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Foreign labour law has become a significant issue for employers as more companies look to expand abroad to keep pace with globalisation. A changing landscape of regulation in the wake of slow recovery from the global financial crisis has made the challenge of managing an international workforce more acute. In its report World Employment and Social Outlook – Trends 2015, the International Labour Organization warns that, despite improvement in some advanced economies, the employment situation remains difficult in much of Europe and many emerging and developing economies. Now in its sixth edition, Employment & Labour Law provides a snapshot of the employment law landscape across the globe. With its ease of access and template style, it provides an invaluable tool for employers who operate across borders and those looking to venture into new territory.
ForewordSiân Keall Travers Smith LLP
Argentina Federico M Basile M & M Bomchil
Australia Gordon Williams Minter Ellison
Austria Thomas Angermair Dorda Brugger Jordis
Belgium Chris Van Olmen Van Olmen & Wynant
Brazil Domingos Antonio Fortunato & Fernanda Louro Coutinho Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados Dario Rabay & Viviane Rodrigues Souza, Cescon, Barrieu & Flesch Advogados
Canada Brian O’Byrne Fasken Martineau
Chile Paulina Miranda PMV Abogados
Croatia Hrvoje Vidan Vidan Law Office
Denmark Mariann Norrbom Norrbom Vinding
England & Wales Siân Keall Travers Smith LLP
Finland Eva Nordman-Rajaharju, Leenamaija Heinonen & Ingrid Remmelgas Roschier, Attorneys Ltd
France Joël Grangé & Florence Bacquet Flichy Grangé Avocats
Germany Michael Magotsch & Dr. Sascha Morgenroth DLA Piper UK LLP
India Rabindra Jhunjhunwala & Anshul Prakash Khaitan & Co
Italy Franco Toffoletto Toffoletto De Luca Tamajo e Soci (Member of Ius Laboris)
Japan Hideki Thurgood Kano Anderson Mōri & Tomotsune
Luxembourg Pierre Elvinger & Anouck Schneider Elvinger, Hoss & Prussen
Mexico Pietro Straulino Ogletree Deakins International, SC
The Netherlands Eugenie Nunes, Lianne Hoorntje & Afra Pepping Boekel N.V.
New Zealand Greg Cain & Renee Butler Kensington Swan
Singapore Deborah Evaline Barker & Ang Keng Ling Withers Khattarwong
South Korea Jeong Han Lee Bae, Kim & Lee LLC
Spain Rafael Gimenez-Arnau & Bernardo Perez-Navas Garrigues
Switzerland Dr Matthias Oertle Lenz & Staehelin
Turkey Pelin Baysal, Beril Yayla Sapan & Asena Aytuğ Keser GÜN + PARTNERS
United Arab Emirates Jamie Liddington Hadef & Partners
United States Peter A Susser Littler Mendelson, PC
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EMPLOYMENT & LABOUR LAW
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General Editor: Siân Keall Travers Smith LLP
SIXTH EDITION
EMPLOYMENT & LABOUR LAW
INTERNATIONAL SERIES
Siân Keall, Travers Smith LLP
General Editor Siân Keall
Travers Smith LLP
Commissioning Editor Emily Kyriacou
Commercial Director Katie Burrington
Publishing Editor Dawn McGovern
Editor Lisa Naylor
Editorial Publishing Co-ordinator Nicola Pender
Published in September 2015 by Thomson Reuters (Professional) UK Limited, trading as Sweet & Maxwell Friars House, 160 Blackfriars Road, London, SE1 8EZ
(Registered in England & Wales, Company No 1679046. Registered Office and address for service:
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ISBN: 9780414051249
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FOREWORD Siân Keall | Travers Smith LLP ....................................................................... v
ARGENTINA Federico M Basile | The Bomchil Group .......................................................... 1
AUSTRALIA Gordon Williams | Minter Ellison ................................................................... 13
AUSTRIA Thomas Angermair | Dorda Brugger Jordis ......................................................... 31
BELGIUM Chris Van Olmen | Van Olmen & Wynant ........................................................... 49
BRAZIL Domingos Antonio Fortunato & Fernanda Louro Coutinho | Mattos Filho, ............ 69 Veiga Filho, Marrey Jr. e Quiroga Advogados Dario Rabay & Viviane Rodrigues | Souza, Cescon, Barrieu & Flesch Advogados
CANADA Brian O’Byrne | Fasken Martineau ..................................................................... 85
CHILE Paulina Miranda | PMV Abogados ......................................................................... 115
CROATIA Hrvoje Vidan | Vidan Law Office ....................................................................... 129
DENMARK Mariann Norrbom | Norrbom Vinding ............................................................ 147
ENGLAND & WALES Siân Keall | Travers Smith LLP ........................................................ 167
FINLAND Eva Nordman-Rajaharju, Leenamaija Heinonen & Ingrid Remmelgas | ............. 185 Roschier, Attorneys Ltd
FRANCE Joël Grangé & Florence Bacquet | Flichy Grangé Avocats ................................ 203
GERMANY Michael Magotsch & Dr. Sascha Morgenroth | DLA Piper UK LLP ................... 227
INDIA Rabindra Jhunjhunwala & Anshul Prakash | Khaitan & Co ..................................... 251
ITALY Franco Toffoletto | Toffoletto De Luca Tamajo e Soci (Member of Ius Laboris) ........ 263
JAPAN Hideki Thurgood Kano | Anderson Mōri & Tomotsune .......................................... 283
LUXEMBOURG Pierre Elvinger & Anouck Schneider | Elvinger, Hoss & Prussen ................ 301
MEXICO Pietro Straulino | Ogletree Deakins International, SC......................................... 321
THE NETHERLANDS Eugenie Nunes, Lianne Hoorntje & Afra Pepping | Boekel N.V. .........337
NEW ZEALAND Greg Cain & Renee Butler | Kensington Swan ......................................... 361
SINGAPORE Deborah Evaline Barker & Ang Keng Ling | Withers Khattarwong ............... 379
SOUTH KOREA Jeong Han Lee | Bae, Kim & Lee LLC .......................................................397
SPAIN Rafael Gimenez-Arnau & Bernardo Perez-Navas | Garrigues ................................. 413
SWITZERLAND Dr Matthias Oertle | Lenz & Staehelin ................................................... 429
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TURKEY Pelin Baysal, Beril Yayla Sapan & Asena Aytuğ Keser | GÜN + PARTNERS ......... 443
UNITED ARAB EMIRATES Jamie Liddington | Hadef & Partners .................................... 457
UNITED STATES Peter A Susser | Littler Mendelson, PC .................................................. 481
CONTACT DETAILS ......................................................................................................... 497
FOREWORDSiân Keall | Travers Smith LLP
It is such a pleasure to be introducing the sixth edition of Employment and Labour Law. The last one was received very positively (a couple of my international clients chased me to find out about the new edition because they use it so regularly). I feel enormously privileged to edit a book with such impressive contributors. Towards the end of 2014, a group of the lawyers contributing to this book met in London to discuss a range of employment topics. From our discussions it was immediately clear that many of us grapple on behalf of our clients with similar issues despite operating in a range of different jurisdictions. We hope that the structure of this book continues to reflect this community of experience.
Each chapter is structured under the same headings and in the same order so that a reader can easily compare and contrast. The content is deliberately high level so that the reader does not get stuck in too much detail. This book is therefore not a substitution for specific legal advice but I know from your feedback that you value being able to quickly and easily make cross-jurisdictional comparisons. Please note that, for the sake of flow and easy reading, male personal pronouns have been used throughout the book, but the law applies equally to women unless stated otherwise.
Many countries have made changes to their employment laws since the fifth edition in order to support the green shoots of economic recovery, or in some cases to try to ward off further decline. Do these changes work and do they have unintended consequences? As I write this, Greece teeters on the edge of exit from the EU. Who can tell what lies ahead? The only thing we know for sure is that change will continue in this most political of legal specialisms.
Again, my thanks to Adam Rice, a senior lawyer in the employment team at Travers Smith and my secretary Annie Kuan both of whom do so much to make this edition possible. Also thanks must go to the contributors of each of the country chapters, who provide valuable and practical insight into employment law in the different jurisdictions. Finally the Thomson Reuters team has, as always, been hugely supportive and have coped calmly when my client deadlines have taken me out of action unexpectedly.
Siân Keall
London, August 2015
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1. SOURCES OF EMPLOYMENT LAW1.1 What are the principal sources of law and regulation? Legal regulation of the employment relationship is mainly covered by:
• TheNationalConstitutionandinternationaltreatiesandrecommendationsoftheInternationalLabourOrganization(ILO), whose provisions foresee protection of the worker and the work itself and the right to organise unions to collectively represent workers in their labour claims against the employer and in the execution of strikes.
• TheEmploymentContractAct(ECA)andProfessionalStatutes(actsapplicabletosalesmen,constructionworkersand journalists), which set out the rights and obligations of the parties tied under the employment relationship, types of employment contacts and, among other important provisions, the regulation of the termination of the employment relationship.
• CollectiveBargainingAgreements(CBAs)whichcontainprovisionsforspecificactivitiesandworkersrepresentedbytheir unions.
• TheLabourHazardsAct(LHA)whichsetsouttheregulationoftheresponsibilitiesoftheemployerbeforelabour-related accidents and professional illnesses.
• Retirement and Social Security Act which regulates retirement benefits and some additional legal provisionsgoverning healthcare and social security contributions that fund the entire social security system.
• Individualcontractswhichmayestablishparticularconditionsofemploymentsupersedingtheprinciplesofpublicorder contained in the ECA.
1.2 What is the order of priority of the relevant sources? Which take precedence in the event of a conflict?
The National Constitution is, hierarchically, the superior legal statute which cannot be contradicted or ruled against by any other law or legal provision.
Within the scope of labour regulations, the ECA – as the legal regulation for all private labour relationships with the exception of the ones specially excluded from its scope (public employees, farm workers and housekeepers) – cannot be replaced or modified by any collective bargaining agreements, professional statutes or individual contracts of employment.
Section 12 of the ECA establishes that agreements between the parties suppressing or reducing the rights set out in the ECA, statutes, individual contracts or collective agreements will be null and void. Furthermore, section 13 of the ECA states that any clauses of the employment contract modifying or reducing rights established under the ECA or collective bargaining agreement will be null and considered replaced according to the terms sets out in that section. Finally, section 14 of the ECA declares that if the parties have proceeded with simulation or fraud in their contracts with respect to labour legislation, those provisions of the contract will be void.
Notwithstanding the hierarchy of the ECA, case law and judicial precedents are substantial sources which produce modifications to the law. A good example of this is that currently, termination without cause follows the doctrine stated
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by the Argentine Supreme Court in a judicial precedent rather than the law itself, which has been declared in part unconstitutional by the court.
Besides this, all in all, there are no conflicting scenarios in the law itself, as the legislative structures provide clear definition of the scope of their applicability and hierarchies.
1.3 What are the relevant statutes and international treaties?The relevant statutes are:
• Housekeepers’ regime: the Act sets out the rights and obligations of male or female employees working inhousekeeping activities where the employer seeks no economic goal. This reference is aimed at separating cleaning or cooking services rendered in offices or any place of work where the employer pursues its business activities. Those services fall under the governance of the ECA. Rights and obligations in the housekeepers’ regime are, in general, equivalent to the ones set out in the ECA.
• Construction regime: Act No. 22,250 regulates the scope of rights and obligations applicable to workers andcompanies in construction activities. Employers and employees acting in this special sector of activity must be registered with the Construction Registry, which is the authority that administers the special contributions made by the employers to fund the compensation payable to workers on the termination of their labour relationship.
• Journalists:journalistsandadministrativeemployeesofcompaniesinthejournalist’ssector(newspapers,media,andso on) are tied by special legal provisions specifically applicable to such workers. The journalist’s regulation follows the principles of the ECA but also foresees special protection of the workers by granting higher indemnifications for terminations at will.
International treaties applicable to labour relationships and that have been ratified by law of the National Congress include the Universal Declaration of Human Rights, the American Convention of Human Rights and the International Covenant on Economic, Social and Cultural Rights.
Furthermore, the Argentine Republic has ratified several ILO conventions including the Convention of Application of the Principles of the Right to Organise and to Bargain Collectively, the Equal Remuneration Convention and the Discrimination (Employment and Occupation) Convention.
2. PRINCIPAL INSTITUTIONS The principal institutions include the following:
• TheMinistryofLabourwithitsnationalandprovincialofficesisthemostimportantauthoritythathascontrolandoversight over employment law relationships. Inspections of employers are usually performed by unions or are part of specific campaigns by the authority to, for example, control proper registration of employees, overtime, health and safety standards, and so on.
• TheLabourHazardsCommission,whichisempoweredtoenactnormsandregulationsrelatedtosafetyandhealthinthe workplace, and to administer the insurers of the system.
• TheFederalAgencyofTaxAdministrationistheauthoritywhichoverseesthesocialsecurityregimeandadministrates
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social security contributions, paid by employers and employees, so as to fund the public pension system administered by the National Pension Agency and the healthcare regime (through healthcare institutions).
3. ROLE OF THE NATIONAL COURTSNational labour courts serve the City of Buenos Aires, and provincial courts serve the provinces. The provincial courts are undertheauthorityoftheSupremeCourtofJusticeofeachprovince,andallcourtstogetherareboundbytheNationalSupremeCourtof Justice.With respect to thenational labourcourts, it isworthmentioningthat the judicialsystem isorganised with first instance courts, and at the second level, by the Chamber of Appeals. Within the city of Buenos Aires there is a compulsory conciliatory proceeding before any labour claim can be filed before a court. Indeed, all labour claims must be first filed and heard by a mediator appointed by the Ministry of Labour. The purpose of the administrative stage is to pursue a settlement so as to avoid a judicial claim and thus the intervention of the court.
4. EMPLOYMENT STATUS AND CATEGORIES OF WORKER 4.1 What defines employment status (whether an individual is employed or self-employed)?According to the ECA the mere performance of habitual and/or recurring work to the benefit of any individual or entity in exchange for economic compensation presumes the existence of an employment relationship, as far as the individual could not be characterised as an independent contractor.
Certain categories or special characteristics of services could fall under the scope of an employment relationship or be understood as a relationship that is not governed by the ECA’s provisions.
In the event of doubt, the courts will be inclined to favour the protection of the individual by granting labour rights and upholding a scenario of improper registration or lack of it – scenarios that could trigger severe penalties and aggravated indemnifications in favour of the individual.
Individuals covered by the ECA and by the relevant CBA have the principal right to collect the corresponding remuneration, which amount will be established by habitual market practices for personnel not included in CBAs and by the salary agreements entered into by the relevant union negotiations in the case of blue collar employees.
4.2 What is the relevance of the distinction?The importance of the distinction relies on the completely different legal treatment that both statuses receive. Whilst a worker tied to a formal employment relationship is granted the protection of the law regarding, for example, payment by the employer of a fixed compensation for dismissal without the need to prove any damages resulting from the dismissal, terminations of relationships not falling under the scope of the ECA must be subject to serious evidence to demonstrate damages in order to obtain indemnification.
Moreover, unlike autonomous workers, individuals tied to a duly registered employment relationship are granted with social security protection, like retirement, healthcare and treatment and compensation in case of accident or professional illness.
4.3 What are the main categories of worker?Employees are generally hired under indefinite term labour contracts and the labour relationship is deemed to last until
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retirement unless dismissal or termination, resignation, disability or by mutual consent, takes place.
The only scenario under which an indefinite term contract would not be established would be in the case of an extraordinary and transitory need of the employer that would justify hiring workers with temporary status.
Indeed, fixed-term contracts or temporary hiring are allowed and foreseen in the ECA to address situations when a company needs to replace permanent personnel on sick, maternity or any other leave, or increase its payroll due to an extraordinary increase in production or services.
Employees under any type of employment contract may be hired to work on a full or part-time basis. Hiring of part-time workers must observe the following limitations and restrictions: (i) the working time cannot exceed two-thirds of the working pattern prescribed by the relevant collective bargaining agreement or by the law itself, which establishes daily work of a maximum of nine hours or up to 48 hours per week. Part-time workers are not allowed to work overtime and where overtime is evidenced, an employee would be entitled to collect the same salary as a full-time employee; (ii) notwithstanding that the amount of the salary will be pro-rated, social security contributions in favour of healthcare institutions must be calculated taking into account the total amount of the salary corresponding to full-time employees.
4.4 What is the position of directors?All individuals fall under the ECA without reference to their hierarchy. Managers and directors are also covered by the ECA unless the characteristics of their relationship and their functions were to evidence a status of non-employment.
The type of labour contract is not defined according to the category of the individual. However, coverage of directors and managers by a collective bargaining agreement is extremely rare and has been prescribed by only a few collective agreements.
Directors of an entity do have special treatment with regards to social security contributions because employees that are members of the board of directors are only obliged to pay their social security contributions to the autonomous workers regime and they have the option to decide if they wish to contribute to the employees’ social security regime. In other words, directors are free to pay social security contributions over their salary earned for activities performed within an employment relationship.
5. CONTRACT5.1 What constitutes an employment contract?The ECA defines an employment contract by establishing its existence in any scenario in which an individual performs services for another individual or entity in exchange for monetary compensation within a defined or undefined period of time.
The ECA only foresees written contracts for fixed-term and temporary labour contracts, while there is no legal need to have written terms for indefinite contracts. Notwithstanding, written clauses will often state precisely conditions for bonus schemes, fringe benefits and other terms over and above the legal minimum.
Furthermore, employment conditions are clearly stated in the ECA and the labour ledgers and salary slips.
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5.2 What formal requirements are there in relation to the formation of an individual employment contract?
All labour relationships must be duly registered with the Federal Agency for Tax Administration before the commencement of the work and also be recorded in labour ledgers, so as to properly comply with payment of social security contributions for the grant of social security benefits (retirement, healthcare, and so on).
Companies hiring foreign workers must previously be registered with the National Immigration Office and file all documentation from the foreigner so as to apply and be granted the corresponding work visa.
Finally, there is a mandatory pre-occupational health examination that all employers must comply with.
5.3 Where do the terms come from?The specific terms of the contract of employment are mainly covered by the regulation in force applicable to the particular labour relationship. Labour and salary conditions exceeding the legal standard may be stated in writing in a contract or arranged orally and ratified as per the registration made in labour ledgers and salary slips. In any case, the substantial conditions of employment will usually be regarded and contemplated within the terms of the law.
6. TERMS AND CONDITIONS6.1 What terms, if any, must be included in a contract?As mentioned in question 5, there are no mandatory terms that must be included in an indefinite employment relationship.
However, fixed-term and temporary contracts must clearly state in writing the justification for hiring the employee under that special type of contract.
6.2 What terms are typically included in a contract?Written employment agreements usually set out conditions like: (i) the amount of monthly salary and structure of annual bonuses; (ii) golden parachutes and special terms for dismissal; (iii) special holiday arrangements; (iv) confidentiality obligations.
6.3 What rules apply to:
6.3.1 Working time and rest breaks
The regulation of working hours and rest breaks are not often specified in written contracts, as they are set out in the ECA and relevant legislation. Nevertheless, executives are granted more holidays and flexible working hours. According to the legislation in force, general working hours are nine hours per day and no more than 48 hours per week, with a daily rest of at least 12 hours between the end of a working day and the start of the following day. Also, with some exceptions, it is forbidden to work from Saturday 1pm to Sunday 12 pm. Within those restrictions, the employer is entitled to distribute and organise its working schedule and shifts.
6.3.2 Annual leave
The ECA establishes a period of annual mandatory rest for all employees. The term varies according to the length of service
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of the employee. Employees are entitled to annual vacations when the following requirements are met:
• Theemployeemusthaverenderedservicesforatleasthalfoftheworkingdaysoftheyearinordertobeentitledtotake the total number of vacation days foreseen in the law. The days on which the employee is absent from work due to sickness, labour injury or special leave are computed as worked days for the purpose of vacation calculation. If the employee does not meet the minimum worked days required, he is entitled to take one day of vacation per 20 worked days.
• The term of vacation entitlement depends on the length of service of the employee, which is computed up toDecember 31st of the corresponding year according the following detail:
• duringthefirstfiveyearsofservice,theemployeeisentitledto14daysofvacationperyear;
• fromfivetotenyearsofservice,21daysofvacation;
• fromtento20yearsofservice,28daysofvacation;and
• for20ormoreyearsofservice,35daysofvacation.
The vacation entitlement is counted in continuous days, including weekends and holidays, and must begin on a Monday or the following working day if it was a holiday.
The ECA allows the accumulation of one-third of a period of unused vacation, if agreed by the parties. In other words, an employee can use two-thirds of his vacation entitlement and save one-third to add to the following period of vacation the next year.
The employer must grant vacations to employees between October 1st and April 30th of the following year, and within this period, is free to choose the date it deems convenient. The vacation period must be granted during the summer (December 21st through March 20th) at least every three years (or vacation periods). If husband and wife work for the same employer, their vacation must be granted jointly and simultaneously as long as it does not affect the normal activities of the company.
The employer must communicate the date of the vacation in writing at least 45 days in advance.
As a general principle, the ECA does not allow employees to waive their vacation in exchange for monetary compensation, but in the case of termination of the employment contract for any cause, the employee is entitled to collect the compensation for the pending vacation entitlement already accrued but not used.
7. EMPLOYEE REPRESENTATIONRepresentation of workers before an employer or labour authorities is performed by the employee’s duly authorised union.
The so-called authorisation defines the scope and extent to which the union may represent certain personnel or activities and the entitlement of the union to negotiate collective bargaining agreements applicable to the sector, labour conditions exceeding the legal standard set out in the ECA and to call strikes when faced with collective conflicts.
Representation of the union within the company is performed by delegates, elected by the employees. Once elected, these delegates are vested with special protection under which they cannot be terminated without cause, suspended or have their employment conditions modified in any way without a prior judicial statement.
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To be eligible as a union representative, an employee must (i) have been affiliated with the union for over a year, (ii) be over 18 years old, and (iii) have been working in the company for 12 months prior to the elections.
The general regime sets out the following minimum representation figures (i) from 10 to 50 employees, one representative will be elected, (ii) between 51 and 100 employees, two representatives, and (iii) from 101 employees on, one more representative must be elected per 100 exceeding the initial 100.
Once elected, the delegates represent all the personnel in the company that work under a collective labour agreement, whether they are affiliated to the union or not, and they have the right to:
• Verifycompliancebytheemployeroftheobligationsestablishedunderlawandbyanycollectivebargainingagreement.Within this scope, they are able to participate in the inspections ordered by the administrative labour authority.
• Holdperiodicalmeetingswiththecompany’srepresentatives.
• Fileclaimstotheemployeronbehalfofpersonnel.
The Law of Union Association establishes in section 52 that union representatives will not be suspended or fired or have their working conditions modified without prior judicial decision. Such protection is valid for a year after termination of the mandate of the delegates or union representatives. The applicants who were not elected are entitled to the protection as well, but the protection period is only valid for six months following the formalisation of their nomination, provided they obtain at least 5% of the votes.
Any attempt to suspend or dismiss a protected employee without a court ruling will be null and void and the employee will be entitled to (i) be reincorporated into the company and collect any salary due or (ii) deem himself indirectly dismissed, thus generating a right for him to collect an indemnification for unjustified dismissal plus the salary that would have accrued until the end of his mandate and the salary that would have corresponded to a year after his dismissal.
Collective negotiations require the intervention of the union and the delegates at the company. Also, collective representation will be needed in cases of collective conflicts, but not for individual agreements or collective agreements that do not legally require it. For example, a transfer of personnel within the scope of a transfer of an on-going concern will not need representative forums like works councils or the union itself. Simple notification will suffice. The same applies for collective suspensions or interruptions of work due to a decline in day-to-day business activity.
Affiliation with a union is a right for employees. Such affiliates will have access to hotels, recreational activities and legal assistance provided by the union, whilst non-affiliates will only benefit from the results of labour negotiations attained by the unions, with no access to additional services or benefits.
8. INFORMATION AND CONSULTATIONConsultation with the union is legally required in the following scenarios:
• Negotiationsforcollectivebargainingagreementsandsalaryincreases.
• Collectiveterminationsorsuspensionsduetoforcemajeureoreconomiccrises.Evenwhentherearecircumstancesin which union consultation is not required, it is advisable to enter into a negotiation with the union before deciding on sensitive issues like transfer of personnel, collective dismissals, changes in the place of work or working time.
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9. EQUAL OPPORTUNITIES9.1 What protection do employees have from discrimination?Sections 17 and 81 of the ECA and Anti-discrimination Act No 23,592 contain the main provisions relating to equal opportunities and avoidance of discrimination. There are no specific laws on labour harassment or mobbing, therefore cases related to that would be subject to the general laws of the Civil Code and case law.
Section 17 of the ECA prohibits any kind of employee discrimination for reasons of sex, race, nationality, religion, politics, union affiliations or age and section 81 of the ECA establishes the obligation on employers to provide equal treatment to all employees in the same situation. Unequal treatment is considered to occur in cases of arbitrary discrimination based on sex, religion or race reasons, but not when the different treatment originates in justified objective reasons such as more efficiency or better performance of the employee.
Act No 23,592 establishes that any person obstructing or impeding the egalitarian exercise of constitutional rights may be obliged to cease the discriminatory act at the request of the victim and to repair the material and moral damages caused. This act refers specifically to discriminatory acts or omissions due to race, religion, nationality, ideology, political or union affiliation, gender, economic position, social condition or physical aspects.
This general Act has been deemed applicable to employment relationships and is interpreted in a sense that, at the request of the employee affected by a discriminatory dismissal, a court may order his reinstatement in the job if the discriminatory act is proved.
Some discrimination has entitled the affected employee to invoke constructive dismissal to terminate the employment relationship with the right to be paid a severance package. Unless the claimant can strongly prove before court that the employer has morally injured him, the only compensation is what is available under the ECA for scenarios of termination without cause.
It is worth mentioning that even though some Bills have been submitted to Congress in order to provide specific regulation over harassment in the workplace, none of them have been enacted yet. Therefore, claims related to harassment and mobbing are resolved on a case-by-case basis and, when proved by the employee, are usually resolved by awarding moral damages calculated as a percentage of compensation for dismissal.
9.2 What rights do parents have?Other special regulations of the ECA with regard to protection of certain categories of workers relate to maternity and marriage.
According to the ECA, the law presumes that if an employer terminates without any cause a female employee seven and a half months before or after pregnancy, the affected employee will be entitled to collect – in addition to general compensation for termination at will – aggravated indemnification of 13 months’ worth of salary.
Also, if an employer terminates a female employee three months before and/or six months after marriage, then the employee will be entitled to collect aggravated indemnification of 13 months’ salary. This protection may also be claimed by a male employee if he is able to prove that the termination was decided by the employer as a reaction to the decision of the employee to get married. This situation is remote in practice.
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Female employees are entitled to a total of 90 days’ maternity leave, which can be extended to a maximum of six months as unpaid leave. Paternity only allows a short leave of two working days according to the ECA but collective bargaining agreements usually extend this term. The ECA does not foresee any provision on adoption but some CBAs do. For example, the CBA for the insurance sector grants paid leave of 30 days counted from the adoption date for female workers.
10. DISCIPLINE AND TERMINATION10.1 What rules/procedures must be followed if an employer wishes to discipline an
employee?Disciplinary sanctions must be communicated in writing to the employee, with a detailed explanation of the misconduct behind the sanction. The employee has 30 days to challenge the sanction, or it will be considered as accepted.
It is forbidden to sanction an employee by modifying their employment contract or by applying fines or withholding salary. It is also forbidden to sanction the employee more than once for the same misconduct.
The exercise of disciplinary measures by the employer must comply with requirements on timing and proportionality in order to be legally valid. In this sense, the sanction must be contemporaneous with the employee’s misdeed. Delays in the application of a sanction are justified only when a previous internal investigation is required.
10.2 What disciplinary action may be taken?The sanction must be reasonable and proportional to the breach committed by the employee and in accordance with the seriousness of the misconduct, contextual circumstances, antecedents, seniority, relapses, and so on.
From a slight fault to gross misconduct, a sanction could consist of a verbal or written call for attention to termination with cause. Intermediate sanctions can include temporary suspension of function without payment of salary for up to 30 days in a year, and consecutive slight misconduct could finally trigger the sanction of dismissal with cause due to repetition of infringements by the employee.
The law does not provide a list of misconduct that can be sanctioned. Ultimately the courts will be the competent authority to finally determine if the sanction imposed by the employer complied with the requirements of reasonableness, proportionality and timing established under labour legislation. Only gross and really severe misconduct can lead to termination of employment without payment of severance.
10.3 What are the grounds on which employment contracts can be terminated (by both employer and employee)?
To terminate employment with cause, the employer and employee must evidence in writing the facts and circumstances that trigger and justify the termination of employment. Before termination one party must give to the other a warning to stop the behaviour or failure to fulfil the relevant obligation and if such behaviour or failure continues then the injured party may communicate to the other the termination of the employment relationship.
Termination by the employer due to gross failure by the employee will only grant the employee the right to collect final salary without severance. The former employee has the right to challenge his dismissal before a court, which will rule either upholding or rejecting the cause that the employer has invoked to terminate the employment without payment of severance.
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An employee may terminate employment within the terms of constructive dismissal by alleging gross and severe infringement of the law committed by the employer, such as salary reduction and other abusive changes in labour or salary conditions, discrimination and mobbing. The employer may disregard the right invoked by the employee to consider himself dismissed and again, the employee will have to file his claim before court to secure judicial support.
Termination of employment with cause does not need prior notice to be valid. However, some cases do require a prior warning in order to give the other party the possibility to adjust their behaviour and to properly secure the basis for dismissal.
10.4 What procedure must be followed?Notification of sanctions to employees must be executed in writing for evidence purposes. There is no intervention of any administrative or judicial authority nor any prior communication or consultation with the union.
10.5 What indemnities must be paid?In addition to termination with cause, the employer also has the right to terminate employment without invoking a cause for dismissal.
Terminations during trial periods (of three months) do not trigger severance indemnities (just 15 days’ notice or indemnification in lieu of it). Employees with service of more than three months are entitled to the following:
• Lengthofserviceindemnification.Thisisequivalenttoonemonth’ssalaryforeachyearofserviceorfractionoverthreemonths, taking as a basis for calculation the highest habitual and normal monthly remuneration earned during the last year of service. This basis cannot exceed the maximum cap foreseen in the relevant collective bargaining agreement. However,theNationalSupremeCourtofJusticehasruledthatifthemonthlysalaryoftheemployeeexceedsthecapby over 33%, then in order to calculate the length of service indemnification, the base salary to be considered must be 67% of the remuneration, multiplied by the number of years worked. This criterion was established by the Supreme Court in September 2004 and has been followed almost unanimously by subsequent judicial rulings.
• Indemnification in lieu of prior notice.TheECA establishes that dismissalswithout just causemust be executedwith one month prior notice for employees with service under five years, and two months prior notice for employees with service over five years. If the employer fails to comply with the prior notice, the employee will be entitled to indemnification equivalent to one or two months of salary, according to his service, plus a “13th salary”, equivalent to one-twelfth of the indemnification.
• Remainingsalaryuptotheendofthemonth.Ifthedismissaltakesplaceonanycalendardaynotcoincidingwiththelastday of the month, the employee will be entitled to collect the salary that should have accrued up to the end of the month.
Furthermore, as it is prescribed for any type of termination, the employer must pay to the employee the pro rata portion of the 13th salary and indemnification for unused vacation time.
10.6 What are the consequences of not having the right grounds/following the right procedure?Failure of the employer to comply with certain obligations gives rise to special indemnifications for the employee, such as:
• Irregularregistrationoftheemploymentrelationship:Forthis,anemployermustpaycompensationequivalentto100% of the indemnification due for length of service and lack of prior notice and 25% of all non-registered salaries. The employee must formally request the correct registration while the employment relationship is still in force, in order
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to be entitled to collect the compensation mentioned above. If the employment relationship ends before the formal request, the employee loses the right to the compensation. Notwithstanding, even if the employee does not require the registration while the relationship is in force, he may still claim the indemnification foreseen in section 1 of Act No 25,323 for unregistered employment equivalent to 100% of the amount due for length of service.
• Failuretorendercertificatesofemployment(ActNo25,345):Thiscircumstanceentitlesanemployeetocollectanindemnification equivalent to three months’ salary. This indemnification also applies where the certificate does not reflect the real salaries actually paid to the employee (partially registered salaries).
• Failuretopayindemnificationsfordismissal(section2,ActNo25,323):Ifafterbeingformallyrequiredanemployerfails to pay the corresponding indemnifications for dismissal without cause, thereby forcing the employee to file a lawsuit, these indemnifications will be increased by 50%. This indemnification also applies where the indemnifications paid do not reflect the real salary of the employee (partially registered salary).
10.7 Do special rules apply in certain situations?In addition to the protection given to union representatives, certain categories of workers are also granted aggravated compensation for sudden termination of employment. Please see above question 9.2 in relation to termination for pregnancy and marriage.
11. COLLECTIVEDISMISSALS11.1 What is the definition of collective dismissal?Mass termination of employment contracts upon closure of a business does not invoke special treatment involving reduced indemnifications or any differences from the case of dismissal at will.
Notwithstanding that the legislation in force does not foresee any administrative proceedings for mass terminations without cause, the labour authority may impose a mandatory conciliation process and force the employer to reinstate all the dismissed employees so as not to enter into a collective conflict with the personnel and the union. After a 15-day term of administrative procedure, the company must re-confirm its decision to dismiss and the union could insist on claims and strikes.
11.2 What is the procedure that must be followed in the event of collective dismissals?Mass terminations due to economic reasons and/or force majeure result in payment of reduced indemnification. Section 247 of the ECA establishes that if employees are dismissed due to force majeure or economic reasons they are entitled to collect a reduced indemnification equivalent to 50% of the compensation due for dismissal without cause.
If the company intends to allege that dismissal of the entire workforce is based on economic reasons, in order to pay the reduced indemnification it must comply with a mandatory administrative proceeding foreseen in Act No. 24,013, during which the company must present evidence to prove the crisis which justifies the dismissals.
This proceeding is carried out before the Ministry of Labour, with participation by the company and the union, with the aim of reaching a mutual agreement on the measures to be taken. Once the presentation is filed, a negotiation period of ten days is opened, during which the employer cannot execute the measure that gave rise to the proceeding (the dismissals) and the employees cannot carry out strikes or other job actions.
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If the parties cannot reach an agreement during the negotiation period, the proceeding is concluded and the employer is formally entitled to dismiss the personnel due to economic reasons.
The resolution of the Ministry of Labour which concludes the proceeding does not imply the validity of the dismissals based onforcemajeureoreconomicortechnologicalreasons,whichiseventuallyanalysedanddefinedbyaLabourCourt.Judgesare absolutely restrictive in the analysis of the legal requirements for dismissals based on those reasons.
Notwithstanding the conclusion of the administrative proceeding, the employees may challenge the alleged crisis and file individual claims before the labour courts in order to obtain full payment of the indemnification corresponding to dismissals without cause. In most cases of this nature, case law has rejected the application of section 247 of the ECA on the grounds that the employer must solely assume the economic risks involved in the business.
11.3 What are the consequences of not complying with the applicable procedures?The procedures set out by the legislation in force to execute mass terminations for economic reasons are mandatory and failure to comply with them will render the dismissals illegal and unenforceable. Furthermore, the employer may be sanctioned by the imposition of fines if, when formally requested to initiate the administrative proceedings to re-hire all the affected employees, the employer reject such administrative order.
11.4 What are employees’ rights in the event of collective dismissals?As said above, mass termination triggers the payment of a severance package corresponding to termination without cause. Collective dismissals executed within the scope of economic crisis give rise to reduced severance payment of 50%.
11.5 Are there other circumstances which trigger collective dismissal rights? No other circumstance would trigger collective dismissal rights.
12. FORTHCOMING LEGISLATIONThere are various bills and drafts of modifications of labour provisions that are being analysed in Congress, such as (i) modification to the method for calculation of severance packages disregarding the application of any cap over the salary base, (ii) recognition of paternity leave for fathers and implementation of adoption leave, (iii) the right for employees to participate in a profit-sharing scheme, (iv) protection of witnesses in labour suits by granting aggravated indemnifications in case of terminations executed the year following the relevant witness statement.
13. USEFUL REFERENCESUseful references with free or public access are the following web sites:
Ministry of Labour: www.trabajo.gob.ar/.
Legislation: www.infoleg.gov.ar/.
Case law: www.pjn.gov.ar.
Overview of labour issues in Argentina: www.bomchil.com.ar.
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GENERAL EDITORSiân KeallTravers Smith10 Snow HillLondon EC1A 2ALt +44 20 7295 3000f +44 20 7295 3500e [email protected] www.traverssmith.com
ARGENTINAFederico M BasileM & M BomchilSuipacha 268, piso 12C1008AAF Ciudad A. de Buenos AiresArgentinat +54 11 4321-7500 f +54 11 4321-7555e [email protected] www.bomchil.com
AUSTRALIAGordon WilliamsMinter Ellison Governor Macquarie Tower1 Farrer PlaceSydney NSW 2000Australiat +61 2 9921 4479 f +61 2 9921 8143e [email protected] w www.minterellison.com
AUSTRIAThomas AngermairDordaBruggerJordisUniversitaetsring 101010ViennaAustriat +43 1 533 4795 24f +43 1 533 4795 5024e [email protected] www.dbj.at
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