Smart News International Mobility – March 2022

Smart News International Mobility – March 2022

The whole LPA-CGR avocats mobility team is pleased to present its new Smart News. Please find below a selection of international legislative and jurisprudential news related to mobility issues.

EUROPE : France

ASIA : Hong Kong | China | Singapore

AFRICA : Morocco

MIDDLE EAST : UAE

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EUROPE

France :

Posting of workers certificate and criminal offense of undeclared work  

According to European Union Court of Justice case law, which was responding to a preliminary question (“question préjudicielle”) asked by the French Supreme Court (« Cour de cassation »), the E101 certificate must be considered only regarding social security matters, in front of the courts of posted workers host countries.

As a result, the holding of the E101 certificate, which is now called A1 form, does not prevent the repression of fraud related to posting of workers within the European Union, and therefore the sanction of the employer’s violation of their obligations based on labor law of the host country (CJEU decision of May 14, 2020, case C-17/19 and CJEU decision of April 2, 2020, cases C-370/17 and C-37/18).

In a decision dated March 31, 2021 (appeal n°16-16.713 FP-B+R+I), the Social Chamber of the French Supreme Court listed the consequences of this European case law by considering that the holding of the E101 certificate by the Spanish courts did not prevent the employer from being convicted to pay to the employee several amounts, notably wages.

The French Supreme Court considers that the A1 form does not prevent the employer against all risks resulting from a violation of the legal provisions.

 

End of posting period: pay attention to the drafting provisions

In order to assess the employer’s obligations regarding the repatriation and subsequent redeployment or reintegration of a seconded employee, the courts must necessarily take into account, without distorting them, the clear and precise terms of the contract concluded between the parties.

In this respect, the French Supreme Court recalls that the scope of such obligations depends not only on the terms of the law, but also on the terms of the contract.

In a decision dated on November 10, 2021 rendered by the Social Chamber of the French Supreme Court (appeal n°20-10.954, F-D), an employee terminated his employment contract after the company had offered him, upon his return from expatriation, a job at a lower level than the one he occupied abroad.

The French Supreme Court criticized the decision of the Court of Appeal validating the employee’s termination of the contract, even though it had noted that the contract stipulated „an obligation to reclassify the employee to a position taking into account the experience acquired abroad„, and not to a position with a classification and remuneration equivalent to the one he held during his expatriation. According to the French Supreme Court, appeal judges distorted the clear and precise terms of the contract.

In another decision, the French Supreme Court held that, since the provisions concluded before the employee went abroad, specified that he would be repatriated at the end of his secondment, but did not include any commitment of the employer to re-assign him to his former place of work, the fact that the employee refused this new position justified his dismissal (Cass. soc. June 9, 2021, appeal no. 19-24.366 F-D).

It is therefore advisable to anticipate the end of the employee’s secondment and to be particularly careful when drafting the contractual clauses related to his return.

 

Covid-19 and employees working from home

Following the Covid-19 pandemic, many employees wished to move and work from their new home abroad, without their employer’s agreement.

Companies should pay attention to these issues which could have different consequences, notably regarding social security matters, health and safety matters, or tax matters, due to the possible recognition of a permanent establishment in another country.

⚠ Employees working remotely from abroad are not posted workers or expatriates and do not fall under the same legal regime.

 

Transposition into French labor law of June 28, 2018 Directive

France has transposed Directive (EU) 2018/957 of the European Parliament and the Council of June 28, 2018, amending the Directive 96/71/EC related to posting of workers for service provision.

The main contributions of this directive are:

• The principle of equal remuneration between posted workers and national workers: the “main core” of labor law provisions benefiting to posted workers on French territory is completed by the „reimbursements made in respect of professional expenses corresponding to charges of a special nature inherent to the role or employment, borne by the posted worker, during the performance of his mission, in respect of transport, meals and accommodation„.
• The application of all local labor provisions in the case of long-term posting: the “main core“ of labor law provisions will be applicable to posted employees for 12 months, which duration can be extended for a further 6 months if the employer justifies the extension. Beyond this period, the employee will benefit from almost all the provisions of the Labor Code.

 

Applicable law to an international employment contract and mandatory provisions (“dispositions imperatives”)

In two decisions dated on December 8, 2021, the French Supreme Court clarified the qualification of mandatory provisions (“dispositions imperatives”’).

In the first case (appeal n°20-14.178), the French Supreme Court recalled that, in accordance with Article 8 of Regulation (EC) n°593/2008 of June 17, 2008, the law chosen by the contracting parties cannot result in „depriving the worker of the protection afforded by provisions which cannot be challenged by agreement under the law which, in the absence of choice, would have been applicable„. Thus, this decision was applied to the French provisions related to working time, which do not constitute an overriding mandatory provision (“loi de police”) but are provisions that cannot be challenged by agreement.

In the second case (appeal n°20-11.738) related to an employee hired by a Moroccan bank before being posted to France, the French Supreme Court considered that the mandatory French provisions on the termination of the employment contract were applicable, since they were more favourable than Moroccan law, and that their application was made mandatory by French law.

Consequently, the law of autonomy cannot deprive of effect the mandatory provisions of the law that would be applicable in the absence of a choice from the contracting parties, and therefore the judge must not substitute the second law with the first but make a comparison between the two laws.

 

International situations related to employee’s mobility are now managed by URSSAF

Since January 2022, URSSAF manages requests for secondments abroad of less than or more than three months, and situations of several employments (A1 forms, bilateral certificates, and certificates for maintaining French social security coverage in other countries). This competence is implemented through a new online service, ILASS, accessible on the website mon-entreprise.fr.

 

 ASIA

Hong Kong:

The recurring social issues faced by employers and employees in Hong Kong in the midst of the COVID-19 pandemic in 2021 have been summarised below.

 

Can an employer require its employees to undergo a COVID-19 test?

There is no clear legal basis for employers to require their employees to undergo COVID-19 testing, except where testing is legally required (sector considered to be high risk or if several employees of the same company have been tested positive for COVID-19).

However, depending on the circumstances of the case, such a measure could be justified by the employer’s legal duty to take reasonably practicable measures to ensure the safety and health of his employees, as defined by the Occupational Safety and Health Ordinance (Cap 509). If an employee refuses to comply with a lawful and reasonable direction from the employer to undergo a Covid-19 testing, the employer would be entitled to take disciplinary action against him/her.

 

Can an employer impose salary reductions on its employees?

The amount of salary and benefits received by an employee is a contractual right. Thus, an employer who wishes to reduce the salary or benefits of his employees will necessarily have to obtain the express consent of the latter.

In the context of COVID-19, such reductions could be accepted by the employees in order to avoid the company having no choice but to proceed with economic redundancies. As a reminder, social protection in Hong Kong in the case of redundancies is very weak compared to European protections (severance payment capped at HKD 390,000 for employees with at least two years‘ service).

 

Can an employer force an employee to take leave?

There are two categories of annual leave:

1. statutory annual leave governed by the Employment Ordinance (Cap. 57) which vary from 7 to 14 days depending on seniority; and
2. contractual annual leave granted in addition to statutory annual leave (common practice in Hong Kong, especially in the service sector), whose terms are provided for in the employee’s employment contract.

An employer may, subject to at least 14 days‘ written notice (or less, if agreed with the employee), order an employee to take statutory annual leave.

Regarding contractual annual leave, reference should be made to the terms of the employment contract. If there is no clear distinction between statutory and contractual annual leave, the employer may nevertheless apply the 14-day notice procedure provided for by the Employment Ordinance (Cap. 57).

Finally, unless expressly provided for in the employment contract, it is not possible for an employer to force an employee to take unpaid leave without his / her express consent.

 

China:

The rules to immigrate in China have never been so strict. Since mid 2020, China has implemented a more complex visa application procedure due to the pandemic and its restrictions for cross border travels. From now on, the application to enter  China requires a valid reason, such as business, work or family reunion to obtain the so-called  Invitation Letter (PU), an official document issued by the Chinese foreign affairs department.

The only exception to this PU letter application is when holding a valid Chinese residence permit. Thus an enterprise located in China and hiring  foreign employees will have to abide to the same rules and carry out the formalities to obtain the PU letter.

Applicants are usually facing lots of hurdles: submitting the right documents; identifying the local authority in charge; avoiding backlog and delays in the application process.

The application process is the following:

• The inviter shall first submit the application form to either the Commerce Commission of the District or directly to the City where the company is located, depending on the inviter’s scale of business operations.
• The inviter shall prove the necessity and the urgency of the invitation and the irreplaceability of the invitee with supporting documents, such as labor contracts and cooperation agreements, to support the application . The inviter shall also make a commitment that it will bear all liabilities in case the invitee violates the Chinese epidemic prevention rules.
• The applications should be filed at least 3 months before the expected date of entry, since it must be approved by 3 distinct levels of authority: District, Municipal Government, and Provincial Government.

The approval rate varies from province to province depending on their COVID-19 containment capabilities and their need for foreign investment. Based on our experience we found that an international metropolis like Shanghai is relatively more flexible and open to issue PU letters than Beijing.

 

Singapore:

• Immigration

As of 1^st of February 2022, Covid-19 vaccination is a condition for obtaining the following visas: Permanent Resident («PR»), Long-Term Visit Pass («LVTP») and Student’s Pass. In addition, vaccination will be required for the renewal of existing work passes.

Applicants’ vaccination status will be checked during the visa issuance process. Their vaccination records will need to be updated in the National Immunisation Registry («NIR») (i.e. they have been vaccinated in Singapore or have received a positive serological test result). If applicants are not registered in the NIR (for example, if they have not been vaccinated or have been vaccinated abroad but have a negative serological test), they will have to undergo the full vaccination regime in Singapore to meet the vaccination requirement before they can be granted PR or LVTP holder status.

It is possible to come to Singapore without quarantine on arrival by travelling via a Vaccinated Travel Lane («VTL»). However, certain conditions are required:

• Be vaccinated (3 doses),
• Have travelled and transited only to/through VTL Category I countries and/or Singapore,
• Arrive on a designated VTL flight,
• Undergo a Polymerase Chain Reaction («PCR») or Antigen Rapid Test («ART») within 2 days prior to arrival,
• Have a PCR test on arrival,
• Have an ART test from day 2 to day 7 after arrival,
• Download the Trace Together

Travelers who have been vaccinated and tested positive for Covid-19 between 7 and 90 days prior to departure for Singapore are exempt from the airport arrival test and post-arrival test.

Alternatively, it is possible to come to Singapore via the Work Pass Holder Lane with a quarantine, Stay Home Notice (“SHN») on arrival. The requirements are as follows:

• Be vaccinated (3 doses),
• PCR or ART test within 2 days prior to arrival,
• Undergo a PCR test on arrival,
• Complete a 7-day SHN,
• Download the Trace Together application.
• Undergo a PCR test before the end of the quarantine,
• For travellers vaccinated outside Singapore: perform a serological test to confirm vaccination status within 30 days of SHN.

Work Pass holders who have travelled to Category II (France + Overseas Departments), III or IV countries/regions and are entering Singapore on or after 7 January 2022, 23:59, do not need to undergo the Covid-19 arrival test at the airport.

For those who have travelled to Category I countries (Hong Kong, Macao, Mainland China and Taiwan), they do not need to complete a 7-day SHN. However, they must take an on-arrival Covid-19 PCR test at the airport and self-isolate until they get a negative test result.

• Labour Law

From the 1st of January 2022, an employer has the right to terminate employees with notice if they are not vaccinated, unless the employees are not eligible for vaccination for medical reasons. Such dismissal is not considered unfair.

As of 15 January 2022, employees who are not fully vaccinated will not be allowed to enter to their workplace, even if they have a negative result to the preventive test. In addition, as of 14 February 2022, employees must have received all 3 doses of Covid-19 vaccine to enter to their workplace.

• Social security tax

Contributions to the Central Provident Fund retirement savings scheme are payable on the Covid-19 allowance given to employees.

• Personal Income Tax

If the employee is required by the employer to work from home and the resulting home office expenses such as electricity charges and telecommunication charges are not reimbursed by the employer, the employee may claim these expenses that are incurred for work purposes as a deduction against the employment income for the year.

⚠ The above information is up to date as of 11 February 2022 and is subject to change. It is recommended to consult the Covid-19 measures in place on the websites of the Immigration Check-point Authority, the Ministry of Manpower and the Ministry of Health for updated and more detailed information.

 

AFRICA

Morocco:

Moroccan labor law in the context of covid-19

• Remote work

The health crisis has highlighted the need to overhaul Moroccan labor law. Following the example of the private sector in Europe and in accordance with the recommendations of the public authorities, the Moroccan private sector had to set up remote work for most of its employees.

However, remote work was not legally regulated at the beginning of the crisis and, in spite of a bill proposal initiated by the General Confederation of Moroccan Enterprises, is still not regulated to this day.

If the crisis context justified sometimes hazardous adaptations of the labor law when remote work was set up, some major actors of the economy wish to maintain this organization in a perennial way and consequently, to secure its legal aspects.

The main questions concern the prior agreement of the employee and the participation of the staff representative bodies, and how to formalize and frame the employees‘ obligations. To date, a few guides published by the Ministry of Labor and the provisions of the Labor Code provide for some guidance, while waiting for a reform that practitioners are calling for.

• Health and safety

The health crisis has served as a reminder of the numerous provisions of the Moroccan labor code related to health and safety, which are not sufficiently applied by employers.

Indeed, the implementation of health and safety measures has underlined the importance of setting up a health and safety committee for companies with at least 50 employees and the role of the occupational physician. On this subject, a bill n°55-17 dating back several years, aiming in particular at simplifying the standards to ensure a greater efficiency of the rules of prevention, has still not been adopted whereas the requirement of an adapted legal framework is more and more felt.

 

MIDDLE EAST

The UAE:

The UAE has issued Federal Law no. 33 of 2021 (the ‘New Labour Law’) which came into force on the 2nd February 2022, repealing the Federal Law no. 8 of 1980 (the ‘Old Labour Law’). The New Labour Law applies to all companies in the private sector, both onshore and in freezones with the exception of the ADGM and DIFC who have their own employment laws. The New Labour Law also applies to companies which are partly or wholly owned by federal or local government, unless their establishing laws state otherwise. Companies will therefore need to understand the impact of the New Labour Law to ensure that they comply with the changes brought in.

A crucial change introduced by the New Labour Law is the end of unlimited contracts. All employees must now be employed on fixed term (renewable) contracts of no more than three years in length. The contracts can however be renewed an unlimited number of times for the same term or a shorter term. Employers will have until 1 February 2023 to convert any existing unlimited employment contract into fixed term contracts.

Unlike the Old Labour Law, the New Labour Law recognizes four categories of work models, namely full-time work, part-time work, temporary work and flexible work (where the working hours vary depending on circumstances of the employer and volume of work needed). Part-time employees will now be entitled to annual leave on a pro-rated basis.

Whilst employers and employees still need, for immigration purposes, to register a template labour contract with the Ministry in charge of labour matters (known as ‘MoHRE’ which stands for Ministry of Human Resources and Emiratization), the Implementing Regulations (the ‘Regulations’) of the New Labour Law, which were released on 3 February 2022, have further allowed employers and employees to add bespoke clauses and to enter into long form agreements which provides a legal basis to an already prevailing practice. The template MoHRE contract will still have standard clauses including working hours and rest days, remuneration, annual leave entitlement and notice period, as well as termination procedures, but it will also allow clauses such as non-compete to be added in accordance with the geographic, time and type of work limits specified in the Regulations.

Another important change in the New Labour Law is in the calculation of the end of service gratuity (the ‘EOSG’). The basis of calculation of the EOSG remains the basic salary mentioned in the template MoHRE contract (as further increased over the years as the case may be), excluding allowances, bonuses or commissions. However, in contrast to the Old Labour Law, the New Labour Law allows no reduction in end of service gratuity if an employee resigns. The New Labour Law also significantly specified “working days” as the basis for the calculation of EOSG. While this change has not been addressed in the Regulations, we expect further clarity to given in the near future, as if the change was intentional it will result in a significant increase in the EOSG liability for employers.

The New Labour Law and its Regulations introduced some significant changes to the legal environment prevailing in the UAE which should be analyzed in parallel to other initiatives such as shifting the working week from Sunday/Thursday to Monday/Friday and allowing foreign nationals to reside and work in the UAE without necessarily holding a work visa (introduction of freelance visas).

More generally, the UAE has modernized a significant number of its laws in 2021 which marked the 50th anniversary of the creation of the UAE as an independent State. Notably, its commercial companies’ law was amended to allow foreign investors to establish themselves in mainland UAE in many sectors of the economy, without having to set up a company with a local sponsor which is a spectacular reversal of principle opening the door to many new possibilities of structuring or restructuring a foreign investor’s presence in the UAE.  If you require any assistance with the New Labour Law or its Regulations, or any other aspect of legal reforms taking place in the UAE, please do not hesitate to contact us.

 

The whole LPA-CGR avocat mobility team is at your disposal should you need further information.