Welcome to the August 2024 edition of our Global Employment Tax and Compliance Newsletter. Each month, we bring you the latest updates on employment and immigration laws that impact your business.
This month, we’ve gathered the most critical updates in employment and immigration law worldwide.
As you navigate these changes, you can also explore our latest guides and articles—designed to help you stay compliant and informed. Let’s dive in.
Netherlands: New Legislation Aiming to Strengthen Job Security for Flexible Workers
The Dutch government is moving forward with a proposal known as the “More Security for Flexible Employees Act,” which has been in public consultation since July 2023. This proposed law would overhaul the current system of on-call contracts, replacing them with a new type of employment arrangement called “basic contracts.”
These contracts will establish a minimum number of guaranteed working hours that employees are scheduled and paid for, providing greater stability and predictability.
The flexibility currently afforded to employers under on-call contracts will be significantly reduced, with only students and new temporary agency workers (within their first 52 weeks) continuing under these arrangements.
Changes to Anticipate
- Introduction of Basic Contracts: Under this new framework, employees will be assured a set number of paid hours, minimizing the uncertainty inherent in on-call contracts. This change is expected to shift the balance more in favour of workers, ensuring they have more predictable work schedules and incomes.
- Extended Gap Between Contracts: The legislation also aims to prevent the easy renewal of fixed-term contracts by extending the mandatory break between them from 6 months to 5 years. If an employee has been under contract for over three years, and the gap between contracts is less than five years, the most recent contract will automatically convert into a permanent one.
When Will This Take Effect?
The law is expected to be enforced between January 2025 and January 2026. Once the law is enacted, employers will have approximately six months to adjust their practices to comply with the new requirements.
What Employers Need to Do and Why
To prepare for these changes, employers should start phasing out on-call contracts in favour of basic agreements, except in cases involving students and recent temporary hires. It’s also crucial to carefully track the duration and breaks between contracts to ensure compliance with the new rules, especially since mismanagement could lead to unintended permanent employment commitments.
Employers who fail to adapt to these new requirements may face significant legal and financial risks. For example, incorrectly managing contract breaks could lead to employees automatically receiving permanent contracts, which could carry unintended long-term obligations.
Finland: Unemployment Benefits Changes
The Finnish Parliament has enacted several significant changes to unemployment benefits, including reductions in labour market subsidies and unemployment allowances. These changes were implemented on three key dates in 2024: January 1, April 1, and September 2.
Key Changes
- Extended Waiting Period
As of January 1, 2024, the waiting period for a newly unemployed person to start receiving unemployment benefits was extended from 5 days to 7 days. Additionally, if a freshly unemployed person has remaining holiday days from their previous employment, the compensation for those days will delay the start of their unemployment benefits. - Abolishment of Child Increments
Additional cuts to unemployment benefits came into effect on April 1, 2024. Mainly, child increments previously paid to supplement unemployment benefits have been abolished. Furthermore, the amount of income a person receiving unemployment benefits can earn without affecting their benefits has been decreased. - Prior Work Requirement Adjustments
As of today, September 2, 2024, the prior work requirement for determining a person’s eligibility for earnings-related unemployment allowance has been extended to 12 months, up from approximately six months. Earnings of at least €930 in a calendar month now count as one month towards meeting this requirement.
Transition Contractors onto Full-time Employees
Navigating the Shift: From Independent Contractors to Full-Time Employees
Today, the line between independent contractors and full-time employees often blurs, leading to significant business risks. Misclassification is not just a legal grey area—it’s a real threat that can result in fines, back taxes, and costly lawsuits. As companies expand their global operations, managing contractors across multiple jurisdictions becomes increasingly complex.
Many forward-thinking organisations are strategically transitioning their contractors into full-time employees to tackle this head-on. This shift is an investment in building a committed and stable workforce. But how can your company navigate this transition smoothly?
Why Make the Transition?
- Risk Mitigation: By converting contractors to full-time employees, businesses can significantly reduce the risk of legal repercussions associated with misclassification.
- Increased Stability: Full-time employees are more likely to stay with your company, leading to higher retention rates and a stronger, more cohesive team.
- Enhanced Productivity: Employees who feel secure and valued are more engaged and productive, driving innovation and performance across the board.
Key Trends Shaping the Transition
Several global trends drive the transition from contractors to employees:
- Complex Regulatory Landscapes: Compliance requirements are becoming more intricate, necessitating robust governance frameworks to avoid pitfalls.
- Increased Scrutiny: Governments worldwide are intensifying audits and regulatory scrutiny, especially concerning employee classification.
- Evolving Compensation Structures: As companies rethink their compensation models, aligning them with business goals and regulatory requirements is essential.
Your Roadmap to a Smooth Transition with Acumen International
Successfully transitioning contractors to full-time employees requires a strategic approach:
- Audit Your Workforce: Evaluate your current contractor engagements for compliance risks.
- Estimate Costs: Use comprehensive cost models to understand the financial impact of the transition.
- Legal Compliance Check: Ensure your transition plan adheres to local employment laws in each country where you operate.
- Implement the Transition: Prepare and communicate your transition plan clearly to all stakeholders, ensuring a seamless shift.
Resources for Further Reading
For more in-depth guidance on this topic, we invite you to explore our LinkedIn guide and the full article on our website, How to Convert Independent Contractors into Employees.
Cyprus: Your Next Strategic Move in Global Expansion
As global businesses eye new frontiers, Cyprus often remains a hidden treasure in the strategic landscape of international expansion. Cyprus is an unpolished gem for forward-thinking enterprises looking to establish a foothold in pivotal markets at the nexus of Europe, the Middle East, and Africa.
In our latest exploration, “Cyprus: A Strategic Hub for Global Expansion,” we explore why Cyprus rapidly emerged as a go-to destination for companies seeking a blend of strategic location, tax efficiency, and regulatory stability. This isn’t just another destination—it’s your gateway to robust growth and sustainable success.
Why Cyprus? Key Highlights
- Geostrategic Powerhouse: Cyprus serves as a gateway to some of the world’s most dynamic markets, providing businesses with unparalleled access to Europe, the Middle East, and Africa.
- Tax Efficiency: With a corporate tax rate among the lowest in Europe and an extensive network of double taxation treaties, Cyprus is engineered for financial efficiency. This tax environment is favourable and transformative, allowing businesses to reinvest in growth while maintaining a competitive edge.
- EU Member Benefits: As part of the European Union, Cyprus provides seamless access to the EU’s single market, facilitating the free movement of goods, services, and capital.
- Talent Magnet: Cyprus boasts a highly educated multilingual workforce ready to drive innovation in finance, technology, and beyond.
- Emerging Innovation Ecosystem: Supported by government initiatives like the Cyprus Startup Visa, the startup ecosystem in Cyprus is on the rise, offering exciting opportunities for entrepreneurs and investors.
If you’re looking to gain a strategic advantage and integrate Cyprus into your global expansion plans, we invite you to delve into our detailed guide on LinkedIn or read the full article on our website here.
Acumen International: Your Global Employment Partner in Cyprus and Beyond
The complexity of global expansion demands a partner with both deep local knowledge and global reach. At Acumen International, we don’t just help you expand—we help you thrive. With expertise across 190 countries and a human-centric approach to global employment solutions, we are uniquely positioned to guide your business through the complexities of expanding in Cyprus.
- Precision and Compliance: We navigate the complexities of local laws, taxes, and employment regulations, ensuring that your operations are compliant and optimised for success.
- Tailored Solutions: Our boutique approach means you get tailored support, with a dedicated advisor to guide you every step and ensure that your transition into Cyprus is seamless.
- Strategic Support: Whether it’s through our Global Employer of Record solutions, global payroll services, or immigration expertise, we provide the tools and insights you need to make informed, strategic decisions about your global workforce.
Czech Republic: Introduces Labour Code Amendments and Minimum Wage Changes
The Czech Republic is set to implement significant changes to its Labour Code and minimum wage regulations, which are expected to take effect on 1 January 2025.
From 1 January 2024, the minimum wage in the Czech Republic has already increased to CZK 18,900 per month (up from CZK 17,300). The minimum hourly wage has risen to CZK 112.50.
New Minimum Wage Calculation Method
A new mechanism for calculating the minimum wage is proposed. The monthly minimum wage would be set based on the national economy’s average gross monthly nominal wage for the following calendar year and a coefficient. The goal is to achieve a coefficient of 47% by 2029 (currently at 42.2%).
Guaranteed Wage Changes
The proposal suggests cancelling the levels of guaranteed wages for the private sector. The public sector will be graded according to four groups of work instead of the current eight.
Labour Code Amendments
The draft amendment includes several changes:
- Extended probationary periods (up to 4 months for non-managerial employees and 8 months for managerial employees)
- Shortened notice periods for dismissals due to employee fault
- Guaranteed role reinstatement for employees returning from parental leave
- More flexible working hour arrangements
Implications for Employers and Employees
These changes aim to provide more flexibility in employment relationships and ensure fair wage practices. Employers should prepare to:
- Adjust wages to meet new minimum wage levels.
- Familiarize themselves with the new Labour Code provisions.
- Review and potentially update employment contracts and policies.
The draft is still in the early stages of the legislative process and may be subject to further changes.
Czech Republic: Further Changes to the Labour Code
The Government has proposed an amendment to the Labour Code, introducing several significant changes. It is expected to come into force on 1 January 2025.
These include:
- Probation Periods: The amendment allows for a 4-month probation period for managing employees, which can be extended to 8 months.
- Notice Period Commencement: Changes to when the notice period begins, with a reduction in its duration from 2 months to 1 month in some instances.
- Employee Scheduling: The introduction of the option for employees to schedule their own working time.
- Payment in Foreign Currency: Employers can pay certain types of employees in a currency other than CZK.
France: Upcoming Measure on Birth Leave
The French Government has introduced a new birth leave policy to replace the current parental leave system. Entry into force is expected in August 2025. Although the details are yet to be fully finalized, the expected changes include:
- Replacement of Parental Leave: A 6-month birth leave for both parents, replacing the existing parental leave system.
- Flexibility in Usage: Leave can be taken by one or both parents, simultaneously or successively, and can be utilised full-time or part-time.
- Compensation: Social security will compensate the leave at 50% of the last salary, with a maximum limit of €1,800. The employer may supplement this compensation.
France: Immigration Law Updates
The French Government has empowered préfets with the authority to regularize undocumented workers employed in sectors facing significant labour shortages. This initiative, valid until December 31, 2026, aims to address these shortages by granting one-year residence permits to eligible individuals.
Eligibility Criteria
To qualify for regularization, workers must meet the following conditions:
- Relevant Employment: The individual must have been employed in a role listed as experiencing recruitment challenges for at least 12 months within the last two years. This period can be non-consecutive.
- Consistent Job Holding: The worker should have maintained employment in these specified roles or regions.
- Stable Residency: The individual must have lived in France continuously for at least three years.
- Clean Legal Record: A clean criminal record (bulletin n°2) with no significant legal issues or disqualifications is required.
Discretionary Power of Prefects
Even if all criteria are met, préfets retain the discretion to deny regularisation. Decisions will consider the individual’s social and family integration, compliance with public order, and alignment with French societal values.
Strict Penalties for Non-Compliance
The law also imposes significant penalties on employers who fail to comply with these regulations:
- Fines Up to €30,000: For employing a foreign worker without proper authorisation to work in France.
- Increased Fines: Up to €200,000 if an organised group commits the violation.
- Additional Penalties: For employing foreign nationals outside the terms of their work permits or in unauthorized professional categories or locations.
Next Steps for Employers
The law introduces further obligations, including enhanced training requirements for non-French speaking employees and adjustments to social security benefits for non-EU nationals.
Employers must proactively update their hiring and compliance processes to align with these new regulations. Failure to do so could result in severe financial and legal repercussions.
Entry into force: The law is awaiting final implementation.
Romania: Key Legislative Updates Affecting Employment and Retirement
Recent legislative changes in Romania will gradually raise the retirement age for women from 63 to 65 by 2035. This adjustment reflects ongoing efforts to align retirement policies with demographic trends. Notably, women with children will see a reduction in their retirement age, recognizing the demands of family care.
Effective Date: 1 September 2024
What Employers Need to Do
Employers should prepare for potential updates to their internal processes and documentation. Keeping an eye out for additional government guidance will be essential to ensure compliance and smooth implementation.
Lithuania: Updates on Leave for Adoptive Mothers ??
The Lithuanian Labour Code has been updated to address a prior inconsistency in parental leave. Previously, adoptive fathers were granted both paternity and parental leave, while adoptive mothers were only eligible for parental leave. The amended Labour Code now entitles adoptive mothers to 30 calendar days of leave under the same terms as paternity leave for adoptive fathers.
Effective Date: 1 July 2024
Employer Implications and Risks of Non-Compliance
Employers must not refuse to grant this new leave to adoptive mothers. The leave is funded by the State Social Insurance Fund, not the employer.
Failure to grant the leave may result in a labour dispute. The dispute resolution body can override employer decisions, mandate compensation, and impose fines. Fines could be as high as €3,000, with additional administrative penalties ranging from €240 to €880 imposed by the State Labour Inspectorate for repeated violations.
Netherlands: Changes to Unemployment Premium and State Pension Age
Unemployment Premium
As of 1 January 2025, the rules governing unemployment premiums for overtime hours in permanent employment contracts will be broadened. Currently, employers pay a lower premium for permanent contracts and a higher one for flexible contracts. To maintain eligibility for the lower premium, employees can work up to 30% overtime in addition to their contracted hours without triggering a higher premium.
However, if more than 30% overtime is worked, the higher premium applies retroactively for the entire year. This rule does not apply to larger employment contracts where employees work an average of 35 or more hours per week. The new changes will expand this exemption to contracts with 30 or more hours per week. This adjustment aims to increase employer flexibility while preserving job security for employees.
Impact Date: 1 January 2025
Employer Implications
Starting January 2025, employers can consider offering contracts with 30 working hours per week (instead of the current 35 hours) to benefit from the lower unemployment premium. Employers might also explore reducing the workweek to 28 hours, with an additional 2 hours of overtime, to remain within the exemption criteria for lower premiums.
Singapore: Updates on Employment Pass / COMPASS
Employment Pass (EP) and COMPASS Framework
The Ministry of Manpower (MOM) in Singapore has introduced a new evaluation framework called the Complementarity Assessment Framework (COMPASS) for Employment Pass (EP) applicants. This framework is designed to help employers bring in highly skilled foreign professionals while enhancing workforce diversity. COMPASS operates on a points-based system, assessing both the individual’s qualifications and the specific needs of the employment market.
To qualify for an EP under COMPASS, applicants must meet the new minimum qualifying salary of S$5,000 per month (S$5,500 for financial services) and score at least 40 points in the COMPASS assessment.
Bonus Criteria
MOM has also introduced additional bonus points under COMPASS:
- Skills Bonus (Criterion 5): EP applicants who possess skills in high-demand areas with a significant shortage can earn bonus points.
- Strategic Economic Priorities (SEP) Bonus (Criterion 6): Firms that contribute to Singapore’s strategic economic goals and are supported by sector agencies can earn up to 20 bonus points per EP application.
Shortage Occupation List (SOL)
Applicants applying for roles on the Shortage Occupation List (SOL) can earn up to 20 additional points. Firms benefiting from the SEP Bonus will receive ten bonus points for each EP application. To qualify, firms must be backed by sector agencies and may receive the SEP Bonus support for up to three years.
Educational Verification
MOM is tightening the requirements for verifying educational qualifications for EP applications. From September 2023, employers must ensure that the qualifications declared are verified through selected background screening companies listed on MOM’s website. This requirement applies to both new applications and renewals from September 2024. MOM also explores alternative verification methods, such as online portals linked to government or educational institutions.
Effective Date: 1 September 2024 for renewals.
Slovakia: Recent Employment Updates
Employment Opportunities for Ukrainian Nationals
Ukrainian citizens and specific family members living in Ukraine before February 24, 2022, can apply for temporary protection in Slovakia. This status allows them to work under more streamlined conditions. The protection also extends to non-Ukrainian foreign nationals and their families who had been granted international protection in Ukraine by that date. Upon receiving temporary protection, individuals are provided with documentation that authorizes them to work within Slovakia.
Validity Period: March 1, 2022, to March 4, 2025.
Proposal for a Four-Day Working Week in Slovakia
A proposal under consideration by the National Council could introduce a four-day working week in Slovakia. This change would allow employees to work their full weekly hours over four days instead of five, giving them an additional day off. This day would be intended for personal well-being, including family time, health care, and other personal matters.
Although the proposal has not yet been enacted, employers should stay informed. If the change is implemented, significant adjustments in work schedules and resource management could be required.
Compliance Guide 2024: Essential Insights for Global Employers
As your business expands into new markets, the complexities of managing a global workforce become more evident. The “Compliance Guide 2024—Global EOR” is designed to provide you with clear, actionable insights into navigating these challenges effectively.
What’s Inside
- Current Trends: An analysis of the key shifts in global employment, from the rise of remote work to the evolving expectations of international employees.
- Foundations of Compliance: We break down the core areas where compliance is critical, including employment contracts, tax obligations, and social security requirements.
- Risk Management: We explore the potential risks associated with global employment — such as worker misclassification and permanent establishment risk — and offer strategies to mitigate them.
- Practical Tools: From checklists to best practices, this guide provides the resources to streamline your compliance efforts and focus on your business goals.
Click here to read the Compliance Guide 2024
In global employment, unpredictability is the rule rather than the exception. Expanding across borders means you will inevitably encounter situations that no automated system can fully address.
Whether adapting to sudden changes in local legislation or managing the complexities of relocating key employees and their families—especially without a legal entity in the target country and requiring a work permit sponsor—these challenges demand a personalised approach.
Why Personalised Global Employer of Record Solutions Count
- Handling HR Compliance Challenges: Laws are different everywhere and can change without warning. You need someone who knows the local rules to help you adapt quickly. Automated systems can’t do that.
- Solving Payroll Issues: Global payroll is rarely straightforward. Unexpected tax problems or local regulations can throw things off. With a personalised Global EOR service, you have real people who can quickly step in and fix these issues.
- Customising Employee Benefits: Employee expectations differ across regions, and a one-size-fits-all benefits package falls short. Our experts leverage their deep local knowledge to design competitive, tailored benefits that resonate with your workforce, ensuring they feel genuinely valued and understood.
- Tackling Global Mobility Challenges: Relocating employees isn’t just about paperwork; it’s about managing the unexpected. Whether navigating visa complications, finding suitable housing, or securing a school for your employee’s children, our dedicated advisors address these challenges.
Click here to read the full article.
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Conclusion
Keeping up with these legal updates is crucial for staying compliant in your global operations. If you found these insights valuable, subscribe to our Global Employment Tax and Compliance Newsletter to receive monthly updates in your inbox. Stay informed and prepared for what’s next.