Welcome to the May 2023 edition of Acumen International's Monthly Global Employment Tax and Compliance Newsletter! As an international employer or global employment service provider operating across jurisdictions, staying current on labour, tax, and immigration law changes is vital to ensure compliance and mitigate risks.
In the ever-evolving landscape of global employment, regulations and requirements vary from country to country. Navigating these complexities can be challenging, but our Newsletter is here to help.
We understand the importance of keeping you informed about the latest developments in labor, tax, and immigration laws worldwide. Our team of experts diligently gathers relevant updates to provide you with valuable insights and guidance.
Explore our comprehensive updates on global employment tax, spotlight on compliance regulations, country focus section, and expert advice.
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🇪🇺 Shining a Light on Equal Pay: The EU Pay Transparency Directive
The European Union (EU) has taken a significant step towards addressing the gender pay gap by adopting the Pay Transparency Directive.
The Directive acknowledges that the principle of equal pay, as included in Directive 2006/54/EC, faced obstacles such as a lack of pay system transparency, uncertainty regarding work of equal value, and procedural hurdles for victims of pay discrimination.
The gender pay gap in the EU varies, with Luxembourg having the smallest gap of 0.7% and Latvia the largest at 22.3%. The Netherlands falls within the middle range, with a pay gap of 14.2%.
This Directive aims to ensure that women and men receive equal pay for equal work or work of equal value. It aligns with the EU Gender Equality Strategy 2020-2025 and complements existing directives on transparent and predictable working conditions. The directive tackles the issues identified in evaluating equal pay implementation, such as lack of pay system transparency, ambiguity regarding work of equal value, and procedural obstacles for victims of pay discrimination. It introduces essential measures to enhance pay transparency and enforcement mechanisms.
The directive's scope covers employers in both the public and private sectors, although the definition of "employers" will be determined during implementation. It also extends its protection to various categories of workers, including part-time workers, temporary contract workers, and those in management positions. Furthermore, the directive may cover domestic workers, trainees, apprentices, and others.
The core concept of the gender equality directive is equal pay for equal work or work of equal value. Determining work of equal value is based on objective, gender-neutral criteria, considering skills, effort, responsibility, working conditions, and other relevant factors. Employers are allowed to differentiate pay based on unbiased criteria. To promote transparency, the directive introduces several measures.
For applicants, employers must provide information about initial pay or pay ranges for specific jobs, while inquiries about pay history are prohibited. Job vacancy descriptions must be gender-neutral, and recruitment processes must be non-discriminatory. Pay structures are required to ensure equal pay within organizations, allowing for comparisons of job values.
Current workers can access information about pay criteria, pay grades, and pay progression. They can request written information on their individual pay levels and gender pay differences. Employers must disclose data on the gender pay gap to designated authorities for publication and comparison purposes.
To empower victims of pay discrimination, the directive ensures better access to justice. Workers can pursue legal action even after the employment relationship ends. Compensation for damages resulting from equal pay infringements includes full recovery of back pay, bonuses, lost opportunities, non-material damage, and interest on arrears without a fixed upper limit. Penalties, including fines, are imposed on employers for repeated infringements.
Worker representatives and equality bodies are crucial in legal proceedings and collective claims for equal pay. Adequate protection is provided against adverse treatment for workers invoking their rights. Member states have three years to transpose the directive into national law, which is expected to bring significant progress in achieving gender equality in pay within the EU.
🇳🇴 Norway
As employers navigate the evolving landscape of hiring practices in Norway, understanding and complying with the new regulations governing staffing agency personnel is crucial. By acknowledging the reduced access, exemptions, prohibitions, entitlements, redefined criteria, and the need for proactive workforce planning, organisations can adapt effectively and mitigate potential risks while maintaining compliance and fostering a sustainable employment ecosystem.
Let’s explore the recent regulatory changes regarding hiring personnel from staffing agencies in Norway. Effective 1 April 2023, these new rules are set to significantly impact employer access to agency staff and introduce various considerations for organizations to navigate.
Reduced Access to Staffing Agency Personnel
The most significant change entails reducing employer access to personnel from staffing agencies, limited to temporary needs only. With the ability to hire agency staff based on temporary business needs being phased out, organizations face the task of carefully assessing and anticipating their satffing needs. Strategic workforce management and planning becomes paramount to ensure the availability of necessary talent while complying with the new regulations.
Exemptions for Health and Care Services and Expert Advisors/Consultants
While the new rules restrict access to agency staff, exemptions exist for specific sectors. The health and care service sector can still justify hiring agency personnel to ensure seamless service operation, provided the work is of a temporary nature. Additionally, organizations can engage advisors and consultants with specialized expertise for clearly defined projects, offering flexibility in these areas.
Entitlement to Permanent Employment for Hired Employees
Under the new regulations, all hired employees are entitled to permanent employment after three years, regardless of their basis of hire. This provision seeks to enhance job security and safeguard employees' rights within the workforce, aligning with evolving labour standards.
Redefinition of Independent Contractors and Employment Status Assessment
Another critical aspect of the regulatory changes is introducing a new definition for independent contractors. This redefinition may result in some current independent contractors being reclassified as employees. Employers should review their agreements with consultants, independent contractors, and service providers to assess the risk of employment status changes and ensure compliance with the new legal framework.
🇷🇴 Romania
In this update, we highlight the proposed changes in employment law in Romania, focusing on introducing two distinct types of individual employment agreements. While the law update is currently awaited, pending procedure, it is essential to understand the implications these new agreements may have for both employers and employees.
At Request" Agreements for Specific Types of Work
One of the proposed individual employment agreements is the "at request" agreement, which applies to specific types of work. In this arrangement, employees provide services based on the employer's request, working on days and under terms determined by the employer. It is important to note that employees under this agreement should receive a salary equivalent to a minimum of 32 working hours per month. This type of agreement is restricted to specific industries, namely agriculture, hunting (and related areas), the organizing of exhibitions, fairs, congresses, publicity, and other leisure activities.
Individual Employment Agreements with Multiple Employers within the Same Group
Another significant development is the introduction of individual employment agreements with several employers, limited explicitly to companies within the same group. Under this arrangement, employees can work for multiple employers within the same group, performing similar activities and duties. This provision aims to facilitate a flexible workforce allocation within related companies while ensuring clarity and coherence in employment relationships.
🇬🇧 United Kingdom
Increased Compensation Bands for Injury to Feelings in Discrimination Cases
The President of the Employment Tribunals has recently announced an adjustment to the compensation bands, known as the Vento bands, for injury to feelings in discrimination cases. This update aims to provide clarity and guidance regarding the appropriate compensation levels awarded in such cases.
In discrimination claims, individuals can seek compensation for financial loss and injury to their feelings. The Vento vs Chief Constable of West Yorkshire Police case established guidelines outlining three bands of potential awards based on the severity of the discrimination:
The revised Vento bands provide a more precise and comprehensive framework for determining the appropriate level of compensation for injury to feelings in discrimination cases. This is a welcome development, as it will help to ensure that victims of discrimination are fairly compensated for the harm they have suffered.
This update serves as a valuable clarification on the current level of injury to feelings awards. However, it is essential to acknowledge that the employment tribunal retains its discretion to determine the appropriate band for each case and decide the specific award amount within that band. Factors considered include the severity of the treatment and the level of distress caused, among other relevant considerations.
Effective from 6th April 2023, an addendum to the Presidential Guidance on employment tribunal awards for injury to feelings has been issued, providing the revised Vento bands as follows:
Lower band: £1,100 to £1,120
Middle band: £11,200 to £33,700
Expanded Tribunal Limits: Enhancing Compensation for Unfair Dismissal Cases
In an effort to bolster the protection and compensation available to employees in unfair dismissal cases, significant increases to tribunal limits have been introduced. Effective from 6 April 2023, these adjustments aim to ensure fair and just outcomes for individuals facing wrongful termination.
Increased Basic Award and Redundancy Payments
For dismissals occurring on or after 6 April 2023, the weekly limit for calculating the basic award and redundancy payments will rise to £643. This increase, up from the previous limit of £571, recognizes the importance of providing adequate financial support to employees facing such circumstances. It ensures that individuals receive a fair compensation reflecting the impact of their dismissal and potential loss of employment.
Increased Compensatory Award for Unfair Dismissal
In most cases of unfair dismissal, the compensatory award serves as a means of providing redress for the financial and non-financial losses suffered by the employee. Under the revised tribunal limits, the maximum amount for the compensatory award will escalate to £105,707. This notable rise from the previous limit of £93,878 reinforces the commitment to providing appropriate compensation for individuals who have experienced unjustifiable termination.
🇫🇮 Finland
In a significant development, the Finnish Parliament has approved a government proposal for a partial reform of the Non-Discrimination Act, effective from 1 June 2023. The primary objective of this reform is to enhance the legal protection of discrimination victims and foster equality within the workplace in Finland.
Expanded Mandate of the Non-Discrimination Ombudsman
Under the approved reform, the Non-Discrimination Ombudsman's authority will be extended to cover cases related to employment. This expansion empowers the Non-Discrimination Ombudsman to handle cases even when no specific victims are identified. Furthermore, the National Non-Discrimination and Equality Tribunal will have the authority to make recommendations on the appropriate amount of compensation in such cases.
Strengthening Employer Obligations and Equality Assessment
The reform emphasizes an employer's duty to promote equality within the workplace. It introduces specific factors that employers must consider when evaluating equality, particularly during the hiring process. The assessment of equality must be incorporated into the equality plan, and its conclusions must be included in the plan as well. Furthermore, the obligation to draft equality plans will now extend to cover early childhood education, while those responsible for organizing such education will have an increased responsibility to address and respond to incidents of harassment. Employers must thoroughly review the legislative amendments to ensure compliance with the new provisions.
🇨🇦 Canada
As of May 7, 2023, Employment and Social Development Canada (ESDC) has made changes to the process of submitting Labour Market Impact Assessment (LMIA) applications. Email submissions are no longer accepted. Instead, employers are required to register with Job Bank and utilize the new LMIA Online Portal, which is directly linked to their Job Bank Account.
To access the LMIA Online Portal, the designated employer contact person must have a valid Canadian Social Insurance Number. However, certain exceptions apply for foreign companies without a presence in Canada or those not registered with the Canada Revenue Agency (CRA). These companies must meet specific criteria and apply for an exception from using the LMIA Online Portal.
In the case of employers in Quebec who are concurrently submitting a Temporary Selection (CAQ) application to Immigration Quebec (MIFI), it is mandatory to include a copy of the LMIA application summary generated by the LMIA Online Portal along with the CAQ application.
These changes aim to streamline and enhance the LMIA application process, ensuring more efficient and accurate submissions. Employers are advised to familiarize themselves with the new requirements and make the necessary adjustments to comply with the updated procedures.
Conclusion
In conclusion, we hope that this May 2023 edition of Acumen International's Monthly Global Employment Tax and Compliance Newsletter has provided you with valuable insights and resources to navigate the ever-changing landscape of labour, tax, and immigration laws.
By staying informed and proactive, we believe that you can effectively address compliance challenges and optimize your global employment practices.
By prioritizing awareness of labour, tax, and immigration law changes, you can maintain compliance and proactively address potential challenges.
With our expert insights and comprehensive updates, we aim to empower you with the knowledge necessary to navigate the dynamic global employment landscape successfully.
Stay informed, stay compliant, and stay ahead with Acumen International.
