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UK: Lock decision holds the key for calculating holiday pay

In December 2016, the Court of Appeal in British Gas Trading Ltd v Lock decided that contractual results-based commission must be included in the calculation of holiday pay. As the Supreme Court has refused to hear an appeal against this decision, the position remains then that when employees take the ‘European’ element of their holiday (that is the first 4 weeks out of the UK 5.6 weeks of statutory allowance), he/she should not be placed in a worse position in terms of the pay that they receive.

The decision arose out of a case brought by Mr Lock, a British Gas salesman, whose remuneration package included basic salary and commission. When he took annual leave, he received basic pay (excluding his commission), which was considerably less than his usual salary. He complained and argued that he should receive his usual salary whilst taking holiday.

As the case involved consideration of EU law (the Working Time Directive), Lock’s case was referred to the Court of Justice of the European Union, which held that commission should be taken into account when calculating holiday pay.

Now that the Supreme Court has refused to grant an appeal of this decision, the case will return to the employment tribunal to consider a number of outstanding issues, including what losses Mr Lock suffered, but the reference period employers must use to calculate holiday pay is yet to be clarified, and this has been held as a matter for national courts. The Employment Tribunal will now decide how such calculations are to be made and whether claims can be backdated.

This is significant for employers in sectors such as retail where employees tend to receive sales-based commission.

For more information, please contact L&E Global.

China: Employees would be liable for breaching the non-disclosure of remuneration information clause agreed upon by both parties

Mr. Chen signed an employment contract and a Confidentiality Agreement with Company A on January 26, 2015. According to the Confidentiality Agreement, the information about an employee’s remuneration and benefits was confidential and should not be directly or indirectly disclosed to any third party or any irrelevant employees of Company A. In January 2016, Mr. Chen was reported to have discussed remuneration information with other employees and disclosed the remuneration information of other employees through on-line chat tools. Company A thought Mr. Chen’s behavior had breached the Confidentiality Agreement and adversely influenced the normal business operations of the company, so it sent a notice to Mr. Chen to terminate his employment contract as of January 15, 2016. Eventually, the case was brought to the court. The judges opined that the Confidentiality Agreement was concluded based on the real intention of both parties, and its content was valid without contravention of any law and regulation, so Mr. Chen should perform his confidentiality obligation and should not disclose the remuneration information. As a result, Company A’s termination of Mr. Chen’s employment was determined to be justified. In view of the above, in the judicial practice, the non-disclosure of a remuneration information clause agreed based on both parties’ real intention shall be valid, and the employee violating such clause shall assume corresponding responsibilities.

For more information, please contact Zhong Lun Law Firm our affiliated member firm in this country.

France: A fixed-term contract may include a suspensive condition

The Labor Code provides that a fixed-term employment contract may be terminated only if the parties have agreed, or if there was serious misconduct, force majeure or unfitness ascertained by the occupational physician. However, the contract may provide for a suspensive condition on which its execution depends. Such a clause is valid if the contract has not yet started. For example, a collective bargaining agreement may stipulate that an employee’s employment contract should only come into effect after a medical examination, which must be carried out with the employer’s diligence within 72 hours. To the extent that the employee had not taken up his duties, the Court of Cassation held that this clause was valid.

For more information, please contact Flichy Grangé Avocats our member firm in this country.

Germany: Customer request does not justify a “headscarf ban”

The female plaintiff of Muslim faith was working as a software designer for a private employer. After a customer complained that she was wearing an Islamic headscarf in the workplace, the employer reaffirmed the principle of necessary neutrality with regard to his customers and asked the plaintiff not to wear the headscarf anymore. The plaintiff did not fulfill that request and was therefore dismissed.

The European Court of Justice ruled that the willingness of an Employer to take account of the wishes of a customer to no longer have the services of that employer provided by a worker wearing an Islamic headscarf, cannot be considered a genuine and determining occupational requirement within the meaning of that provision (Article 4 Para. (1) of Council Directive 2000/78/EC). The request of the customer can therefore not be used to justify the difference in treatment of the employee. Furthermore, the Court has emphasised that it is only in very limited circumstances that a characteristic related, in particular, to religion may constitute a genuine and determining occupational requirement.

The verdict of the European Court of Justice is based on a case before the local courts in Belgium, but will have to be considered in all European jurisdictions, including Germany.

For more information, please contact Pusch Wahlig Legal our member firm in this country.

Germany: Burden of proof in a court proceeding regarding payment for overtime

In the case at hand, an employee claimed remuneration for overtime work. As a rule, an employee claiming payment for overtime work must demonstrate in a court proceeding that he/she actually worked the overtime as claimed and that this was instructed or tolerated by the employer. In the present case, the employee was employed as a vehicle operator and obliged to work overtime within the framework of the law. His truck was equipped with a digital trip recorder. Times apart from the driving period needed to be manually recorded as “other working time” or “break”. The employee calculated his overtime with his driver card. In his writs submitted to the court, he explained which days he drove, for what period of time and for which tour.

The German Federal Labour Court ruled that the explanations of the employee in his writs were sufficient for demonstrating the overtime worked in a first step. Based on these explanations, the employer was obliged to demonstrate which tasks he assigned to the employee and when and to what extent the employee fulfilled these tasks. In particular, the employer must demonstrate that the assigned tasks could be completed within the employee’s regular working time. If the employer is not able to fulfill these requirements, the court will base its ruling on the data submitted by the employee. Therefore, this judgment will likely make it easier for employees to enforce claims for overtime payment in the future.

For more information, please contact Pusch Wahlig Legal our member firm in this country.

Netherlands: Is an employee bound by a business relations clause that is included in a staff handbook?

This case involved a dispute between the parties as to whether the employee was bound to a business relations clause that had been included in the staff handbook. For a business relations clause to be valid, the clause must be agreed to in writing. Based on a previous ruling of the High Court, a business relations clause can be included in a staff handbook, if one of the following two requirements have been met:

1) the employee signed a document (mostly the employment contract) in which a reference to the staff handbook has been made, and the staff handbook has been provided to the employee together with the employment contract; or
2) the employee signed a document in which he explicitly agrees to the business relations clause.

In this particular case, the employee had signed the employment contract, in which a reference had been made to the staff handbook. However, the staff handbook had not been provided to the employee together with the employment contract. The employee had received the staff handbook some time later during his employment. The High Court ruled that the requirements mentioned above must be applied strictly in order to ensure that the employee has had the opportunity to carefully consider the consequences before agreeing to such a clause. The same requirements would apply to a non-competition clause.

For more information, please contact Palthe Oberman our member firm in this country.

Spain: Relief contracts terminate when the relieved employee reaches the ordinary age for retirement

In Spain, there is a special contractual form called a “relief contract”. This occurs when an employee decides to opt for the partial retirement instead of the ordinary retirement (the Relieved) and a new employee is hired by the Company to substitute the Relieved (the Reliever). The Reliever must be an unemployed person or an employee who has a fixed-term contract with the company.

This contract however, is subject to a term, that is, the contract finishes when the Relieved acquires the ordinary retirement.

A recent Spanish Supreme Court (SSC) ruling addressed what would happen if the Relieved opts for the early retirement instead of the ordinary retirement. Should the contract be extinguished by the company? In this particular case, the company decided to terminate the relief contract and to hire another employee to fill the functions of the Relieved, arguing that the relief contract had come to an end due to the retirement of the Relieved.

However, the SSC set that the relief contract ends when the Relieved acquire the ordinary age for retirement, which was not the case here, since the early retirement was acquired by the employee before reaching the ordinary age for retirement. Thus, the relief contract cannot be terminated until the Relieved reaches the ordinary age for retirement and not before, even if such employee has opted for the early retirement and, from a legal and administrative point of view, appears as a retired employee.

For more information, please contact Bufete Suárez de Vivero, S.L. our member firm in this country.

Belgium: Always check whether a person is competent to fire an employee!

An employee was fired for serious cause by the CEO of her company. Although the bylaws of the company determined that a dismissal could only be given by a managing director appointed by the Board of Directors, the dismissal letter was signed by the CEO, who was not a managing director. The employee therefore fought her dismissal in court. During the procedure, the dismissal decision of the CEO was ratified by the Board of Directors of the company.

The Labour Court of Appeal however judged that – in view of the fact that a dismissal for serious cause must be given within a period of three working days after the competent body has taken knowledge of the facts, which form the basis for the dismissal for serious cause – also the ratification of such a decision taken by an incompetent person must be done within that same period.

In this particular case the ratification occurred outside that time period. Moreover, the employee concerned had challenged the competence of the CEO three weeks after the dismissal, which was considered reasonable by the Labour Court. As a consequence, the Court ruled that the dismissal for serious cause was irregular. The employer was therefore condemned to pay a severance pay to the employee.

For more information, please contact Van Olmen & Wynant our member firm in this country.

Canada: Court dismisses union’s application for injunction restraining random drug and alcohol testing

In 2010, the Toronto Transit Commission (the “TTC”) implemented a “Fitness for Duty Policy” (the “Policy”) that provided for drug and alcohol testing of employees in positions that had been identified as “safety-sensitive”, as well as certain management and executive positions. In 2011, the Policy was amended to provide for random drug and alcohol testing for employees in safety-sensitive positions. The TTC sought to implement random testing in 2016.

The Amalgamated Transit Union, Local 113’s (the “Union”) filed a grievance in 2010 alleging that the Policy violated the Collective Agreement, the Ontario Human Rights Code, and the Canadian Charter of Rights and Freedoms. When the TTC notified the Union in 2016 that random testing would be implemented, the Union filed an application with the Court for an interlocutory injunction to prohibit the TTC from implementing random testing pending the resolution of the arbitration hearing. By 2016, the grievance arbitration was in its sixth year of hearing, with no end in sight.

The Union argued that random drug and alcohol testing would cause psychological harm and reputational damage, and that it would permanently damage the relationship between employees and management. However, the Court found that the Union had failed to demonstrate that bargaining unit members would suffer “irreparable harm” in respect of their privacy rights if the injunction was not granted. In support of this finding, the Court concluded that:

1. bargaining unit members’ expectation of privacy concerning drug and alcohol consumption was reasonably diminished, as they would expect that steps would be taken to ensure that individuals in safety-sensitive positions were fit for duty;
2. the procedures and methods the TTC had chosen to randomly test for drugs and alcohol were both minimally invasive and reliable, relative to other available methods of testing;
3. the Policy was reasonably tailored to achieve its stated health and safety purpose; and
4. any contraventions of the Collective Agreement or the Human Rights Code pursuant to the Policy could be remedied by the payment of monetary damages to affected employees.

The Court also found that the “balance of convenience” favoured refusing the injunction. In assessing the “balance of convenience”, a court must determine which of the two parties will suffer the greater harm from the granting or refusal of the injunction. After reviewing the evidence, including extensive expert evidence regarding the efficacy of the proposed alcohol and drug testing methods, the Court found that random testing would enhance public safety by increasing the likelihood that employees in safety-sensitive positions prone to drug or alcohol use would either be detected or deterred by the prospect of being randomly tested. Weighing this benefit against the potential invasion of employees’ reasonable expectation of privacy, the Court concluded that the balance of convenience favoured the TTC.

The injunction was dismissed and the Union’s challenge to the TTC’s Policy will continue to proceed at arbitration.

For more information, please contact Filion Wakely Thorup Angeletti our member firm in this country.

Sweden: An invalid exit agreement found to have same legal effects as an invalid dismissal

The case concerned an employee whose exit agreement with a company had previously been declared invalid by the Labour Court. The declaration meant that her employment had not been terminated through the agreement. The case mainly concerned whether the employee should be entitled to salary during the period between when she had left the employment, until the time when the exit agreement was declared invalid.

The Labour Court found no regulations or case law that was directly applicable to this specific situation, but found it reasonable to analogically apply the legal effects of the invalidation of a dismissal or summary dismissal. Hence, the employee should be entitled to salary during the disputed period. However, since the employee had received severance pay, this amount was deducted from the compensation.

For more information, please contact Cederquist our affiliated member firm in this country.