and joined Homburger in 1995.

Education: Lic.iur./Dr. iur. Zurich, 1989/1996 (summa cum laude); LL.M., Harvard, 1995.

Dr. Gregor Bühler, LL.M. (born 1964) is a partner and Co-Head of Homburger’s Employment Law Group. He frequently represents clients in employment disputes before Swiss courts. He further advises clients with respect to all areas of employment law, in particular with respect to privacy and intellectual property aspects and regarding the termination of employment relationships. His work also includes assistance to implement new employment terms and to transfer employment agreements and employee data in connection with commercial transactions.

Gregor Bühler was admitted to the Bar in 1992. He joined Homburger in 1995, becoming a partner in 2003.

Education: Lic. iur./Dr. iur. Gallen, 1990/1995; LL.M., Georgetown University, 1997.



Chapter 35

Gün + Partners

Pelin Baysal

Beril Yayla Sapan

Turkey

working conditions, daily or weekly working hours, basic salary and other benefits (if any), salary payment period and parties’ obligations in the case of termination.


Workplace practices can be considered as terms implied into employment contracts. Workplace practices come into existence when a benefit is unilaterally provided by the employer consistently and under the same conditions and, thus, it becomes a provision of the employment contract in case such practices continue for at least three years.


Employers are under the obligation to pay the employees’ salary, taking all necessary precautions to ensure the health and safety of employees, abiding to the equal treatment principle. They also have a duty of care to their employees including protection of employees’ personal rights, personal data and protection of employees against mobbing.


Collective bargaining agreements can be made between trade unions of employees and employer unions or with employers which are not affiliated to a union.



Trade unions can be established with at least seven workers and they can be established without prior authorisation. There are 20 different lines of business (such as the food industry, communication, construction, health and social services, etc.) enumerated in the Union Law and they need to conduct their activities in one of these lines of business in compliance with the main business activity conducted in the workplace.



The main sources of employment law are as follows:■ The Constitution.■ Turkish Labour Act numbered 4857 (the “TLA”).■ Law on Trade Unions and Collective Bargaining Agreements

numbered 6356 (the “Union Law”). ■ Law on Civil Service Trade Unions and Collective Bargaining

Agreements numbered 4688. ■ Maritime Labour Law numbered 854.■ Press and Media Labour Law numbered 5953. ■ Turkish Code of Obligations numbered 6098 (the “TCO”). ■ Occupational Health and Safety Law numbered 6331.■ The secondary laws and regulations including annual leave,

working hours, overtime work, minimum wage and female and child employees.

■ Communiqués and circulars published by the Ministry of Labour and Social Security with regards to the application and recommendation of the labour legislation.

■ Court of Appeal’s Assembly of Civil Chambers’ decisions on the unification of the conflicting judgments.

■ Employment contracts, collective bargaining agreements, internal regulations/personnel regulations.


Different types of employment contracts are regulated such as: continual–transitory; definite (fixed) term–indefinite term; full-time–part-time; and temporary employment contracts. Additionally, there are on-call, team and seasonal service employment contracts.


In principle, employment contracts do not have to be in writing. However, fixed-term employment contracts with a term of at least one year should be in writing. In other cases, the employer should provide a written document to his/her employees, which demonstrates the general and special


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No, they are not.

3 Discrimination


Turkish Constitution, TLA, and the Law on Human Rights and Equality Institution of Turkey numbered 6701 (“Law No. 6701”) prohibit discrimination of the employees. According to TLA, discrimination regarding language, race, political opinions, philosophical beliefs, religion and sex or similar reasons are prohibited.


According to the principle of equal treatment regulated by TLA, discrimination of the employees who sign different types of employment contracts and/or work in similar positions and/or who are trade union members is prohibited. Law No. 6701 also prohibits employers from discriminating while determining the conditions regarding job applications and recruitment.


In principle, the employee should prove discrimination. However, if the employee proves a strong likelihood that the equal treatment principle has been violated, then the employer should prove that the discrimination did not take place. According to TLA, except for biological reasons or reasons related to the nature of the job, the employer must not make any discrimination, either directly or indirectly, against an employee in the conditions, execution and termination of his/her employment contract due to the employee’s sex or maternity.


The employee can apply to the employer or directly file a claim before the court.The parties can settle claims before or after they are initiated.


If an employer breaches the equal treatment principle, the employee is entitled to request compensation up to four months’ of his/her salary. The employee can also claim rights, to which he/she has been deprived, i.e. loss of salary. The employer will also be subject to an administrative fine amounting to TRY 146 per employee.


Trade unions are entitled to enter into collective bargaining and negotiate the terms and conditions of collective employment contracts. Trade unions are entitled to act on behalf of the employees and represent them. They can take collective actions in order to enforce the terms and conditions of collective bargaining agreement, file actions and represent the employees or their successors during the proceedings for protecting their rights arisen from the employment relationship, legislation and/or custom. Trade unions are also authorised to assign a workplace union representative among the employees.


Trade unions are entitled to take industrial action in order to protect the economical and social statutes, working terms and conditions of the employees.In the event that one of the parties fails to attend the collective bargaining meeting, or does not start negotiations or continue negotiations despite attending the meeting, or parties do not reach an agreement within the negotiation term, then one of the parties should notify the dispute to the authorised institution (Regional Directorate of Employment and Labour or the Ministry of Labour and Social Security depending on the jurisdiction) within six days. Upon receiving the notification of the dispute, the authorised institution appoints a mediator within six days. The term of mediation is 15 days but it can be extended for a maximum of six working days by the agreement of parties. If the parties fail to reach an agreement at the end of the term of mediation, then the mediator drafts an official report within three days regarding the dispute and his/her suggestions for resolution and submits it to the authorised institution. The authorised institution notifies the official report to the parties within three working days. Following the notification of the official report, strike action can be taken within 60 days.


It is not regulated under the related law and regulations to set up works councils.


Although there is no legal obligation for setting up works councils, it is upon the employer’s initiative to establish one.


Trade unions may have an impact on workplaces through workplace trade union representatives and their rights do not interact with work councils since the related law did not regulate such interaction.

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Employees are provided paid leave up to 10 days which they can use in whole or separately within one year provided that it is used by one of the working parents and based on the doctor’s report showing that their child is at least 70% disabled or chronically ill.

5 Business Sales


In the case of a share sale, the employer will not change and the employment shall continue. In the case of an asset transfer, employment contracts which are effective on the transfer date will be automatically transferred to the transferee together with all the rights and obligations.


In the case of an asset transfer, after the transfer date, the transferor employer will be jointly and severally liable together with the transferee for two years, regarding the obligations arising from TLA and employment contracts. According to the Union Law, rights and obligations arising from the applicable collective agreement remain in force until the conclusion of a new collective agreement unless there is a collective agreement applied in the incoming employer.


There are no information and consultation rights on a business sale.


The employees cannot be dismissed due to the business sale. However, the employer’s right to terminate the employment due to economic, technological grounds or changes in working organisation and just causes is reserved.


Employers are not entitled to freely change the terms and conditions of employment due to the business sale without the employee’s written consent.


Provided that there is no essential reason, the employer cannot make discrimination between full-time and part-time employees or between an employee works with a fixed-term agreement and one who works under an open ended employment contract. This principle is also applicable for temporary agency workers.



Employees are entitled to take maternity leave of 16 weeks; eight weeks before and eight weeks after confinement. In case of multiple pregnancies, an extra two-week period shall be added to the eight weeks period before confinement. Upon the employee’s request and doctor’s approval, female employees can continue to work until three weeks before confinement. If necessary, these periods may be extended depending on the employee’s health and special requirements of the job, subject to a medical report.Following the maternity leave, the employee is also entitled to part-time leave (a 60-day period for the first child, 120 days for the second child and 180 days for more children. An additional 30 days will be added in the case of multiple pregnancy or 360 days in the case of birth/adoption of a disabled child. Employees who are taking part-time unpaid leave are paid in ratio by their employer. For the hours not worked due to their part-time leave, they can be entitled to a part-time payment from the Social Security Institution.An employee can also take unpaid maternity leave for six months.


During the 16 weeks of maternity leave (for multiple pregnancies 18 weeks), employees are entitled to receive maternity payment from the Social Security Institution in the amount of two thirds or half of their gross daily salary depending on the treatment. In this regard, the employers are not obliged to make maternity leave payment.


Employees are entitled to have daily nursing leave for one-and-a-half hours for feeding their child under age one.


Fathers have the right to take paid paternity leave for five days.


Provided that both parents work, one of the parents can work part-time until the child reaches the age to attend primary school. This leave is unpaid and the employee’s request to take such leave is required.



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reasons such as requirements of the enterprise, workplace or work. Just causes are classified under three categories: health reasons; cases incompatible with morals, goodwill and similar circumstances; and force majeure. If there is just cause, the employment will be terminated with immediate effect. The employer will not pay severance payment if the just cause is based on the cases incompatible with morals, goodwill and similar circumstances. If the just cause is based on health reasons or force majeure, the employer should pay severance payment. If there is valid reason, the employer should comply with the notice period or pay notice compensation. If the employee has at least one year’s service, the employer must also pay severance payment at the rate of 30 days’ salary for each full year as of the date on which the employment relationship has commenced. Payment must be made pro rata to the service period of the employee within a year. In any case, the maximum amount to be paid to an employee as severance payment is TRY 4,426.16 per year.


If the employer terminates the employment contract relying on a just cause for cases incompatible with morals, goodwill and similar circumstances, the employer must use his right within six working days as of the date when it learns of the employee’s act. In any case, the employer cannot use this right if the act took place a year or more before the employer discovers it. For the employees who are subject to job security provisions, the employer must inform the employee of his/her low performance or misbehaviours and obtain his/her written statements regarding the reasons of his/her low performance or behaviours before terminating the employment. If the terminations arising from the requirements of the enterprise, workplace or the work, according to the Court of Appeals’ precedent, the employer should take an operational decision before terminating the employment.The employer should state the termination reasons in writing in the termination letter.


The employee is entitled to file a re-instatement action in one month as of the notice of termination and request determination of the invalidity of the termination and his employment. If the court accepts the case, it also decides for the employee’s four-month salary and other benefits to be paid for the period in which the employee has not worked. Considering the possibility of the employer not to reinstate the employee upon his/her application, the court also determines the compensation amount between four to eight months of the employee’s salary.


Yes, employers can settle claims before or after they are initiated.



TLA sets forth the minimum notice periods. If the length of the employee’s service is less than six months, the notice period must be at least two weeks; if it is six to 18 months, the notice period must be at least four weeks; if it is 18 months to three years, the notice period is six weeks; and if it is more than three years, the notice period must be at least eight weeks. The parties can increase those periods through employment contracts.


Garden leave is not regulated under TLA. However, the parties can agree on garden leave terms in writing.


The termination of a fixed term agreement before its expiration should be based on just cause. Otherwise, the employee may request the amount that he would have earned until the end the fixed term agreement. As for the termination of an indefinite-term agreement, in principle the employer can terminate it by complying with notice periods. If there is a probation period in the employment contract, the employee can terminate the agreement during the first two months without complying with any notice. Consent from a third party for termination of the employment is not required.


According to the job security provisions, if an employee has been working for at least six months at a workplace which has 30 or more employees, the employer can only terminate the employment contract by relying on a valid reason or just cause. However, the employer’s representative and his/her deputies who are entitled to manage the entire enterprise with authorisation to hire and terminate employees cannot benefit from job protection provisions.


If the employee benefits from job security provisions, then the employer should rely on a valid reason or just cause to terminate the employment. Valid reasons can be related to the individual employee such as the employee’s capability or behaviour, or business-related



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According to the TCO, employees do not have to be provided with financial compensation in return for covenants.


Employers can request their damages arising from the breach of a non-compete agreement. If the parties agreed on a penalty clause, the employer can demand from the employee to pay the penalty clause. Also, the employer can request from the court to cease such breach provided that there is a clause in the employment contract which gives the employer such right.



According to the TLA, employers are obliged to process employee’s data lawfully and in good faith. As per the TCO, employers can use employee’s personal data only if it is related to the employee’s tendency to work or the execution of the employment contract is required to do so. For the transfer of employees’ personal data outside of Turkey, the employee’s explicit consent is required. Under the Data Protection Law numbered 6698 (“DPL”), if there is an exceptional situation, transfers abroad can only happen if the foreign country has sufficient measures. Otherwise, the employer in the foreign country must guarantee in writing to the Data Protection Institution (“DPI”) sufficient protections for equivalent measures.


According to the DPL, an employee should apply to their employer in writing in order to obtain a copy of any personal data. The employer should conclude the request within 30 days at the latest, free of charge. If there is a cost to provide employees with their own data (e.g. photocopying), the employer may charge a fee according to the tariff which will be prepared by the DPI.


Employees are not entitled to carry out a criminal record check against potential employees since criminal records can only be provided to the individual to whom it relates or his/her proxy. However, in practice, employers request from the potential employees to provide their criminal records during the recruitment period.


According to precedents of the Court of Appeals, employers can monitor their employees’ email messages and it is deemed legal regardless of the employees’ consent, as long as the employer’s/


In case the employer terminates the employment contracts of: ■ at least 10 employees out of a total workforce of between

20–100 employees;■ at least 10% of the employees out of a total workforce

between 101–300 employees; or■ at least 30 employees out of a total workforce of 301 or more

employees,within one month on the same date or different dates as a result of economic, technological, structural or similar enterprise, business or work requirements, it constitutes a collective dismissal.As a first step the employer should take an operational decision. Then the employer should notify the trade union representative (if any), the Provincial Directorate of Social Security Institution and Turkish Employment Agency at least 30 days in advance. This notification must be in writing and include reasons for the termination, number and the group of employees to be dismissed and a timeframe for redundancy proceedings. According to the TLA, the termination notice will be deemed effective after 30 days of the employer’s notification to the said official authorities. After the notification, the employer should also consult with the trade union representative, if any, regarding such redundancy.


The employer is obliged to pay an administrative fine for each employee subject to the collective redundancy if it does not comply with its obligations. The administrative fine is TRY 606 per employee. The employee can file a re-instatement action if the employee benefits from job security provisions.



Non-compete, non-solicitation and confidentiality clauses are included in employment contracts as restrictive covenants.


According to the TCO, the non-compete clause should be in writing and applicable for the employees who are in contact with customers and have access to customers’ trade secrets. The covenant should be reasonably limited with regard to place, time and subject. The restricted period should be limited to two years but it can exceed two years in specific circumstances. Regarding confidentiality, as per the TCO, the employee is also under the confidentiality obligation during the post-employment period, as long as it is required for the protection of the employer’s rightful interest.



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Conciliation is not mandatory. However, the Draft Law of Labour Courts envisages mandatory conciliation for employment disputes.The main costs of civil proceedings such as application fees, litigation expenses and official attorney fees should be paid. The Turkish Civil Code of Procedure enables those who cannot afford litigation expenses to request legal aid from the court.


A usual first instance proceeding before a labour court takes around one year.


Final decisions rendered by labour courts can be subject to examination before regional appellate courts within eight days as from the announcement of the judgment by the labour court. To date, decisions related to non-monetary disputes and decisions given by the labour courts for disputes having a monetary value less than TRY 3,000 are final and cannot be subject to appeal. Final decisions given by regional appellate courts related to non-monetary disputes and decisions rendered for disputes amounting to more than TRY 41,000 can be subject to examination before the Supreme Court within eight days as from the notification date of the regional appellate court’s decision. Regional appellate courts began to operate on 20 July 2016. It is therefore not possible at this stage to predict how long the total appeal stage (examination before the regional appellate court and Supreme Court) would take.

AcknowledgmentThe authors would like to acknowledge the assistance of their colleague Ezgi Kut in the preparation of this chapter. Ezgi Kut received her LL.B. from Galatasaray University and she is an associate in the Corporate and Commercial Department of the firm.

company’s computer, equipment, etc. are used. The Constitutional Court made a decision on 24 March 2016 and stated that if an employer has notified its employees that business email accounts can be reviewed and used only for business purposes, the employer has a right to review these emails even if they contain personal information. The Constitutional Court also stated in this decision that the conflicted interests of the employer and employees should be balanced in a fair way and intervention by monitoring the email accounts should be evaluated on the grounds of whether or not it is proportional with the legitimate purpose of the employer. Employees’ phone conversations and text messages cannot be examined or recorded. The judge may decide to listen or record telephone communications for the purpose of conducting an investigation or criminal prosecution if there is no other way for obtaining evidence and there are strong grounds for such investigation concerning the crime that has been committed.


Under Turkish law, there is no specific regulation regarding the act of monitoring employees’ use of social media. It is accepted that employers can monitor employee’s social media activities without having prior consent of the employee if the social media content is public, if it is not, then the employer cannot control it.



Labour Courts are the specialist courts for disputes related to employment relationships and are entitled to hear all claims arising out of the employment relationship.


For employment-related complaints, simple procedure is applied. Therefore, only plaint and response petitions can be filed by the parties and no further exchange of petitions can be carried out.



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Pelin Baysal Gün + Partners Kore Şehitleri Cad. 17 Zincirlikuyu 34394 İstanbul Turkey

Tel: +90 212 354 00 00Email: [email protected]: www.gun.av.tr

Beril Yayla SapanGün + Partners Kore Şehitleri Cad. 17 Zincirlikuyu 34394 İstanbul Turkey

Tel: +90 212 354 00 00Email: [email protected]: www.gun.av.tr

Pelin is one of the partners in the commercial and corporate department of Gün + Partners. She received her LL.M. from Ruprecht-Karls University and her LL.B. from Ankara University Faculty of Law.

She concentrates on commercial and corporate law matters with a special focus on dispute resolution and arbitration, employment in addition to insurance and reinsurance matters. She has advised on large-scale arbitration matters and represented many international and local clients on high-value commercial disputes.

Her practice also focuses on labour law; she represented and advised local and multinational clients in various employment issues including termination of employment, restructuring, confidentiality and non-compete obligations.

She is recommended for commercial litigation, insurance and reinsurance in Turkey by several global publications and directories.

Gün + Partners is one of the largest law firms in Turkey. It provides a full range of legal services for local and international corporate clients. The firm has nine partners and over 60 lawyers. All the firm’s lawyers are bilingual and fluent in English, and some have German, French and/or Russian as a third language. The firm has working offices in Ankara and Izmir and corresponding attorneys in other major cities.

Gün + Partners has a specialist employment practice group providing advisory and litigation services. The employment practice group regularly advices and represents clients on employment contracts, internal policies, confidentiality and non-compete obligations, internal investigation of mobbing claims, data protection, collective bargaining, employee related IP rights and employee inventions, terminations, restructurings and reorganisations, collective redundancies, business immigration, workplace accidents and related litigation.

Beril Yayla Sapan is a senior associate in the commercial and corporate department of the firm. She received her LL.M. in Economy Law from Galatasaray University and her LL.B. from Bilkent University Faculty of Law.

She concentrates on contracts, customs and commercial litigation matters. She has been involved in legal audits, high-profile commercial conflicts and various high-profile debt collection procedures ranging from concordats to bankruptcy proceedings.

She has experienced also in areas where commercial and criminal laws overlap. She has advised several multinational companies in relation to white collar crimes. Her practice also includes labour law issues and she has advised clients in relation to employment contracts, restructuring facilities and related litigation.



Chapter 36

Hogan Lovells International LLP

Elizabeth Slattery

Jo Broadbent

United Kingdom


Various terms are implied into employment contracts. The duty of mutual trust and confidence is particularly important: employers and employees should not behave in a way that is calculated or likely to destroy or damage the relationship of confidence and trust between them.The implied duty of loyalty and fidelity prevents an employee from competing with his employer while he remains in employment and from disclosing confidential information. Employees are under an implied obligation to exercise reasonable skill and care and to obey reasonable instructions. Employers have a duty to pay wages and to provide a suitable and, so far as practicable, safe environment.Terms can also be implied by custom and practice if an employer invariably follows a particular practice over a period of time.


Employees have certain minimum legal rights, including the right to receive a week’s notice per year of service up to a maximum of 12 weeks. A national minimum wage of £7.20 per hour (for workers aged 25 or over; lower rates apply to younger workers) and a maximum average working week of 48 hours apply to most workers. Workers can “opt out” of the maximum working week.Workers are entitled to minimum daily and weekly rest periods and to 5.6 weeks’ holiday each year.


According to government statistics, in 2015 around 27.9 per cent of the total UK workforce, but only 16.1 per cent of private sector employees, were covered by collective agreements.Collective bargaining takes place almost exclusively at company or workplace level.



The main source of employment law is legislation. Rights agreed at a European level are normally brought into force through national legislation. Other rights are included in contracts of employment.There are likely to be future changes to employment law following the UK’s decision to leave the European Union. However, at the moment, the UK continues to be subject to obligations under EU law and employment rights remain unchanged.


The law distinguishes between employees, workers and the self-employed. Employees have the most extensive rights. Individuals are employees if: the employer has control over the work; there is mutuality of obligation (an obligation on the employer to offer and on the employee to perform work); and there is nothing inconsistent with an employment relationship.Individuals are workers if they are obliged to perform services personally and do not carry on a business. Workers are not protected against unfair dismissal and are not entitled to receive redundancy payments.The self-employed typically have very limited protection.


Contracts of employment do not have to be in writing. However, employees must be provided with a written statement of particulars including: the names of employer and employee; job title; when continuity of employment began; pay rates and payment intervals; place and hours of work; holiday entitlement; sick pay; disciplinary and grievance policies; notice provisions; and whether the terms of employment are governed by a collective agreement.Employee shareholders must receive an additional statement setting out their employment rights and rights as a shareholder.


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council. If collective redundancies or a transfer of an undertaking is proposed, an employer must consult with a recognised trade union and (if the default rules apply) must notify, but does not have to consult, the works council.


There is currently no general statutory right to representation at board level. It is very rare for an employer to appoint employee directors voluntarily.

3 Discrimination


Employees and workers are protected against discrimination because of age, disability, gender reassignment, pregnancy, race, religion or belief, sex, sexual orientation or marriage or civil partnership status (“protected characteristics”). They are also protected against certain types of discrimination because someone with whom they are associated has a protected characteristic.Discrimination is prohibited at every stage of the employment relationship, including recruitment and after termination.


Direct discrimination occurs if an employee is less favourably treated because of a protected characteristic. Only direct age discrimination can be justified.Indirect discrimination occurs where an employer adopts a “provision, criterion or practice” which puts people who share a protected characteristic at a particular disadvantage. If employers can justify a “pcp” by showing it is a proportionate means of achieving a legitimate aim, the treatment is not unlawful.Harassment is conduct related to a protected characteristic which has the purpose or effect of violating an employee’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment.It is unlawful to victimise an employee because they have taken action to enforce their right not to be discriminated against, or because they have made or supported someone else’s allegations of discrimination.Disabled employees have a right not to be treated unfavourably for a reason arising from a disability and to have reasonable adjustments made for them if they are put at a disadvantage by a provision, criterion or practice adopted by the employer or by a physical feature of an employer’s premises.


An employer is vicariously liable for the acts of its employees, so is liable if one employee discriminates against another in the course of employment. An employer can avoid liability if it can show that it has taken all reasonable steps to prevent the discrimination occurring.



Trade unions can gain recognition through agreement with an employer, or under the statutory recognition process. Under the statutory process, unions are entitled to apply to the Central Arbitration Committee (CAC) for recognition if the employer, in conjunction with any associated employer, has 21 or more employees and at least 10 per cent of employees are trade union members. The application will succeed if it is supported by a majority of workers, demonstrated by trade union membership or employee surveys. The CAC may arrange a ballot to check support. The trade union must secure the votes of the majority of workers voting and at least 40 per cent of the total workers constituting the bargaining unit. If successful, the trade union will be entitled to collective bargaining on pay, hours and holidays.


Recognised trade unions have a variety of rights, including the disclosure of information for collective bargaining, to be informed and consulted in relation to collective redundancies and transfers of undertakings, pension matters and training, and given information on health and safety issues.


Complex rules govern a trade union’s right to take industrial action. A union must obtain support for industrial action from members in a secret ballot, and must provide the employer with details of the ballot and its result. If the union fails to comply with the requirements, employers can obtain an injunction to prevent the action.


Employers are not obliged to set up works councils in the UK unless they have 50 or more employees and a request is made by at least 10 per cent of the workforce. Such requests are unusual.If a request is made and a works council is set up, its rights and responsibilities will be a matter for agreement. In the absence of agreement, default rules require representatives to be elected and to be informed and consulted about the economic situation, threats to employment, and substantial changes in work organisation.


Works councils do not have co-determination rights.


Trade union rights generally take precedence over those of a works

Hogan Lovells International LLP United Kingdom


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A woman returning to work from OML is entitled to return to the job in which she was employed before her maternity leave on the same terms and conditions, and with the benefit of any general improvement in terms and conditions. A woman returning to work from AML has the same right, unless it is not reasonably practicable for her to return to the old job, in which case she is entitled to return to a job which is suitable and appropriate and on no less favourable terms and conditions.


Eligible fathers are entitled to one or two weeks’ paternity leave, which is paid at a rate of £139.58 per week (from April 2015; the rate was not increased in 2016). Some employers offer enhanced company paternity pay.


Adoptive parents enjoy rights to ordinary and additional adoption leave which are broadly similar to maternity leave rights. Parents have the right to 18 weeks’ unpaid leave to care for a child under the age of 18, although a maximum of four weeks’ leave is generally permitted each year. Employees have the right to take unpaid time off work to deal with family emergencies.A new right to shared parental leave was introduced in 2015. If a woman chooses to bring her maternity leave to an end early, the balance of any leave and pay can be taken by either parent as flexible shared parental leave before the baby is a year old. Similar rights apply to adoptive parents.


Employees with at least 26 weeks’ service are entitled to request flexible working, regardless of their reasons for doing so. Employers must consider requests reasonably. There is no right to have a request granted and employers can reject requests for a number of business reasons. The penalty for failing to follow the correct procedure is fairly low (a maximum of £3,832) but the employer could also face discrimination (particularly indirect discrimination) claims if a request is refused.

5 Business Sales


An asset sale will generally amount to a transfer of an undertaking if tangible and intangible assets are transferred and the business continues as a going concern. The contracts of employment of employees employed by the seller and assigned to the business will automatically transfer to the buyer. In the UK, an outsourcing will often amount to a transfer of an undertaking.In a share sale, there is no change in the identity of the employer.


Employees can bring discrimination claims before the Employment Tribunal. Claims can be settled before or after they are initiated if a settlement agreement is entered into which complies with various formalities. For example, the employee must have received independent legal advice on the terms and implications of the agreement. Claims can also be conciliated by the Advisory, Conciliation and Arbitration Service (ACAS) and any settlement will be binding.


Compensation is the main remedy in discrimination claims, comprising an injury to feelings award and a loss of earnings award. Injury to feelings awards range between £660 and £33,000 depending on how serious the discrimination was and how long it lasted. A loss of earnings award compensates the employee for the financial loss they have suffered because of the employer’s discrimination. There is no limit on compensation in a discrimination claim.Employment Tribunals can make recommendations requiring an employer to take steps to reduce the impact of the discrimination.


Part-time workers have the right not to be treated less favourably (on a pro rata basis) than those who work full-time. Fixed-term employees have the right not to be treated less favourably than comparable permanent employees. The use of successive fixed-term contracts is limited to four years, unless the use of further fixed-term contracts is justified on objective grounds. Agency workers who have been engaged for a period of 12 weeks have an entitlement to the same basic terms and conditions in relation to pay and working hours as comparable employees.



Employees are entitled to a period of six months’ ordinary maternity leave (OML) and six months’ additional maternity leave (AML). At least two weeks’ leave must be taken after a child’s birth (compulsory maternity leave).


A woman’s usual terms and conditions of employment continue throughout OML and AML, except remuneration. Remuneration is replaced by Statutory Maternity Pay (SMP) which is currently paid at a rate of 90 per cent of normal pay for the first six weeks, followed by a flat rate of £139.58 a week (from April 2015; the rate was not increased in 2016) (or normal weekly pay if lower) for a further 33 weeks. Some employers offer enhanced company maternity pay.



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An employer can require employees to serve a period of “garden leave” if this is permitted under the employee’s contract. Garden leave may also be permitted if the employee has indicated that he does not intend to be bound by the terms of the contract (for example, he has sought to misuse confidential information).


Employees with more than two years’ service are protected against unfair dismissal. An employee is treated as dismissed if his employer terminates his contract (with or without notice), if he is employed on a fixed-term contract which expires, or if he resigns in response to a fundamental breach of contract by the employer. Consent from a third party is not required before a dismissal takes place.


It is automatically unfair to dismiss an employee for a variety of reasons, including: reasons related to pregnancy or maternity or family leave; reasons related to health and safety; for acting as an employee representative or taking part in trade union activities or protected industrial action; for making a protected disclosure; for making a flexible working request; or for working as a part-time or fixed-term employee. There is no qualifying period of employment to bring such claims.


Employers must show that they have a potentially fair reason for dismissal. The potentially fair reasons are misconduct, capability (health or performance), illegality, redundancy or “some other substantial reason”.Employees are entitled to receive a statutory redundancy payment if they are dismissed for redundancy. This is calculated as a week’s pay (capped at £479) for each year of service, with certain age-related discounts and uplifts. The maximum statutory redundancy payment is £14,370. Employees dismissed for a reason other than redundancy are not entitled to receive a statutory payment.


Employers must follow a fair procedure to avoid a finding of unfair dismissal. What amounts to a fair procedure depends on the reason for the dismissal, but will generally involve warning the employee that he is at risk of dismissal, giving him a chance to comment on the employer’s reasons for wanting to dismiss and a chance to appeal against a decision to dismiss. It is unlikely to be fair to dismiss on


Employees transfer to the buyer on their existing terms and conditions and with their continuity of employment preserved. The buyer must observe those terms following the transfer. Most pension benefits do not transfer. Collective agreements are treated as having been made with the buyer, so their terms may continue in force.On a share sale, employees continue to be employed on their existing terms and conditions.


Representatives of affected employees (trade union representatives or, in their absence, elected representatives) must be informed and may need to be consulted on an asset transfer. They must be told about the fact of the transfer, when it is likely to take place, the reasons for it, the implications for the employees, and whether any measures are proposed by the buyer or seller. If measures are proposed, the employee representatives should be informed long enough before the transfer to allow consultation to take place. A failure to inform and consult can result in a protective award of up to 13 weeks’ pay per employee.Unless the company has an information and consultation agreement (which is still unusual) there should be no information and consultation obligations on a share sale.


Dismissals because of a transfer are effective but automatically unfair unless the employer can point to an “economic, technical or organisational” reason entailing changes in the workforce, such as a genuine redundancy situation. Dismissals that are not automatically unfair may be unfair on normal principles.No special rules apply to dismissals in connection with a share sale.


Changes to terms and conditions because of a transfer are only allowed if the buyer can point to an “economic, technical or organisational” reason entailing changes in the workforce. This is difficult to show.No special rules apply to changes to terms and conditions in connection with a share sale.



Employees have to be given notice of termination unless they are dismissed for gross misconduct. The length of the notice period is set down in an employee’s contract of employment, subject to the statutory minimum (see question 1.5).



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Covenants typically prevent an employee from competing with, dealing with customers of, or soliciting the customers or staff of a former employer.


Employers will only be able to enforce covenants if they can show that they have a legitimate business interest to protect (such as confidential information or customer connections) and that the covenant goes no further than reasonably necessary to protect that interest. If the covenant is too wide in its scope or duration, it will not be enforceable. Restrictions usually last between three and 12 months, depending on the seniority of the employee and the nature of the interest to be protected.


Employees do not have to be given financial compensation in return for covenants. If a covenant is not justified, or it is too wide in scope or duration, a court is unlikely to enforce it, even if the employer makes an offer of financial compensation.


If a former employee is acting in breach of his covenants, an employer can apply to the court for an injunction to prevent further breaches. The employer may also be entitled to recover damages to compensate for any loss caused by the employee’s breaches.



Employers must comply with the Data Protection Act 1998 (DPA) when processing employee data. In particular, data must be processed fairly and lawfully, for specified and lawful purposes, and adequate security measures must be in place. There are restrictions on transferring data outside the EEA unless adequate protection for the data is in place. The Information Commissioner can impose fines of up to £500,000 for serious breaches of the DPA.


Employees are entitled to make a subject access request (subject to payment of a £10 fee). Employers then have 40 days to tell the employee whether their personal data is being processed, the purposes for which data is processed and to whom it is disclosed, and to provide a copy of all personal data that is held unless this would involve “disproportionate effort”.

capability grounds unless the employee has been given a reasonable opportunity to meet the required standard of performance or attendance, and in this case the process can take a number of months. Medical evidence about an employee’s condition might also be required in a capability dismissal.


An employee with more than two years’ service can bring an unfair dismissal claim in the Employment Tribunal. If the claim succeeds, the employee would be entitled to a basic award (a week’s pay capped at £479 per year of service, with permitted age-related discounts and uplifts, to a maximum of £14,370). The employee would also be entitled to a compensatory award, to reflect the financial loss caused by the dismissal. The maximum compensatory award is currently £78,962, or 12 months’ pay if lower. There is no qualifying period of service for a claim of automatic unfair dismissal (see question 6.4). Employees can also bring a discrimination claim if they believe their dismissal was because of a protected characteristic. There is no qualifying period of service for discrimination claims and no cap on compensation. There is also no cap on compensation for a claim that an employee was dismissed for making a protected disclosure. In practice, many claims for unfair dismissal are accompanied by one or more claims of discrimination and/or dismissal for making a protected disclosure.


Unfair dismissal claims can be settled in the same way as discrimination claims (see question 3.4).


If an employer has proposals to dismiss 20 or more employees as redundant within a period of 90 days, it must consult with trade union representatives or employee representatives before any final decisions are taken. Consultation must last at least 30 days if between 20 and 99 dismissals are proposed, and at least 45 days if 100 or more dismissals are proposed. Consultation must take place about avoiding dismissals, minimising the number of dismissals and mitigating the consequences of dismissals. The employer must also notify the Department for Business, Energy & Industrial Strategy of the proposed redundancies.


If an employer fails to inform and consult on a collective redundancy, claims can be brought in the Employment Tribunal. If the claim is successful, the tribunal can order the employer to pay a protective award of up to 90 days’ pay per affected employee.



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Employment Tribunals have jurisdiction to hear most employment-related complaints. They are composed of an Employment Judge (who is legally qualified) and two lay representatives, who usually have relevant experience as trade unionists or HR professionals. Many claims (including claims of unfair dismissal) are now heard by an Employment Judge sitting alone.


Employees normally have to refer disputes to ACAS for pre-claim conciliation. If pre-claim conciliation is not successful, claims can be lodged with the Employment Tribunal. Generally, claims have to be lodged within three months of the matter complained of, with extensions to allow pre-claim conciliation to take place.The parties must exchange documents and witness statements, and there is a hearing to decide the complaint. Normally, an employee has to pay a fee of up to £250 to lodge a claim, and a further hearing fee of up to £950 (although the employer will usually be ordered to reimburse those fees if the employee’s claim is successful). It is still relatively rare for the losing party to be ordered to pay the other party’s costs.


A case generally takes around six months from being lodged until it is heard by the Tribunal.


Employment Tribunal decisions can be appealed on a point of law to the Employment Appeals Tribunal, which is a specialist appeal tribunal that normally comprises a judge sitting alone. In cases of particular importance, the judge may sit with lay members with practical experience of employment relations. Appeals typically take nine to 12 months. There are fees to lodge a claim and before a hearing.


Employers can carry out pre-employment checks, but it is good practice to limit this to checking information provided by the candidate. More detailed vetting may be appropriate where the role entails risks to the employer, clients, customers or others. Criminal records checks can be made through the Disclosure and Barring Service in relation to specified roles. Different levels of disclosure are available depending on the nature of the job applied for, with more detailed disclosures available where candidates will be working with children or vulnerable adults.


Monitoring may be permissible if there is a good reason for it and it is a proportionate response to the problem it seeks to address. An employer will normally need to conduct an impact assessment, weighing up the purpose of monitoring against the adverse impact for employees or others, to judge whether monitoring is justified. If electronic communications are being intercepted, the employer will also need to make sure that it complies with the Regulation of Investigatory Powers Act.


Misuse of social media in or outside the workplace may amount to misconduct, which an employer can deal with in the normal way through its disciplinary procedure. Whether a dismissal is fair will depend on the damage or potential damage to the employer’s reputation, whether the employer has a clear policy on the issue, and whether dismissal is proportionate (as well as whether a fair procedure has been followed).



Uni

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gdom

Elizabeth SlatteryHogan Lovells International LLPAtlantic House, Holborn ViaductLondon EC1A 2FGUnited Kingdom


Jo BroadbentHogan Lovells International LLPAtlantic House, Holborn ViaductLondon EC1A 2FGUnited Kingdom


Elizabeth is Head of the London Employment Practice and advises on all aspects of employment and employment relations law. Her practice includes advising on individual employment disputes, unfair and wrongful dismissal, discrimination and equal pay, enforcement of post-termination covenants and protection of confidential information, and employment aspects of regulatory and other investigations. Elizabeth also advises on collective employment law, employee consultation, trade union recognition and industrial action. In addition, Elizabeth has extensive experience advising on employee matters arising in connection with all types of corporate transactions, business transfers and outsourcing agreements.

Elizabeth has been listed as a leading UK employment law practitioner in both UK and International directories.

Today’s market challenges

Employment law frameworks around the world are complex and pose many challenges for global companies. They affect the way business is conducted and have an impact on how strategy is built and rolled out. The ability to work swiftly and effectively across borders – in a variety of languages and cultures – is essential.

How we help

We have the geographic reach and local knowledge our clients need. From this platform, we provide sophisticated, coordinated guidance on the most pressing and difficult employment issues, wherever they arise.

Our work covers the full spectrum of employment matters. We help navigate workplace policies and practices. We develop comprehensive risk avoidance strategies. We advocate in litigation and arbitration. We negotiate with unions and other employee representatives. And we regularly implement strategic domestic and international initiatives.

Our team approaches all of these challenges creatively, strategically and cost-effectively. Over and above being a legal adviser, we aim to be a business partner. And we always put our clients first.

Jo is PSL Counsel in the Hogan Lovells’ employment team. As well as keeping clients and the team up to date with legal developments, she develops and presents internal and external client training courses and workshops and sits on the Employment Lawyers Association training committee. One of her particular interests relates to maternity and other family friendly policies – she is the main contributor to the “Family friendly” section of the CIPD’s HR-inform tool, and the author of Xpert HR’s shared parental leave section. Jo is also a co-author of the book “Informing and Consulting Employees: the New Law”, and contributed the UK employment law section to a book on European cross-border mergers.



Chapter 37

Shook, Hardy & Bacon L.L.P.

William C. Martucci

Carrie A. McAtee

USA


No. Employment is generally assumed to be at-will, meaning either the employee or the employer can end the employment relationship at any time. For those employment relationships that are under contract, most are in writing. However, depending on applicable state law, the employment contract need not be in writing to be enforceable. There is no federal law that requires employers to provide specific written information to employees at the time of hire, but some states require employers to disclose information such as the employee’s wages or regular payday at the outset of employment.


While employment is generally assumed to be at-will, almost every state recognises various exceptions to this rule. Depending on the jurisdiction, such exceptions may include: 1) an express or implied contract; 2) an implied covenant of good faith and fair dealing; or 3) an exception prohibiting discharge if it would violate the state’s public policy. The law surrounding these exceptions varies widely by state.


Yes. Minimum terms and conditions of employment are imposed by federal and state laws that require most employers to pay a minimum wage. These laws also require most employers to pay overtime — time and one-half the employee’s regular rate — for each hour worked over forty hours per week, unless the employee is statutorily exempt. Some states expand these minimum terms and conditions to also include mandatory breaks, overtime in excess of eight hours in a day, or overtime for work performed on weekends.


The National Labor Relations Act (NLRA) protects employees’ rights to organise a union. While nearly one half of U.S. employees in the private sector belonged to unions in the 1940s, union employees now represent a shrinking segment of the U.S.



Employment issues are governed by a host of federal, state, and local laws that vary depending upon jurisdiction. The primary sources of federal employment law include the: Age Discrimination in Employment Act (ADEA); Americans with Disabilities Act (ADA); Civil Rights Acts of 1866 (Section 1981); Equal Pay Act (EPA); Fair Labor Standards Act (FLSA); Family and Medical Leave Act (FMLA); Title II of the Genetic Information Nondiscrimination Act (GINA); National Labor Relations Act (NLRA); Occupational Safety and Health Administration Act (OSHA); Title VII of the Civil Rights Act of 1964 (Title VII); Uniformed Services Employment and Reemployment Rights Act (USERRA); and Worker Adjustment and Retraining Notification Act (WARN). Employers are generally prohibited from retaliating against employees for exercising rights under these laws. There are also a myriad of other federal laws that protect whistleblowers who raise complaints that those laws have been violated.Each state and some localities have their own set of employment laws that often offer protections similar to, or even greater than, those afforded by federal law. State law also governs the areas of unemployment compensation, workers’ compensation for on-the-job injuries, employment contract, covenant, and tort matters, as well as wrongful discharge based on public policy considerations.


Coverage of the employment laws is generally determined by the number of employees working for the employer. While many of the federal employment laws do not apply to small employers, the various state employment laws may cover those employers. Employees are often distinguished based on whether they are “at-will” or subject to a collective bargaining or other employment contract. Under the “at-will” employment doctrine, the employee or the employer can end the employment relationship at any time. In contrast, employees subject to a contract may be protected by a “just cause” requirement or other terms and conditions of employment to which they would not ordinarily be entitled. Employees are also distinguished based on whether they work in the private or public sector, as different sets of employment laws often apply depending on this factor.


USA


No, they are not.

3 Discrimination


Yes. Employment discrimination is prohibited by a variety of federal, state, and local laws. Federal law prohibits employment discrimination based on the protected characteristics of race, colour, national origin, sex, pregnancy, religion, age, disability, citizenship status, genetic information, military affiliation, and also prohibits retaliation against employees who oppose, or participate in, proceedings challenging unlawful discrimination. Most state and some local laws contain analogous prohibitions, with certain jurisdictions expanding the list of protected categories to include such characteristics as marital and/or familial status, sexual orientation, gender identity, political affiliation, language abilities, use of tobacco products, public assistance status, height, weight, and personal appearance.


Prohibited discriminatory practices generally include bias in all terms, conditions and privileges of employment, including hiring, promotion, evaluation, training, discipline, compensation, classification, transfer, assignment, layoff, and discharge. These activities are often referred to as “adverse actions”. To demonstrate discrimination, an employee must establish a connection between the protected characteristic and the adverse action or condition. Workplace harassment is also unlawful. While most harassment cases involve allegations of sexual harassment, harassment based on other protected categories is also actionable. Employer liability in harassment cases depends on who engaged in the harassment, whether the harassment resulted in a tangible employment action, and the employer’s response to the harassment.Finally, it is unlawful to retaliate against employees who raise concerns about unlawful discrimination or harassment. An employee need not prove that discrimination occurred in order to prove that the employer’s response to the employee’s complaints constituted unlawful retaliation. Rather, an employee simply needs to prove a causal connection between the complaints and the adverse action.


Yes. The primary defence to a discrimination claim is establishing that the adverse action was taken for a legitimate, non-discriminatory reason. There are also affirmative defences to discrimination claims that may apply in limited circumstances and depending on the nature of the claim. For example, employers are generally allowed to discriminate on the basis of sex, age, religion, or national origin because of a bona fide occupational qualification (BFOQ). A BFOQ exists when a specific characteristic is necessary for the performance of the job. Gender may be a relevant factor, for example, in job performance for a model of women’s clothing. The BFOQ defence is very narrowly restricted and should not be relied on in most situations.

workforce. In fact, the use of collective bargaining in the private sector has decreased in recent years to a rate below 10 per cent. In contrast, the percentage of union employees in the public sector has been an area of dramatic growth for labour organisations.For workforces that are organised, bargaining typically takes place at the company level. Some large unions do coordinate bargaining within an industry. However, they still have to come to independent agreements with each company.



The NLRA gives most private sector employees rights to organise a union in the workplace, and prohibits employers from interfering with, restraining, or coercing employees in the exercise of these rights. Employees generally decide on whether they desire union representation through a formal election decided by a majority of votes cast.


When employees choose a union to represent them, the employer and the union are required to meet at reasonable times to bargain in good faith to reach a binding agreement setting out terms and conditions of employment. The employer does not have to adopt any proposal by a union but is required to bargain in good faith.If no agreement can be reached, the employer may declare an impasse. However, the union may appeal to the National Labor Relations Board (NLRB) if it contends that the employer has not conferred in good faith. The NLRB can order the employer back to the bargaining table.


Yes. The NLRA protects activities such as strikes and picketing, so long as they are done in a lawful manner. The NLRA governs acceptable purposes and timing of strikes as well as the conduct of workers involved in a strike or picketing.


No. In the United States, the union is the form through which employee representation occurs.





Shook, Hardy & Bacon L.L.P. USA


USA

for unpaid leave for up to 16 weeks, and permitting intermittent maternity leave.


An employee must be restored to the same position or its equivalent with equivalent pay, benefits, and other terms and conditions of employment upon her return from maternity leave. The FMLA also prohibits employers from interfering with employees’ FMLA rights and from retaliating against employees for having requested FMLA leave or otherwise exercised FMLA rights.


The FMLA enables both eligible mothers and fathers to take up to 12 weeks of unpaid paternal leave, but it only covers eligible employees who work for companies with 50 or more employees. If the mother and father work for the same employer, the employer may limit their combined FMLA paternal leave to a total of 12 weeks.


Under the FMLA, eligible employees are also entitled to up to 12 weeks of unpaid parental leave to care for the employee’s child who has a serious health condition. Additionally, the FMLA affords up to 12 weeks of unpaid parental leave for any qualifying exigency arising out of the fact that the employee’s son or daughter is a military member on active duty, and up to 26 weeks of unpaid leave to care for a military service member with a serious injury or illness who is the employee’s son or daughter.


Yes. The FMLA permits eligible employees to take up to 12 weeks of unpaid leave to care for a covered family member who has a serious health condition. This leave may be taken intermittently or in the form of reduced schedule leave when medically necessary.

5 Business Sales


The type of sale may affect the status of the seller’s employees: a sale of ownership shares generally does very little to change the business, while a sale of assets extinguishes the former business. When the sale of the business is an asset sale, the employment relationship ends and the buyer generally has no duty to retain the former employees, but may elect to do so.


Generally, the buyer has the right to set the initial terms and conditions of employment under which it will hire employees. A


Employees enforce their discrimination rights by filing a charge of discrimination with the applicable government agency and/or a civil lawsuit. Federal and state fair employment agencies enforce most laws prohibiting employment discrimination, and often serve as gateways for employees seeking to enforce their discrimination rights. For most types of discrimination, an employee must file a claim with the applicable agency before filing any private lawsuit in court. Employers can settle discrimination claims either before or after they are initiated. In age discrimination claims, the Older Work Benefit Protection Act expressly provides additional procedural safeguards pertinent to a paid release of age discrimination claims.


Remedies available for discrimination claims depend on the law under which those claims are asserted, but generally include some combination of back pay, lost benefits, front pay, liquidated damages, compensatory damages (which include emotional distress damages), punitive damages, and attorneys’ fees and costs, as well as equitable relief such as reinstatement.


No, they do not.



There is no nationwide law mandating paid maternity leave. U.S. law does require unpaid maternity leave for some employees, but not all. The federal Family and Medical Leave Act (FMLA) provides for 12 weeks of unpaid maternity leave, but it only covers eligible employees who work for companies with 50 or more employees. To be eligible for FMLA leave, an employee must have worked for the employer for at least 12 months and for at least 1,250 hours in the 12 months prior to the first day of leave. A number of states have enacted family leave statutes that similarly afford leave, some of which expand employee rights by covering smaller employers and extending the time for unpaid leave up to 16 weeks.


Under the FMLA, an eligible employee is entitled to: 1) up to 12 weeks of unpaid maternity leave per year; 2) continuing health insurance benefits during the leave (if already provided by the employer); and 3) job protection (an employee is guaranteed to return to the same job or its equivalent). Some state family leave laws provide more generous leave benefits than the FMLA by covering smaller employers, extending the time



USA


While employers may utilise a “garden leave” arrangement with employees, this is not common in the United States.


Employment is generally assumed to be at-will, meaning either the employee or the employer can end the employment relationship at any time for good reason, bad reason, or no reason at all. There are four major exceptions to this employment at-will doctrine: 1) dismissal due to discrimination or retaliation in violation of a federal, state, or local statute; 2) an express or implied contract, including a collective bargaining agreement; 3) an implied covenant of good faith and fair dealing; and 4) a public policy exception prohibiting discharge if it would violate the state’s public policy. The law surrounding these exceptions varies considerably by state.There are two basic types of involuntary termination, known often as being “terminated” and being “laid off”. Termination is the employer’s choice to end the employment relationship, generally for reasons relating to the performance or conduct of the employee. A layoff is usually not strictly related to an employee’s performance, but instead due to the elimination of jobs for economic reasons or the employer’s business need to restructure. Consent from a third party is not required before dismissal, unless such a provision exists in an applicable collective bargaining agreement or other employment contract.


Employees subject to a collective bargaining or employment contract may enjoy special protection against dismissal depending on the terms of the contract. At-will employees are generally protected from dismissals that are discriminatory, retaliatory, or in violation of a state’s public policy.


Employers are entitled to dismiss for reasons related to the individual employee or business-related reasons, so long as those reasons do not violate: 1) an applicable employment contract; 2) the employee’s right to protected family, medical, or military leave; or 3) the laws prohibiting discrimination, retaliation, or wrongful termination in violation of public policy. Employees are generally not entitled to compensation on dismissal beyond their final pay and any other business expenses owed to them at the time of dismissal. Depending on the law of the state in which the employee works, an employee may be entitled to receive temporary and partial

union that asserts its rights can then require the employer to bargain collectively after the initial establishment of terms.There are three common ways that a collective bargaining agreement would transfer to the buyer. First, since a collective bargaining agreement is a contract, general U.S. contract law principles apply. The buyer can: agree to the collective bargaining agreement as part of the terms of sale; adopt it by express agreement; or impliedly adopt it by continuing to follow its terms and otherwise showing consent to it. Second, the buyer may be obligated to bargain with the union upon consideration of several factors, including whether: (a) the seller’s employees represent a majority of the buyer’s employees; and (b) the identity of the employing enterprise remains substantially intact in structure and business purpose. Third, the NLRB could determine that the buyer intends to retain the seller’s employees and has led them to believe they would be retained without changes to their conditions of employment.


No, unless the business sale results in a plant closing or a mass layoff, in which case the employees may be entitled to 60 days’ notice of the layoff under the federal Worker Adjustment and Retraining Notification Act (WARN) or an applicable state law counterpart.


Yes. An employee who was at-will with the seller retains this at-will status when the ownership of a business transfers. If the sale is an asset sale, the employer must decide whether to retain each employee and is generally free to choose not to hire any of the former employees. Any layoff of the employees pursuant to the sale must generally be done in accordance with WARN or an applicable state law equivalent. These laws generally require 60-days’ notice of a plant closing or mass layoff.


Generally, an employee who was at-will with the seller would retain the at-will status when the ownership of a business transfers. As a result, the buyer — just like the seller — could require that the employee’s terms of employment change if the employee wants to stay employed. There are no particular protections for employees in this instance.



No, except in some circumstances involving a plant closing or mass layoff, in which case the employees may be entitled to 60 days’ notice of the layoff under WARN or an applicable state law equivalent. Some of these analogous state laws are more expansive in terms of coverage and employee rights.



USA

programme, if the employer offers consideration in exchange for signing a waiver of rights under that law. Any such waiver must include certain mandatory provisions to be valid.An employer may have additional obligations when dismissing a group of employees as required by an applicable collective bargaining agreement, or, in some cases, if the employee works in the public sector.


While a group of at-will employees may generally be dismissed by an employer at any time, the federal WARN Act and its state equivalents require some employers to provide employees advance notice of a layoff or plant closing. An employer who violates the WARN provisions by ordering a plant closing or mass layoff without providing appropriate notice is liable to each aggrieved employee for an amount including back pay and benefits for the period of violation, up to 60 days, as well as civil penalties for each day of violation. Some state laws equivalent to WARN have even harsher penalties for violations. Employees enforce their WARN rights by filing a civil lawsuit. To the extent employees believe the mass dismissal violated other employment laws, such as those prohibiting discrimination, the employees can file individual or class action claims with the appropriate employment agency and/or in court.



The laws governing enforceability of restrictive covenants vary considerably by state, and a covenant that is enforceable in one state may well be unenforceable in another. Most states recognise restrictive covenants regarding non-competition, non-solicitation, and non-disclosure of confidential business information. These covenants are generally enforceable if they are reasonable in scope and time, and do no more to limit the employee’s ability to compete than is necessary to protect the employer’s legitimate interests. Some states (approximately fifteen to twenty) have substantially limited the circumstances under which covenants are enforceable. In California, for example, non-competition covenants are invalid unless otherwise covered by an express statutory exception.


Most states follow the general rule that restrictive covenants are enforceable, provided they are necessary to protect a legitimate interest of the employer and are reasonably limited in duration, geographic scope, and the restrictions placed on the employee in pursuing his or her profession. The minority position — held most notably by California — prohibits the use of restrictive covenants in virtually all circumstances.


In most circumstances, there is no separate, specifically identified

wage replacement called “unemployment compensation”, which is generated by the state government from a special tax paid by employers.


No, unless otherwise required by contract, collective bargaining agreement, or, in some cases, if the employee works in the public sector.


The types of claim an employee can bring vary depending on jurisdiction. Employees can bring a variety of claims under federal, state, and local law, including: unlawful discrimination; breach of express or implied contract; breach of the implied covenant of good faith and fair dealing; violation of the statutes guaranteeing family, medical, and military leaves; tort claims, such as infliction of emotional distress, negligent hiring, supervision or retention, invasion of privacy, or defamation; wrongful termination, including wrongful termination in violation of public policy and retaliation for having raised a workers’ compensation claim; and retaliation for exercising rights under the various employment statutes.Remedies available for these employment claims vary considerably depending on the law under which the claims are asserted and the jurisdiction. Such remedies generally include some combination of back pay, lost benefits, front pay, liquidated damages, compensatory damages (which include emotional distress damages), punitive damages, and equitable relief such as reinstatement, as well as attorneys’ fees and costs under some employment statutes.


Employers can settle the majority of employment claims either before or after they are initiated. However, special rules exist for employers seeking to settle claims based on violations of the Fair Labor Standards Act (FLSA), which requires minimum wage and overtime pay for most employees. Individual employees cannot consent to work for less than what is prescribed by the FLSA and, therefore, cannot waive their rights under the FLSA by settlement unless the settlement is approved by either the United States Department of Labor or a federal court. Similarly, employment class action settlements require court approval to ensure they are fair, adequate, and reasonable.Federal law also contains special procedures that must be followed when settling age discrimination claims, but resolution of these claims does not require court approval.


Yes. In some cases involving a plant closing or mass layoff, employees may be entitled to advance notice of the layoff under the federal WARN Act or an applicable state law equivalent. Also, the federal age discrimination law requires an employer to make certain disclosures to employees being dismissed as part of an exit incentive programme or other employment termination



USA

harmful physical agent access to their medical records and records of such exposure. The Fair Credit Reporting Act (“FCRA”) grants applicants and employees access to their consumer reports, which is defined to include background check reports. Employee access rights to their personnel and medical records are guided by state law, and vary widely from state to state. In some states, employees have no legal right to these records. Many states, however, have some type of law authorising access to personnel and/or medical records and outlining the terms of such access.


Yes, though various federal and state laws regulate the process for conducting such checks and how they may be used. A federal law, the Fair Credit Reporting Act (“FCRA”), requires employers to obtain written consent from applicants or employees before obtaining background reports from any company in the business of compiling background information. If an employer thinks it might take an adverse action against an applicant or employee because of something in a background report, it must give the applicant or employee a copy of the report and a notice of FCRA rights. Some states and even localities have their own laws that offer protections for screening applicants and employees similar to, or even greater than, those afforded by the FCRA. Various federal and state anti-discrimination laws prohibit checking the background of applicants or employees or using background report information when that decision is based on a person’s protected status, such as race, national origin, color, sex, religion, disability, genetic information, age, or other characteristics protected under state law. An employer’s neutral practice of disqualifying applicants or employees based on criminal or credit history may disproportionately impact minorities, and therefore violate these anti-discrimination laws if not job related and consistent with business necessity. Beyond this general anti-discrimination rule, the law varies by state on whether, and to what extent, employers may consider background check information — especially criminal or credit histories — in making employment decisions. Some states impose very few restrictions on inquiries into and use of an applicant’s criminal or credit history, while others take a much more restrictive position. For example, in some states, employers are prohibited from checking applicant credit reports altogether or may be allowed to do so only for certain types of jobs. Some states prohibit employers from asking about arrests, convictions that occurred beyond a certain time period, juvenile crimes, or sealed records. Some states permit employers to consider convictions only if the crime is job-related, and others allow employers to consider criminal history only for certain types of jobs.


Generally, yes, with some exceptions. An employer is usually entitled to monitor employees’ use of its email and computer system if it owns the devices and runs the network. Employee monitoring has, however, become more complicated by the surge of employees utilising personal devices for work activities. Various federal and state laws prohibit unauthorised access to employees’ personal electronic devices and personal email even when accessed on the employer’s device and network. Generally speaking, a broad

compensation as such. However, since employment is a contractual relationship, some consideration must be given. In many states, continued employment is sufficient consideration for the imposition of a restrictive covenant.


An employer can enforce a restrictive covenant by filing a civil lawsuit seeking an injunction to prevent the employee from violating the covenant and/or damages to compensate the employer for the violation.



Employee data protection laws in other countries are often much more restrictive, though the U.S. is trending toward more data protection obligations with an assortment of data protection laws that regulate the collection, use and transfer of employees’ personally identifiable information (“PII”) and personal health information (“PHI”). These laws are not limited to protecting active employee information, so employers’ obligations extend to former employees, job applicants, independent contractors and other non-employee groups whose personal information they may obtain (such as customers). There are five primary federal data protection laws that impact the employment relationship: the Health Insurance Portability and Accountability Act (“HIPAA”), which dictates under what circumstances and to whom PHI may be released; the Genetic Information Nondiscrimination Act (“GINA”), which covers genetic information; the Americans with Disabilities Act (“ADA”), which limits when an employer may obtain medical information, how such information may be used, and disclosure of such information; the National Labor Relations Act (“NLRA”), which prohibits employers from interfering with workers’ rights to engage in concerted activity, including such activity through social media, and the Fair Credit Reporting Act (“FCRA”), which applies to those who use consumer reports, including background checks conducted on applicants and employees. Another federal law, the Privacy Act, limits the type of information that federal government employers may keep on their employees. Additionally, most U.S. states have enacted some form of data protection legislation that often impacts the employment relationship, though these states impose a wide range of requirements. Almost all states have enacted laws requiring notification of security breaches involving PII and many have enacted laws requiring companies to destroy, dispose, or otherwise make PII unreadable or undecipherable. Some states have laws providing expanded protections to PHI. More recently, a significant number of states have enacted employee social media privacy laws.


There is no federal law requiring current or former employees access to their personnel records. There are, however, federal laws regulating employee access to medical records, records of exposure to hazardous substances, and consumer reports. The Occupational Safety & Health Act (“OSHA”) authorizes employees who may have experienced workplace exposure to a toxic substance or



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system is comprised of 12 judicial circuits that are geographically divided across the country. Each circuit is divided into a number of geographic districts, with a trial court in each district. Decisions of these trial courts may be appealed to the district’s corresponding circuit court of appeals, and ultimately to the Supreme Court. State courts have jurisdiction to hear cases arising out of state employment laws. Each state has a court system that is comprised of trial courts, courts of appeals, and a state supreme court. Federal employment agencies such as the EEOC and DOL have authority to investigate certain employment claims and even litigate those claims in federal court on behalf of employees. These agencies also have authority to hear such employment claims through an administrative law judge.


The applicable procedure depends on the forum in which the employment claim is brought. Employment lawsuits pending in federal courts are governed by the Federal Rules of Civil Procedure, and each state has its own civil procedure rules that apply to employment lawsuits pending in its courts. Likewise, each administrative agency with jurisdiction to investigate or hear employment claims is governed by statute or procedural regulations that apply to such claims. The EEOC is statutorily required to engage in conciliation before it is permitted to file a lawsuit against an employer on an employee’s behalf. Otherwise, conciliation is not mandatory before a complaint can proceed, absent a contract or collective bargaining agreement to the contrary. Typically, there is no fee to be paid by the employee in this judicial and/or administrative setting. The opportunity to resolve the dispute is considered to be a sound public policy approach for early dispute discussion and potential resolution.


Courts have substantial discretion to determine the length of time afforded for each employment case and will take into account the complexity of the litigation and the claims asserted. For employment cases that are decided at trial, it is rare for an employment claim to be tried in less than a year from the filing date of the case. More complex individual or class cases are often litigated for several years before being tried.


Yes. Interlocutory appeals are only permitted in limited circumstances, but it is possible to appeal a lower court’s final judgment. Depending on the jurisdiction and complexity of the litigation, an appeal can take anywhere from six months to a few years in more complex cases.

workplace usage policy (particularly one that speaks specifically to these “Bring Your Own Device” and personal email issues) serves to protect an employer’s right to monitor activity on its network. An employer planning to monitor should maintain such a policy and obtain employee acknowledgments that they do not have a reasonable expectation of privacy when using the employer’s devices and network. Some employees may have additional protection from email and computer monitoring, such as those in the public sector who may have constitutional privacy rights and those subject to union contracts that may restrict the employer’s right to monitor.An employer’s right to monitor employee telephone calls is more limited. Under federal law, employers may monitor employee calls made “in the ordinary course of business”, but cannot listen to or record calls it knows are of a personal nature. Some states have additional restrictions on monitoring employee telephone calls, such as requiring employers to inform the parties to the call that the conversation is being recorded or monitored.


Generally speaking, an employer may limit employees’ use of social media during working hours and how employees use social media regarding the employer’s business. For example, an employer usually has the right to discipline an employee who violates company policy by harassing other employees on social media or disclosing company proprietary information on social media. But, an employer’s control over an employee’s use of social media is limited. Many state and local laws prohibit employers from disciplining employees based on lawful, off-duty activity on social networking sites unless the activity implicates the employer’s legitimate business interest. Additionally, the National Labor Relations Act (“NLRA”) protects employees’ rights to engage in “concerted activity,” which includes such activity on social media. The NLRA applies to union and non-union employees alike, so all U.S. employers must be mindful of their social media policies and practices so as to not infringe upon these NLRA rights. Employer access to private social media content is also limited. Federal law prohibits employer access to private social media accounts without consent from the employee or applicant. Many states have password privacy laws that prohibit employers from even requesting social media user name and password information from employees and applicants. These laws usually provide exceptions for employers when investigating workplace misconduct or complying with applicable law.



Federal courts have jurisdiction to hear cases arising out of the federal employment laws, employment cases in which the United States is a party, and employment cases between citizens of different states when there is more than $75,000 in controversy. The federal court



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William C. MartucciShook, Hardy & Bacon L.L.P.1155 F Street, N.W., Suite 200Washington, D.C. 20004-1305USA


Carrie A. McAteeShook, Hardy & Bacon L.L.P.2555 Grand BoulevardKansas City, Missouri 64108-2613USA


Bill serves as the practice group leader of SHB’s National Employment Litigation & Policy Practice, representing corporate employers exclusively. Chambers notes “Bill is worth having on any dream team for employment litigation and policy issues. A preeminent figure in the employment litigation arena”. A graduate of Georgetown Law School and a global strategic policy advisor, he has successfully tried a number of jury cases and resolved a variety of class action cases. His primary practice areas target complex class action (employment discrimination and wage and hour) litigation, EEOC litigation, high-level executive disputes, and unfair competition litigation. His jury work has been featured in The National Law Journal, while Human Resource Executive/Lawdragon has recognised Bill as one of America’s Most Powerful Employment Lawyers. He teaches Multinational Business Policy and the Global Workplace at Georgetown.

The SHB National Employment Litigation & Policy Practice represents corporate employers in complex class action (employment discrimination and wage & hour) and EEOC litigation. Chambers USA: America’s Leading Lawyers for Business describes SHB as: “A Powerhouse. Truly one of the best litigation firms in the nation”. Innovation and collaboration are SHB hallmarks.

Chicago | Denver | Houston | Kansas City | London | Miami | Orange County | Philadelphia | San Francisco | Seattle | Tampa | Washington, D.C.

For more information, contact:

William C. Martucci, Partner Shook, Hardy & Bacon L.L.P. 1155 F Street, N.W., Suite 200, Washington, D.C. 20004-1305, USA Tel: +1 202 783 8400 Fax: +1 202 783 4211 Email: [email protected] URL: www.shb.com

Carrie is a partner in SHB’s National Employment Litigation & Policy Practice, representing corporate employers exclusively. She has litigated a broad range of federal claims in the employment discrimination and harassment context, including age, disability, race and sex discrimination, as well as sexual and other forms of harassment, and retaliation. In addition, Carrie has broad experience dealing with the Equal Employment Opportunity Commission (EEOC), and guides clients through the administrative charge process and litigating with the EEOC in numerous jurisdictions. She also specialises in litigation matters involving federal wage and hour and FMLA claims. Carrie has successfully tried multi-party EEOC cases before juries across the United States and has written and lectured widely on different aspects of EEOC litigation and administrative processes.


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