Welcome to the April 2023 edition of our Global Employment Tax and Compliance Newsletter! We bring you the latest updates and insights on employment tax and compliance regulations worldwide in this issue. Our expert team has been closely monitoring the regulatory landscape to provide you with the most relevant and up-to-date information.
This edition will cover important developments in several countries, including Spain, Poland, China, Singapore, Belgium, Latvia, and the Netherlands.
We will discuss changes to tax rates, social security contributions, and other labour law and compliance requirements that employers must be aware of. Additionally, we will provide guidance on best practices for managing global payroll, ensuring compliance with data protection regulations, and mitigating risks associated with remote work arrangements.
As the employment tax and compliance world evolves rapidly, we understand employers’ challenges in keeping up with these changes. That is why we are committed to providing accurate and actionable information to help you navigate these complex issues confidently.
Thank you for choosing our Global Employment Tax and Compliance Newsletter as your source of information on employment tax and compliance. We hope you find this edition informative and valuable.
Regarding the Right to Disconnect, measures have been introduced in Belgium to promote a healthy work-life balance for employees outside of regular working hours. Employers with a staff of 20 or more individuals are required to develop a policy that outlines the practicalities of implementing the Right to Disconnect, guidelines on the use of digital tools, and education and sensitization actions for employees and managers on the proper usage of digital tools and the potential risks of over-connectivity. This policy must be introduced through a collective labor agreement or, in the absence of such an agreement, through work regulations. The collective labor agreement must be filed with the FPS Employment registry. At the same time, a copy of the work regulations that includes the modalities and implementation must be submitted to the social inspectorate.
The Polish parliament has recently passed a bill that modifies the Labor Code, allowing employers to conduct non-invasive testing for the presence of alcohol or intoxicating substances in employees and civil law contractors. The main purpose of these checks is to ensure the safety and well-being of employees and other individuals or to protect property.
The President must sign the Act before it takes effect, and it will become effective 14 days after its publication. The expected impact date is Spring 2023.
Employers in Poland interested in using alcohol or substance-use checks should first determine whether it is necessary to protect the safety and well-being of their employees and others or to protect property. If they decide to conduct these checks, they should establish relevant policies and procedures to ensure that the checks are conducted in a non-invasive manner.
The Polish parliament has approved amendments to the Act on Aid to Citizens of Ukraine in connection with the armed conflict on the territory of Ukraine, which provide additional support for Ukrainians and their spouses in obtaining work and residence permits. The changes include:
Extending temporary residence permits until August 24, 2023, if the last day of stay in Poland under the previous provisions of the Act falls between February 24, 2022, and the same date in 2023.
Creating an easier path for Ukrainian citizens to obtain temporary residence permits, even if they don’t meet the typical criteria for this type of permit.
Defining “diia.pl” as an electronic document allowing the Polish border crossing.
The Bill also abolishes almost all special immigration anti-COVID regulations for foreigners of all nationalities, such as extending the deadline for submitting temporary residence applications and the validity of temporary residence permits and cards that expired during the epidemic or state of epidemic emergency up to 30 days after the end of the state of emergency.
The expected impact date for most provisions is Spring, except for the anti-COVID immigration regulations that will come into force on August 24, 2023.
Employers should monitor any new regulations regarding the employment of foreign workers to prepare for potential changes in the work permit process and requirements for verifying the right to stay in Poland.
Employers must ensure their foreign employees have legal residence status to work in Poland. Fines for illegal employment range from PLN 500 (approx. €106.15) to PLN 30,000 (approx. €6,369) per case.
The Ministry of Manpower is set to implement a new evaluative framework called the Complementarity Assessment Framework (COMPASS) for Employment Pass (EP) applicants. The aim is to allow employers to select highly qualified foreign professionals while promoting workforce diversity. COMPASS is a points-based system that evaluates individual and employment-related attributes in EP applications. To qualify for an EP, applicants must meet the increased qualifying salary of S$5,000 per month (S$5,500 per month for employers in the financial services sector) and score at least 40 points under COMPASS.
The impact date for the new framework is September 1, 2023, for new EP applications and September 1, 2024, for renewals. Employers should take note of this new framework and prepare for future EP applications and renewals accordingly.
The Abu Dhabi General Market (ADGM) in UAE has recently released guiding principles on whistleblowing, signaling a growing emphasis on transparency and accountability in the region. These principles provide a framework for employees to safely and securely report any wrongdoing, misconduct, or illegal activities within an organization without fear of retaliation.
This move by ADGM is a positive step towards promoting a culture of ethical behavior and corporate social responsibility. The region’s employers should note these guidelines and consider incorporating them into their policies and procedures.
In particular, companies in regulated sectors such as finance, healthcare, and energy should proactively review their existing whistleblowing policies to ensure they align with ADGM’s principles. Employers should also monitor developments in the regulation of whistleblowing and speaking out policies, as it is possible that there may be additional requirements in the future.
Failing to have a robust whistleblowing policy in place could expose employers to significant legal and reputational risks. Organizations must take whistleblowing seriously and create an environment where employees feel comfortable reporting any potential wrongdoing. By doing so, employers can demonstrate their commitment to good governance and protect their reputation as responsible corporate citizens.
The legislation was implemented in Denmark to comply with the EU Directive on transparent and predictable working conditions for employees, which makes several changes, including adjusting the concept of an employee, expanding the scope of covered employees, changing the timescale for providing written information to the employee, listing more working conditions that must be disclosed as a minimum, and setting new minimum requirements for several working conditions.
The impact date for these changes is 1 July 2023, and while employers require no specific action, they should be aware of the changes and ensure compliance.
The penalty for non-compliance is expected to be compensated at a rate reflecting current case law. The compensation in the Danish draft Bill corresponds to the compensation in the current Danish Contracts Act, with a maximum of 13 weeks’ salary and up to 20 weeks’ salary in cases of aggravating circumstances. If the breach is excusable and has been of no specific importance in all other respects, the compensation cannot exceed DKK 1,000. The range of compensation amounts in current case law is typically between DKK 5,000 and DKK 10,000, so employers should comply with the new requirements to avoid potential penalties.
Latvia has amended the Law “On Maternity and Sickness Insurance” to implement the EU Directive on work-life balance for parents and carers. The amendments introduce new provisions, including a minimum two-month parental benefit period for each child’s parent, which cannot be transferred to the other parent.
Parents also have the right to choose the total period for receiving parental benefits for a child’s care, with two options available: 19 months, of which 15 months can be used until the child reaches one and a half years of age, and the non-transferable part can be used by each parent until the child reaches the age of eight, or 13 months, of which nine months can be used until the child reaches one year of age, and each parent can use the non-transferable part until the child reaches the age of eight. Furthermore, if one parent receives maternity benefit, the period of parental benefit (19 or 13 months) will include the period of maternity benefit payment.
For recipients of parental benefits who are employed or self-employed and not on childcare leave, the benefit will be paid at 50% of the parental benefit payable to those on childcare leave, an increase from the current rate of 30%.
These changes are effective from January 1, 2023. Employers must review and update their internal parental benefits policies to ensure compliance with the new requirements.
Effective December 16, 2022, new Regulations have been implemented to transpose the EU Directive on Transparent and Predictable Working Conditions in Ireland. The 2022 Regulations include requirements for more predictable working time, reasonable advance notice for employees with variable schedules, limitations on the duration of probationary periods, and rights for employees to work with other employers outside their schedule. Additionally, on-demand employment contracts will have limited use and duration, written notification of employment terms will be provided within specified timeframes, employees with 26 weeks of service can request a transition to more secure employment, and mandatory training will be offered without cost.
Employers must ensure compliance with the new Regulations, update template contracts accordingly, and be aware of the new employment terms and training requirements. Failure to comply with the provisions of the 2022 Regulations may result in employees filing complaints with the Workplace Relations Commission.
The Revised Law on Protection of Women’s Rights and Interests in the People’s Republic of China imposes new obligations on employers to safeguard female employees’ legal rights and interests. These include measures to prevent sexual harassment, such as formulating internal rules and policies, designating staff responsible for anti-sexual harassment, providing training and education, establishing complaint channels, and handling disputes confidentially. Employers are also prohibited from engaging in discriminatory behaviors during recruitment, such as restricting job positions or setting employment conditions based on gender, marital/childbirth status, or pregnancy testing.
The Budget Law sets out the contribution bases and rates for social security, unemployment, termination of activity protection, the Wage Guarantee Fund, and professional training. While there are no changes to contribution rates under the general social security system from those applicable in 2022, the cap on the contribution base for 2023 has increased to €4,495.50 per month. The law also regulates the new intergenerational fairness mechanism, which requires an additional 0.6% contribution (0.5% payable by the employer and 0.1% by the worker) to the contribution base for certain contingencies, including retirement plan coverage.
Employers must take note of the new contribution bases and rates for 2023 and ensure they apply them correctly. Reviewing the contribution base limit to ensure compliance with the new cap is important. Employers should also consider how the new intergenerational fairness mechanism will affect their social security contributions and factor this into their financial planning.
The Spanish government has recently announced changes to its expatriate tax regime, commonly called the “Beckham” tax regime. The regime provides for a 24% income tax rate for qualifying expatriate employees with an annual income of up to €600,000. The latest changes are intended to incentivize more expatriates to work in Spain and now apply to individuals with contracts that permit them to work remotely in Spain.
In addition to the remote work provision, the new changes reduce the number of years an individual is required to have been a non-Spanish resident before the assignment from 10 to 5 years. This means that expatriates who have been living in Spain for less than five years can now benefit from the favorable tax regime.
Furthermore, in certain circumstances, spouses and children of expatriate employees can now also benefit from the “Beckham” tax regime. These changes will likely make Spain a more attractive destination for expatriate employees and their families, which could positively impact the country’s economy.
The Netherlands has recently changed the “30%-scheme,” which provides certain foreign employees with a tax-free allowance of 30% of their income. However, starting from January 1, 2023, employees applying for this scheme will only be able to receive the tax-free allowance on income up to €216,000. This means that income earned beyond this amount will not be eligible for the tax-free allowance.
Additionally, employees already part of the “30%-scheme” before January 1, 2023, will experience a phased reduction in the tax-free allowance. Employers must review their compensation and benefits packages for foreign employees and ensure they comply with these new regulations.
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