Welcome to the 21st Edition of Acumen International’s Global Employment Tax & Compliance Newsletter!
Your continued engagement and support have inspired us to craft each edition with even more dedication; this one is no exception. In this September issue, we’ve curated the most critical updates and practical insights to help you confidently navigate global employment.
Solving Global Workforce Challenges with Employer of Record Solutions
As global workforce demands shift, businesses expanding into new markets encounter challenges—from managing compliance with local employment laws to ensuring accurate payroll across multiple jurisdictions. With real-time, hands-on support in over 190 countries, Global Employer of Record solutions helps businesses navigate critical issues such as permanent establishment risks, complex immigration procedures, and worker misclassification.
Explore this guide to understand how Acumen’s EOR solution enables faster team deployment, efficient market scaling, and seamless compliance without setting up local entities.
EU ??: Artificial Intelligence (AI) Regulation
The EU’s new Artificial Intelligence (AI) Regulation has been introduced to establish a legal framework for developing, marketing, and using AI systems across the region. This regulation, which has been in development for nearly three years, aims to ensure that AI systems comply with relevant laws and respect fundamental EU rights and values. The regulation adopts a risk-based approach, categorizing AI systems into four levels of risk: unacceptable, high, limited, and minimal.
Key Changes
- AI systems are classified based on risk categories. Depending on the classification, systems may face prohibitions, be subject to market monitoring, or require specific documentation, impact assessments, and transparency measures.
- Companies, including HR departments, must assess the use of AI systems and identify whether their systems fall under these regulated categories.
- Effective Date: 1 August 2024 (Phased implementation, with obligations entering into force in stages until August 2027).
Employer Actions
- Identify which AI systems they use.
- Determine if any AI systems, particularly those used for HR purposes, are prohibited or classified as high-risk.
- Ensure compliance with the regulations for AI systems deemed high-risk, including monitoring and documentation.
- To mitigate liability risks, companies should ensure robust compliance systems are in place to support AI’s safe and lawful use following the regulation’s requirements.
Austria ??: Teleworking Regulations to Be Extended
The Austrian Employment Contract Law Amendment Act (AVRAG), Section 2h, currently outlines the requirements for home office use. This regulation is being expanded to include teleworking, which covers working from locations like relatives’ homes, libraries, or co-working spaces. From January 2025, employers must ensure that written agreements for teleworking arrangements, alongside existing home office agreements, are in place to comply with the updated law.
The extended law requires teleworking agreements to be formalised in writing, like home office agreements, to ensure proper organisation and compliance with the expanded scope. The effective date is 1 January 2025.
Czech Republic: Significant Amendments to the Labour Code (Flexible Amendment)
A new government bill introducing flexible amendments to the Labour Code is currently being discussed in Parliament. These amendments aim to provide flexibility for employees and employers, covering parental leave, termination rules, work time organisation, wages, probation periods, and youth employment. The effective date is 1 January 2025 (subject to changes until final adoption).
Parental Leave
- Employees on parental leave can perform the same job under a different contract with the same employer.
- Employees returning from parental leave before their child’s second birthday are guaranteed their original position and workplace.
Termination Rules
- The notice period will begin on the day the termination notice is received.
- The notice period is reduced to one month for terminations due to misconduct or failure to meet job requirements.
Compensation for Work-Related Health Issues
Employees who lose their jobs due to work-related injuries or illnesses will receive special compensation funded by employer insurance.
Work Time Organisation
- Employees can schedule their working hours by agreement.
- Rest periods can be shortened to six hours in emergencies, with rest time compensated the following day.
Wages
Employees who work abroad, permanently reside abroad, or are EU citizens without permanent residence in the Czech Republic can agree to be paid in a currency other than CZK.
Probation Period
The maximum probation period will be extended to four months for regular employees and up to eight months for managers.
Czech Republic: Cancellation of Guaranteed Wages
Historically, the guaranteed wage set the minimum pay for various jobs based on complexity, responsibility, and required effort. As of 1 August 2024, this system will be abolished in the private sector. Only the national minimum wage of CZK 18,900 per year (approximately €750) will apply. Effective Date: 1 August 2024.
Czech Republic: Self-Scheduling of Working Hours
Employers and employees in the Czech Republic may mutually agree for employees to self-schedule their working hours. The agreement must be formalized in writing, and the average weekly working time must be adhered to over the agreed compensation period. Effective date: 1 January 2025. Employers must ensure that any self-scheduling agreements are in writing to avoid penalties. If self-scheduling agreements are not properly documented, a fine of up to CZK 300,000 (approximately €12,000) can be imposed.
Key Points
- Notice Period: Either party can terminate the agreement with 15 days’ notice without providing a reason.
- Compensation Period: The standard period is 26 weeks, extendable to 52 weeks under a collective agreement.
- No Allowance: Employees are not entitled to compensation for personal obstacles like medical appointments.
Is Shadow Payroll Holding Back Your Global Expansion?
Managing payroll for internationally mobile employees often leads businesses to choose shadow payroll as a temporary solution. However, this approach can introduce hidden complexities and risks for long-term growth. In our latest article, we examine the limitations of shadow payroll and present Global Employer of Record (Global EOR) as a more scalable and sustainable alternative.
Why Global Employer of Record Is the Smarter Choice
- Compliance across multiple countries: Avoid non-compliance risks and penalties with expert handling of local regulations.
- Seamless scalability: Expand into new markets without the complexities of establishing local entities or managing intricate payroll systems.
- Simplified operations: Focus on your core business strategy while we manage payroll, taxes, and legal requirements across borders.
- Long-term sustainability: While shadow payroll may suffice in the short term, Global EOR is designed to support your long-term international operations with stability and peace of mind.
Looking to assess employment costs across multiple countries? Our Global Payroll Calculator helps you gain clear insights into total costs, tax obligations, and compliance needs across 190 countries.
Read the full article to explore how Global EOR can be a game-changer for your global expansion strategy.
Denmark: Legal Challenge to the EU Minimum Wage Directive
The Danish Government has launched legal action against the EU’s Directive on adequate minimum wages, arguing that it conflicts with Denmark’s long-standing labour model. In Denmark, wages and other employment terms are negotiated between employers and employees through collective agreements rather than being set by legislation.
The government views the Directive as incompatible with these practices and seeks to have parts of it annulled by the European Parliament.
Impact Date: Awaited (The legal process is ongoing, and the Directive is scheduled to be implemented by 15 November 2024 across the EU).
Key Points
- Denmark’s legal challenge is based on its labour model, in which wages are negotiated collectively rather than through statutory regulation.
- The outcome of the legal proceedings could impact how the Directive is implemented across Member States.
- Employers in Denmark should follow the legal proceedings closely, as the outcome may affect wage-setting practices and collective agreements.
France: Proposed Birth Leave Initiative
The French Government plans to introduce a new “birth leave” initiative to replace the current parental leave system. While the proposal is still being developed, it aims to provide both parents with six months of leave following the birth of a child, with flexible arrangements for how the leave can be utilised. The anticipated effective date is subject to final approval.
Key Changes
- A 6-month birth leave option will substitute parental leave for both parents.
- The leave can be used by either parent or shared between both, simultaneously or separately, with options for full-time or part-time usage.
- Social security will cover 50% of the employee’s previous salary, with a cap of €1,932 per month. Employers may opt to top up this compensation.
France: New Pathway for Legal Residence of Foreign Workers in Labour Shortage Areas
The French government has granted préfets—senior regional government officials who represent the national government at the local level—the authority to provide residence permits to undocumented workers in sectors and regions with significant labour shortages. This measure is in effect until 31 December 2026 and offers eligible individuals a one-year residence permit—an implementation period until 31 December 2026.
Eligibility Criteria
To qualify for legal residence, individuals must meet the following conditions:
- Have worked as a salaried employee in a sector or region facing recruitment difficulties for at least 12 months (consecutively or within the last 24 months).
- Have held a job in one of the identified areas or sectors.
- Have lived continuously in France for at least three years.
- Have a clean criminal record with no convictions, disqualifications, or legal restrictions.
Préfets retains the discretion to deny applications based on social and family integration, compliance with public order, and alignment with French values.
Additional Changes
- Training programs will be provided for foreign workers who are not proficient in French.
- Social security benefits will be extended to non-EU foreign nationals.
- Employers should revise their hiring and employment procedures for foreign workers to ensure compliance with the new provisions.
Non-compliance with the new regulations may expose employers to fines and potential claims for damages.
Selling the Illusion: Why Global Employment Can’t Be Fully Automated
As global employment platforms flood the market with promises of rapid onboarding and low costs, the allure of full automation often overshadows the reality. Our latest article explores the critical gaps these platforms leave behind and why human expertise remains essential for sustainable international growth.
Key Insights
- The Illusion of Automation: Automated platforms may seem like a quick fix, but they lack the adaptability needed for real-world global employment challenges.
- Human Support is Irreplaceable: Complex immigration, tax, and regulatory issues demand personalised, on-the-ground solutions.
- Building Strong Teams: Long-term success in global employment requires more than software—it needs the human touch to navigate unpredictable challenges and support employee well-being.
Read the full article to understand why human-led expertise, supported by a robust infrastructure, is vital to building resilient and loyal global teams.
Ireland ??: Implementation of the EU Adequate Minimum Wages Directive
Ireland is required to implement the EU Adequate Minimum Wages Directive by 15 November 2024. The Directive promotes wage adequacy and encourages collective bargaining without enforcing a uniform approach across Member States. Ireland, which has a statutory minimum wage, must conduct regular reviews to ensure wages meet set criteria. Impact Date: by 15 November 2024.
Key Points
- Ireland must regularly review its minimum wage to ensure it meets adequacy standards.
- The Irish Government will work with trade unions and stakeholders to comply with the Directive’s requirements.
Lithuania ??: Minimum Wage Increase Legislation
The Lithuanian government has enacted new legislation to increase the minimum wage to better align with living costs and economic conditions. This update aims to provide more substantial financial security for workers. The new wages requirements will become effective on 1 January 2025, and employers must fully comply by this date.
Key Changes
- Monthly Minimum Wage: Increased to €1,038 from January 2025.
- Hourly Minimum Wage: Raised to €6.35, ensuring that hourly workers receive fair compensation aligned with the new standard.
What Employers Need to Do
Employers should adjust their payroll systems to reflect the new minimum wage levels, ensuring all workers are paid according to the updated legislation. Failing to comply with these wage standards can result in fines imposed by the State Labour Inspectorate, ranging from €240 to €880 for initial violations, with higher penalties for repeated non-compliance.
UAE: Court Recognizes Cryptocurrency as Part of Salary Payment (Case Law)
In a landmark case, the Dubai Court of First Instance has ruled that part of an employee’s salary can be paid in cryptocurrency, marking a significant development in the UAE Labour Law. This ruling arose from a dispute where an employer failed to pay a portion of the salary in cryptocurrency, as stipulated in the employment contract. The impact date is 15 August 2024. Employers should ensure compliance by this date.
Key Changes
- The court has confirmed that cryptocurrency can be used to partially pay an employee’s salary under the UAE Labour Law.
- However, paying the full salary in cryptocurrency is not permissible, as salary payments are still required in UAE Dirhams (AED) or another recognised currency for companies under the Wage Protection System or in free zones.
What Employers Need to Do and Why
Employers that wish to pay part of an employee’s remuneration in cryptocurrency must ensure that contracts and policies clearly outline how cryptocurrency will be valued and include provisions for volatility. They should also be aware that tax and social contributions cannot be paid in cryptocurrency and must account for these limitations in their payroll processes.
Failure to properly outline the terms of cryptocurrency payments in contracts could lead to unexpected liabilities or disputes, especially if the cryptocurrency’s value fluctuates significantly or if regulations change. Employers must clarify the arrangements for employees to avoid financial and legal risks.
Global Employment Services in Ukraine and Risky Regions
The war in Ukraine has caused immense disruption, displacing millions and damaging vital infrastructure. Despite these challenges, Ukraine remains a key part of the global economy. Our latest article explains how Acumen International’s Global Employer of Record (EOR) services have helped businesses rehire displaced Ukrainian talent and continue operations across borders.
Key Insights
- Rehiring Talent Across Europe: Learn how we helped a Ukrainian enterprise quickly rehire employees who had been displaced in Spain, Poland, and Austria.
- Continued Hiring in Ukraine: Despite the conflict, industries such as military production and software development continue to need local talent.
- Hiring in Risky Regions: We provide compliant hiring solutions for companies operating in volatile regions, ensuring lawful employment without local entities.
- Global Immigration Support: Our tailored services ensure businesses can seamlessly onboard employees and their families, offering essential support in risky or complex regions.
Read the full article to discover how Acumen International’s Global EOR solution helps businesses hire in Ukraine or risky regions, keeping operations running smoothly even in unpredictable circumstances.
Netherlands: Broadening of Unemployment Premium Exemption
The Dutch government has introduced changes to the unemployment premium system, expanding the conditions under which employers can benefit from lower unemployment premiums. This reform, set to take effect on 1 January 2025, aims to offer employers more flexibility while maintaining employment contract security for workers.
Key Changes
- Employers currently pay lower unemployment premiums for permanent employment contracts and higher premiums for flexible contracts.
- Under the new rule, employees on permanent contracts will be allowed to work up to 30% overtime beyond their contractual hours without triggering higher unemployment premiums.
- Contracts with 30 or more working hours per week will now qualify for this exemption, broadening the scope beyond the current threshold of 35 hours.
- If an employee works over 30% overtime in a given year, the higher premium will apply retroactively for the entire year.
What Employers Need to Do and Why
Employers should review their existing contracts and working hour arrangements. Contracts with average working hours of 30 or more hours per week will fall under the expanded exemption, allowing for greater flexibility in work hours while maintaining lower unemployment premiums. Consider adjusting work hours (e.g., reducing to 30 hours) to remain within the new scope and benefit from the lower premium.
Netherlands: Legislative Proposal to Enhance Job Security for Flexible Workers
The Dutch government has proposed the “More Security for Flexible Employees Act,” which has been under consultation since July 2023. This new law aims to replace on-call contracts with “basic contracts,” offering more precise terms for employees with fixed or indefinite working hours and improving job security for flexible workers. Expected Date: The implementation date is not yet confirmed but is expected no earlier than 1 January 2026. Employers will likely have a 6-month transition period to comply with the new regulations.
Key Changes
- Introduction of Basic Contracts: On-call contracts will be replaced by contracts specifying a minimum number of paid hours for which employees are scheduled. These contracts will offer greater stability to workers.
- Exemptions: On-call contracts will still be available for students and temporary agency workers, but only during the first 52 weeks of their employment.
- Breaks Between Contracts: The maximum allowable gap between fixed-term contracts will increase from 6 months to 5 years. If the combined duration of contracts exceeds 3 years, with breaks of 5 years or less, the contract will automatically convert to an indefinite term.
What Employers Need to Do and Why
Employers should prepare to replace existing on-call contracts with basic contracts where applicable. It is advisable to start keeping detailed records of fixed-term employees and their contracts for at least 5 years after termination to ensure compliance with the new rules. Failure to manage the timing between contract renewals could lead to unintended conversions to indefinite contracts, with potential wage claims from employees.
If this proposal becomes law, employers risk wage-related claims or the automatic conversion of fixed-term contracts into indefinite contracts if breaks between contracts are not managed carefully.
Singapore: Upcoming Guidelines on Restrictive Clauses in Employment Contracts
The Ministry of Manpower, in collaboration with the National Trades Union Congress and the Singapore National Employers Federation, is developing new guidelines to regulate the use of restrictive clauses in employment contracts. These guidelines will cover clauses related to restraints of trade and non-compete agreements. Effective date: second half of 2024 (exact date pending).
Key Changes
- The new guidelines will provide more transparent standards for the reasonable use of restrictive clauses, ensuring fairer employment practices. They will complement existing guidelines on retrenchment and manpower management.
- Employers should be aware of these upcoming guidelines and prepare to review their employment contracts once the guidelines are released.
Singapore: Upcoming Parental and Paternity Leave Legislation
The Singapore government is rolling out new leave policies to support parents better. In 2025, significant changes will be made to paternity and parental leave entitlements.
Key Changes
- Paternity Leave Extension: From 1 April 2025, working fathers with Singaporean children born on or after this date will be entitled to four weeks of Government Paid Paternity Leave (GPPL), an increase from the current two weeks.
- New Parental Leave Framework: A new system will replace the existing shared parental leave scheme. From 1 April 2025, parents will share six weeks of paid leave, increasing to ten weeks from 1 April 2026. This new entitlement is in addition to the existing maternity and paternity leave provisions.
Effective Dates
- Paternity Leave Extension: Effective from 1 April 2025.
- Parental Leave: Implementation begins on 1 April 2025 (six weeks) and entirely takes effect on 1 April 2026 (ten weeks).
Employer Implications
Employers hiring in Singapore must update their leave policies and systems to reflect these changes by April 2025. Failure to do so may lead to non-compliance risks. It is also essential to inform employees of these new entitlements on time to ensure a smooth transition.
Expanding into Azerbaijan: A Strategic Approach with a Global EOR Solution
Expanding into a new market like Azerbaijan can present various challenges, but with the right guidance, the process can be significantly streamlined. Acumen International’s Global Employer of Record (EOR) solution offers businesses a streamlined, compliant, and efficient way to enter the Azerbaijani market without the need to establish a legal entity.
Key Insights
- Achieve fast, compliant market entry within 1-2 weeks.
- Access top local talent without the complexities of setting up local operations.
- Stay compliant with evolving tax regulations and labour laws.
- Minimise risks while cutting unnecessary operational costs.
Take the next step in your global expansion journey with confidence. Read the full Guide to explore how Global EOR can simplify your business entry into Azerbaijan.
Coming Soon: The Global Compliance Guide — Your Key to Seamless Global Expansion
Acumen International is soon launching a powerful tool designed to simplify one of the most intricate aspects of global growth: compliance. The Global Compliance Guide will enable businesses to navigate local laws, workforce regulations, and tax obligations in over 190 countries from a single solution.
This tool is a strategic resource for businesses planning to expand their global footprint. By providing comprehensive, accurate, country-specific insights, the Guide allows companies to assess potential risks and plan global operations confidently, saving time and avoiding costly mistakes.
The Global Compliance Guide complements our Express Global Employment solutions, which streamline compliant hiring in new markets, and Global Payroll Calculator, which helps you estimate employment costs across 190+ countries.
Together, these tools offer a seamless way to plan, calculate, and expand globally, all while mitigating risks and ensuring compliance with local regulations.
Stay tuned for the official launch!
Wrap Up
At Acumen International, we believe global employment is about the people behind every solution—those who need it and those who deliver it. This month’s newsletter blends practical updates with our human-first approach. For a deeper look, read “A Different Take on How We Deliver Global Employment Services“, a unique, story-driven reflection on global expansion.
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