Asia Employment Law Horizon-Scanning – 2018
Welcome to the 2018 edition of our Asia employment law horizon scanning.
The impact of digitalisation and the gig economy featured heavily in last year’s edition. And digital transformation remains a hot topic this year, as confirmed by recent developments in Australia, Malaysia and Singapore, although more ‘classic’ labour and employment issues are back on the agenda in a number of jurisdictions.
The past 12 months has seen a number of legal developments, including changes to working time regulations in Hong Kong, Japan, South Korea and Taiwan. The need for higher data protection standards has resulted in new data privacy regimes in China and the Philippines (not to mention GDPR, the new EU data protection regime, which enters into force this May and will impact on Asia based employers). Whistleblowing has also come to the forefront, with existing laws being reviewed in Australia. Lastly, the #MeToo campaign has reached Asia as well, with a renewed wave of awareness over issues of sexual harassment, particularly in Australia and Singapore.
We hope that our discussion of expected developments for the year ahead, put together by Freshfields with thanks to colleagues from other law firms, will help you understand the region’s rapidly evolving employment laws.
Please click on the links on the left to be taken straight to the articles.
Australian businesses under scrutiny in 2018
In 2018, Australian businesses will have to contend with the effects and consequences of many significant changes and initiatives implemented in 2017.
Foremost among these is the new Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which was established on 18 December 2017. It is expected that the further investigations will take place within the financial services sector and there will be a great deal of work to be done among banks, funds, insurers, to ensure reputation protection and consumer confidence.
The issue of sexual harassment will come under greater scrutiny in 2018 following the recent Hollywood scandals. Many high-profile Australian businesses have found themselves in the media spotlight in 2017 responding to allegations of sexual misconduct and toxic workplaces. All Australian businesses should ideally review their workplace culture, policies and training schedules in 2018 to ensure their workforces are aware of the standards they are expected to meet and the consequences if they do not.
New whistleblowing laws may be put in place in 2018, following a recent Australian parliamentary inquiry. The inquiry recommended many changes to Australia's whistleblowing laws, including the introduction of a new set of private sector legislation and the establishment of a Whistleblower Protection Authority. A new “bounty” system may be put in place which awards whistleblowers a percentage of any penalty imposed against employers for matters uncovered through workplace investigations or prosecutions.
Pay for work on Sundays and public holidays
Changes were made in 2017 which will significantly cut Sunday and public holiday penalty rates for employees in Australia's hospitality, retail and fast-food industries. The changes will be implemented over the course of a transition period concluding in 2020, and are estimated to affect around 220,000 retail workers. Retail sector businesses should review their personnel payment arrangements on an annual basis to ensure compliance.
Better protection for vulnerable workers
Amendments were made to Australia's workplace laws in 2017, with the aim of protecting "vulnerable workers", such as those working in Australia on a holiday visa. These changes included making franchisors and holding companies responsible for underpayments by their franchisees or subsidiaries in certain circumstances, and introduced a higher level of penalties for ‘serious contraventions’ of the law. There are also increased penalties for employers in relation to record-keeping, meaning that employees on holiday visas, among other employees, must be properly accounted for.
Uber drivers are not employees
Australia's Fair Work Commission recently considered a significant case in which an Uber driver claimed that he had been unfairly dismissed from his ‘employment’. Before considering his application, the Commission had first to determine whether he was in fact an employee of Uber, or whether he was instead an independent contractor.
The Commission considered a range of factors, including the level of control Uber was able to exercise over the driver and ultimately found that the driver was not an employee, and accordingly he could not claim unfair dismissal.
This decision will have significant implications for gig-economy workers in Australia and their ability to successfully claim employee entitlements and protections. However, the Commission acknowledged that the current state of employment law may need to evolve further to properly account for the unique features of the gig-economy, and suggested that Parliament might be required to introduce new legislation to address the issue. This area of law will continue to be closely monitored as it develops further in this regard.
Lander & Rogers Lawyers
New cyber regulations protecting employees’ personal information
In 2017 the long-awaited Cyber Security Law and the General Rules of the Civil Law came into effect. These laws stress the importance of personal information protection - “organizations and individuals shall acquire personal information by following the principles of legitimacy, rightfulness and necessity and ensure the safety of such information. Any individual or organization may neither acquire personal information by stealing or through other illegal ways, nor illegally sell or provide personal information to others”.
In April 2017, the Cyberspace Administration of China published the Draft Measures for Evaluating the Security of Transmitting Personal Information and Important Data Overseas (Open for Comments) (the Measures) in accordance with the Cyber Security Law. The Measures require organisations and individuals to store personal information within the territory of China. According to the Measures, if an individual’s personal information is to be exported or transmitted abroad, the individual must be provided with the purpose, scope, contents, recipient and recipient jurisdiction of such export/transmission. Without the individual’s consent, personal information must not be exported or transmitted to another jurisdiction. The Measures do not explicitly address any issue relating to the disclosure of employees’ personal information by employers. But from the broad definition of ‘personal information’, we understand that the Measures, once effective, will also apply to the situation where an employer transfers/exports employees’ personal information overseas.
The draft Measures are expected to become effective in 2018.
On 25 January 2018, the Information Security Technology – Personal Information Security Specification (the Specification) was published by the Standardization Administration of China, and will come into effect on 1 May 2018. Although the Specification is voluntary, it constitutes a best practices guide for the treatment of personal information in China and therefore could become influential. In addition to the general principles set by the Cyber Security Law and the Measures, the Specification specifies detailed security measures including encryption when transmitting and transporting sensitive personal information.
Upping employee protection
A number of reforms and consultations were initiated in 2017 or earlier, making strides towards upping employee protection in the jurisdiction. This has not been without resistance though.
Whilst there has been some progress on a number of proposed reforms, many of them are either still being heavily debated between stakeholders or are still waiting for second and third readings in the Legislative Council.
For example, the Standard Working Hours Committee submitted a report to the Hong Kong Government in January 2017 with its recommendations on working hours policy. In June 2017, the Executive Council passed a proposal regarding working hours. Amongst other things, it required employers of employees who earn HK$11,000 or less each month to enter into written employment contracts which include terms on working hours and overtime remuneration. It also required employers to compensate employees who earn HK$11,000 or less for overtime payments at a rate no less than their normal wages. This proposal was heavily criticised by a number of trade unions and their representatives, who feel that that it does not go far enough to protect low-income workers. The bill for standard working hours proposal is anticipated for 2018.
The proposal to abolish the Mandatory Provident Fund offset mechanism is also still in progress. The offset mechanism currently allows employers to offset an employee’s entitlement to a severance or long service payment on termination against the contributions that the employer has made to that employee’s MPF fund. Following from the developments last year, the Chief Secretary indicated that the Hong Kong Government expected to achieve progress on the plan by February 2018. However, so far no consensus has been reached between the Government, the business community and employees as to how the proposal would be implemented.
The Employment (Amendment) Bill 2017, which seeks to give the courts and the Labour Tribunal the power to require an employer to reengage or reinstate an employee who has been unlawfully and unreasonably dismissed, was gazetted in May last year. A similar bill was gazetted in 2016 but lapsed at the end of the legislative term. The 2017 bill is currently awaiting its second and third reading at the Legislative Council.
All in all, whilst there has been some progress on a number of important reforms last year, lots of work will still be required before they materialise.
Increase in maternity benefits
The Maternity Benefit Act, 1961 which regulates paid maternity leave entitlement and other related benefits was recently amended. The maximum period of maternity leave available to an employed woman (having fewer than two children) has been increased from 12 to 26 weeks.
Pregnant women can now take maternity leave eight weeks prior to the date of expected delivery as opposed to the previously prescribed period of only six weeks. The amendment also introduces maternity leave of up to 12 weeks for commissioning mothers (women who use surrogates) as well as for women who adopt a child below the age of three months.
Further, in order to ensure a smooth transition back to work, a provision allowing female employees to ‘work from home’ has been introduced. Depending upon the nature of work, female employees may make use of this benefit on terms acceptable to the employer. The amendment also requires companies employing 50 or more employees to provide nursery facilities within a prescribed distance of the workplace, either separately or along with common facilities. These amendments are expected to benefit around 1.8 million working women in India.
New disability discrimination law
In 2017, new legislation on the rights of disabled people came into force – this aims to bring Indian law in line with the United Nations Convention on the Rights of Persons with Disabilities. The new Disability Act primarily places responsibility upon the appropriate government(s) to ensure that persons with disabilities enjoy their rights equally to others and are not subjected to discrimination.
Whilst the Disability Act does not apply in full in the private sector, there are certain obligations which do apply to private sector businesses. All companies are required to frame and publish an equal opportunities policy setting out, amongst other things, details of the facilities and amenities to be provided to disabled employees in order to enable them to discharge their duties effectively, to periodically publish a list of identified posts suitable for persons with disabilities and to ensure that the company is accessible to those with differing abilities.
Companies with 20 or more employees are also required to appoint a liaison officer to oversee the recruitment of disabled persons and maintain records of any disabled employees.
Employment regulations tend to be employee-friendly in Indonesia and this is likely to escalate in 2018.
Amendment to the Employment Law on Health, Safety and Environmental Issues
Following an explosion at a fireworks factory in which 47 people lost their lives in late October 2017, the Ministry of Manpower (MoM) has been under public pressure to amend the regulations relating to health, safety and the environment (HSE), particularly those relating to the supervisory responsibilities of MoM with regard to HSE issues. One of the findings in the aftermath of the explosion was that the company that owned the factory was found not to have held a valid HSE licence for several years.
Changes to HSE regulations will be set out via amendments to Law 13/2003 on Employment (the Employment Law), and issuance of a new regulation that will revoke Ministry of Labour Regulation 7/1964 on Requirements for Health, Sanitation and Lighting in the Workplace.
However, it is important to note that plans to amend the Employment Law had been in place for several years before the Indonesian parliament, but were never carried out. Instead, most amendments to the Employment Law came from Constitutional Court decisions.
Annual revision of the Regional Minimum Wage
Determination of the minimum wage (Upah Minimum Regional, UMR) is often a controversial issue.
Consistent with the provision in Government Regulation No. 78/2015 on Wages, UMR are determined annually by the Governor of each Indonesian province. The bases for determining UMR in each province are the annual rate of inflation and gross domestic product (GDP) growth. The 2018 UMR for DKI Jakarta, issued on 16 November 2017, is IDR 3,648,035.82 (approx. US$271) per month.
At the end of 2018, each provincial Governor in Indonesia will issue a new regulation to determine the UMR for 2019, which is likely to be politically charged this time as 2019 will be a year of elections at regional and presidential level.
Constitutional Court decision
Revocation of an employer’s right to prohibit family relationships between its employees
On 14 December 2017, the Indonesian Constitutional Court issued a decision that revokes an employer’s right to prohibit a family relationship between its employees. This followed judicial review of Article 153 (1)(f) of the Employment Law, which gave employers the right to prohibit such relationships.
Public reaction to the decision has been supportive, especially from labour unions and the legal aid foundation. However, several business associations voiced their opposition to the decision for fear of future problems in the workplace.
Further Judicial Review of Employment Law
An application for judicial review of Article 6 (on prohibition of discrimination in the workplace), Article 59(7) (the transformation of fixed-term to permanent contracts when the requirements for a fixed-term contract are contravened), and Article 86(1) (employee entitlement to protection of well-being and safety) of the Employment Law was submitted to Constitutional Court on 21 December 2017. The Constitutional Court has not yet made a determination on any of these matters.
Soemadipradja & Taher
Crack down on excessive overwork
Japan has long been known for its ‘life-time’ or ‘long-term’ employment system where workers typically work for the same firm for their whole career. Under this system, there is a culture where workers are expected to show dedication and commitment to the firm they work for, which often results in very long working hours.
Under Japanese law, employers must enter into a so-called ‘Article 36 Agreement’ in order to have their employees work overtime (ie more than eight hours per day and 40 hours per week). Employers must stipulate in the Article 36 Agreement maximum hours of overtime, which cannot exceed 45 hours per month. This can be further extended under ‘exceptional circumstances’ but only for up to six times per year (the exceptional circumstances exemption). However, it is widely renown that many firms do not comply with the maximum hours stipulated in the Article 36 Agreement, and this has resulted in excessive working hours, sometimes even leading to death from overwork (the so-called ‘karoshi’). Following a high profile karoshi case, the government has been cracking down on excessive working hours by strengthening enforcement of the Article 36 Agreement. Many firms, including large well-known corporates, have been imposed criminal fines for breaching the Article 36 Agreement. Firms therefore need to make sure that they fully comply with their Article 36 Agreements, as enforcement is likely to be even more intensive in 2018.
The new bill on overtime
A new bill will be submitted to the diet in 2018 to further tighten regulations on overtime work. Under current regulations, there is no limit on the hours of overtime that employers may stipulate in their Article 36 Agreements for the exceptional circumstances exemption (which can only be used for up to six times a year).
Under this new bill, the maximum hours of overtime for the exceptional circumstances exemption must be below 100 hours per month. This bill is highly likely to be approved and implemented in the near future. Firms which currently have their employees work long hours of overtime should review their workforce and working styles of their employees and take measures to reduce excessive overtime hours.
Vanguard Lawyers Tokyo
New benefits for unemployed citizens
The Employment Insurance System Act 2017 came into operation on 1 January 2018 to create the Employment Insurance System which is administered by the Social Security Organisation.
The Employment Insurance System (EIS) is intended to provide certain benefits including re-employment placement programme for insured persons in the event of loss of employment and ultimately promote active labour market policies. The benefits claimable under the EIS Act include job search allowance, early re-employment allowance, training allowance and reduced income allowance.
An insured person would not be eligible to receive said benefits where the loss of employment was based on voluntary resignation, expiry of the contract, termination of the contract by mutual consent, completion of the work in accordance with the terms of the contract of service, retirement or termination due to misconduct.
The employers’ contribution rates ranges from RM0.50 to a maximum cap of RM7.90 for employees with monthly wages of RM30.00 to RM4,000.00 and above. However, the rates of contribution may be revised by the Minister every three years or more, after taking into consideration the sustainability of the fund.
Social security coverage for gig workers
The Self-Employment Social Security Act 2017 came into operation on 13 June 2017. The Act aims to provide social security to any self-employed citizen or permanent resident of Malaysia, in particular taxi drivers and e-hailing service providers, including Uber and Grab drivers.
Unlike the other schemes, the contribution is solely paid by those carrying out the self-employment activity under the Employment Injury Scheme. The rate of contribution under this scheme is fixed at 1.25 per cent of monthly wages.
Proposed amendment to the Maternity Leave Provision
During the tabling of Budget 2018 on 27 October 2017, a proposal was made for the mandatory maternity leave in the private sector to be increased from 60 to 90 days.
According to the Deputy Minister of Human Resources, the adoption of the proposed 90-day maternity leave would be split into two phases. The first phase would involve consultation with the stakeholders to get their views and feedback. The second phase would involve amendments to relevant acts.
Whilst there has been indication that proposed amendments to the maternity provision are likely to be tabled in Parliament in January 2018, there is nothing to that effect at the moment.
Yong Hon Cheong
Zaid Ibrahim & Co. (a member of ZICO Law)
New Data Privacy law
Republic Act No. 10173, also known as the Data Privacy Act (DPA), was enacted on 15 August 2012. Its Implementing Rules and Regulations were subsequently issued and became effective five years later, on 9 September 2017. Although the DPA is not specifically labour or social legislation, it has several provisions that affect the employer-employee relationship. An employer is considered as either a personal information controller or personal information processor vis-à-vis its employees, depending on whether the employer itself processes the employee data or outsources the same to third parties.
Accordingly, employers are required to comply with the applicable guidelines on the adoption of organisational, physical, and technical security measures as required by the law, and employees enjoy the rights of data subjects. When a data subject objects or withholds consent, the personal information controller shall no longer process the personal data, unless “the collection and processing are […] necessary for the performance of or in relation to a contract or service to which the data subject is a party, or when necessary or desirable in the context of an employer-employee relationship between the collector and the data subject.” Furthermore, the law provides that the provisions on the rights of data subjects do not apply “to the processing of personal data gathered for the purpose of investigations in relation to any criminal, administrative or tax liabilities of a data subject”.
Any limitations on the rights of the employees as data subjects must only be to the minimum extent necessary to achieve the purpose of the undertaking or investigation. While employees may not invoke their rights in some instances and consent may not be necessary, the employer is still required to implement security measures to protect the personal data of its employees.
Emiterio C. Manibog Jr.
Sexual, workplace and other forms of harassment are unlawful in Singapore through the application of the Protection from Harassment Act (PHA or POHA) which makes harassment both an offence and an actionable statutory tort. We expect to see more companies taking such issues seriously in 2018 by implementing anti-harassment, whistleblowing and zero-tolerance policies to encourage employees to speak up, and taking measures to investigate and address such complaints.
Changes to the main Employment act
In mid-January 2018, the Ministry of Manpower (MOM) commenced a month-long public consultation for proposed changes to the Employment Act (EA, the main statute protecting workers’ rights in Singapore).
Proposed changes include: (i) expanding coverage of the Act to include professionals, managers and executives earning more than S$4,500 in basic monthly salary; (ii) extending entitlements to overtime pay and rest days to a larger group of employees (these protections are presently limited to workmen earning up to S$4,500 monthly and non-workmen (ie non-manual labour employees) earning up to S$2,500; and (iii) doing away with the MOM Labour Courts and allowing the Employment Claims Tribunals (ECT) to hear unfair dismissal claims as well (the ECT currently only hears salary related disputes). On the back of this, the ECT claim limits may also be increased (the limits are currently S$20,000, or S$30,000 for union-assisted/mediated claims). These proposals seek to ensure that Singapore’s labour policies keep pace with rising median wages and the changing face of employment.
We may also see amendments to Section 18A of the EA (not dissimilar to the TUPE regime), which provides for the automatic transfer of EA employees when their employers undergo restructuring or their businesses are sold. There have been calls for greater clarity to address exactly which transfers and transactions would fall within (or outside) the scope of Section 18A. Expanding the EA’s coverage would also have the effect of allowing more workers to be automatically transferred.
In the area of non-competition and restraints of trade, judges are increasingly inclined to uphold and enforce post-termination restrictive covenants (including confidentiality, non-competition, non-solicitation of clients and non-poaching of employee clauses).
Increased protection for gig workers
Following the rapid growth of the gig economy last year and the increasing prevalence of short-term contracts and freelance workers in the local labour market, 2018 may also see increased protection for self-employed persons.
In November 2017, the Tripartite Alliance for Fair and Progressive Employment Practices called for public feedback on the top concerns of self-employed persons in the future economy (concerns typically include late pay, ineligibility for employment benefits and the uncertainty of finding sufficient work). The government’s proactive stance on exploring greater protection for self-employed persons may result in employment reforms this year to ensure more legally enforceable rights for such workers in line with protections in other countries.
Ian Lim Wei Loong
TSMP Law Corporation
Boosting a wage-driven economy
The new Korean president Moon Jae-in, who came into power in May 2017 after the impeachment of former President Park, is taking a number of steps on the labour front to create a “wage-driven economy”. His thinking is that by creating new jobs, increasing the minimum wage, and converting “non-regular workers” into permanent employees with better salaries and benefits, domestic consumption will increase, which will lead to more investment into and growth of the Korean economy.
To achieve this, the first and biggest priority of the new presidential administration is “job creation”. One way in which the president’s administration intends to create new jobs in Korea is by reducing the working hours of the existing work force. To this end, we anticipate that in 2018 the National Assembly will pass legislation that would effectively reduce the maximum number of working hours per week from 68 hours to 52 hours per week (40 of which are regular work hours and the remaining 12 of which are overtime/holiday work).
Under this new administration, the minimum wage for 2018 has already been increased by 16.4 per cent from 2017, a dramatic increase compared to past increases. We expect the government will seek to make similar increases to the minimum wage every year going forward to allow the government to achieve its goal of having a minimum wage of KRW10,000 (US$8.94) per hour by 2020.
Finally, the Korean government is expected to audit companies more actively to ensure that they are using “non-regular workers” such as subcontractors and workers from temp agencies, in accordance with the law. To the extent that violations are found, companies will be ordered to hire those non-regular workers as permanent employees.
Matthew F. Jones
Kim & Chang
Employment reforms to support foreign investment
The government is very much focused on engaging in development projects and has already embarked on several major ones. Additionally, much attention is being paid to attract foreign direct investment and the government is aware that it will be necessary to implement substantial employment law reforms in order to achieve this. Furthermore, the government came into office on the basis of good governance and is focused on eliminating gender discrimination.
In his recent budget speech, the Finance Minister revealed the intention to amend the Shop and Office Employees (Regulation of Employment and Remuneration) Act.
Moreover, in order to generate employment, the government is vigorously engaged in infrastructure development projects and is envisaging creating more and more Free Trade Zones.
Julius & Creasy
Further amendments to Labour Standards Act
Less than one year since a major amendment to Taiwan’s Labour Standards Act (the Act) took effect, the Ministry of Labour has proposed a new amendment to the Act in November 2017. The purpose of the amendment to the Act was to provide sufficient rest and alleviate the overtime problems of Taiwan’s workers, but employers had argued that greater flexibility was needed and that the rights of both workers and employers needed to be balanced.
To reflect the needs of employers, the Legislative Yuan (Taiwan’s unicameral legislature, often referred to as it’s parliament) reviewed and passed the Amendment on 10 January 2018, and the Amendment will enter into force on 1 March 2018.
The key points of the Amendment are as follows:
1. Change in wage calculation for work on a rest day
Under the Act, when calculating overtime wages for work on a rest day, work for four hours or less shall be counted as four hours, and work between four to eight hours shall be counted as eight hours. The Amendment has changed this provision, so that the overtime wage for work on a rest day shall be based on the worker’s actual working hours performed.
2. Increase in maximum permitted overtime
Under the Act, the maximum overtime for a worker was no more than 46 hours per month. Under the Amendment, the maximum overtime hours for a worker has been increased to 54 hours with the consent of a labour union or with the approval of the labour-management conference, provided that the total overtime shall not exceed 138 hours over a period of three months.
In addition, the Supreme Administrative Court recently defined the concept of “overtime” as work performed during non-working time or on a rest day. If the employer knows that a worker is working overtime in the workplace and does not stop or oppose such overtime work, the employer shall be deemed to have agreed to the overtime work and shall, as indicated above, be required to provide relevant overtime wages or compensatory time off with the worker’s consent as stipulated in the Act.
3. Decrease in minimum rest period for working shifts
Under the Act, a worker was entitled to have at least two days off for every seven days worked, provided that the two days off were divided into one regular day off and one recess day. If the worker worked in shifts, he/she was to enjoy a rest period of no less than 11 continuous hours. This provision was intended to provide workers with sufficient rest, but it would have a significant impact on certain industries in Taiwan, such as manufacturing, transportation and health care services, and thus this provision had yet to be put into effect. The Amendment provides that an employer in specific industries may be entitled to adjust the regular day off and recess day during such seven-day-cycle with the consent of the competent authority in charge of the relevant enterprise. Moreover, the Amendment has lowered this requirement so that an employer may provide only an eight-hour rest period with the consent of a labour union or with the approval of the labour-management conference.
4. Unused annual paid leave may be postponed for one year
Under the Act, an employer was to pay the wages for annual paid leave which were not used by workers by the end of the year. The Amendment has revised this provision so that the unused annual paid leave may be postponed until the end of the following year. Such annual paid leave shall not be paid out as wages unless the worker does not use the leave in the following year.
LCS & Partners
Thailand’s core employment law was amended through the enactment of the Labour Protection Act 2017 (the 2017 LPA Amendments), which came into force on 1 September 2017.
Introduction of a statutory retirement age and retirement payments
Prior to the enactment of the 2017 LPA Amendments, Thailand lacked any legislative or statutory regime governing retirement for employment law purposes, leaving the entire matter to the employer. In this respect, any employer having 10 or more employees was required to maintain a set of work rules, covering: (1) working days, regular working hours and rest periods; (2) holidays; (3) overtime and work on public holidays; (4) date and place of payments; (5) leave of absence; (6) discipline and disciplinary punishment; (7) lodging of complaints; and (8) termination of employment, compensation, and special compensation, with the work rules representing a binding document between the employer and its employees.
However, relevant ambiguities arising in the work rules of specific employers led to several Supreme Court cases determining that retirement can, in certain cases, constitute termination of employment, entitling a retiring employee to statutory and contractual severance pay and other benefits accrued by law upon termination of his/her employment. On the other hand, a number of other Supreme Court cases determined that a voluntary retirement due to infirmity brought upon by old age should be treated as a resignation rather than a termination, such that statutory severance need not be paid.
To overcome the shortfalls of relying solely on an individual employer’s work rules, the 2017 LPA Amendments mandate that any employee aged 60 or more may elect to retire, whether permitted by the employer under the applicable work rules or not. Retirement at 60 is not mandatory under the 2017 LPA Amendments and employees can choose to work beyond that age, if permitted under the applicable work rules. Any election to retire is voluntary, with any qualified retiring employee required to give 30 days’ notice of the intention to retire. Any such retirement under the 2017 LPA Amendments triggers an employer’s obligation to pay statutory severance and other amounts due upon termination (including, potentially, contractual benefits due upon termination). An employer failing to make such retirement payments may be subject to imprisonment of up to six months and/or a fine of up to THB100,000.
Although an employer’s individual work rules may prescribe a lower age of retirement, such work rules cannot exclude or abrogate the statutory right of an employee to retire at 60 under the 2017 LPA Amendments (eg by prescribing a retirement age higher than 60).
Work rules are no longer required to be submitted to DOLPW
Prior to the 2017 LPA Amendments, an employer was required to submit a copy of its work rules in Thai to the Department of Labour Protection and Welfare (DOLPW) for its records within seven days from the date of the announcement of such work rules to the employees. The DOLPW had a statutory right to review and propose amendments or modifications to such work rules for compliance with applicable laws. Following the 2017 LPA Amendments, submission of the work rules to DOLPW is no longer required.
Hunton & Williams (Thailand) Limited
Amendments to Labour Code delayed
Vietnam’s Labour Code 2012 was expected to be amended in 2017, but this has been delayed until 2019. The main aim of the amendments will still be to align the Labour Code to a number of new laws or regulations on employment matters that came into effect after 2013, for instance laws on employment, vocational education, social insurance and occupational safety and hygiene.
Regional minimum wage increase
A new regional minimum wage is applicable in Vietnam from 1 January 2018. The average increase is 6.5 per cent. As an indication, the monthly minimum wage in Region I which generally covers almost all urban districts of Hanoi and Ho Chi Minh City will increase from about US$165 to about US$175 per month. The figures for Regions II, III and IV will be about US$155, US$136 and US$121 respectively.
The regional minimum wage is applicable to unskilled employees working under normal working conditions (exclusive of additional benefits – for example because of harsh/toxic conditions, night shift or overtime). For skilled employees (which generally means employees who have at least completed vocational training), the minimum salary must be at least 7 per cent above the regional minimum wage.
Additional employment costs
Additional participants to Vietnam’s State-run social insurance scheme
Vietnamese employees working under a labour contract of one to three months are now subject to a mandatory social insurance scheme. In addition to compulsory health insurance, foreigners working in Vietnam under a work permit (generally those working in Vietnam for three months or longer) or practising certificate (such as foreign lawyers) are subject to a mandatory social insurance scheme. The business community is waiting for the issuance of a governmental decree to see how the latter requirement is to be implemented. Vietnam’s compulsory social insurance scheme requires contributions from both employers and employees, so there will be extra cost for employers.
Higher salary for calculation of compulsory insurances
The salary of an employee may consist of: (i) the basic salary; (ii) allowances; and (iii) other salary supplements. Vietnamese law has set out a timeline so that the elements under categories (ii) and (iii) are gradually cumulated with the basic salary for the calculation of compulsory insurances (including social insurance, health insurance and unemployment insurance). Effective from 1 January 2018, the compulsory insurance premium is calculated on the basis of “basic salary + allowances + salary supplements”. This will increase employment costs incurred by employers.
Criminal liability for violation of labour law
Vietnam’s 2015 Criminal Code came into force on 1 January 2018. Under the new law, in addition to criminal acts already provided for (such as illegal dismissal of employees, child labour abuse and violation of occupational safety and hygiene requirements), criminal liability may also arise from forced labour and evading payment of social insurance, health insurance or unemployment insurance for employees.
Apart from individual criminal liability charge as it used to be, the criminal liability for evasion of compulsory insurance obligations may also apply to commercial legal entities in the form of monetary fine which may range from VND200m to VND3bn (about US$8,800–132,000) depending on the numbers of employees involved and the seriousness of the offence.
Why do the new EU rules on data protection matter to Asia based global employers?
The new EU General Data Protection Regulation (GDPR) will enter into force on 25 May 2018 and is widely seen as one of the world’s stricter regime. GDPR is replacing the existing EU Directive regime that was in place since 1995 and brings in a number of changes. The possibility for regulators to impose significant fines in case of breach has been one of the most commented changes.
Businesses headquartered outside of the EU will also need to keep in mind GDPR’s extraterritorial scope: GDPR will potentially apply to situations where the processing of data takes place outside of the EU (as long as the company is deemed to have an establishment in the EU/EEA) and even to situations where the data controller or processor has no establishment in the EU/EEA but offers goods or services to data subjects in the EU/EEA or monitors the behaviour of the data subjects provided that such behaviour takes place in the EU.
For instance, an Asia based business administering a global incentive plan for its EU subsidiaries may be considered as the controller of the employee data used in this framework. Further, an Asia based business which has no establishment in the EU/EEA and does not seem to directly perform behavioural monitoring of data subjects in the EU might however receive resumes and CVs of applicants based in the EU, through Union-based recruitment agencies. One cannot completely exclude that this could be considered as “monitoring of behaviour” by a regulator.