Employment laws and collective bargaining agreements in countries around the world drive employers’ payroll calculations and the required documents to be issued, a global practitioner said May 12.
While “lots of jurisdictions will have a single, overarching piece of legislation that covers employment law,” collective agreements are also fairly commonplace, Tim Kelsey, managing director of Kelsey’s Payroll Services, said. In some European countries, more than 90% of employees may be covered by a CBA, including senior executives, Kelsey said.
When U.S. employees are sent to another country, they are subject to the work country’s requirements for annual leave, paid sick leave, and maternity or family leave, Kelsey said.
The European Union’s Posted Workers Directive also requires employers to provide the more beneficial of the employee’s existing terms of employment or the minimum requirement in the work country, Kelsey said.
“This presentation is really about the art of the possible, what could happen in the employment relationship around the globe,” Kelsey said at the American Payroll Association’s 40th Payroll Congress in Las Vegas.
Labor Codes, Collective Agreements
Kelsey used South Africa’s Basic Conditions of Employment Act as an example of a labor code, a single piece of legislation that in the country sets rules on working hours, overtime and holiday pay, pay for night work, leave, allowable deductions and pay, and termination requirements.
Labor codes may have employee thresholds that trigger additional requirements for employers, Kelsey said. In South Africa, the BCEA requires employers with at least five employees to provide employees written details of employment, to provide pay slips for each time they are paid, to keep employee records, and to post a summary of the BCEA in the workplace, he said.
Many countries have a “culture of using a collective bargaining agreement,” which may be universally applicable within an entire industry, Kelsey said. Payroll providers might be experts in statutory requirements but might not be experts in CBAs, and it is instead more likely they will want direction on CBAs, he said.
France “is a jurisdiction where you do really need to look out for collective bargaining agreements,” because nearly all employees are covered by one, and agreements are published on the government’s Legifrance website (French), Kelsey said. He recommended looking at a CBA before drafting an employment offer, instead of fitting an offer into a CBA.
In Germany, 60% of West German employees and 47% of East German employees are covered by 73,000 registered industry or corporate agreements, and some agreements may require the employer to make additional pension or health insurance contributions, Kelsey said.
In Denmark and other Scandinavian countries, the “culture is that you have a collective bargaining agreement” instead of a statutory minimum wage, and 90% of Danish workers are covered by CBAs while 65% are members of a union, Kelsey said. The agreements are much more generous than employment law requirements, with most in Denmark providing 40 weeks of maternity or parental leave at full pay and six weeks of annual leave, he said.
Kelsey advised employers not to approach CBAs with trepidation. “These are not all bad news for the employer,” he said, adding that with an agreement the employer provides extra benefits but in return employees are more flexible.
Wage Payment, Bonuses, Deductions
“Often there are pieces of legislation that fundamentally cover the act of physically paying the salary,” Kelsey said, noting that that type of legislation is useful to look for when entering new jurisdictions.
Such wage payment laws set the allowable methods of payment as well as wage payment frequencies, Kelsey said, using the Philippines as an example. The country’s labor code requires payments at least every two weeks or 16 days unless a longer period of up to a month is agreed upon and specified in the employment contract, Kelsey said.
The Philippines is also an example of a country that requires a 13th-month payment for “rank and file” employees, Kelsey said. The payment is intended to be one-twelfth of an employee’s annual basic salary, which in the Philippines excludes payments such as overtime pay, and can be made in two parts.
In Singapore, employers are required to apply to the Ministry of Manpower for permission to make nonstatutory deductions two months before the employer intends to start making the deductions, Kelsey said.
The Netherlands is an example of a country where minimum wages increase every six months, and monthly, weekly, and daily rates are provided but not official hourly rates, Kelsey said.
France has strict payslip requirements regulating what content should be included and where it should be located, Kelsey said.
“If you looked over a number of French companies’ payslips, you’d see that they all pretty much look the same,” he added.
Documents on Termination
Some countries require employers to provide documents on termination, either for the benefit of the employee or next employer or for the purposes of calculating unemployment benefits, Kelsey said.
Belgium’s C4 form, known as an unemployment certificate, specifies the reason for termination and information on earnings and taxes used to calculate unemployment benefits, Kelsey said.
France requires employers to provide a statement to employees of their final salary and any other amounts owed to the employee, Kelsey said.
Germany requires employers to provide a holiday certificate to be given to the next employer, generally showing the employee’s annual leave entitlement, number of days of leave taken in the current year, and the number paid on termination, Kelsey said.
Leave and Reporting
The Netherlands requires employers to pay sick leave for two years, with the first year at at least 70% of salary or the minimum wage, which can be increased by a CBA, and the second year at 70% of salary subject to a minimum, Kelsey said. Sick leave is not reimbursed by the state except if the illness relates to pregnancy, he said.
Reporting requirements to the country’s employment agency, UWV, begin after four weeks of illness and include return-to-work plans for employees out for at least that long, Kelsey said.
Polish employees can choose to receive maternity leave at 80% of pay for 12 months or 100% for six months, or can choose both options, equating to six months at 100% followed by six months at 60%, Kelsey said.
Luxembourg, besides its statutory annual leave requirement of 26 days per year, requires disabled employees to be provided six extra days, Kelsey said. Employees who do not have a rest period of at least 44 continuous hours per week in an eight-week period also receive one extra day of leave for each eight-week period, he said.