Staffing industry legal news – November 2018
Alexa Bradbury

4 minutes

Staffing industry legal news – November 2018

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: 

United Kingdom

IR35 updates 

During his Autumn Budget the Chancellor announced that the off-payroll rules will be extended to most private sector businesses from April 2020 (small business clients of 50 individuals or less will be excluded). A further consultation on how the reforms will be rolled out in practice will be launched by the government. Many feared the new rules would be in effect from April 2019, however it seems that the many problems associated with the public sector rollout as well as Brexit happening at the end of March next year had an influence in delaying the private sector reform. 

The news follow another embarrassing story that hit the headlines in September involving a contractor who was engaged by HMRC. In the recent court case, HMRC had to settle the full amount claimed by one of its own contractors for unpaid holiday after it was determined that she was an employee. Using the CEST (Check Employment Status for Tax) tool, it was concluded the engagement was inside IR35, and that the contractor – a marketing and business development consultant – had to go onto an agency payroll. Following that decision, the contractor claimed that she was therefore an agency worker under the regulations and, as such, entitled to holiday pay and to the same entitlement as comparable HMRC employees. This case has once again highlighted the complexities surrounding employment status as well as the unfairness associated with the taxation of contractors as employees without granting them any employment rights or benefits, something the government is still to address. 


New regulations on flexible working time

The new working hours regulation came into effect on 1 September 2018, increasing maximum daily working hours from 10 to 12 and from 50 to 60 hours per week. Overtime hours exceeding 10 hours a day or 50 hours a week are referred to as special overtime and are subject to the following:

  • These overtime hours are voluntary in nature, therefore the employee may refuse to work these hours without having to provide any reasons, and they are to be protected from discrimination or being served noticed due to their refusal;
  • The compensation for the special overtime is to be chosen by the employee – monetary remuneration or time off in lieu.

    The new regulations also provide exceptions from working time provisions to employees with significant autonomous decision-making authority, and introduces a new exception for work on weekends and public holidays, among other changes.


Employment law update

The Chinese authorities have announced a series of changes that affect employment in country, and here we highlight two of them.

Residents of Hong Kong, Macau and Taiwan (HMT Residents) are no longer required to obtain a work permit in order to work in mainland China following a new nationwide policy announced in the summer. Effective from 1 September 2018, a residence permit (Mainland Residence Card) will have to be obtained instead. Eligibility is based on residence in mainland China for more than 6 months and either: a) having a stable job; b) a legitimate and stable residence, or c) an education course that is attended continuously. While this will enable companies to hire HMT employees more easily, and the workers will receive extra benefits, there are still grey areas, especially regarding employer and employee obligations under the new scheme. Employers are therefore advised to obtain further clarification before proceeding with the hiring of new HMT residents to avoid exposure to risks.

Another reform plan that should be noted relates to the collection of social insurance contributions. Up to now local governments have been able to determine who would collect such contributions – whether the local tax authority or the local social insurance authority. The challenge has been that the local social insurance authority does not have access to employee salary information, consequently many companies have been underpaying social insurance contributions. According to the plan announced in July, from 1 January 2019 the local tax authorities will be responsible for collecting all social insurance contributions across the country – it is hoped that by having an uniform approach the level of compliance will increase.


Right to disconnect compensation

Back in August 2018 the French Labour Court awarded €7,500 to an employee who had exceeded her statutory maximum working hours by sending and receiving work-related emails outside normal work hours. According to the Court, the employer failed to monitor and manage her work pattern as well as keep appropriate records of her working hours – therefore allowing the employee to work excessively, in breach of the Organisation of Working Time Act 1997.

While the award amount may not have been significant, employers should not ignore the fact that not only France has introduced the Right to Disconnect law, but similar approaches have been adopted in Germany and Italy; a similar bill was also proposed in New York earlier this year. Not only should employers consider the employees’ right to disconnect, but also ensure that correct records are being kept and, when excessive hours are being worked, this situation should not simply be allowed to continue, but, instead, be addressed accordingly.


Draft Data Protection Bill 

The government of India proposed a draft data protection bill, but there are fears it has serious implications for technology and digital services companies that do business in the country. One of the main concerns is that the new law may require firms to store at least one serving copy of personal data on a server or data centre located in India. The bill would also allow the processing of personal data in the interest of the security of the state, if authorised, as well as for prevention, detection, investigation and prosecution of any offence or any other contravention of law, which could represent a threat to the right to privacy considering the weak safeguards currently in place. Finally, the bill creates a regulatory structure that is under significant control of the central government, which translates as an uncomfortable insufficient level of independence.

The Bill’s provisions suggest a close alignment to positions taken in the GDPR adopted by the EU in May 2018, however critics say that is not enough and that the lack of clarity in some areas and the concerns highlighted above should be addressed by the Indian government prior to passing the Bill.


New rules for address registration by foreign employees

As of the beginning of July 2018 foreign employees are not allowed to register with migration authorities at the address of their employer’s office anymore, unless that is the actual address where they reside. The address of the dwelling or hotel where the foreign citizen actually lives in Russia is the one to be registered – with the process being performed by the hosting party, that is, the owner of the dwelling or the hotel. In case the owner of the dwelling is also a foreign citizen, he or she can only carry out the registration if he/she is a residence permit holder. Those who are categorised as highly qualified foreign specialist can act as hosts for members of their own families.

Failure to comply with the rules can result in an administrative fine of up to 7000 rubles, or even worse, the deportation of the foreign worker.  


Ryanair pilot was employee not contractor

At the beginning of September a Spanish judge ruled that a former Ryanair pilot should have been considered an employee and not an independent contractor. The same lawyer that supported the former pilot in this first case has confirmed he is preparing lawsuits for other pilots, also engaged by the airline, for allegedly violating the Spanish labour and tax laws. Back in August a collective lawsuit was filed by the pilots’ union (Sepla) in the High Court against the company over contracts.

At the end of September the airline had to cancel 250 flights due to pilots and cabin crew staging a 24-hour walkout in six European countries – while pay was also a contributing factor to the protest, the biggest dispute is over working conditions and the fact that Ryanair engages their workers under Irish contracts and subject to Irish legislation instead of their own countries’ labour laws.

For more legal news in other areas of the world including Australia, Finland, Portugal and South Africa please contact us for further information.