Allen & Overy LLP
Allen & Overy Germany is one of the leading German legal practices with offices in Frankfurt and Hamburg. Our service includes domestic and cross-border advice in German, English and US law. We are committed to understanding our clients their structure and their objectives. Our partners frequently publish and lecture on issues arising in their practice areas and regularly offer seminars on current issues.
Employment & Benefits
The European Court of Justice recently ruled that EU member states must require employers to establish an objective, reliable and accessible system for measuring their employees' daily working times. Without such a system, the hours and overtime actually worked cannot be reliably measured and employees' ability to enforce their rights cannot be guaranteed.
With respect to employers with a multi-jurisdictional presence in the European Union, where a dispute arises between them and an employee concerning the law applicable to cross-border employment contracts, it is first necessary to assess whether the objectively applicable law was deviated from by way of a choice-of-law clause. If so, it is then necessary to determine whether this affects the objectively applicable law's mandatory provisions and whether these are more favourable to the employee than the law chosen.
In employment contracts with a cross-border reach, it is always necessary to determine the objective law to which the contract is to be subject and to what extent this may be deviated from by way of a choice-of-law clause. While the primary deciding factor in this context is the place in which employees generally perform their work, a number of problems may be encountered when determining where this is.
Foreign companies planning to transfer local business units to a domestic company must first resolve a number of issues. Since the cross-border spin-off is currently not regarded as a feasible option, the transfer of assets and liabilities must be effected by way of an asset deal. In Europe, this generally triggers a business transfer under local law whereby the employment contracts of the staff within the unit in question are transferred to the domestic company.
Many international companies run their domestic operations via a branch of a foreign parent, rather than a locally established company. While cross-border spin-offs are theoretically permitted under European law, they do not represent a feasible option due to inadequate domestic regulations. Whether such reorganisations will affect workers' employment status and works councils' co-determination rights, particularly following a change in operations, must be assessed on a case-by-case basis.
The European Commission recently proposed to implement an internal and external whistleblowing reporting process which gives employees and external persons the opportunity to report breaches of EU law and ensures that such reports will be followed up. The scope of the proposal is broad, but such protection should be reasonable, taking into account the interests of not only the whistleblower, but also the companies in question and the public.
Companies should always clarify which social security laws apply to employees who are deployed in other countries. For such employees, it is often important to know whether they can remain in the social security system of their home country in order to avoid losing their existing social security accruals. Where the cross-border deployment of staff relates to non-EU countries, it is necessary to determine whether a social security treaty with the country in question has been concluded.
Sending employees on secondments to company sites in other countries is a major issue in cross-border employment law. It is often a popular way of deepening cross-border cooperation, particularly in terms of transferring know-how and securing closer contact with foreign branches. Employers increasingly wish to fall back on instruments of this kind, especially in preparation for Brexit. In legal terms, particular focus should be placed on drafting contracts.
When drafting employment agreements which relate to several EU jurisdictions, it is advisable to determine the applicable law in advance. The decisive feature in this context is the jurisdiction to which the employment contract objectively belongs. The place of work principle dictates that employment contracts and relationships are primarily subject to the law of the country in which or from which the employee habitually carries out work in the performance of their employment contract.
In today's globally interconnected world of work, cross-border issues play an increasingly prominent role – particularly for corporates with a multi-jurisdictional presence in the European Union. When drafting employment agreements which relate to several EU jurisdictions, it is therefore advisable to determine the applicable law in advance. The possibility of selecting which legal context should apply offers parties a certain level of autonomy; however, this is not unlimited.
The EU Pensions Directive, first proposed over 10 years ago, finally came into effect in September 2003. The directive aims to pave the way for pension schemes to operate, and be managed, across EU borders - an attractive proposition to multinational companies due to the potential for cost savings and simplified administration.
The decisive factor in determining whether the Acquired Rights Directive results in a 'relevant transfer' of employees on a contracting-out is whether there is a stable economic entity which retains its identity. In considering whether an entity retains its identity, a distinction is made between 'asset-reliant' and 'labour-intensive' entities.
In June 2003 the EU-level social partners agreed a joint text on socially intelligent restructuring, which provides companies with a set of guidelines to follow in order to ensure successful change management. Key recommendations include good-quality, timely and open communications, and developing workers' skills and qualifications.
The European Court of Justice has ruled that all on-call duty performed by a doctor required to be present in a hospital constitutes 'working time' for the purposes of the Working Time Directive. This will be the case even where the doctor sleeps at the hospital when his services are not required, and periods of sleep or inactivity do not amount to rest periods.
The European Commission is planning a draft directive on data protection in the workplace in 2004 or 2005. Its proposals include a general European framework on the processing of medical data, and limits on the use of data resulting from drug and genetic testing.
The EU Council of Ministers has failed to reach political agreement on the proposed directive regulating the working conditions of temporary agency workers. A key area of disagreement is the length of the qualifying period before protection applies.
The European Commission has published a report as part of an EU initiative to promote the sustainability and security of national pension systems. Key among the findings is that the ratio of people over 65 to people of working age is expected to double between now and 2050, with pensions expenditure in most member states rising significantly from about 2015 onwards.
There has been further progress towards the proposal for a directive for EU-wide rules on the activities and supervision of institutions operating occupational retirement provision services. The current draft introduced a number of changes, including a provision allowing schemes to provide retirement benefits in the form of a lump sum without restriction.
In November 2002 the European Parliament approved the proposal for a directive regulating the working conditions of temporary agency workers. However, the European Council has been unable to agree on a revised text, primarily due to continuing disagreement on the length of the qualifying period before the protection applies.
The European Commission recently presented a new proposal for a directive on takeover bids, which affords employees and their representatives stronger information and consultation rights than those contained in the previous proposal rejected by the European Parliament in July 2001.
A high-level group of company law experts, appointed by the European Commission to make recommendations aimed at modernizing the regulatory framework for company law, has published its final report. They include a recommendation that the costs of all share incentive schemes be properly accounted for in annual accounts.
An amendment to the 1976 Equal Treatment Directive, which strengthens worker protection against discrimination on grounds of sex, marital or family status and pregnancy and maternity, requires implementation by member states by October 5 2005. Among other things, it requires member states to establish equality monitoring bodies.
The European Parliament has suggested a number of changes to the proposed directive on the working conditions of temporary agency workers. These include confirmation that the principle of non-discrimination should be applied from the commencement of a temporary agency worker's assignment, and an exemption for member states unaccustomed to the non-discrimination principle.