CONTENTS
6-8
An Overview of Recent Changes to European Employment Law
Ius Laboris
10-11 Baker & McKenzie Japan
Upcoming Change in Employment Laws
12-13 Baker & McKenzie Venezuela
The Evolution and Impact of Employment and Labour Law in Venezuela
14
Bech-Bruun
Leading Law Firm in Denmark
16
Clifford Chance
The Changing Employment Landscape – the Dual Dismissal System
17
Latham & Watkins
All Change Please – UK Employment Law Overhaul in Process
18-19 Littler
Employment & Labor Law Solutions Worldwide
20-21 Veirano Advogados
Discrimination – Brazil Overview
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For further information on this article or on Ius Laboris’s services please contact: Sam Everatt at Ius Laboris in Brussels on +32 2 761 4617 or exdi@iuslaboris.com
AN OVERVIEW OF RECENT CHANGES TO EUROPEAN EMPLOYMENT LAW
A new European curiosity for “Flexicurity” Olivier Wouters, partner at leading Brussels based employment law firm Claeys & Engels, and a founding member of the Ius Laboris alliance, looks at the response of European governments and the EU itself to the Eurozone crisis and their attempts to change employment legislation to combine job security for employees and provide employment incentives and flexibility for employers, whilst Sam Everatt, executive director of Ius Laboris, the world’s largest labour, employment and pensions law firm alliance looks at how the alliance has grown to meet the challenges of this fast growing area of international law. The persistent financial crisis is still causing havoc in Europe. As unemployment hits
record levels and there are still forecasts of a grim economic outlook for many months to come, European governments are more than ever compelled to reconsider and amend their employment legislation and policies. These amendments are dictated by the recurring objective to combine job security for workers with more employment flexibility for employers. That way, the current financial crisis is certainly creating a new momentum for “flexicurity”.
employment rules from the hiring to the firing, including new regulations to deal with flexible contracts. Although some rules on fixed-term contracts are tightened up, it is now possible for an Italian employer to enter into a first time fixed-term employment contract with an employee for a period no longer than 12 months, without having to specify the reasons of the fixed term.
There is more than one example to illustrate this development.
In Hungary, local labor law is overhauled by a new labor code that is intended to improve competitiveness and to increase employment in the face of the current crisis.
Italian Labor Law, for example, recently underwent extensive changes in order to reform the Italian labor market. These reforms introduce a relatively wide variety of changes to the current Italian
New forms of atypical and flexible employment are introduced, as well as significant changes in employment rules from hiring to termination. Severance pay for unlawfully terminated employees is capped at
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12 months’ salary. In some circumstances, employers will be allowed to end fixedterm contracts before the term expires. Although the new Hungarian labor code retains the general principle that individual employment agreements may only deviate from the code’s rules in favor of employees, the same does no longer apply for collective bargaining agreements. According to the new code, collective bargaining agreements may deviate from the code’s rules to the employees’ detriment. This eyecatching measure is intended to stimulate the conclusion of collective agreements. In the beginning of 2012, Spanish labor law underwent a historic reform to enable the country to try to manage its mass unemployment problem.
The new measures are intended to improve the employability and the stability of workers, and represent an attempt to transform Spain’s employment model by creating a new and different work culture adapted to modern business reality. At the one hand, employability is addressed through various modifications to Spain’s labor legislation. Professional training is now considered a personal right: all employees who have been with a company for at least one year are granted 20 hours of paid leave for job-related training activities. In addition, a more flexible human resources management is also required, which should allow for professional progression being based on the employee’s efforts and abilities, instead of professional classification. At the other hand, the issue of stability is addressed by giving particular importance to the specific regime for Small and Mediumsized Enterprises (SMEs) entitling them to tax deductions for hiring employees under the age of 30 with indefinite term contracts. In the Netherlands, the new inclination for “flexicurity” as well as the increasing importance of professional training (and retraining), can also be described in the Dutch government’s announcement on new legislation on dismissal. In future, it would be possible for Dutch employers to
terminate an employee’s employment contract without the prior judicial review of the cantonal court (“Kantonrechter”), although the employers will have to bear the costs of the first period of unemployment (for a maximum of six months). This would allow employers to reduce the cost of dismissal and to motivate them to help employees to find a new job. Moreover, the existing severance indemnity would be replaced by a financial compensation package (a “transition budget”) that must be used for training or for finding a new job. Although it appears that these plans will not be effective before 2014, the intention of the Dutch government is apparent - strengthening the functioning of the labor market by increasing workers’ mobility and training. In July 2012 the Belgian government announced its plans for a “recovery strategy” aiming at an enduring revival of this country’s economy, supporting its population’s purchasing power, a reinforcement of its companies’ competitiveness and a creation of more “highquality” jobs. Although the Belgian “recovery strategy” encompasses a wide variety of measures, the tendency for “flexicurity” is less evident here as it appears that the intended measures are less sweeping: an increase in the workers’ net salary to expand the gap with unemployment benefit, and the creation of more trainee posts for low-level school-leavers linked to the reduction
of the employer’s social security contributions for employers-tutors, etc. One can however assume that more fundamental reforms will follow shortly as the Belgian government has been forced by the Belgian Constitutional Court to cancel the difference in treatment between blue-collar workers and white-collar workers no later than 8 July 2013. A profound reform of Belgian employment law seems inevitable when creating a single and unified legal framework for employees in Belgium. Of course, the necessary urge to reform employment rules and policies can also be clearly perceived at EU level. Although social and employment policy is mainly in the hands of the EU Member States, it cannot be denied that the different European institutions have a longstanding commitment to increase employment levels in Europe. Through the so-called “Europe 2020-strategy”, the EU is striving for a competitive, social and resource-efficient economy. This implies, for example, that 75% of the European working population must be at work by 2020. In the context of this “Europe 2020-strategy”, the heads of state or governments of the EU Member States decided on a so-called “Compact for Growth and Jobs” on 29 June 2012. This compact encompasses action to be taken at the level of the EU Member States as well at EU level itself, with the aim of relaunching
growth, investment and employment as well as making Europe more competitive. Country-specific recommendations to guide Member States’ policies and budgets are endorsed. EU Member States are expected to translate these recommendations into their forthcoming national decisions and budgets, structural reforms and employment policies. In this framework the Member States are expected to put a particular emphasis on a variety of aspects, including clear-cut social and employment measures, whilst at the EU level, measures to combat high youth unemployment must be enforced by increasing traineeship opportunities. As the result of these new European measures remain to be seen and as it appears that the end current crisis is not yet in sight, the winds of change will still be blowing through European employment legislation, for some time to come. A second breath for “flexicurity”.
THE ROLE OF AN INTERNATIONAL AND EMPLOYMENT ALLIANCE As in many parts of the legal sector, the beginning of the 2000s brought big changes for the labour and employment field. The creation of large international, full service firms brought with it the development of integrated international legal services and the expectation from multinational
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corporate clients that this integrated approach could be achieved across many areas of legal practice. This increasing demand for international services prompted five European specialist and Employment law firms to come together in 2001 to form Ius Laboris, an Alliance that would provide the full range of HR legal services to multinational companies. The initial idea of leading independent law firms creating a specialist Alliance soon took off. For many firms, the possibility of being able to formally ally themselves with other leading independent HR law practitioners across multiple jurisdictions and to offer their clients an integrated, international service was compelling. The Alliance grew quickly to over 40 firms by 2008. However the growth pattern was highly controlled with Ius Laboris carefully selecting only those firms whose strategic vision aligned with the Alliance and who were present in the countries that were strategically important to Ius Laboris clients. The founders of Ius Laboris could have chosen other routes to achieve similar aims, such as joint ventures or referral networks. However, whilst each
had their pros and cons, time has proved that the formal Alliance structure has been very successful at bringing benefits to both clients and the member firms. The first and most obvious benefit for members and their clients is that the Alliance has a low administrative and management overhead. This comparatively light support structure means that members are not investing heavily in a corporate headquarters and all of the support structure that comes with it and allows them to be much more flexible with their pricing and, allows Ius Laboris to be more responsive and proactive in reacting to the changing client needs, than more rigidly controlled structures. Secondly, the independence of the members allows them to adapt to the needs of the local market. If there are certain areas that are more important in one particular country, then naturally firms are free and indeed encouraged, to develop their expertise and capabilities in that particular area, whether it is social security, tax or discrimination. Each jurisdiction country throws up its own hot issues, and what is important in one country may not
need the same focus in another. Thirdly, the specialisation and focus of the member has been crucial in allowing them to guarantee that consistently high quality and breadth of service can be provided in each jurisdiction in which Ius Laboris operates. Employment law differs from other forms of corporate advisory work in that local expertise is key. Unlike major construction or investment projects for example, what really matters when advising multinational companies on HR and people related issues, is a thorough knowledge of the local laws and processes. This depth of knowledge can only really be provided by local experts, and cannot be achieved if dispensed from one of the world’s major financial centres. The business rationale for the Ius Laboris alliance is clear. Clients benefit from the close collaboration and the development of project management and workflow skills between the member firms who know each other well and whose culture is aligned. Putting the right governance and organizational structures in place is important, but it is the strong cultural element that binds the members together and
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it is this element that has been crucial to the growth of the Alliance since the beginning. We believe that it is this element which sets Ius Laboris apart from other groupings and that we do very well.
About the authors: Olivier Wouters is a partner at Claeys & Engels, a member of Ius Laboris. Olivier Wouters practices employment law, law and social security law. Sam Everatt is the executive director at Ius Laboris, the world’s largest human resources law firm alliance. He is responsible for the general management and oversight of all business areas of Ius Laboris.
About Ius Laboris: Ius Laboris is the world’s largest alliance of employment & pension’s law firms providing companies employing an international workforce with first-class legal advice and support on all human resources issues. The alliance has over 2,500 attorneys worldwide with 41 members in 39 countries and 141 cities. Please see www.iuslaboris.com
Firm Name: Baker & McKenzie Contact Person: Yasuhiro Fujii Position: Partner Tel: +81-3-5157-2778 Email: yasuhiro.fujii@ bakermckenzie.com Web: www.taalo-bakernet.com/e/ or www.bakermckenzie.com
Upcoming Change in Employment Laws In this article, we highlight the upcoming amendments to two Acts in 2012 that will have a serious impact on employers: The Labour Contract Act (‘Labour Contract Act’) and the Act for Securing the Proper Operation of Worker Dispatching Undertakings and Improved Working Conditions for Dispatched Workers (‘Worker Dispatching Act’).
The Labour Contract Act The bill to amend the Labour Contract Act was passed on 3 August 2012, and the amendments has come into effect on 10 August 2012 upon promulgation (and partially within one year from 10 August 2012). These amendments seek to secure employment of contract employees, namely employees hired for a fixed period. However, the amendment that has come into effect is only to enshrine into law the doctrine established by case law that applies to employer’s refusal of renewal – that, under certain circumstances, an employer may not legitimately refuse to renew a fixed period employment contract without justifiable causes (i.e. an employer may not terminate a contract employee only for the reason of expiration).
Although this amendment appears serious to employers, it does not require they take any immediate action, because it does not change the existing case law. The more important amendments (that are supposed to come into effect early in 2013) are firstly, to grant contract employees a right of conversion to a permanent employee; and secondly to prohibit employers to set employment terms and conditions of contract employees unreasonably as compared to those of permanent employees. The former amendment would seriously impact employers using contract employees. When a contract employee, after completion of five-year service with renewal(s) with the employer, may offer to the employer an employment contract without a fixed period commencing from the date following the expiration of the then-current employment contract, the employer is automatically deemed to have accepted such offer, as a result of which the offered employment contract without a fixed period will be formed.
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The Worker Dispatching Act The amendments to the Worker Dispatching Act has already been enacted earlier in 2012 and will come into effect on 1 October 2012 (and partially on 1 October 2015). These amendments seek to tighten regulation of both labour hire agencies and host employers that use labour hire workers. Although the amendments mainly affect labour hire agencies, there are three changes that will impact host employers. Firstly, the amendment imposes an obligation on the host employer to take ‘measures necessary for stabilising the employment’ of the labour hire worker when it terminates the relevant worker dispatch agreement with the labour hire agency for its own reasons (i.e. not for cause). These measures could include, for example, introducing a new job or a new host employer to the labour hire worker, or paying compensation to the labour hire agency for putting the labour hire worker on paid leave of absence. Secondly, the amendment prohibits host employers from engaging their ex-employees as labour hire workers for one year after termination of employment. Finally, the amendment imposes a sanction against host employers that breach the Act, by granting labour hire workers a right to convert to employees of the host employer. This amendment will come into effect in 1 October 2015 but will most impact host employers. Under the amended Act, a host employer will be deemed to have offered the labour hire worker a direct employment contract when it accepts him/her under an arrangement that is in breach of the Act. As a result, a direct employment contract will be formed with the host employer when the labour hire worker indicates his/her intention to accept the deemed offer.
However, a situation could arise where the host employer either uses a labour hire worker for prohibited work; receives labour hire services from an unlicensed labour hire agency; engages a labour hire workers for a period exceeding the statutory limit; or engages a labour hire worker without executing a worker dispatch agreement with the aim of avoiding the application of the Act. Among other things, companies using labour hire workers should – with consulting lawyers – firstly, review current labour hire arrangements to confirm that they are compliant with the laws, including a review of the categories of work that labour hire workers engage in; secondly, review the length of current labour hire arrangements, and determine if they are subject to any statutory limitation period; thirdly, review existing contracts with labour hire agencies, and ensure that they include appropriate representations and warranties regarding the agency’s compliance with the Act; and lastly, review existing contracts with independent contractors and secondment arrangement, to confirm that they are implemented in an appropriate manner and legitimate manner so as not to be considered the bogus consignment or secondment practice. Although some of the above amendments are not coming into effect straightaway, it is important that companies immediately consult with lawyers that have the necessary expertise to not only review the risk inherent in the existing contracts for employees and labour hire workers, but determine how to manage them in the future.
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Carlos A. Felce* Partner carlos.felce@bakermckenzie.com Tel: (+58212) 276-5133 Manuel Díaz Mujica Partner manuel.diaz@bakermckenzie.com Tel: (+58212) 276-5131
The Evolution and Impact of Employment and Labour Law in Venezuela In general, since its inception at the beginning of the 20th century (particularly with the Labour Law of 1936 and its subsequent amendments), the Venezuelan labour legislation has generally been protective of the employee, establishing certain basic rights and principles designed to obtain a reasonable balance in the employment relations at individual and collective levels. However, at the same time, the labour legislation in Venezuela contains provisions allowing employers in general to adequately manage the workplace. Therefore, the key for the employer to succeed in this area is to become familiar with the labour provisions in advance and to take proactive and preventive measures, to make sure the company is in compliance with such provisions while securing and adequately exercising its managerial rights. Of course, a key element is for the employer to also develop an atmosphere of mutual respect and trust in the workplace, conducive to the timely attention and resolution of individual (and, where applicable, collective) labour concerns or grievances in an adequate manner. The amendments that have been enacted and implemented over the years, generally, have had the objective of including improvements to the existing platform of labour rights. However, in some cases, they have introduced certain flexibility for the employer to manage the workplace. Currently, some of the main principles included in the Venezuelan labour legislation are, among others that are not mentioned in this article, the principle of prevalence
of reality over form, the nonwaiver principle, the protection principle and the non-arbitrary discrimination principle. Labour rights included in the legislation are, among others that are not mentioned in this article, payment of a salary; rest days and holidays; remuneration and surcharges for work during rest days, holidays, overtime and work at night; and lastly, vacations, vacation bonus, profit sharing, seniority benefits and indemnities in the event of unjustified dismissal. In addition, certain workers are specially protected against dismissal, deterioration of conditions and transfers, without just cause previously proven before and authorised by the competent Labour Office. Just to mention some examples, there is a Presidential Decree containing this protection for several workers in the private sector, with certain exceptions. The Decree is supposed to be effective until 31 December 2012, but it could be extended through a similar Decree as it has been happening in recent years. Pregnant workers and the respective fathers are also protected during pregnancy and the two years following childbirth, as are Prevention Delegates elected under the Organic Law on Occupational Prevention, Health and Safety. On 7 May 2012, the new Organic Labour and Workers’ Law (the ‘OLWL’) was published in the Official Gazette, replacing the previous Organic Labour Law (the ‘OLL’) originally published on 20 December 1990 and entirely in effect since 1 May 1991, with partial amendments effective on 19 June 1997 and later on 6 May 2011. The OLWL introduced several changes to the labour legislation in Venezuela, and while it is not the objective of this article to describe all the changes included, the following is a general summary of
some of the main ones.
The Seniority Benefits System The OLWL introduced a new seniority benefits system, which is similar to the one set in the former OLL, but with certain changes. Among these changes are that there is a final seniority benefits calculation to be made at the end of the employment relationship and on the basis of the employee’s last salary, which is to be compared with the seniority benefits that were earned during the employment relationship. If the final calculation is higher than the seniority benefits earned during the employment relationship, the employee receives the benefits earned during the relationship plus the difference between the latter and the final calculation.
The Labour Stability System The OLWL introduced a new labour stability system. Unlike the former labour stability system set forth in the former OLL which allowed the employer to dismiss without cause by paying certain additional indemnities, under the new system the employee who is dismissed without cause, elects whether to be reinstated with back pay or finalise the employment relationship and receive payment of the additional indemnity(ies) that may apply.
Outsourcing The OLWL prohibits certain forms of outsourcing, which were not prohibited under the former OLL. It also establishes a transition period of three years for employers that had hired companies in cases of prohibited outsourcing, to hire the corresponding employees involved in the prohibited outsourcing. During the transition period, the employees involved are protected against dismissal, deterioration of conditions and
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transfers without just cause previously proven before and authorised by the Labour Office. They are also entitled to receive the same benefits as if the employer had already hired them.
The Working Week The OLWL reduces the maximum duration of the daytime working week to 40 hours and of the mixed time working week to 37.5 hours (from 44 and 42, respectively, under the former OLL). It also grants an additional mandatory weekly rest day that must be enjoyed consecutively with the traditional mandatory weekly rest day. However, these provisions are not yet in effect and will become effective as of 7 May 2013. In the meantime, companies affected must adjust their work hours with the participation of the affected employees, and file the corresponding new work schedules before the competent Labour Office.
Detailed Receipts The OLWL provides that if the employer does not comply with the obligation to issue detailed receipts to its workers each time it pays salaries and benefits, the allegations of the workers regarding the salary will be presumed truthful in the absence of evidence to the contrary.
Written Employment Agreements Similarly, if the existence of the employment relationship has been demonstrated but there is not a written employment agreement executed with the employee, the OLWL provides that the allegations of the employee concerning the contents of the employment agreement will be presumed true unless there is evidence to the contrary. The employer must also record the date and hour when the worker was provided with a copy of the employment contract, in a book that the employer must keep for this purpose.
Sanctions for Violations The OLWL increases the sanctions applicable for violations of certain labour obligations, and creates criminal liability for certain infractions, e.g., contempt of an order to reinstate a protected
worker, violation of the right to strike, failing to comply with or hindering the enforcement of decisions issued by labour administrative authorities, and for illegally and unjustifiably closing the source of work.
The Workers’ Councils Although the OLWL has introduced the Workers’ Councils, with functions different from those of trade unions, these Councils will not be in effect until a special law is enacted for this purpose.
Filing Claims The OLWL creates a new administrative procedure for the filing of claims against the employer concerning questions of fact.
Mandatory Benefits and Collective Relations Finally, the OLWL increases some of the mandatory labour benefits and introduces many changes in the area of collective relations. Among these, the creation of a National Registry of Workers’ Unions starting in January, 2013; the obligation by trade unions to adjust their by-laws to the OLWL prior to 31 December 2012; and the provision allowing a sole workers’ union in a company to obligate the employer to negotiate a collective bargaining agreement, even though the union does not represent the majority of the interested workers. There are many more changes introduced by the OLWL, and the changes highlighted in the preceding paragraphs contain additional details and points of interest, which are not included in this article. In general, employers must familiarise themselves with the new legislation and adopt effective measures to make sure they comply. Failure to comply with the labour legislation may result not only in specific liabilities and sanctions but also in the impossibility to obtain the (or in very serious cases, even the revocation of the existing) Labour Solvency. The Labour Solvency is required, among other purposes, to participate in bids and enter into contracts with the public sector, and to purchase foreign currency from the competent exchange control authorities at the official
exchange rate. Consequently, it is advisable for employers to obtain legal advice in order to not only properly implement the changes introduced by the OLWL, but to ensure compliance with the Venezuelan labour legislation in general.
About our Venezuelan Employment and Labour Practice Group Our Venezuelan Labour and Employment Law Practice Group is comprised of a team of 21 lawyers and various law clerks practicing in Caracas, Maturín, Puerto La Cruz and Valencia, Venezuela. In Venezuelan cities where labour lawsuits or claims are likely to occur but where we do not have offices, we have professional relationships with local law firms that help us handle cases. Chambers Latin America has rated our Venezuelan labour and employment practice in Band 1 for the past three years (2010-2012). The PLC Which Lawyer? Yearbook has rated our labour and employee benefits practice as leading for the past five years (2008-2012). Our team has vast experience advising and representing employers in the most relevant employment and labour law issues in Venezuela, including without limitation: compensation and benefit plans and structures; calculation of severance pay and other labour benefits, drafting of employment contracts and settlement agreements; negotiation, drafting and interpretation of collective bargaining agreements; provision of legal advice, representation or assistance in connection with individual and collective labour negotiations, conflicts and litigation; provision of legal advice with respect to the hiring, transfer and termination of international and local employees; labour audits and labour-related compliance issues; codes of conduct, internal labour policies, rules and regulations; re-organisations; personnel reductions and outsourcing; occupational health and safety issues; social security and other mandatory social contributions; proceedings before the administrative and judicial labour authorities; and in-house seminars and training courses.
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Bech-Bruun Mette Klingsten Partner, Head of Employment and Labour Department With our 515 employees and offices in Copenhagen and Aarhus and a representative office in Shanghai, BechBruun is among the leading and largest law firms in Denmark. We are a full-service law firm rendering advice on all aspects of corporate and commercial law. Our clients encompass Danish and international enterprises of every size and organisations and public authorities. Bech-Bruun has 78 partners, 263 fee earners and 40 case administrators. We have the size and the specialist expertise to staff any transaction with lawyers from the right seniority levels. As a result, we are able to meet our clients’ challenges at competitive rates. We take a sincere interest in following any challenge or opportunity our clients might face. We do not only assist our clients resolve difficulties, but also advise on how to proactively exploit business opportunities and prevent problems. We have lawyers from many different countries and a large international network capable of rendering advice in matters transcending national borders. Bech-Bruun’s ambition is to make complex legal issues simple to understand for our clients. We know that the end result is much more important than the details that got us there. To reach the best results, we provide crossdisciplinary advice tailored to the situation and needs of your business. At Bech-Bruun, we base our work and the way we do business on decency and respect for our clients, employees and the surroundings. We acknowledge the Danish Bar and Law Society’s Code of Conduct, and as a signatory of the UN Global Compact we observe its ten guiding principles to which we submit an annual report on our CSR activities. CSR is an integral part of our management and business strategy. By combining social responsibility and business, we commit ourselves to treating our employees and the surrounding world with respect, to reducing any adverse environmental impact and to creating good business results for both our clients and our firm. Responsible business ethics are the foundation in the way we operate and reflect our commitment to our clients and stakeholders. Our Code of Conduct provides for our expectations to the ethical behaviour of our employees and reflects how we expect to engage with our stakeholders. Bech-Bruun’s Employment and Labour Department, headed by Mette Klingsten, is highly rated by two of the leading international legal rating directories – Legal 500 and Chambers. Our performance is rated on the basis of transactions completed, successful court cases conducted and interviews with Danish and international clients as well as competing law firms. The Employment and Labour Law
Tel: +45 7227 3520 www.bechbruun.com mkl@bechbruun.com Langelinje Allé 35, 2100 Copenhagen, Denmark Department is listed as a first tier firm in both Legal 500 and Chambers and Partners.
Quotes from Chambers 2014:
Department head Mette Klingsten is «business-oriented, pragmatic and very skilled,» «The lawyers are extremely skilled; it is hard to find better expertise in Denmark.» «The work Bech-Bruun does is excellent; we are always very satisfied.» The work of the team has an international element and we regularly work with colleagues and other lawyers abroad. Our expertise includes: • Public employment law and the law pertaining to the civil service • Collective labour law • Advice on terminations and redundancies • Drafting of contracts • Staff handbooks and policies • Employee-appointed board members • Bonus and incentive schemes • The Danish Transfer of Undertakings Act • Expatriation/repatriation • Anti-discrimination legislation • Health and safety issues • Information and consultation • Human rights. • CSR
Advising the Clients
Our clients find that despite having strong in-house HR expertise, they require expert advice and legal assistance in many aspects of Danish and international employment and labour law. For more than 30 years, we have advised listed companies, international corporations and SMEs as well as public authorities and municipalities on issues within all areas of employment and labour law. Our multi-discipline approach and effective resource allocation ensures our clients exhaustive advice that takes all relevant matters into account. We also have long-standing experience in conducting cases of general public importance before the ordinary Danish courts, the Danish Labour Court, the Danish Unfair Dismissals Tribunal as well as arbitration tribunals. Common challenges Three decades of intense labour market regulation have resulted in increasingly complex and extensive employment and labour legislation. Moreover, many Danish companies are subject to collective agreements, which may make it difficult to determine which set of rules applies. An increasing number of companies are also faced with challenges arising from the new transnational dimensions that today’s highly international labour market brings about.
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Clifford Chance LLP Amsterdam Sara Schermerhorn, Counsel Tel: + 31 20 7119 332 sara.schermerhorn@cliffordchance.com www.cliffordchance.com
The Changing Employment Landscape – the Dual Dismissal System Internationally, the Netherlands is known for its deviating dismissal system, which means that unless for cause, employees cannot be dismissed unilaterally. In order to serve a legally valid notice, a dismissal permit is required from a governmental institute ‘UWV’. A severance is not awarded in this procedure, but may be claimed afterwards. Alternatively, the Court can be requested to terminate the employment relationship, and may then award financial compensation in a procedure that does not provide for appeal. In both instances, the test of whether a valid reason for the dismissal is present takes place prior to the dismissal itself. No dismissal permit is required for statutory directors (statutair directeur) who, apart from an employment contract, may have a corporate relationship with the company that employs them. Their dismissal as board member shall automatically result in the termination (after lapse of the notice period) of their employment. For a long time, this dual dismissal system has been under discussion. Having the existence of two dismissal routes, with major differences with regard to process, the possibility of appeal, the turnaround time and the compensation, has been hard to justify. Furthermore, there is discussion regarding the differences in protection between the so-called insiders and outsiders (permanent employees as opposed to flexible workers), and the low workers mobility in the Netherlands, which is said to be caused by the existing system. The fall of 2011 resulted in a legislative proposal on abolishment of the preventive dismissal test and the dual dismissal system. In the spring of 2012 after the fall of the Dutch government, a budgetary arrangement was reached and confirmed by the departing government, aimed at additional cost-saving measures. Part of
this arrangement provides for a revision of the Dutch dismissal system – again, stepping away from the preventive dismissal test and the dual dismissal system, with the intended start date of the – yet to be drafted – legislation being 1 January 2014. Although the plans are severely criticised and may undergo changes further to comments of advisory bodies and the new government, there is a firm belief amongst the various stakeholders (trade unions, employer’s organisations, academics etc) that a change to the Dutch employment landscape is inevitable.
Cantonal Court Formula
Currently, Courts when granting compensation in dismissal cases, apply a non-statutory severance payment calculation based on the ‘Cantonal Court Formula’ – a formula used by the Dutch Courts to determine the financial compensation in cases presented to the Court. As a result, this formula is used for settlements outside the Court, and takes account of the age and years of service. After a retrenchment of the (outcome of the) formula in 2009, a committee representing the joint Courts has announced that it is once again taking a close look at the formula. The background for taking this decision is that the differences in outcome, depending on the dismissal route applied, cannot be justified. The committee has said to work on a new formula for calculating the compensation that should apply indifferent to the dismissal route. Furthermore, it has indicated that the element of someone’s (missing) job opportunities will gain weight. In the formula, this may impact the severance that is payable to less educated employees with possibly poorer job opportunities, thereby indirectly sanctioning employers who do not invest in the employability of their employees. The relevant committee has indicated that it expects to be able to present the revised formula
during this year’s fall with direct effect.
Public Debate
A further revision and downward adjustment of the Cantonal Court Formula fits into the ongoing debate on a long-term basis. Exorbitant remuneration and severance fees have become a topic of increasing interest and are – especially when failing performance is rewarded – publicly rejected. Many initiatives have already addressed this topic. Apart from codes that are setting best practice provisions for maximum severance fees for listed companies’ management, or management board members in the financial or banking industry, legislation is also pending with regard to setting a statutory maximum to severance fees for a wider group of employees. The most recent plans regarding the revision of the Dutch dismissal system, also refer to the idea of a strongly economised statutory severance. In addition, a statutory bonus prohibition has been enacted for selected employees of entities receiving state aid. The regulatory required remuneration policies that promote sound and effective risk management, are also becoming more and more common in many sectors of industry. What goes for the dismissal system, also applies here. However, not all proposals regarding employee remuneration and, more specifically, severance payments, may in the end be enacted – or not at least in its current form, changes to severance payments are likely to be there. It is good to keep this in mind when negotiating on a contractual severance with an individual, or discussing a new social plan with the trade unions or works council. Be aware that good timing of planned actions may be worthwhile in view of the above developments.
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Latham & Watkins LLP Catherine Drinnan Partner Tel: 44 207 710 1116 catherine.drinnan@lw.com www.lw.com
All Change Please – UK Employment Law Overhaul in Process Despite the fact that the Government has stated its intention to reduce red tape in legislation, organisations that employ UK employees could be forgiven for thinking precisely the opposite effect is being achieved. Over the last year, there have been numerous consultations and calls for evidence organised by BIS, as well as the Beecroft Report, the Enterprise and Regulatory Reform Bill, a commissioned review of tribunal practice and procedure, and the debate on ‘say on pay’ in the wake of the shareholder spring. In addition, the auto-enrolment regime for workplace pensions gets off the ground this October. However, it is becoming increasingly difficult for employers to keep up and legal advice should be sought to ensure they are aware of changes to their rights and responsibilities. A number of the reforms (and proposed reforms) are, ostensibly at least, designed to make things easier for employers in a time of global recession. For example, new hires from 1 April 2012 have to be employed for two years, as opposed to one, before they acquire the right to claim unfair dismissal. The idea is that employers are more likely to hire new staff if they perceive it will be less complicated to dismiss them if the relationship does not work out. However in practice, it might be the case that we merely see a rise in claims where there is no service requirement, such as discrimination or dismissal on the grounds of being a ‘whistleblower’. Similarly the idea of introducing compensated ‘no fault’ dismissals, as mentioned in the Beecroft Report, for small businesses, would potentially reduce the regulatory burden for those least able to bear it. However the most recent indications from the Government suggest that this change is not being actively considered at the moment. The proposal that many types of employment claims will need to undergo a mandatory period of conciliation with ACAS (the Advisory, Conciliation and Arbitration Service) likewise should simplify the claims resolution process, and lead to fewer cases progressing to tribunal (with the legal fees and management time that entails). However, questions are being raised about how ACAS will cope with the increased workload, particularly from those who have had mixed experiences of ACAS under the current regime. Furthermore, the concept of introducing a financial penalty on employers, in addition to damages awarded to the employee, which are found by a tribunal to have breached employment rights has caused consternation among employers, and may act as a deterrent to hiring more UK staff. The concept of ‘protected conversations’, where employers can have off the record discussions with employees without the employee being able to raise the contents of those discussions in a subsequent unfair
dismissal claim, may seem a useful extension of the ‘without prejudice rule’ (by removing the need for there to be a dispute between the parties for the protection to apply). However, it is unlikely to be simple to determine whether a conversation is protected, and whether anything the employer says is improper, meaning the protection will fall away. As to whether renaming ‘compromise agreements’ as ‘settlement agreements’ will have any practical effect, remains to be seen. The proposal to introduce standard form settlement agreements for parties to use may on the face of it be a welcome simplification, but in practice these are unlikely to be workable for any but the simplest of dismissals. While employers are grappling with these issues and their applicability to their workforce as a whole, UK listed companies will also need to consider the Government’s proposals regarding executive pay, expected to come in to force in October 2013. The existing regime, whereby shareholders have a non-binding vote on the company’s remuneration policy, would be replaced by a binding vote to be held every year, or every three years, if the company’s remuneration policy has not changed. In addition, the structure of the remuneration report would change to provide maximum transparency, including a forwardlooking element dealing with the policy and proposed payments, and a backwards-looking element covering the way in which the policy was applied in the previous year. There are also changes to come in the pensions arena. In order to address the issue of UK employees failing to save enough for their retirement, the Government has introduced a requirement on all UK employers to auto-enrol ‘eligible jobholders’ into a qualifying pension plan. This can be the employer’s own plan, provided it meets the qualifying criteria, or a plan offered by a specialist provider, such as the National Employment Savings Trust (NEST). The date from which an employer must comply with the new regime will depend on the number of its employees, with the largest employers required to comply from October 2012. Employers will also ultimately be required to contribute 3% of the employee’s qualifying earnings (this being earnings between the lower earnings limit and the upper earnings limited - £5,564 and £42,475 for 2012/2013), with employees contributing 5%, although this contribution requirement will be phased in over five years. Employees can opt-out (but the employer cannot encourage them to do so), and must be reenrolled every three years. The UK employment and benefits landscape is changing, and employers need to ensure they remain compliant to avoid potential pitfalls and maintain a harmonious workforce.
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Littler Peter Susser Chair, International Employment Law Practice Group Telephone: (202) 842-3400
Labor and employment law issues have become as globalized as the world of business and commerce. With the pervasiveness of the Internet and social media, when a business employment practice is singled out and challenged in one location the repercussions can be felt around the globe. Through an integrated worldwide strategy, Littler brings together practitioners experienced in local and crossborder labor and employment matters to provide seamless client service across national boundaries. Littler’s international employment and labor law practice can help multinational clients maneuver through the best of economic times, as well as during unstable periods. We help global clients adapt to the maze of employment laws, taking into account the varied economic circumstances and customs throughout the world. We advise Fortune Global 500 companies on the full array of labor and employment issues, including managing independent contractors, litigating and arbitrating cross-border employment claims, drafting executive contracts, assisting with workforce reductions, and assessing and drafting global ethics and data privacy policies. We also advise medium- and smaller-sized companies making their first international ventures, as well as those that are expanding their overseas operations. We assist clients in developing the framework to operate internationally with employees in various countries, whether they are on temporary assignment or have longer-term expatriate arrangements.
Littler’s attorneys provide clients with extensive support in: • Assessing risks and benefits of global operational decisions;
psusser@littler.com Littler.com 650 California Street 20th Floor San Francisco, CA 94108
• Managing global labor relations; •
Protecting corporate reputation and brand;
• Managing global human resources; •
Addressing international data protection issues;
•
Reviewing expatriate employee programs;
•
Developing multilingual management training.
We are proud to have practitioners with vast experience in international employment law on our team. A number of our lawyers have served as in-house counsel for major international corporations, while others have practiced employment law in various countries. Still others have assisted companies with cross-border labor issues, including global labor relations matters, international compensation and benefits issues, multijurisdictional data privacy projects and global workforce reductions. In addition, our team frequently acts as the Adviser to the Employers’ Delegation to the annual International Labour Conference of the International Labour Organization (ILO) in Geneva, Switzerland. Littler has a seasoned team to serve the needs of our clients throughout Latin America and the Caribbean, with practices in Colombia, Costa Rica, Dominican Republic, El Salvador, Honsuras, Mexico, Panama, Puerto Rico and Venezuela. Littler attorneys also are licensed to practice law in Africa, Australia, Brazil, Canada, China, Spain and the United Kingdom. They often work with leading attorneys in jurisdictions worldwide to provide clients global legal services with a single point of contact.
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We provide advice on international matters including: Global Labor Relations As companies expand internationally, labor unions have responded by evolving into global enterprises in multiple jurisdictions. Unions have extended corporate campaigns to a global scale and are utilizing the dispute resolution processes of international organizations such as the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises. Littler advises employers on global labor relations matters and negotiating international framework agreements that establish a relationship between a multinational company and a trade union at a global level. We also provide legal representation in proceedings before the U.S. National Contact Point of the OECD.
Cross-Border Litigation, Arbitration and Discovery – Multinational companies are increasingly drawn into employment-related claims that involve employees and managers in multiple offices. For example, a European bank may be sued in New York for alleged discrimination based on decisions that originated in the United States. Electronic evidence often exists in multiple jurisdictions and may be subject to disclosure in U.S. litigation. The application of the attorney-client privilege also becomes an issue across national borders. We have extensive experience in litigating matters of this nature on behalf of multinational entities.
Works Councils – We advise employers operating in countries that engage works councils to comply with their requirements, including informing and consulting with works councils prior to reductions-in-force, business reorganizations and other significant developments.
Codes of Conduct – To protect a client’s global brand and reputation, we help employers develop corporate
codes of conduct, which guide a company’s operations and working arrangements in multiple jurisdictions. Taking into account a country’s local laws, customs and social norms, we advise employers on which guidelines to adopt and how they should be written and implemented.
the employer should have an adequate expatriate program to ensure that appropriate policies are in place. Our lawyers assist employers in tackling tax issues and establishing appropriate compensation, benefits, allowances and perquisites for expatriate employees.
Workforce Management –
Transnational Restructuring –
We assist employers in managing many aspects of human resources, from recruiting and hiring employees (and, in many instances, transferring them across international borders), to performance development and training, disciplinary actions and terminations. Standard procedures in one country may have far different implications in another, and we advise employers on how to modify their approaches and priorities in an efficient manner to maximize compliance with local laws.
Data Privacy – International data protection laws have made the task of managing human resources information across multiple borders even more challenging, with many countries’ data protection agencies enforcing their own comprehensive data privacy laws. Littler has helped multinational corporations understand the international data privacy landscape, adapt to local requirements on processing and transferring personal data, and develop privacy policies that comply with these varying standards. We help employers set up the necessary legal structure for cross-border data transfers.
Employment and Transfer Agreements – Multinational employers frequently develop employment agreements for their local and international staff. These agreements must take into account the differing requirements of local laws. Provisions viewed as standard in an employer’s home country may not be consistent with the laws of the country where its executives are assigned or its business is expanding.
Expatriate Programs –
With an increasing number of agreements involving multinational transactions, Littler has a team in place to coordinate due diligence on an international scale for deals ranging from tens of millions to billions of U.S. dollars. Countries have different rules on the parties’ obligations to employees of companies targeted for purchase, the effect of the business transaction on the parties’ current employment contracts, and the duty to inform and consult or bargain with employee representatives. Littler can advise clients and coordinate legal advice in multiple foreign jurisdictions.
Advising International Employers on U.S. Labor and Employment Law – International companies with staff in the United States face unique challenges, including numerous federal, state and local labor laws and a fluid, multilayered regulatory environment. International employers can be vulnerable to disputes and lawsuits, but they also have special rights under Friendship, Commerce & Navigation Treaties. There are also common law rights that recognize the unique problems of companies that transfer expatriates across borders and are required to adapt their workplace to the special demands of U.S. employment laws. Many of our lawyers have years of experience assisting foreignbased corporations in complying with and adapting their workplace practices to U.S. law. We provide practical advice and training programs to help companies address labor and employment challenges they may encounter in the United States. These include claims of sexual harassment and discrimination, as well as allegations related to citizenship, ethnicity or national origin.
Before an employee is sent on an international assignment,
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Veirano Advogados José Carlos Wahle Partner Telephone: +55 (11) 2313-5810 jose.wahle@veirano.com.br
www.veirano.com.br Av. Brigadeiro Faria Lima, 3477 - 16º andar Itaim Bibi - 04538-133 São Paulo, SP - Brasil
Discrimination – Brazil Overview Brazil is a litigious country in many aspects of employment and yet discrimination is not among the most popular causes of legal action. Brazil balances unevenly between the warmth of a purported but controversial racial tolerance and the cruelty of social-economic prejudice. The Brazilian well-known docile and friendly character copes with discrimination in a mostly peculiar way. There is scattered prejudice underlying many actions of the ordinary life and popular culture, but there are not as many cases of blunt and open discrimination behaviour. Alex Bellos, as The Guardian correspondent in Rio de Janeiro, captured the essence of such conflicting features of the Brazilian society: “The Brazilian urge to dress up (…) seems to be especially powerful because beneath the clothes there are few countries as racially diverse or socially unequal. (…) Wearing a uniform – such as a Flamengo shirt or a carnival costume – is a way of denying differences of races and class. In a crowd of people dressed in the same strip, it is easier to forget the violent differences that mark the day-to-day life. Since football is the strongest symbol of national identity, wearing a football strip asserts a utopian Brazilianness. Brazil feels like a country that works.” (BELLOS, Alex, Futebol, The Brazilian Way of Life, 2002, Bloomsburry, p. 127). The Brazilian Constitution was enacted in 1988 after 20 years of military dictatorship. It came out as a very extensive legal book providing in detail for many social and political rights that had been neglected before. It has 250 permanent articles, many subdivided in several paragraphs and sections, plus 97 articles of provisional measures, some of which are still in effect. For example, there is constitutional provision for annual paid vacation, minimum wage, maternity leave, among many other employment
benefits. The fundamental rule on discrimination in the workplace is also in the Federal Constitution, which is supplemented by the Labour Code and other federal laws – according to the Constitution employment is a matter exclusive of federal legislation. (a) The Constitution bans «any form» of discrimination and grants to the people the freedom of profession. It also prohibits “arbitrary” termination, which has been consistently interpreted as the prohibition to terminate employment for any reason that is not businessoriented. (b) The Labour Code was amended in 1999 to include article 373-A, which prohibits job ads with reference to gender, age, «colour» (not «race»), family status (encompassing marital status and maternity). It also prohibits the refusal of job, promotion or termination based on those same aspects plus pregnancy. Such prohibitions will not apply if the job is obviously unsuitable for such characteristic, of course. For example, women are entitled to some special conditions to lift weight and to work overtime. Pregnancy is also protected under the Labour Code and the Constitution. (c) The Law 5,473 (1968) prohibits discrimination in the recruiting programmes. It was not revoked but it became obsolete as more specific laws came about (d) The Law 8,213 (1991) stipulates quotas for disabled workers applicable to companies with 100 employees or more. (e) Not particularly aiming at the workplace, discrimination or prejudice of “race, colour, ethnic group, religion or national origin” are generally prohibited in Brazil by a law enacted in 1989 (Law 7,716) and further elaborated in 1997 and 2010 (as amended by Laws 9,459 and 12,288). Articles 3rd and 4th of the Law 7,761 tackle the issue in public and private jobs respectively. (f) Last, the Law 10,741 enacted in 2003 provides generally for social
protection of elderly citizens, including professional rights and prohibition of age discrimination in recruiting programmes, except as the circumstances may justify younger workers, such as the need of physical strength.
Who’s covered? The Federal Constitution’s fundamental, the prohibition of “any form” of discrimination applies to everyone whether employee, or independent contractor. The Law 7,716 applies to all workers, both public agents and employees of private companies. The more specific rules provided for in the Labour Code though apply to employees only.
What enforcement/remedies exist? The Law 7,716 is in fact a penal law. The actions of discrimination or prejudice provided therein, including the aforementioned articles 3rd and 4th, constitute criminal offences. According to the Constitution an offender of racism is not eligible to bail-out. Sentence may be up to 5 years and imprisonment is an actual possibility. The Law does not provide for specific compensation, although fines will apply to minor offences such as publicizing work ads with requirement of unjustifiable personal features. The general rule of civil liability applies and thus all direct damages are subject to compensation, as ascertained by the judge. Depending on the circumstances, the compensation may include loss of wages, e.g., to someone who has been unfairly refused a job, or more frequently a special compensation for pain and suffering (under the Brazilian notion of moral damages, as opposed to the material ones). Awards for special damages do not follow statutory patterns or criteria. The judge must arbitrate
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them according to general principles of law, balancing between ‘prudence’ and ‘exemplary judgment’, while the ‘parties’ financial condition’ will also be important, so as to prevent the victim from having the incentive to make fortune out of misery and the employer from paying an insignificant amount. Average awards for special damages are modest as compared to other countries: between £4,000 and £8,000. But class actions filed by the Labour Public Attorney’s Office (Ministério Público do Trabalho) are becoming more frequent and awards for collective damages could be as high as £ 2,000,000.
How common are claims? Individual claims are still infrequent as compared to the massive litigation for overtime, equal pay for equal work and other ordinary employment rights. Despite the broad constitutional protection, which will support any plausible claim for discrimination, in reality the discrimination cases in court are chiefly for gender and colour. Actually, existing litigation reflects the traditional statistics that women earn less than men (despite express prohibition) and that coloured people (in Brazil, meaning of African and Native American heritage) earn less than white people (in Brazil, meaning Latin and Caucasian heritage). Women have been making significant recent progress, but they are still below men in jobs and wages. But according to the IBGE, the federal agency for social statics, white men earn wages 40% higher than coloured men with the same education degree, which suggests that unspoken discrimination is still very common and that companies still get away with it. Recently, a bill of law was submitted in the Senate (the Brazilian higher chamber of the Congress) to stipulate more serious penalties, including fines, to such cases of discrimination. The cases of alleged discrimination because of sexual orientation have been moderately growing in the recent years. Age discrimination against senior employees is a social fact, but few turn into litigation. This is partly because it is really difficult to establish that
age was the underlying motive of termination, but mostly because many unions anticipated the problem and managed to obtain special indemnities to employees who are fired close to the age of retirement. As one may deduct from the Law 9,459 there are cases of origin discrimination amongst Brazilian nationals of different regions. Maybe as a result of its continental proportions, internal immigrants from poor regions (North and North-Eastern Brazil) are largely exposed to discrimination in the Southern Brazil. Surprisingly, this social problem is rarely an issue in labour litigation, though. Indeed, according to the Ministry of Labour in January 2011 a national research conducted by IPEA, a federal research institute, showed that 91.7% did not know of any case of discrimination in their workplace.
What claims are most common and what are the trickiest issues for employers? The employer’s strict liability derives from its duty to organize and discipline the workplace. In Brazil, the employer has the power and the duty to keep discipline within the workplace. Therefore, in order to be acquitted from the responsibility for its employee’s illegal conduct towards colleagues the company must prove that it looks after discrimination/ harassment free work environment demonstrating concrete actions and to demonstrate that it could have not prevented the incident. The company is also expected to take prompt disciplinary action upon any incident. The most difficult cases are alleged but doubtful actions of discrimination as a result of improper or abusive management. Multinationals mainly and some large national companies have Equal Opportunity policies, ombudsmen, hotlines and other mechanisms to prevent and ban discriminatory conduct. Experience shows that mid-level and low-level employees tend to make inappropriate use of hotlines for personal complaints which do not constitute professional
misconduct. Maybe this is because the average Brazilian worker tends to mix personal feelings with professional relationship.
Are there any specific exceptions in your law? As a matter of fact, the prohibition of discrimination in the workplace contains a general provision that allows justifiable exceptions by the circumstances. The law does not provide for specific examples, but one can figure out that certain jobs requiring physical strength are more suitable to youngsters or to a certain gender, such as jobs that require manual lifting of weight or endurance, police officers, firemen, security guards (inspection review or body search require guards of the same gender of the subject person) etc.
Retirement The default retirement age is 65 for men and 60 to women, while some special rules apply, such as to rural workers and to workers exposed to unhealthy conditions. Mandatory retirement is not common and in fact it is only possible in the public service.
Interesting cases In the beginning of 2012, Petrobrás, the Brazilian oil multinational, closed a class action through an agreement with the Labour Public Attorney’s Office at São José dos Campos, a traditional industrial city about 100 km from São Paulo. The lawsuit was motivated by different forms of discrimination against outsourced workers. Petrobrás allegedly refused to let into its refinery approximately 30 outsourced workers who either had a criminal record or a history of strike or labour litigation. In exchange of the lifting of the charges including a £ 156 Mi claim for special damages, Petrobrás agreed to take back any discrimination conduct, to promote nationwide educational campaigns and paid a special indemnification to charity organization of £ 130,000, approximately. By José Carlos Wahle, Parter at Veirano, São Paulo, Brazil
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