To help you stay on top of the latest legislation recruiters and employers need to be aware of, we’ve teamed up with ICE, specialist providers of international compliance consultancy to the staffing industry. Together we’ll bring you news of the latest legal updates that impact the world of work.
Here’s what’s been happening over the past few months:
Off-payroll rules potentially being extended to the private sector
It transpired at the end of October that, as feared by many, the Treasury is indeed looking to extend the off-payroll IR35 rules to the private sector. Whilst no clear statements have been made on the subject, it is believed that reforms are under consideration. Back in April 2017, the public sector saw the implementation of the reformed IR35 rules, with the liability of determining the engagement status being transferred from the contractor supplying services through a Personal Services Company (PSC) to the public sector client. As a result, many more public sector employers are now deducting tax and national insurance contributions at source from contractors’ pay. In a recent newspaper interview, the Financial Secretary to the Treasury, Mel Stride, indicated that 90,000 additional public sector workers were taxed as employees in the first three months following the reforms. Stride also suggested there was an issue of fairness between the two sectors that needed to be addressed, which has been perceived as a strong hint as to what the government plans are.
Parental Bereavement Bill supported by the government
Details of new proposed legislation entitling working parents to paid leave following the death of a child were published by the Department for Business, Energy and Industrial Strategy. The Parental Bereavement (Pay and Leave) Bill proposes that employed parents who lose a child under the age of 18 have the right to two weeks’ paid leave to grieve, which could be taken at any time up to 56 days after the child’s death.
Employees with a minimum of 26 weeks’ continuous service will be eligible for statutory parental bereavement pay (at their prescribed statutory weekly rate or at 90% of their average weekly earnings – whichever is lower), for which employers will be able to recover some or all the cost from the Government.
It is believed that the Bill will be enacted and become law in 2020.
President Macron postpones tax reform and implements more employment changes
Last year, the French government announced plans to introduce a PAYE type of system from January 2018 in order to withhold personal income tax at source. However, earlier in the summer, Prime Minister Edouard Philippe announced what Emmanuel Macron had already promised during his campaign – if he won the presidency, the tax reform would be postponed until 1 January 2019. This was then further confirmed by a Decree published in the Official Journal in September 2017.
During 2018 the new system will be tested with a few volunteer companies to verify its feasibility, which means the majority of employees will still have to file their personal income tax return in May 2018 for their 2017 income.
Also in September, a number of employment changes signed by President Macron came into force, including:
- Workers with more than 8 months seniority up to 10 years of service have had their legal minimum dismissal indemnity per year of service increased to a quarter of the average monthly remuneration (previously this awarded only to those with more than a year of service); after 10 years seniority onwards, the indemnity equals to a third of the average monthly remuneration
- A cap applied to unfair dismissal damages awarded by court based on years of service (i.e.: a maximum of 20 months for employees with 29 years of service or more)
- Claims can be brought before a labour court up to 12 months after a termination (as opposed to the previous limitations of 1 to 2 years, depending on the reason for termination).
In October, the Dutch coalition agreement was presented, proposing a series of changes to the labour law.
The new coalition plans to extend fixed-term contracts to a maximum of three years, instead of two. In addition, the possibilities to deviate from the six-month ‘gap’ (between contracts) in a collective labour agreement (CBA) will be expanded. Currently, this deviation can only be used for certain seasonal work.
The new coalition is proposing a completely new regime, where contractors will be categorised based on their remuneration, as follows:
- The first group consists of independent contractors earning up to 125% of the applicable minimum wage (or the lowest pay scale of the CBA, if there is one). So those with earnings between €15 and €18 an hour, engaged under a long-term contract, or still, performing regular business activities, will be deemed to have an employment contract
- The second group includes contractors earning more than the first group (average of €15 to €18 an hour) but with an hourly rate under €75
- Finally, the third group includes all contractors who earn €75 or more per hour, are engaged for shorter periods (less than a year) and perform work that is not seen as the normal business activities of the client. These will be given the possibility to opt out of payroll taxes.
There are also measures that will make termination of employment easier and less expensive, enable longer probationary periods, reduce the period of sick pay payable by small businesses and increase the rights of workers engaged under zero-hour contracts as well as those engaged through payroll companies.
Recent changes to temporary work market
The Act on the Employment of Temporary Workers was recently amended, introducing a series of changes and limitations aimed at improving the temporary work market. The main points can be summarised as follows:
- A client can use the services of a temporary agency worker for a maximum of 18 months over a period of 36 months
- In order to enforce the new tenure limit and facilitate audits carried out by labour inspectors, employers are required to keep an individual record of start and end dates of their temporary workers (either in written or electronic format) during the 36-month period and maintain these for the following 36 months. Also, it is worth noting this should be a joint effort by the agency and client
- With a view to ensuring equal treatment of temporary workers, clients must make remuneration information available to the temporary agency, including details of the internal remuneration regulations in force and any changes to these
- Pregnant temporary workers who have been supplied to a client for at least two months in total will be guaranteed employment until their delivery date, ensuring the right to a maternity benefit after the birth of the child and, therefore, equalising the rights of temporary workers and regular employees.
For more legal news in other areas of the world including Italy, Luxembourg, Canada, Columbia and Thailand please contact us for further information.