Dear clients and friends,
We just finished another year, which means it’s time once again for our yearly global employment law quiz. Have you kept up to date with the latest and zaniest in global employment laws? Take our quiz to find out. And even if you don’t know the answers, you can dazzle your friends and family with your newly acquired knowledge. Good luck!
And if you missed previous years’ quizzes (or if you just want to take them again), you can find them here, here and here. But if you prefer the drier but more comprehensive summary of this year’s employment law trends, please read 2019 in Review, 2020 Preview.
In Russia, you may not want to run for the shredder when an employee is terminated. Employment contracts must be stored for:
- 15 years
- 30 years
- 75 years
- 100 years
Answer c: 75 years. Believe it or not, in Russia, critical employment documents such as employment agreements and internal HR orders must be retained for 75 years from the date of creation. And what’s more, the documents must be kept in hard copy form. (Now that’s a large file cabinet!) Keep in mind that the trend elsewhere is toward smaller file cabinets – data privacy laws elsewhere across the globe increasingly require companies to follow rules of data minimization, so once retention periods are over, documents cannot be retained any longer, whether in hard copy or electronic form.
In Luxembourg, a post-termination non-compete restriction can be imposed on an employee if it restricts the employee from:
- Employment with a competitor
- Becoming a service provider or contractor of any competing business
- Becoming a director, officer or advisor to a competing business
- All of the above.
Answer b: Post-termination non-competes in Luxembourg only restrict former employees from working as independent contractors. Therefore, the former employee is free to work for, advise or hold shares in a competing company, even if the employee entered into a valid post-termination non-compete. This is another reminder how important it is to carefully think through your strategy on global restrictive covenants.
Egg freezing is an increasingly popular benefit offered to employees around the globe. However, some countries place restrictions on the circumstances in which women can freeze their eggs. In China, egg freezing is available to:
- All women
- Women under the age of 30
- Women who have had at least one miscarriage
- Women in a relationship
- None of the above.
Answer e: None of the above. This question requires you to be eggs-act. Egg freezing is permitted, but Assisted Reproductive Technology (ART) can only be used for medical treatment subject to compliance with the family planning law. Single women cannot utilize ART. A woman must be married to a man to be eligible (same-sex marriage is not permitted in China).
The laws are silent on whether egg freezing is ART. In practice, egg freezing is deemed to be ART by government officials and hospitals, so, generally, freezing eggs is not permitted in the PRC unless it is for medical treatment due to serious illness or infertility.
However, news outlets have reported on PRC hospitals that take the position that egg freezing on its own is not ART and can be done for single women, but those women must be legally married when they later use their frozen eggs, because implanting eggs would qualify as ART.
In which country can employers be sued for discrimination if their job advertisements only address binary male and female applicants?
Answer a: Germany. In December 2018, the Civil Status Act (Personenstandsgesetz) was amended. The law now recognizes a third sex, which is referred to as “diverse.” The background was that in October 2017, the Federal Constitutional Court of Germany (Bundesverfassungsgericht) ruled that where individuals cannot be permanently identified as either male or female, this violates their constitutional right to be free from gender-based discrimination. The ruling arose because the civil status law requires gender to be registered but at the time did not allow any entry other than “male” or “female.”
For employers, this is important under the General Equal Treatment Act, which prohibits unequal treatment and discrimination due to gender. This means that job advertisements must explicitly address males, females and diverse people.
Which country requires employees to carry a social security certificate (so-called Form A1) in case of cross-border business trips?
- All EEA countries
Answer c: All EEA countries. EEA employees generally need to carry a Form A1 whenever they are normally working in, or posted to, other EEA countries in order to avoid liability for social security contributions and potential fines against their employer. Although there is no express rule regarding short-term business travel, the current consensus is that the Form A1 requirement applies even to quick business trips.
By presenting a Form A1 to the relevant authorities, employees can show that they have paid social security contributions in another country and thus cannot be required to pay social security contributions in the country where they are working for the period of time set forth in the Form. Without a Form A1, there is a risk that social security contributions will have to be paid in both the home country and the host country, and there could be significant fines.
Under recent legislation in South Korea, the penalty for retaliating against an employee for reporting workplace bullying and harassment is a fine of up to KRW30 million (US$28,500) or imprisonment for up to one year.
Answer b: False. Under recent South Korean legislation, retaliation against an employee for reporting workplace bullying and harassment can result in imprisonment for up to not one but three years. The legislation took effect on May 29, 2019 and marks the first time that employers in the country have been legally required to address workplace harassment. The law defines sexual harassment to include, among other things, verbal abuse. It also requires employers to implement policies on workplace bullying and harassment and to investigate allegations of workplace harassment.
In 2019, all of the following countries except one increased the monetary threshold for exclusion from securities prospectus requirements to €8 million. Which country did not increase this threshold?
Answer b: Belgium. Effective July 21, 2018, the exclusion from the prospectus requirements for the offering of securities is available where the consideration paid for the securities is less than EUR 5 million in the EU or EEA during any 12-month period. However, each EU/EEA country has the discretion to raise the threshold for the exclusion up to €8 million. To date, France, Germany, and United Kingdom have all increased the threshold for the exclusion up to €8 million. On the other hand, Belgium only increased the threshold for exclusion up to €5 million. So employers who plan to offer high-dollar securities to Belgian employees − take heed!
In 2019, which of the following countries introduced new securities rules that provide a possible exemption from securities filing requirements for equity awards granted to employees?
- Saudi Arabia
Answer c: Saudi Arabia. The Kingdom of Saudi Arabia’s Capital Market Authority (CMA) recently introduced the Rules on the Offer of Securities and Continuing Obligations (OSCOs), which provides an exemption from security filing requirements for issuers providing security offerings to employees, including employees of subsidiaries. Under OCSCs, the offer of securities to employees is considered an “Exempt Offer,” which leads to significant changes of securities requirements, including (1) securities offerings to employees may be made through either an authorized person or the offeror of the shares themselves; (2) the requirement to notify the CMA before making a securities offering to employees has been eliminated; and (3) the requirement to notify the CMA on a quarterly basis of the total number and value of the exempt offers made has also been eliminated.
In Germany, any employment relationship can effectively be terminated by a termination document signed with e-signature.
Answer b: False. There is a legal requirement that German termination notices must be in writing (ie, a “wet” signature is mandatory). Consequently, an e-signed termination notice in Germany would have no legal effect.
E-signature increasingly is seen as the model companies want to follow globally, but it is important to check that it works locally on all types of employment documents (or the company could be in for an unwelcome surprise). Using Germany as an example again, it is also a strict requirement for any fixed-term employment contract to be in writing. An e-signed fixed-term contract would be deemed to be an unlimited term contract in Germany. So you may end up with that employee for a lot longer than intended.
All of the countries which are member states of the European Union (EU) introduced new local laws this year requiring employers to track employees’ working time.
Answer b.: False. Although the European Court of Justice (ECJ) held this year that all EU member states must require employers to set up a system for recording workers’ time each day to comply with EU law, not all member states have introduced such laws this year. So far, only Spain has enacted such a law.
The ECJ judgment does not impose an immediate obligation to record working time. Rather, it requires member states to provide for recordkeeping in their own laws, which many (in fact most!) member states already do. To comply with the judgment, some member states may have to make changes to existing legislation, or introduce new provisions. However, no other member states have followed Spain’s lead in introducing new local laws. As further developments are now anticipated, many employers are using the ECJ’s decision as a catalyst to review their working time recording practices.
Which of the following countries requires payment for non-competition restrictions both during and after the employment relationship for the restriction to be enforceable?
- South Korea
Answer c: Lithuania. According to the new Lithuanian Labor Code (effective as of 2017), in order for a noncompete obligation to be enforceable either during employment or after its termination, the employer has to pay the employee compensation of at least 40 percent of his/her average monthly salary. The requirement to pay compensation for non-competes during employment is unusual and one to watch out for.
If compensation for the noncompete is not paid, then the noncompete will not be unenforceable. In addition, although not yet tested by the Lithuanian courts, theoretically the employee can ask the company to pay him/her compensation for not competing retrospectively for up to three years (with a long stop date of 2017 when the new Lithuanian Labor Code was introduced). That could end up being a lot of Lithuanian litas.
Where are US-style unlimited paid time off (PTO) policies enforceable outside the US?
- All of the above
Answer d: All of the above, but there is lots of devil in the details. In all listed countries, an unlimited PTO policy would be enforceable, but only as long as the local minimum statutory vacation entitlements are observed. Rolling out US-style unlimited vacation internationally comes with high risks, however, because most non-US countries already require mandatory paid vacation and sick days. Offering unlimited PTO would be interpreted as being on top of those statutory entitlements, so there is much room for abuse. Think back to when Ferris Bueller taught us how important a day off is; if Ferris lived outside the US, he would definitely take advantage.
In the US, unlimited PTO works because most states do not have a requirement to grant paid time off to their employees. US employers often implement an unlimited PTO policy, with the advantage that there is no tracking of used PTO days needed, no carryover takes place and no payout obligation arises. However, these advantages do not translate outside of the US.
If a company feels strongly about having unlimited PTO outside the US, the best option is to implement a mixed policy, offering local statutory vacation for employees to take officially and then allowing them to also use unlimited vacation (after they exhausted the statutory time off). This at least mitigates some of the risk of violating local rules requiring tracking and payout. But global implementation generally still undermines the US drivers to have a policy that is less expensive, less burdensome and less bureaucratic.
Which country recently implemented so-called “Green and Yellow” employment agreements that can be used for employees who are entering into their first employment contract?
Answer d: Brazil, obviamente. This new kind of employment agreement, ostensibly named for the colors of the Brazilian flag, has been rolled out to encourage employers to hire young people aged 18 to 29. It can only be used by employees in their first employment contract. The Green and Yellow employment agreement has to be signed between January 1, 2020 and December 21, 2022 and it can have a maximum duration of 24 months only.
To encourage the creation of job vacancies, for these contracts the Brazilian government cancelled some corporate obligations, such as the obligation to pay the social security contributions. There is also no obligation to cover the 2.5 percent education salary. The intention was to make these employment agreements cheaper for the employer. Violations of the Green and Yellow Employment Agreements rules automatically transform the employment contract into an agreement for an indefinite period.
Which of the following can be prohibited in the workplace by employers in Canada?
- Workplace violence
- Gummy bears
- Sexual harassment
- All of the above
Answer e: All of the above! Prohibiting workplace violence, sexual harassment and horseplay? Makes sense (and a policy prohibiting such conduct may even be legally required in some provinces). But banning gummy bears? Effective October 17, 2019, new regulations under Canada’s Cannabis Act paved the way for the legal production and sale of marijuana edibles, extracts and topical products. Demand is expected to be high, and robust policies will be required to manage the use and risks associated with the use of these difficult to identify products in the workplace. Canadian employers are within their rights to implement a drug and alcohol policy that prohibits use of substances such as non-medical use marijuana (whether in gummy bear form or otherwise) during working hours. An innocent gummy bear snack may not be as innocent as you once thought.
Which country has a law requiring employers to provide crèche facilities in their establishments, going so far as to prescribe the exact height of the crèche walls, the construction material to be used, the minimum play area to be given to each child, and even the amount of milk to be made available to every child each day?
- Czech Republic
Answer b: India. The Maternity Benefit Act, 1961 (“MB Act”) was amended in 2017 to require employers to provide crèche facilities in establishments with 50+ employees. State governments are required to implement local rules on the details.
In August this year, Karnataka became the first state in India to introduce local rules on crèche facilities. These rules contain some interesting provisions, among them requirements to (1) provide and maintain one crèche for every 30 children; (2) ensure that the crèche is situated within 500 meters of the entrance of the establishment; (3) have the children medically examined before their admission into the crèche (and also, conduct periodical medical check-ups after admission); (4) provide at least 5 square feet of floor area for each child; and (5) ensure wholesome refreshments. Employers in Karnataka are assessing the feasible ways to implement the crèche requirements and are making gradual arrangements to ensure compliance.
The state government of Haryana also has introduced draft rules on crèche facilities. Similar rules are awaiting introduction in other Indian states, so stay tuned for more updates.
Under the UK Equality Act, it is unlawful for employers to discriminate against employees based on their “philosophical beliefs.” A philosophical belief must relate to a “substantial aspect of human life and behaviour” and be “worthy of respect” in a democratic society. Which of the following beliefs has been found by UK Employment Tribunals to be a protected philosophical belief following a trial?
- The sanctity of copyright
- Climate change
Answer c: Climate change. The UK Employment Tribunals have determined that holding a belief in climate change, including a belief that that carbon emissions must be cut in order to avoid catastrophic climate change, is capable of meeting the definition of a “philosophical belief” that would fall within the scope of the UK Equality Act. In at least one case, the employee alleging that he was terminated as a result of his belief stated that his views on climate change were not just an opinion or a lifestyle choice but a belief that impacted all aspects of his life, including where and how he travelled, his choice of home, what food he bought and even his hopes and fears.
Conclusion: Thanks for participating in the 2019 global employment law quiz! We hope that your 2020 is filled with joy and all the quizzes you desire.
DLA Piper Global Employment Team