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Employment Trends Europe – January 2021

A summary of events affecting employment law from November 2020 to January 2021 in Belgium, England, France, Germany, Italy, the Netherlands and Spain.

12 January 2021

Publication

As employers around the world continue to navigate their way through the pandemic, we highlight notable events and developments affecting employment law in the following jurisdictions:

Our Feature page covering Covid-19 workforce and employment issues provides updates to all the key issues across our international network.

Our Firmwide Feature page also provides timely updates and broader guidance on how to navigate this period of global uncertainty across services and sector.

Previous editions of Employment Trends Europe are available here.

Belgium

Brexit

Back in April 2019, Belgium adopted a so-called "Brexit Act" in order to be prepared for the possibility of a hard Brexit. On 6 March 2020, Belgium also adopted an additional hard Brexit Act for employers facing difficulties due to Brexit, with temporary measures aimed at safeguarding employment.

Given that a new trade agreement was reached in principle at negotiators' level on 24 December 2020 on the future EU-UK relationship, these agreements will no longer come into force.

Covid-19 force majeure temporary unemployment

All companies wanting to introduce the regime of temporary unemployment due to coronavirus can resort to the flexible and simplified regime of temporary unemployment due to covid-19 force majeure.

There are no longer any conditions for applying for this simplified regime of temporary unemployment. The employer no longer has to prove that there were at least 20% days of temporary unemployment in the second quarter of 2020, or that it belongs to an exceptionally hard-hit sector (see ETE October 2020).

This simplified regime of unemployment will, in theory, be open to all employers until 30 June 2021.

England

France

Homeworking: some expected clarifications

Four out of 10 employees have been working from home during the lockdown period and this has raised different issues from professional expenses to health and safety obligations.

Following a negotiation between unions at a national level, a new national agreement (ANI) was reached on 26 November 2020 and provided general guidelines and (some) clarification of existing rules, although it is not mandatory. In a nutshell, the main points are:

  • The importance of social dialogue for homeworking to be successful.
  • Identifying the roles eligible for homeworking (which is the employer's responsibility but can be negotiated).
  • Homeworking is voluntary, except in exceptional circumstances.
  • The need for the employer to explain any refusal to a homeworking request.
  • An adaptation period and frequency of homeworking.
  • Professional expenses paid by the employer.
  • Protection of personal and professional data.
  • The need to train employees and managers.
  • Avoiding health and safety risks, in particular isolation of employees.

As a reminder, following the Macron reform of the French Labour Code in 2017, homeworking became more flexible. However, the previous national agreement of 2005 on homeworking has not been terminated and therefore, there are different sets of rules to combine.

This unsatisfactory agreement (not complete or precise) has already been a difficult compromise to reach between employers and unions yet is only the first step towards the further definition required after the cultural shock of the Covid and new ways of working, including remotely. This is a discussion that needs to be continued and completed in the future.

Co-employment between a parent company and subsidiary: a new explicit criterion to be met by employees

In order to receive damages from a solvent company, employees of a subsidiary that are dismissed on economic grounds generally seek to establish that the parent company was their "co-employer".

In corporate groups, companies have strong connections with each other, so, traditionally, the criteria used to establish a "co-employment" was the confusion of (i) interests,  (ii) activities and (iii) management demonstrated by the parent company's interference in the  subsidiary's social and economic management.

However, the lower courts' interpretation of these tests was uncertain for companies.

The French Supreme Court has recently changed the criteria and ruled that  "co-employment" may be established provided that,  apart from the existence of a subordination link, there is a permanent interference of a company in the economic and social management of another company  in the group, leading to the total loss of autonomy of action of the latter. This is beyond the necessary co-ordination of economic actions between companies belonging to the same group and the state of economic dominance that this can lead to. The normal dominance in a group of companies does not automatically lead to a total loss of autonomy.

As a result, this decision has clarified the situation and should slow down co-employment claims. In practice, the concept of co-employment will likely only be accepted by the courts in exceptional circumstances.

Germany

Extension of short-time work regulations for another year

The German government has decided to extend the maximum short-time work entitlement period from 31 March 2021 until 31 December 2021. During this period, employees may be entitled to increased short-time work allowance and reimbursement of social security.

  • The increased short-time work allowance provides for the payment of 70% of lost net remuneration (or 77% for parents) from the fourth month of reference. As of the seventh month, it increases to 80% of the lost net salary (or 87% for parents).
  • The right to full reimbursement of social security contributions during short-time work will be extended until 30 June 2021. From 1 July 2021 to 31 December 2021, 50% of the social security contributions will be reimbursed if the short-time work started before 30 June 2021.
  • The entitlement period for short-time allowance has now been extended to 24 months for all companies that have started short-time work by 31 December 2020, however at the longest until 31 December 2021.

News on the planned German Remote Working Act

  • A first draft bill presented by the German Federal Labour Minister providing for a legal entitlement for employees to work from home for 24 days per calendar year has been rejected.
  • The German Federal Labour Minister has since submitted a revised draft bill. Contrary to the previous draft, employees shall now not be granted a statutory entitlement to  remote working for a certain number of days, but shall instead be granted a right to discuss the matter with the employer: The draft provides an obligation for the employer to discuss the start, duration, scope and distribution as well as the type of  remote work with employees, upon request, with the aim of reaching a respective agreement. If no agreement is reached, the employer will have to explain the rejection decision to the employee no later than two months after receipt of the remote working application. If the employer does not fulfil their obligation to explain the rejection decision or to discuss the matter at all then the remote work arrangement notified by the employee shall be deemed to be in place for the duration indicated, but for no longer than six months.  

Upcoming decision of the European Court of Justice regarding limitation periods for holiday entitlements

  • The German Federal Labour Court has submitted to the ECJ the question of whether holiday entitlements are subject to the regular statutory limitation period of three years under German law. The ECJ will now have to decide whether an application of the statutory limitation periods is consistent with European law.
  • The decision will be of significant importance to employers, regarding the question of whether employees can accumulate holiday entitlements for an unlimited period of time. In practice, this is particularly relevant in cases where employers have not duly asked employees to take their remaining leave. According to European and German jurisprudence, the holiday entitlement does not lapse in this case. A respective decision from the ECJ could lead to a limit on the employee's entitlement to a period of three years.

Italy

2021 Budget Law

At the end of 2020, Italy passed its 2021 Budget Law, which contains various employment law-pertinent mechanisms:

  • Ban on redundancies: Employers are prohibited from carrying out individual and collective redundancies until after 31 March 2021 (dismissals for just cause or disciplinary reasons are still permitted).
  • Tax breaks: Employers can benefit from tax relief upon hiring employees up to 35 years of age and women.
  • Paternity leave: Paternity leave has been extended from 7 to 10 days to be used within 5 months from the baby's birth.
  • Covid furlough: Employers meeting certain circumstances can take advantage of an additional 12 weeks of furlough funds.
  • ISCRO fund: The government introduced a safety net for self-employed individuals who can benefit from government funds in certain circumstances.
  • Fixed-term contracts: The derogation that was introduced in the "Dignity Decree" whereby fixed-term employment contracts could be renewed, on an exceptional basis, for an additional 12 months beyond the legally established limit, will remain in place until 31 March 2021.
  • Gender pay gap: The green light was given to set up a fund starting in 2022 that will have an endowment of €2 million per year to support activities aimed at supporting gender balance and gender pay equality in the workplace.

Netherlands

Qualifying the employment relationship

If parties enter into a management or service agreement, they intend to have their relationship qualify as such from both an employment and a tax perspective, but the Supreme Court has ruled that the relationship may qualify as an employment relationship even if parties intended differently.

From an employment perspective, this is only possible if the individual providing the services claims to be an employee and initiates proceedings. The Dutch Supreme Court ruled that all circumstances of the matter will be relevant and while the parties' intention when entering into the agreement was one of these circumstances to be taken into account the Court ruled that this was not the case.

From a tax perspective, it is possible that the tax authorities deem the relationship to be an employment relationship resulting in taxes and social premiums being due. Whether this is the case, depends on all circumstances of the matter. Whilst previously the Declaration of Independent Contractor Status (VAR-verklaring) would provide clarity on whether the relationship was actually a service relationship, this Declaration was abolished several years ago. A system of model agreements was introduced with the Assessment of Employment Relationships (Deregulation) Act (Wet DBA) in 2016, making both parties responsible for qualifying the agreement correctly. This Act has not given the clarity it was expected to give and it is therefore the intention to replace this Act with a different system. However, the current government has decided to not make any changes prior to the election of a new government. It has furthermore been announced that enforcement of the Act will be delayed until at least October 2021.

In the meantime, a web module will be introduced to help parties answer questions to see (based on a point system) whether their relationship qualifies as an employment relationship. It is the government's intention to start a pilot with the web module as soon as 11 January 2021 (although it has been delayed several times) for a period of six (6) months. During the pilot phase the outcome of the module will not be legally binding and is only for informative purposes.

Spain

Equality legislation coming into force in 2021

On 14 October 2020, two regulations related to equality in the workplace were published:

Royal Decree 901/2020 regulating Equality Plans for employers and setting out their registration requirements: 

Entering into force on 14 January 2021, this aims to develop the regulatory framework and obligations for employers regarding their Equality Plan including diagnosis, content, subject, salary audits, monitoring and evaluation, as well as the requirement to proceed with public registration.

In addition, this new regulation develops other formal aspects related to Equality Plans such as the procedure and legitimacy to negotiate equality plans. This should resolve issues, such as those that arise when the company has several workplaces with legal representation of workers or when there is no such legal representation.

Companies employing 50 or more workers are obliged to negotiate an Equality Plan, although there is a gradual application of the obligation with the deadlines set for:

  • Companies with 151 to 250 workers to have an Equality Plan in place is from 8 March 2020.
  • Companies with 101 to 150 workers to have an Equality Plan in place from 8 March 2021.
  • Companies with 50 to 100 employees to have an Equality Plan in place from 8 March 2022.

In companies with less than 50 employees, having an Equality Plan in place is voluntary (unless otherwise required in the applicable sectorial Collective Bargaining Agreement).

Any Equality Plans already in place on 14 January 2021 must be adapted in scope with the new Regulations within a maximum period of 12 months from the entry into force of the royal decree.

Royal Decree 902/2020 for gender pay equality:

On 14 April 2021, companies and collective agreements must demonstrate transparency regarding gender pay as set out in the Royal Decree 902/2020: including remuneration registers, remuneration audits, the system for assessing jobs and the right to information of workers. The aim of this is to identify direct or indirect discrimination when carrying out work of equal value, where a lower salary is received without it being justified.

All companies, regardless of their size, must have a remuneration register in place. This register must cover all employees and contain averaged and detailed data on salaries including management staff and senior management. This information should clearly specify sex, remuneration type(s), the mean and median of total remuneration for individual occupational groups, occupational categories including the levels, positions or any other applicable classification system.

Alongside the above, in the case of a 25% or more difference between the salaries of both genders in companies with more than 50 employees, a justification for this difference must be included in the register.

Companies that are obliged to carry out an Equality Plan (+50 employees, details above) will also have to include in their plan an equal pay audit to check whether the principle of gender pay equality is being complied with.

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This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.

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