Are any legal changes planned that are likely to impact on the way employers in your jurisdiction approach termination of employment? If so, please describe what impact you foresee from such changes and how employers can prepare for them?

Employment & Labour Law (3rd edition)

Argentina Small Flag Argentina

No.

China Small Flag China

According to the Supreme People's Court 2018 Judicial Interpretation Project Plan announced by the Department of General Administration of Supreme People’s court, Interpretation (V) of the Supreme People's Court of Several Issues on the Application of Law in the Trial of Labor Dispute Cases may be supposed to finalize by the end of 2019.

Judicial interpretation a unique source of law in China, which is made by Supreme People’s court, presenting the legal understanding of the supreme judicial organ. In China, especially in the legal practice, even if the law being interpreted is not clearly defined, if the relevant judicial interpretation has provisions, it shall be deemed that the law being interpreted has been clearly defined. Judicial interpretation will be cited as a legal basis in trial practice.

Regarding the judicial interpretation of labor law, there are 4 interpretations released. It has been over 6 years since the Interpretation (V) released in 2013. With the increasing complexity of labor disputes, the 5th interpretation will provide solutions that are more in line with the requirements of the times and judicial practice.

Currently, employers must follow the existing laws and regulations strictly so that they can maintain compliance management and control the legal risks as much as possible.

Ecuador Small Flag Ecuador

In Ecuador there has been no flexibilization of the labor law, except for a 1991 legal reform that established contractual figures for casual, occasional and seasonal workers. Now we are going through a crisis of unemployment and half of the population does not have a job. There are announcements regarding law modifications, which would make it easier for employers to hire workers.

France Small Flag France

The Macron laws provide for minimum and maximum damages that the judge may award the employee in case of unfair dismissal, depending on the employee’s seniority and the company’s headcount.

This minimum and maximum amounts are currently challenged by employees before French labor courts, and some of them have already considered these rules as unenforceable. Only a French Supreme Court decision, that could take place in the following months or years, will confirm or not the validity of such rules.

Note that on top of this amount, employees may be entitled to additional damages in specific circumstances (dismissal in vexatious circumstances, violation of safety at work, etc.) and may also make salary claims (overtime, bonus, etc.).

The minimum and maximum amounts are as follows. These thresholds and caps apply except if nullity of dismissal is incurred (which is the case in the event of very serious violations such as harassment or discrimination for example).

Germany Small Flag Germany

A legal change recently occurred with respect to dismissals of severely disabled employees. The employer is now also obliged to consult the council of employees with disabilities within the operation before terminating an employment relationship with a severely disabled employee (with the prior consent of the relevant state authority). Otherwise the termination is invalid only because the consultation is missing.

Furthermore, in recent years the courts have raised the standards for valid mass dismissal notifications to the Employment Agency, so that preparation of such notifications now requires high levels of diligence.

Chile Small Flag Chile

The current government has announced a change to the current compensation system replacing it with a limited (50%) guaranteed compensation in case of termination for any ground. This initiative has not even entered as a bill and it is expected to be adjusted considering political and economic considerations; however, a modification of the compensation system in this sense could have an economic impact for the employers, because they would have to maintain a sufficient provision of funds in case of termination of the employment relationship based on grounds that do not depend on employer’s will (e.g. resignation or by worker misconduct).

Indonesia Small Flag Indonesia

To date, we are not aware of any proposed major changes to the Labour Law.

Italy Small Flag Italy

In Italy, there are no legal changes planned which are likely to impact termination of employment.

However, the Italian Constitutional Court has recently (namely, in November 2018) declared the invalidity of the “arithmetic rule” to quantify indemnities against unfair dismissals.

As far as employees not holding the qualification of executive (“dirigente”) hired by “big” companies as of March 7, 2015 are concerned, law regulations - as it was in force before the ruling at issue - set forth that employees unfairly dismissed, except for very limited cases, were entitled to the payment of an indemnity amounting to 2 months of salary per each year of service, within a minimum and a maximum floor equal to - respectively - 6 and 36 months of salary.

The above statutory “arithmetic rule” (2 months of salary per each year of service) has been declared invalid by the Italian Constitutional Court, so that this is no longer effective: therefore, the actual amount of indemnities against unfair dismissals is now established by the Judge within the above floors (6-36 months of salary), thus taking into account general criteria provided for by Italian law such as the relevant employee’s company seniority, the size of the employer’s business, the overall number of employees with whom the latter is staffed as well as conditions and behaviours of both the employer and the employee.

As before the case-law precedent at stake the actual amount of employers’ liabilities associated with the termination of the employment relationship were quantifiable in advance and, in any case, rather low, while now this cannot be quantified in advance and may be significant also with respect to “newly-hired” employees, it is likely that employers will adopt a careful approach when dismissing employees.

Malaysia Small Flag Malaysia

As far as we are aware, there are no legal changes planned that are likely to impact on the way employers in Malaysia approach termination of employment.

Norway Small Flag Norway

No.

Philippines Small Flag Philippines

We see no substantial planned legal changes that will affect termination of employment in the Philippines.

United States Small Flag United States

There have been minimal changes to the basic structure of federal employment law under the Trump administration. The majority of federal labor and employment bills introduced in 2018 were stalled in Congress. Most recent federal employment law developments have occurred through regulatory bodies. For example, the National Labor Relations Board (NLRB) issued a proposed rule clarifying the standard for determining if two or more employers are joint employers of employees, reversing its 2015 decision in Browning-Ferris Industries. The standard provides that an employer may be found to be a joint-employer of another employer’s employees only if it possesses and exercises substantial, direct and immediate control over the essential terms and conditions of employment and has done so in a manner that is not limited and routine.

In other NLRB developments, the U.S. Supreme Court in Epic Systems v. Lewis, No. 16-285, recently held that class or collective action waivers in employment arbitration agreements (requiring employees to pursue work-related claims in arbitration) are lawful under the National Labor Relations Act (NLRA), but this did not end all controversies involving waivers. In several cases before it, the NLRB will determine whether the arbitration agreements independently violate the NLRA because they interfere with employees’ ability to access the Board.

At the same time, employers should remember that state law is often the dominant influence in employment law matters, and the states remain free to either follow or resist any employment related trends in Washington, as well as set their own course in providing additional protections for employees. For example, California recently enacted a number of sexual harassment prevention and anti-discrimination laws that became effective January 1, 2019.

Brazil Small Flag Brazil

Mattos: The recent Labor Reform brought more than 100 changes to the labor and employment laws. The Labor Reform aimed to purport collective negotiations, and give more flexibility to employers and employees when bargaining about the working conditions, while preserving the minimum labor and employment standards provided for by the Constitution. It also innovated in some aspects, such as introducing the arbitration for resolution of some employment disputes. As these changes and new features are mostly business oriented, some of them may be challenged by employees’ union before labor courts.

Turkey Small Flag Turkey

Following the entry into force of the Code of Mediation for Legal Disputes in 2013, it has been noted that 72% of the overall disputes that were taken to mediation were related to employment law and almost all of such has resulted in settlement. Thus, to release the work load of the Labour Courts and to expedite the trial process, in late 2017, the Labour Courts Code has introduced a mandatory mediation process in employment law disputes (related to the employee receivables and reinstatement). Following the implementation of it, mediation has become a prerequisite to initiate a reinstatement claim or a claim on employee receivables before the court. This introduction is widely celebrated in the sector as, if implemented effectively, it is capable of reducing legal costs associated with employment law disputes as well as reducing the time and effort spent on long trial periods. However, if it degrades into a bureaucratic paper shuffling than a functioning alternative dispute resolution, it may, on the contrary to what is sought to be achieved, in fact prolong the entire process.

Thailand Small Flag Thailand

A new provision was added to the LPA in 2017 which provides that the retirement of an employee at an age either agreed between the employer and employee or specified by the employer, is deemed to be a termination of employment under the LPA. Where there is no agreement on a retirement age, or the retirement age is not specified by the employer or the retirement age is specified to be at an age older than 60 years, an employee who reaches 60 years of age (or at any time thereafter) is entitled to express his/her intention to retire to the employer, and the retirement will take effect 30 days later. In these instances, the employer is obliged to pay severance pay in accordance with Section 118 of the LPA.

With respect to planned legal changes, the Ministry of Labour is proposing to amend the LPA on various issues, including the imposition of 15% interest where an employer fails to pay wages in lieu of advance notice upon termination of employment, and to extend the scope of severance pay provisions such that an employee having a length of service of 20 years or more would be entitled to severance pay of 400 days’ salary. There is as yet no definite date on which these proposed amendments are likely to be passed, and so it is highly recommended that employers should continue monitoring their progress.

Switzerland Small Flag Switzerland

Broadly speaking, Swiss employment law is rarely subject to changes, in particular with respect to rules on termination of employment.

Nevertheless, as mentioned above, a new amended bill dealing with the protection of whistleblowers is currently pending and will presumably be discussed by the Federal Parliament this year (see question 14).

This bill is essentially modelled on the principles developed by case law, notably the principle of proportionality. It sets forth an escalation process allowing the employee to violate their duty of loyalty in order to report an irregularity discovered in the course of their activity for the employer.

The process mainly includes the following steps:

  • an irregularity must first be reported to an internal or external body, specifically competent for receiving such alerts;
  • if the employer does not remedy the irregularity within a certain period of time, the employee is entitled to report it to the competent authorities;
  • finally, the irregularity may be disclosed to the public provided that the employee has previously (and unsuccessfully) reported it to the employer and to the competent authorities.

As the bill is based on existing case law, we do not expect major changes in practice and the protection of whisteblowers will likely remain rather weak.

In order to ensure that irregularities are handled efficiently, it may be advisable for employers to put in place an independent body (a 'contact person') to which employees can report such suspected irregularities on a confidential basis.

This would also ensure that employees who disclose potential irregularities directly to the authorities or to the public be lawfully terminated for breach of their duty of loyalty.

Sweden Small Flag Sweden

No.

New Zealand Small Flag New Zealand

90 day trial periods: the ability to terminate employment on notice for any reason in the first 90 days of employment has been restricted to small medium enterprises (SME) employers (fewer than 20 employees) from 6 May 2019.

It anticipated that litigation will be commenced by groups of workers who have frequently been engaged as contractors (including courier drivers and telecommunications technicians) to challenge the validity of the principal contractor relationships, and seek to be classified as employees or potentially ‘dependant contractors’. If the anticipated challenge(s) are successful, this may require employers to alter practices relating to the termination of contracts for service.

The Government is progressing the Employment Relations (Triangular Employment) Amendment Bill. The purpose of this Bill is to ensure that employees employed by one employer, but working under the control and direction of another business or organisation (for example, workers engaged through labour hire companies), are not subject to a detriment in their right to allege a personal grievance against the ‘host’ employer. This may have significant impact in certain sectors where labour hire workers are commonplace, and may affect the termination processes.

Luxembourg Small Flag Luxembourg

n/a

Romania Small Flag Romania

Currently, there are no publicly known reliable alerts of any legislative trend impacting the way employers approach termination of employment.

However, striking the right balance between contractor engagement and properly documented employment relationships is definitely still in the spotlight of both employment and tax authorities and therefore should continue to remain on employers' radars as well. This is the more so since termination of any such contractor relationship sometimes leads to claims of misclassification from contractors with some unlawful employment termination potential component.

Peru Small Flag Peru

Peruvian government is currently evaluating the possibility of increasing the indemnification for unfair dismissal from twelve (12) to a maximum of twenty four (24) salaries, with the purpose of conditioning such payment to the impossibility of the worker to claim his or her reinstatement at work.

Such increase would –therefore- limit the cases in which the worker is entitled to request his or her reinstatement at work, being able to request it only in the case of a void dismissal (as described in Question N° 13). This would definitely impact how employers manage dismissal procedures, making it a more attractive alternative considering that the reinstatement of a worker entails higher labour costs.

Japan Small Flag Japan

No specific legislation is currently under consideration with respect to termination issues. However, from 1 April 2018, employees operating under a fixed-term contract which (i) was executed or renewed on or after 1 April 2013, (ii) has been renewed at least once, and (iii) has continued in effect for more than five years may request the contract to be converted into a contract with an indefinite term (please see reply to Question 1). Employers should be mindful of this so as to avoid any inadvertent conversions resulting from automatic renewals, as well as when offering new fixed-term employment arrangements.

Some employers have already taken measures such as the following to cope with this change:

  • amend the work rules for fixed-term employees to set forth the maximum length of employment at five years, and introduce a system to switch fixed-term employees to permanent employees,
  • create a new category of employees employed for an indefinite term with a scope of responsibility suited for former fixed-term employees, and
  • be more proactive in converting well-performing fixed-term employees to regular permanent employees, while being more selective in renewing the contract for fixed-term employees before the maximum five-year period.

The Netherlands Small Flag The Netherlands

A new provision was added to the LPA in 2017 which provides that the retirement of an employee at an age either agreed between the employer and employee or specified by the employer, is deemed to be a termination of employment under the LPA. Where there is no agreement on a retirement age, or the retirement age is not specified by the employer or the retirement age is specified to be at an age older than 60 years, an employee who reaches 60 years of age (or at any time thereafter) is entitled to express his/her intention to retire to the employer, and the retirement will take effect 30 days later. In these instances, the employer is obliged to pay severance pay in accordance with Section 118 of the LPA.

The Thai National Legislative Assembly has recently approved the latest amendments to the LPA, which are to become effective upon their announcement in the Royal Gazette. There is no set date for the announcement at present, but it is expected to take place in the second quarter of 2019. The following are notable amendments.

  • The maximum cap for severance pay will be increased from 300 days’ wages (at the latest wage rate) for an employee with 10 or more years of service, to 400 days’ wages for an employee with 20 or more years of service.
  • Employees will be granted a minimum of three days’ paid business leave per year.
  • Maternity leave will be increased from a minimum of 90 days to 98 days (14 weeks) per pregnancy and will extend to leave taken for pre-natal care such as for attendance at doctor’s appointments.

Austria Small Flag Austria

While not necessarily linked to the termination of an employment relationship, labour disputes regularly touch upon questions regarding working hours. The relevant provisions have been recently amended. Most notably, the maximum working time has been raised. The maximum daily working time now amounts to twelve hours and the maximum weekly working time to 60 hours. Consequently, it is no longer possible to agree upon "special overtime" in a works agreement. However, to address temporarily higher work needs, it is now permitted to conclude a works agreement allowing for an exception to weekend and holiday rest on four weekends or public holidays per employee and year. The regulation surrounding working time is complex and highly dependent upon the individual case. The amendments go beyond the above recital. In order to mitigate the risk of labour disputes (pre or post employment termination) and administrative fines, employers are well advised to take the new rules into account.

Mexico Small Flag Mexico

An important Constitutional amendment is awaiting approval by state congresses where, among other changes, the current Conciliation and Arbitration Board will be replaced by courts in the judicial branch. While this is not a change that will directly impact the way employers approach termination of employment in Mexico, we believe that a completely new judicial and adjudication system will shape litigation around alleged wrongful terminations. It is expected that the protective nature of the FLL will continue, but there is a chance that independent courts (as opposed to the current Labour Board of the Ministry of Labour) may have a more balanced vision of the contending parties at trial.

United Kingdom Small Flag United Kingdom

Terminations of employment which arise in contentious circumstances may be resolved through the use of settlement agreements (see question 16). A confidentiality clause (or non-disclosure agreement, often referred to as an NDA) is frequently included as a term of the settlement agreement.

Criticism has been levelled at the use of NDAs as a means of protecting the employer’s reputation, in particular, where the employee has raised allegations of sexual harassment. Use of NDAs in such circumstances has been perceived as an unethical means of silencing victims of sexual harassment.

The use of NDAs is currently subject to an inquiry by the Women and Equalities Select Committee. A possible outcome of this inquiry is regulation of the use of NDAs. In future, employers may find it more difficult to maintain confidentiality where termination of employment arises out of discrimination and/or harassment allegations.

In anticipation of potential changes to the law, employers should focus on ensuring that bullying and harassment policies are being enforced and that employees are able to escalate grievances to access timely intervention. This should reduce the risk of terminations arising in such circumstances and limit the scope for conduct which could result in reputational damage for the employer.

Armenia Small Flag Armenia

At the moment, legal changes that may affect the approach of employers to dismissal are not planned.

South Korea Small Flag South Korea

N/A

Croatia Small Flag Croatia

On 1 July 2019, the Protection of Whistleblowers Act is expected to enter into force, which should provide even more protection for whistleblowers and their family members. Whistleblowing should explicitly be provided as an unlawful reason for termination of employment.

Ireland Small Flag Ireland

The Employment (Miscellaneous Provisions) Act 2018 commenced in March 2019 and makes a number of significant changes to employment rights, including a prohibition on zero hours contracts. This introduces anti-penalisation measures to protect employees, including protection from dismissal, where they exercise their rights under this legislation.

Issues have already been raised about the drafting and interpretation of this legislation, which may impact on the approach taken by employers in terminating employment where any issues relating to this legislation have been raised by the employee(s).

Bolivia Small Flag Bolivia

Under that concept, there is no current change plan.

Monaco Small Flag Monaco

A law is being considered relating to the whistleblower protection under which employers should set up specific measures.

A harmonisation between Monaco and the European Union is being debated. In this event, it could impact the order of dismissal and the regulations relating to discrimination and social cover.

Singapore Small Flag Singapore

Following the amendments as of 1 April 2019, coverage under the EA has been extended to generally all employees, with limited exceptions. Managers and executives earning more than S$4,500 per month who were previously not covered under the EA can now avail themselves of recourse for wrongful dismissal under the EA.

In addition, while prior to the amendments Employment Claims Tribunals (“ECTs”) heard salary-related disputes and MOM heard wrongful dismissal claims, ECTs now hear wrongful dismissal claims as well, providing a more convenient one-stop service to employers and employees, who might otherwise have to approach two different parties to resolve their issues.

Further, in deciding wrongful dismissal claims, ECTs must now have regard to the recently published Wrongful Dismissal Guidelines (1 April 2019), as mentioned above.

The amended EA also clarifies that dismissal includes involuntary resignation by the employee due to any conduct or omission on the employer’s part.

In light of these changes, employers should carefully review their employment documents and termination processes, especially in relation to managers and executives, to ensure compliance with Singapore laws.

Updated: June 24, 2019